November 2018 Cell Tower Market Update
Cell Tower Lease Renewals
Landlords continue to be contacted by their tenants years ahead of lease expiration. Sometimes it will make business sense to entertain your tenant’s request to extend their cell tower lease. Other times it may be in your best interest to ignore the request and wait closer to lease expiration.
Negotiating years ahead of lease expiration may be a complete waste of your time. In addition, you would also be negotiating from a position of little leverage since there is so much time left on the lease.
Remember time is on your side, not your tenant’s side. Give us a call if you would like to discuss renewing your cell tower lease further.
Cell Site Upgrades and Expansions
In 90% of cell site upgrade requests the tenant is presenting the project to the landlord as “consent only”. What this means is the tenant can upgrade with no additional rent due to the landlord. This is often incorrect and you need to make sure you identify their mistake.
Once we are engaged by landlords we are often able to identify opportunities to increase the tenant’s rent – despite the tenant’s claim that the project is consent only. Just because a tenant or tenant rep states something is true, does not mean it is. Often the tenant is spinning the facts to benefit the tenant’s self-interest. In fact they are often aware they owe you the landlord additional rent, however, it is up to you to discover this fact and prove them wrong.
We closed what started out as a “consent only” transaction last week increasing the tenant’s rent by 270%!
Make sure to run all your tenant’s lease renewal and upgrade requests by Airwave Advisors! Don’t leave money on the table!
Year End Cell Tower Lease Sales
Some sellers are taking advantage of a year-end cell tower lease sales tax strategy of splitting up their lump-sum payment. 50% of the sales proceeds are paid out in tax year 2018. The remaining 50% of the sales proceeds are paid out in tax year 2019.
Other investors are using 1031 exchanges to defer taxes altogether. Would you rather own a cell tower lease with a 30 day termination clause, or a piece of land leased to a McDonalds with guaranteed income for a specified amount of time?
With recent increase in the interest rate by the Fed we anticipate purchase prices to decrease going into 2019 and 2020. If you are contemplating selling now is the time! Give us a call to discuss the value of your lease today.
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