Q3 2018 Cell Tower Lease Market Update
Cell Tower Lease Market | Key Takeaways
- Cell tower lease renewal requests are frequent, entertain some offers and pass on others.
- New cell tower development remains steady, tenants try to secure rock-bottom rates.
- Cell tower lease buyout prices have peaked; fed forecasted to raise interest rate in September.
The cell tower lease market remains strong with a flurry of activity in lease renewals, new cell tower development, and buyouts.
Lease Renewals, Proceed With Caution
With cell tower lease renewal requests, we are seeing every wireless carrier and tower company reach out to landlords years ahead of lease expiration. How a landlord responds depends on how many years is left on the lease. We often are seeing requests from tower companies in excess of ten years prior to lease expiration. The tower company’s offer in those instances is often a one-time payment such as $5,000.00. What the offer really means is, “How about you take this $5,000.00 and we remove your right to increase our rent ten years from now.” Is this a fair offer? The answer is no; there is a tremendous imbalance of benefit proposed for the tenant, not the landlord.
There are of course exceptions. If the lease is expiring in the next few years it typically makes business sense to entertain the negotiation at this time. Remember you are negotiating against cell tower lease experts who do this for a living. They know how much they will pay and what their options are, if any. Empower yourself with information and a higher caliber of expertise by engaging the services of Airwave Advisors.
New Cell Tower Leases – Don’t Give Away The Farm
The title can be taken literally. We have worked on countless agreements where tenants wanted to lease acres of land. In turn it interferes with grazing livestock, farming, and the landlord only receives $400.00 per month.
Remember that a new cell tower lease agreement is typically 25 -30 years in length and is drafted by the tenant, not an independent third party, such as a Bureau of Real Estate within your state. Any terms you agree to today, will affect your rights on your property for decades to come. Make sure to have any new cell tower lease opportunity reviewed by Airwave Advisors to ensure you aren’t leaving money on the table.
Buyout Prices Peaked – Increase In Interest Rates Forecast Downturn
We have closed many lease buyout transactions this year in extremely competitive situations. Pricing remains the constant variable.
Investors purchase cell tower lease contracts up until a certain rate of return. If the price to purchase the lease becomes too high and the investor no longer receives their target rate of return (or better), then they pass on the opportunity. The market for opportunities remains plentiful, so no one opportunity will make or break any investor. What does this mean for a landlord (seller)?
With the forecast of continued interest rate hikes, market economics tells us as the cost of cash becomes more expensive, purchase prices for investments will go down. We are starting to see the effects of high prices and higher mortgage rates in the Southern California residential real estate market as sales just dropped to their lowest levels in years.
If you have considered selling your lease, now is the time. Having closed over 70 cell tower lease buyout transactions with every credible buyer in the market, there is no better trusted advisor than Airwave Advisors.
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