Q4 2017 Cell Tower Lease Briefing
As we head into the end of the year we want to share with you some cell tower lease strategies and news items.
T-Mobile Sprint Merger Buzz
Previously shot down in 2011 under the Obama administration (AT&T and T-Mobile), and discussed again in 2014 (Sprint and T-Mobile), a merger now looks to be more promising for a proposed merger between the third and fourth largest US cellular carriers, T-Mobile and Sprint.
CNBC reported on September 22, 2017, that both parties are close to agreeing to tentative terms to a merger. What does that mean for property owners with Sprint and T-Mobile leases? If a merger goes through it is bad for everyone. Only one network will remain, so either the Sprint or the T-Mobile network will disappear completely. Leases will be terminated, lease values will drop to zero. This leads us to consider cell tower lease buyouts to hedge against risk of future lease termination and loss of income.
Cell Tower Lease Buyouts | 50/50 Year End Strategy
A popular end of year tax strategy with cell tower lease buyouts is to split the sales proceeds into two payments. The first cell tower lease buyout payment you receive prior to December 31, 2017, and the second cell tower lease buyout payment is made on January 1, 2018. This may benefit the seller depending on the amount of taxes they are already forecasted to pay in 2017. Please note, Airwave Advisors, LLC, and Nick G. Foster as an individual are not tax advisors. It is always a smart business practice to check with your accountant or CPA prior to entering into any cell tower lease buyout.
Verizon leases continue to sell at a premium followed by AT&T, T-Mobile, and Sprint. Some investors have stopped purchasing Sprint leases altogether out of fear of an impending merger. If you are interested in selling your cell tower lease, give us a call today at (888) 443-5101.
New Cell Tower Lease Construction | Build-To-Suit vs. Speculative
There are two types of new cell tower lease construction, build-to-suit and speculative. We break build-to-suit into two categories. First is when you have been contacted directly by a carrier such as AT&T, Verizon, or T-Mobile. Second, you have been contacted by a company who has an exclusive contract to build a tower for AT&T, Verizon, or T-Mobile. Build-to-suit opportunities are opportunities you want to entertain.
Speculative development is the complete opposite. Speculative development is when a company contacts the property owner stating they are building a cell tower and they want a multi-year option (typically 3-5 years). The speculative development company wants to pay you nothing or maybe $500 for the multi-year option. They do not have a signed exclusive contract to build any tower, they are fishing. Signing up property owners and crossing their fingers that one of their signed contracts will be a match for a carrier.
It is important to quickly identify early on when you have been contacted if the new cell tower development is build-to-suit or speculative. You don’t want to invest time, or money, in an opportunity that isn’t quite what it seems. If you need help vetting the opportunity, please give us a call.
Cell Tower Lease Renewals & Rent Reductions
Cell tower lease renewals are your opportunity to increase your rent and renegotiate other terms in your lease. The tower companies are paying large one-time payments in addition to rent increases – however make sure to avoid the pitfalls! Be aware right of first refusal clauses, confidentiality clauses, power of attorney, and many of strings they try to attach to the deal. You are up against experts who do this for a living, make sure to engage experts such as Airwave Advisors to ensure you are not leaving money on the table and making costly mistakes.
The trolls have crawled out of the sewers again to try to convince property owners to reduce their cell tower rents. Companies who pitch this garbage are paid a commission on the savings they secure for their client. Transferring money out of your pocket, into theirs, using fear based selling techniques. Be wary of anyone trying to reduce your cell tower lease rent and call us if approached with this tactic.
How Can We Help?
We are currently working on cell tower lease buyouts, new cell tower leases, lease renewals, and expert witness work. With over forty Success Stories, our results speak volumes to our ability to help you maximize your cell tower lease.
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