Everything YOU Need To Know About A Cell Tower Lease Buyout
As the nation’s leading cell tower lease buyout experts, it is our job to ensure that you receive the highest purchase price with the best terms in your cell tower lease buyout transaction! We have closed over $60,000,000.00 in buyout transactions, helping landlords like you receive significantly more money with their sales transaction.
It is our job to keep our finger on the pulse of the market at all times! We provide you an immediate estimate based on up-to-date prices, along with competitive offers to purchase your cell tower lease.
We listen to your needs to develop a tailor-made sales strategy for your particular situation. Contact us today!
What Is A Cell Tower Lease Buyout?
A buyout is when a property owner who has a cell tower lease that pays them rent, sells their right to receive rent to a buyer for an agreed-upon price and period of time. Having closed over one hundred sales transactions, we offer an unparalleled depth of experience available to property owners. The majority of buyouts are the seller granting the buyer an easement for a period of 50 or 99 years. The minority of transactions involve granting an assignment of the lease only for a period of 30 years or less. The reason being sellers receive the maximum purchase price if they opt for the longer-term transaction.
It is likely you have been contacted by companies wanting to buy your lease. Companies such as Landmark Dividend, Towerpoint Capital, AP Wireless, and others (“Buyers”) – make unsolicited offers daily to purchase cell tower leases. Buyers offer to buy your cell tower rent typically for the next 30 years all the way to perpetuity (forever). Their offer is presented as a one-time lump sum cash payment than can range in the hundreds of thousands into the millions of dollars. The range of the purchase price is largely dependent on the current rent you are receiving, the rent escalator, and the lease expiration date.
A buyout offer is attractive if you have an immediate need for cash. Often landlords will sell their rent to (i) pay down or pay off debt, (ii) reinvest the cash in immediate needs such as property improvements, or (iii) to maximize their price when selling or purchasing a property.
How We Help With Selling Your Lease?
With over 100 closed transactions for over $60,000,000.00 in sales, Airwave Advisors® has extensive experience to assist you in your buyout transaction. We use a very successful process to ensure you get the best results with your transaction. Step 1, we review the cell tower lease, any and all amendments, the current rent, and most importantly – we listen to your needs. Step 2, once we understand what you would like to accomplish with your transaction, we submit the underwriting to top buyers in the market who fit your specific criteria. Step 3, we review the pros and cons of each offer with you and once you have selected an offer, we assist you through the entire transaction to ensure a successful close.
What Are My Tax Implications With A Sales Transaction?
Please consult with a qualified tax advisor to understand your specific tax implications. Airwave Advisors® is not a qualified tax advisor and any information found on airwaveadvisors.com should not be construed as tax advice. What we typically see from our clients is they approach taxes in one of two ways. If they decide to take the sales proceeds payment and hold the proceeds as liquid cash, they typically pay capital gains tax. Other clients prefer to defer taxes by reinvesting their sales proceeds into incoming producing real estate by utilizing Section 1031 of the United States Internal Revenue Code (26 U.S.C. § 1031). When performing a 1031 exchange it is important to engage a qualified 1031 exchange intermediary to hold the sales proceeds (until it is transferred to your next escrow). Airwave Advisors® has worked with many 1031 exchange providers and can recommend you 1031 exchange intermediary’s to interview, should you require. To learn more about 1031 exchanges check out are article, “How To 1031 Exchange Lease Buyouts”
Questions YOU Need Answered Before Agreeing To Sell Your Lease
- Are you 100% confident you achieved the top sales price with your sales transaction?
- Are you 100% confident you have structured the transaction to best suit your needs?
- Are you using advisors who have extensive experience to help you with this transaction?
- Have you been advised on all potential pitfalls and issues that may arise in these transactions?
Why Choose Us For Your Sales Transaction?
- Extensive experience adding value to sellers with over 100 transactions closed for over $60,000,000.00 in sales proceeds.
- A+ client service is paramount and our service is unmatched! Airwave Advisors is the only buyout advisor in the United States to maintain an A+ rating with the BBB with no negative complaints. In addition, Airwave Advisors maintains a 5-star rating on Google and has over 45 5-star testimonials.
- In addition to the value, we bring in increasing sales prices comes the additional resources available to you with referrals for qualified legal counsel, CPAs, and 1031 exchange intermediaries.
- Contact us today to discuss your lease buyout transaction!
How To 1031 Exchange Your Transaction
A 1031 exchange is a popular option for sellers of cell tower leases looking to defer taxes. Under Section 1031 of the United States Internal Revenue Code (26 U.S.C. § 1031), a taxpayer may defer recognition of capital gains and related Federal income tax liability on the exchange of certain types of property. It is the opinion of many accountants that if structured correctly a buyout transaction qualifies.
How Do I Perform A 1031 Exchange?
To perform a 1031 exchange step one is to engage a cell tower lease expert such as Airwave Advisors to assist you in putting together a transaction that most benefits you the seller. The next step would be to engage your CPA to ensure your CPA is on board with the proposed transaction deal structure. Finally engage a 1031 exchange services company. The sales proceeds from your transaction will need to be wired to the 1031 exchange provider, not your personal or business bank accounts.
How does a your transaction qualify?
First, always check with your CPA to make sure your transaction qualifies. Cell tower lease sales transactions can be structured as an easement or an assignment of the lease. An easement typically constitutes a transfer of an interest in real property under most state laws. If an easement is perpetual it is often viewed as a transfer of fee interest in real property and therefore qualifies as “like-kind”.
How much time do I have to identify a purchase?
You have 45-days from the date of sale to identify up to three properties. This 45-day window is known as the identification period. You then have 180 days (shorter in some circumstances) to acquire one or more of the identified properties, which is known as the exchange period.
Frequently Asked Questions
What is the market value of my cell tower lease?
The value of your cell tower lease will depend on the tenancy (AT&T, Verizon, T-Mobile, Sprint, etc.), the rent, the rent escalator, and the time remaining on the agreement. Location and installation type also are important factors, however, tenant credit grade and the economics of the contract are paramount.
How are buyout prices determined?
Sales prices are determined at any given time on what buyers in the market are willing to pay. If you received an unsolicited offer from a company it is typically below market. In the industry there are buyers called “aggregators” and their objective is to purchase cell tower lease agreements significantly below market. They then turn around and sell them at a higher price to buyers who pay more for the contracts in the market.
To assist you in determining a value of your cell tower lease. Check out our buyout calculator.
How do I get top dollar when selling my lease?
Your lease can be worth as much as a house if not more. It makes sense to hire a broker to sell your house and it makes sense to hire a cell tower lease expert to sell your cell tower lease. We have helped landlords like you receive hundreds of thousands if not millions of dollars by helping them cash in on their lease. We know the market, buyers who will pay top dollar, and we are your experts for this complex transaction. We will bring top offers to you and we will be there to help guide you through the process from start to finish.
How do I know if I am receiving a fair offer?
To answer your question you need to first understand who is presenting the offer. The person who presented you with an offer from the buyer company is a sales representative. He or she receives a higher commission for the lower the purchase price at which they can purchase your lease. Unsolicited offers are always below market, sometimes as much as 60% below the market. That is a lot of money that is being left on the table should you want to sell your lease. That’s why it is always important to have a cell tower lease expert such as Airwave Advisors® to help you navigate the market.
Why are these companies calling me trying to purchase my cell tower lease?
Investors on wall street view cell tower leases that have AT&T, Verizon, T-Mobile, and Sprint as tenants on the tower, as investment grade. As such, investors seek to purchase cell tower leases looking for a specific return on their investment. If the sales price meets or exceeds their target return they will purchase the lease. If a seller has unreasonable expectations for price, buyers will pass on the opportunity and deploy capital to other opportunities that meet or exceed their goals. The companies are calling you because you have a contract they would like to purchase as an investment.
How much is the buyout company making on my cell tower lease?
It depends on who you sell the lease to and at what price. If you sell the lease significantly under market it is highly likely the buyer will turn around and sell the contract to another party the following day. By example if you sold your cell tower lease for $200,000.00 and it was actually worth $400,000.00, the buyer will likely turn around and sell it to another buyer the following day to make a quick and easy $200,000.00 profit. To make sure you do not leave money on the table, contact Airwave Advisors today!
Why do property owners seek out selling their cell tower lease?
Property owners sell their cell phone lease agreements for many reasons. A cell tower lease is a technology based lease agreement. One day in the future the lease will be terminated when there is no longer a need for cell towers, or the specific cell tower is no longer needed. That is why 90% of leases have termination rights allowing the tenant to terminate the lease agreement in 30 days.
Sellers want to remove that risk that their income will disappear. Sellers then typically use their sales proceeds to put into savings, other investments, or to pay off debt.
How will an easement or lease assignment affect the future use of my property?
The answer to this question will be tailored to each individual property. Every property is unique. Some properties the easement or lease assignment will have no likely negative impact for decades to come. Other parcels may be negatively impacted if the incorrect deal structure is not put into place prior to close.
Should I sell for the maximum amount of cash and term or a shorter-term?
The answer will be specific to the seller. Do you believe your cell tower lease will still be in place 30 or 50 years from now? Do you believe we will still be using cell towers as a technology 30 or 50 years from now? Feel free to give us a call to discuss further.
Why do cell phone companies dislike lease buyout companies?
Cell phone companies prefer to work with property owners who do not know much about cell towers or cell sites. When the lease is sold to a knowledgeable buyer in the industry, the cell phone companies cannot play anymore games. They are matched up with a landlord who knows their business well and who will typically seek to capitalize on any mistakes they make.
How much under market are unsolicited offers typically?
If you receive a phone call or letter in the mail to purchase your cell tower lease, nine times out of ten it will be below market. Why? Because the individual reaching out to you is typically paid commission which is calculated on how low he can purchase a cell tower lease for. By example, if your cell tower lease is worth $500,000.00 and the individual sends you an offer to purchase your cell tower lease for $200,000.00. If you agree, the individual just got a steal and will make a huge commission on the low price upon which they just purchased the cell tower lease from you.
Is the purchase term of a buyout negotiable?
Yes, think of term like a lever with price. If you agree to a buyout of 99 years, you push the lever up and get the most amount of money. If you want to sell for 20 years, you pull the lever down and you get less money. Term is always negotiable to meet your needs. The question you have to consider is do you want to receive the most amount of money in the deal, or for some reason do you want to take back control of the cell tower lease in the future?
Are installment buyout offers a bad idea?
Typically yes. Installments is accepting a lump sum payment and the buyer pays you in installments over multiple years. When you calculate in inflation, lost opportunity cost of not having all your money today, it does not make sense to pursue.
Have any buyers of cell tower leases gone out of business in recent years?
Yes. Years ago many cell tower leases when sold went to two major shops and then over night they one by one turned off the lights. They went out of business and it did not come as much of a surprise to many. They purchased cell tower agreements at a premium price towards the end of their business model, and it was unsustainable.
What Is The Cell Phone Tower Discount Rate?
A common question we receive with cell phone tower lease valuations is what is the cell phone tower discount rate? We receive calls from appraisers and those determining value of cell towers daily. To discuss what the value of your cell tower lease is. Give us a call and we can quickly provide you a sales price figure.
Can a merger such as with Sprint and T-Mobile affect my buyout?
Yes. If two major companies propose to merge, such as a Sprint and T-Mobile, then buyers will typically pull back on buying leases where those companies are the tenant. History has shown us that when two wireless companies merge they shutdown tens-of-thousands of cell sites across the country. This turns your once monthly rent check and multi-hundred thousand dollar valued lease into the value of nothing over night.
Will I receive a W-9 with my sales transaction?
You should not receive a W-9 at the closing of your sales transaction. The responsibility of paying taxes will fall on the seller.
How do interest rates affect cell tower lease buyouts?
The Federal Reserve decided last year to lift its interest-rate target from near zero, seven years after it pushed its benchmark rate to the floor during the financial crisis. How does this historic movement affect your cell tower lease for years to come?
- What Is Your Current Rent Escalator?
In a lease, or license agreement, a rent escalator clause is typically agreed upon to adjust rent due to influences out of control of the parties – such as inflation.
In today’s market, tower companies and cell phone companies are typically pushing for rent escalators that escalate every five years – which is absolutely ludicrous. Inflation does not wait five years to influence the property owner, therefor a property owner should not accept a rent escalator that escalates every five years.
Instead landlords should require annual rent escalators that are on par, or that will exceed the rate of inflation. With that in mind, a landlord should not accept an annual rent escalator lower than the current rate of inflation.
Another approach that we anticipate may re-surge into popularity is changing the rent escalator to escalate based on the rate of the Consumer Price Index (CPI). With this approach, we recommend a minimum percent upon which the rent will escalate and to avoid a maximum on the rate if it all possible.
- Cell Tower Lease Buyout Prices Will Adjust
The Federal Reserves announcement of a gradual change in the interest rate will affect the cost of capital for everyone – including cell tower lease buyout companies. We anticipate that historic high purchase prices on cell tower lease buyouts will adjust downwards as capital becomes more expensive. Since the news of the Federal Reserves action to increase the interest rate was just announced yesterday, we anticipate it will take a few months for the market to adjust according to the rate.
If a property owner is considering selling their cell tower lease they should contact Airwave Advisors to secure the highest offers available in the market now. As interest rates rise, we anticipate purchase prices will decrease, therefor inaction will cost property owners money – if they are considering selling their cell tower lease.
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I am pleased to write this letter and to share the Nine Mile Falls School District's experience with Mr. Nick Foster & Airwave Advisors. We currently have a cell tower located on our high school campus. Cell tower leases and for that matter, the cell tower industry is not something that is in our normal scope of business. Approximately two years ago, we were contacted by a representative from Crown Castle to negotiate an extension of the lease. At this time, we felt that it was necessary to contact an expert in the field that would represent the district's best interest moving forward.
Superintendent, Nine Mile Falls School District
Very grateful and satisfied customers!!!
We realized a huge benefit by employing Nick and Airwave Advisors! He is extremely prompt in responding to the questions and concerns that developed through out the process. The terms we were originally offered for the option and lease agreement by the cell tower company were increased an additional 140% with built in inflation escalators and the elimination of non-beneficial lease terms. He kept us safe and worked out a great agreement. As an added surprise we even received an additional upfront one time payment equivalent to 2.7 years of lease once construction started.
Executive Pastor, Baptist Temple Church
We were more than pleased with the results that we achieved from Nick Foster and Airwave Advisors. I was really impressed and understood the gravity that Mr. Foster brings to the table, when we had a negotiation with AT&T and no less than nine people attended the call on behalf of AT&T, to discuss the lease with Mr. Foster and I. The results of the call were impressive and I would recommend Mr. Foster to others. He surely contributed to the growth and security of our affiliate.
Executive Director, Habitat for Humanity of St. Joseph County
Our club had been contacted by AT&T about possibly buying out our lease. They were trying to strong arm us into taking the deal, luckily we found Nick Foster and his company Airwave Advisors. Nick negotiated two different deals for almost $100,000 more than what AT&T offered us. Nick was there for us anytime we called. We were pleasantly pleased with our transaction so much so that we passed Nick's name on to others. We trust and endorse Airwave Advisors for your cell tower lease transaction.
General Manager, Oakdale Golf and Country Club
I want to thank you for the work you have performed for Cypress Office Properties related to our cell site leases. Your wealth of knowledge has assisted us in better understanding the cell site tenant base, and in increasing our cell site NOI.
Principal, Cypress Office Properties
I first started talking with Nick about three years ago about our cell tower lease renewal. When negotiations started in earnest, Nick worked tirelessly to obtain a fantastic deal for us, literally doubling our rent and getting several extra benefits as well. Nick is easy to work with and supremely competent. We could not have gotten this deal without him.
Private Property Owner
Nick G. Foster
President & Founder
Why Choose Us
We combine our legal knowledge, with our industry understanding, to add strategic value to your cell tower opportunity. We have meticulously reviewed thousands of lease agreements to ensure you receive the most favorable terms in your cell tower transaction.
We are here to help you achieve your goals! Our Success Stories speak volumes on how we have helped clients like you get results. We have helped hundreds of landlords, from private property owners to institutional investors, to achieve one common goal – results!
Our unparalleled understanding of the marketplace serves to significantly increase your bottom line. Our proprietary database tracks thousands of cell tower locations, rents, and purchase prices. Empower yourself with market knowledge that exceeds your competition with the help of Airwave Advisors.