Tower Lease Values: Record High Monthly Multiples

More Competition for Tower Leases Means Higher Prices

I get two or more new cell tower lease buyers each month asking to be put on our list for scheduled lease auctions. This is leading to higher prices for cell tower financial assets like leases rights of ways and easements. Sellers are enjoying the ride, but there is an end to the balloon. Maybe not now, but a balloon always pops.

Sometimes it is Best to Try to Re-negotiate Your Lease First

Cell hone carriers are changing their tactics as the cost of constructing new towers as expenses soar with the addition of new technology and stricter regulations are implemented. Carriers need longer commitments so they can take advantage of the growing lack of new towers that other carriers need to fill in their dead spots.

Even if you have 10 years or more left on your original lease, it is my opinion that the lease may be able to be enhanced. With a better lease, the value goes up tremendously and that’s what counts if an owner wishes to cash in. Even if selling a cell tower lease is not an option at this time, a better lease will bring more monthly revenue.

There are no promises, but I think it is worth looking at.

Andrew G Kellerman has a unique financial background in Real Estate, Mortgages and Securities that gives him an understanding of cell tower/rooftop leases that few consultants can match.

He can be contacted at 760) 470-1782 of reached by email at Andrew@1st-CellTowerBroker.com

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Cell Tower Lease Consultant: Financial Advisor

“Asking $1,000 more a month may be too much or maybe not enough…”

A cell tower lease negotiation requires a professional to represent you, the landlord, that is if you want true market rate. Every lease is different as is every cell site and a tenant’s critical need for your particular location. Asking $1,000 more a month may be too much or not enough. Cell phone carriers often make, by sub-leasing to other carriers, $10,000 or more each month, so an increase to an offer to lease your property may be peanuts to them.

You will seldom get a straight usable answer when you try and get a feel for what lease rates should be for a ‘like kind’ site, as the need for your site is not going to be disclosed. The firm that may be hired to negotiate for the cell phone carrier may not even know how important the site is to the infrastructure of that carrier’s coverage.

A schooled telecom financial advisor knows how to get to the bottom of this often perplexing conundrum and get you the best set of terms under the best and worst circumstances.

Andrew G Kellerman was trained in the telecom industry and has successfully negotiated with many Fortune 500 companies representing landlords. Whether you are negotiating a new lease or re-negotiating an existing lease, don’t go it alone.

(760) 470-1782 for a quote.

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Cell Site Leases: Want to Hear the Good or Bad News First?

Cell Phones Could Be the Next Cell Towers: Cell Tower Terminations Anyone?

You knew it was coming. Technology has a way to get to the best out of the least. That’s what capitalism is all about. Make the cell phone act as a router for other calls from other users, ‘a tower in your pocket’, so to speak. One of the largest telecom technology companies working on this concept for years is Qualcomm and they predict new cell phones with the capacity to answer and/or forward calls. The new phones will have this ability to do this with or without the without the use of a macro cell (tower or rooftop cell site).

Using long term environment technology (LTE) the phones can be used to advertise for retailers within 1,500 feet. This goes way beyond the capacity of Bluetooth, which may or even be turned on.

Hey John, we’ve got that new laptop you’ve been researching on the Internet”.

This will give the cellular companies two advantages that they do not have presently: 1. a lesser need to build new cell towers or roof top cell sites and 2. an added income source through close proximity advertising. Imagine walking past a computer store and getting a text, “Hey John, we’ve got that new laptop you’ve been researching on the Internet”.

Now the Good News: More New Carriers on Fewer Towers: Co-Location

The cost of installing new cell towers has priced itself towards the end of oblivion. Between zoning, engineering and new regulations, the more efficient path to better cell coverage is to share the already existing cell sites.

This should be great news for the few cell towers that are needed to fill the remaining large areas that still exist that have enough viability to generate a substantial profit and to complete the saturation that is required to compete in this industry.

This is going to greatly improve the cash values of the cell site leases that can take advantage of future negotiations among the cell phone carriers an their landlords.

Andrew G Kellerman is a financial advisor in the telecom industry, dealing with many Fortune 500 companies. Background in stocks, bonds, commodities,and options as VP for Thomson KcKinnon Securities, with over 30+ years in all aspects of real estate and mortgages.

(760) 470-1782 Call for a quote. It could be the smartest decision you’ll ever make!

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Not Getting Co-locaton Rents on Your Cell Tower Lease: You Blew it!

Macro Cell Network Build Out is All But Over

It’s been a great run for the private sector. There has been a lot of wealth created from those lucky enough to be the beneficiary of a cell site on their property. Very few though, had the foresight to negotiate their leases to take advantage of additional cell phone carriers being added to their sites. That is to say, they do not receive, what is termed in the industry as co-location rents (sub-leases).

Zoning and Stricter Regulations Make Site Sharing Economically Beneficial

As costs rise to build new towers, many carriers and tower companies are reconfiguring their tower structures to be able to add their competition to share their facilities. More income for the owner/carrier and less cost for the new sub-tenant make the arrangement cost effective for both.

The landowner/landlord, in most cases, does not benefit from the sharing model. Early leases and a lot of new leases do not address this added revenue that their tenant has in virtually ever site lease. The negotiation that take place between a private land owner and a Fortune 500 cellular company is not a fair fight. Most landowners are just happy to get a monthly income from what was otherwise non producing plot of land. But, there is a time and place for everything.

Time to Re-negotiate Your Lease

When it is time to re-negotiate your cell site lease is the time to address deficiencies in your lease, such as rent increases to reflect prevailing market conditions, rent escalations, and co-location rents.

Don’t get me wrong. Although you may have the upper hand in these negotiations because of the investment the carrier has made at your site and the obligations the carrier has made with other carriers, they aren’t about to be bullied. There needs to be some balance in these talks.

Andrew G Kellerman’s expertise is in the telecom industry, dealing with many Fortune 500 companies. Background in stocks, bonds, commodities,and options as VP for Thomson KcKinnon Securities, with over 30+ years in all aspects of real estate and mortgages.

(760) 470-1782 Call for a quote. It could be the smartest decision you’ll ever make!

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Cancellation or Termination Are Words Cell Tower Lease Owners DO NOT Want to Hear

Telecom Mergers and Acquisitions

Cell tower lease owners cringe when they hear the words ‘Termination‘ or ‘Cancellation‘, especially after turning down the many unsolicited offers that have come their way. Stuff happens.

Many of the smaller cell phone carriers, referred to in the industry as tier 3s, are always on the auction block. This is why they came to be, so they would receive an offer  that is big enough that it can’t be turned down. They know that at some point the bigger cell phone carriers (tier 1s and 2s) will take over their coverage areas if they can’t take over the companies that have big footprints in a desirable market.

I’d Rather be a Stockholder Than a Lease Owner

Bottom line is, it is probably safer to be a stockholder in a small prosperous cell phone carrier than being a cell site lease owner. The problem comes when the acquired tier 3 carrier’s lease’s coverage becomes redundant and many of their cell sites are already covered by the purchaser. That’s when we hear the ‘T’ or the ‘C’ word.

There Can Be a Silver Lining Scenario: Lease Value

When it comes to the value of cell tower leases, the size of the company makes a tremendous difference. To use a familiar market indicator, the monthly multiple, differ depending on the size of the company and the chance of it being purchased or merged with (each creates possible redundancies).

The tier 1s (ones) such as AT&T and Verizon command the highest cash value if you wish to sell your cell lease. One of these carrier’s leases can command a monthly multiple of 160 to 180 times the monthly rent, depending on the other terms of the lease. A $2,000 monthly rent payment could be between $320,000 to $360,000 cash value. A tier 2 lease maybe valued between 130 to 160 the monthly rent and a tier 3 lease, 90 to to 120 times monthly rent.

So the silver lining scenario is that your tier 3 carrier is taken over by a tier 1 carrier. You just went from a high value of 120 times monthly rent to as much as 180 times monthly rent. A big raise, $120,000, as long as your particular site is not already covered by that tier 1 company and your lease value goes to ‘$0′. Sounds a little big like gambling </sarc>.

Andrew G Kellerman’s expertise is in the telecom industry, dealing with many Fortune 500 companies. Background in stocks, bonds, commodities,and options as VP for Thomson KcKinnon Securities, with over 30+ years in all aspects of real estate and mortgages.

(760) 470-1782 Call for a quote. It could be the smartest decision you’ll ever make!

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Cell Tower Lease Negotiations: As if You Are Going to Sell the Lease

Negotiating With Sales in Mind

My approach to negotiating a cell tower or rooftop lease is to ‘do the deal’ as if the lease was going to be sold. The better the key terms are, the more value the tower lease has in cash value.

Selling a Lease: The Window of Best Value

All leases shouldn’t be negotiated as if they will be sold tomorrow. The terms of a lease can be ‘timed’ so that the lease’s best value occurs in a particular window or time frame. Give and take, is the key to timing. Most cell phone carriers will work with a landlord when putting together a cell site. The landlord is not as free to dictate the lease’s terms as they are when re-negotiating an existing lease, but a little creativity can go a long way.

“I’ll Never Sell My Cell Tower Lease”

I can tell you that I’ve heard this refrain almost as often as I’ve heard, “they are terminating my lease. can you help me to get another tenant?” You might want to negotiate the lease with ‘holding on to it forever in mind’, but a savvy investor will always keep his/her options open.

Andrew G Kellerman’s expertise is in the telecom industry, dealing with many Fortune 500 companies. Background in stocks, bonds, commodities,and options as VP for Thomson KcKinnon, with over 30+ years in all aspects of real estate and mortgages.

(760) 470-1782 Call for a quote. It could be the smartest decision you’ll ever make!

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Cell Phone Carrier Towers: NIMBY

It always amazes me that cell phone users have very little understanding on how their cell phones connect to one another. They will get angry when they can’t quickly download a new tune while driving because coverage is weak. these are the same NIMBY (Not in my backyard) that will raise cane if some cell phone carrier tries to improve or originate coverage in an area.

Cell phone coverage is more than that, it is used for portable devices using voice, texts, music and even streaming movies. The intricate web that this information needs to travel is astonishing. Information might travel across the United States or even around the world. Dozens of connected cell towers may help make this journey possible. The cell tower technology has to choose the best, fastest and less congested route.

I still remember the operator asking, “Number please.” ‘Phones’ have advanced to the point that they have multiple times more computing power than those that controlled the first Apollo flights. Want the convenience of these innovations? I’m not so sure. Some believe they couldn’t live without it.

The cost of a professional to help negotiate a new cell tower lease or re-negotiate (before the lease is up) is so small compared to the added value a financial advisor who lives and breaths these documents can add to your lease.

Andrew G Kellerman’s expertise is in the telecom industry, dealing with many Fortune 500 companies. Background in stocks, bonds, commodities,and options as VP for Thomson KcKinnon, with over 30+ years in all aspects of real estate and mortgages.

(760) 470-1782 Call for a quote. It could be the smartest decision you’ll ever make!

 

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Cell Site Lease Rent Increases Coming: Co-location & Consolidation: Re-negotiations

I’ve done an about face on the direction I think cell site (towers and rooftops) lease rates will head. I can eat crow. I have a feeling I’d better grow quite fond of it. I’ve written dozens of articles warning of a bubble in telecom industry that could seriously impact the cash value of the 300,000 plus cell site leases.

My thesis for the telecom lease financial decline was/is based on fixed assets getting hit by the realization that we are burdened with government debt that we cannot possibly service, a  sustained stock market correction, or a foreign market collapse. There are too many triggers to even contemplate and the world’s economy is a ‘house of cards’. But for the near future, the fundamentals seem to suggest continued increases in cell tower sales, more co-locations and consolidations, which should benefit the landlords with the potential to negotiate better leases and to renegotiate existing leases.

  • Crown Castles purchase of almost 10,000 AT&T cell towers in 2013
  • American Tower in talks to buy 7,000 towers from Verizon
  • Average number of carriers on each cell site has gone from 1.8 to 2.2 in last 10 years

I admit it. I didn’t see this coming. The last few lease re-negotiations we’ve done has sparked a new fever in this adviser. The cell phone carriers and tower operators didn’t roll over and play dead in the re-formation of the underlying leases. Not by a long shot, but they were much more receptive to, let’s just say, ‘better terms’ and in some cases would re-negotiate a lease with a longer time remaining before the lease was to expire.

Does this mean that termination of leases will not occur in the future? Because of the consolidations (sub-leasing by one carrier or cell tower operator, to other carriers) should free up some single carrier towers for termination. This trend is shown in the average number of carriers per cell site, increasing from 1.8 to 2.2 in the last 10 years.

The number of cell sites has almost tripled in this same time period. There are a few ‘holes’ left in coverage, but most of these will be filled by the smaller carriers and eventually, these will be absorbed by the Big Four (AT&T, Verizon, Sprint/Nextel and T-Mobile) to complete their needs.

Andrew G Kellerman’s expertise is in the telecom industry, dealing with many Fortune 500 companies. Background in stocks, bonds, commodities,and options as VP for Thomson KcKinnon, with over 30+ years in all aspects of real estate and mortgages.

(760) 470-1782 Call for a quote. It could be the smartest decision you’ll ever make!

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A Well Negotiated Cell Tower Lease is Worth a Small Fortune

Cell tower or rooftop leases are fairly short as far as length goes, so negotiating one of these leases is not rocket science nor is it brain surgery. I don’t think I’m being too harsh when I say, “A well negotiated cell tower lease is worth a small fortune”, and “A poorly negotiated lease is a travesty”. The difference of the cash value of these two potentials can be 300% or more.

I’ve had so many folks call me. They start out with, “Verizon (or whoever) just contacted me about putting a tower on my property or a rooftop on one of my buildings…”. Then they proceed to ask questions about what should they ask as a monthly rent, or, Is $500 a month enough? Or, Is $2,000 a month too much? Folks, there are so many aspects of a good lease, I could easily go on for hours.

Terms of a great lease are not only escalators, monthly rent and the term of the lease, they involve possible longevity, geography and intentions of the cell phone carrier. Every scenario can differ. If and when you get ready to sell your lease is an awful time to find out that your lease is considered sub-standard because you, could a, would a or should a.

The cost of a professional to help negotiate a new lease or re-negotiate (before the lease is up) is so small compared to the added value a financial advisor who lives and breaths these documents can add to your lease.

Andrew G Kellerman’s expertise is in the telecom industry, dealing with many Fortune 500 companies. Background in stocks, bonds, commodities,and options as VP for Thomson KcKinnon, with over 30+ years in all aspects of real estate and mortgages.

(760) 470-1782 Call for a quote. It could be the smartest decision you’ll ever make!

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Cell Tower Lease Income: A Built-in Termination Clause

This is not a ‘hit piece’ that is attempting to scare cell tower lease owners into dumping their leases. On the contrary, this class of lease is an asset that should provide an increasing income for years to come. In fact, fewer than 5% of all cell tower leases have ever been terminated. Most of these were caused by redundancy which occurs when carriers merge or consolidate.

The long term income from a well negotiated telecom lease is in great demand, not just by land owners, but by buyers willing to advance up to 15 years of the income from the lease, even if the lease is in its last years before expiration.

At some point we all get concerned about losing our cell tower leases through decommissioning of our cell towers or roof top sites. We are not losers if we decide to “take our chips and go home”. Sometimes we have a need not to gamble any more.

Here are a few of the things we should all think about:

  • Will the carrier/tenant on my lease still need my cell site in 15 years?
  • Will continuing industry consolidation cause my cell site to become redundant?
  • Will technology over the next 10 to 15 years make my cell site obsolete?

These are all fair questions. Remember that there is a reason that virtually every cell site lease has a built-in termination clause.

Andrew G. Kellerman, President of 1st-CellTowerBroker.com, Inc., is a financial advisor, specializing in telecom leases. His background includes V.P. Thomson McKinnon Securities, commodity futures, stock options, stocks and private placements, real estate and mortgages. Call for a quote before you negotiate or sell a cellular lease (760) 470-1782

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