Cell Tower Lease Buyers: What Will They Pay?

Cell Tower Lease Values

I get the question, “What is my cell tower/rooftop lease worth”?, all the time. Problem is, there is no pat answer. Different buyers will pay different prices for different leases at different times. In other words, each lease needs to be taken apart, piece by piece.

Location of the Tower/Rooftop

A cell tower’s location is intricate in the evaluation of the lease’s value. Some older towers may have become less important to cellular phone carriers because they have filled in their coverage by buying another carrier’s cell site. They may have made a deal to locate their equipment on a competitor’s site or even purchased an entire carrier an this site, your site, may have become redundant. Whether your site is considered a necessary part of the coverage now and in the future is a fundamental of pricing when buyers bid on your cell site. What the prevailing rent is in the area paid by a carrier or its competitors is also a factor in the calculation of the value.

Remaining Term on Your Lease

Most buyers are not going to let you know that the less time you have on your tower lease, the more the lease is worth. Since most leases are sub-par when it comes to monthly rent, escalators and co-location, buyers know that historically they will be able to re-negotiate the lease. Often times they will be able to double the rent, improve the escalators and add participation in the sub-leases they may have with other carriers who house their equipment and antennae.

Rent, Escalations and Co-location Rents

Rents, escalation clauses and co-location rents are all negotiable to a point. You need to understand the importance of that cell site to the carrier(s) occupying the tower/rooftop. Some sites are more important than others. Cell site lease buyers will take this into account when bidding on a lease.

Know the Cell Tower Buyers

Remember you are dealing with companies that are in business to make a profit and their sales people get paid more if they can purchase your lease for less. Having been introduced and trained in the cellular tower business by one of the top buyers in the business, I am very familiar with the whole sales routine. I withdrew from the buyers’ side of the business and decided to put myself in the middle, helping sellers get through the many, many ploys and tactics that I thought were not upfront and transparent. Don’t get me wrong, there are some great companies out there, including the one that trained me. the problem gets back to the less that is paid for a cell tower lease, the more the sales person is paid.

I can tell you that most sales of tower and rooftop leases are under priced. And I can also tell you that there is a sure fire way to make sure you get the most out of your site lease, without getting yourselves into buyout that you will pay for for the next 30 to 99 years.

Using a Cell Tower Consultant

A cell tower lease adviser/consultant or even a cell tower broker will make you money. The sales people hired by cell site lease aggregators are well trained, motivated and will take advantage when they can. You need representation to get the most out of your lease.

Andre G. Kellerman background includes: Stocks, Bonds, Insurance, Commodities, Real estate sales and syndication, tower lease sales and brokering and as a Financial Adviser involving many Fortune 500 companies.

Give me a call before you negotiate! 760-470-1782 or fill out an application to get an idea of what your cell lease is worth.

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Connect to the Internet Using Your Cell Phone

Each is Becoming the Other

Last week e talked about using your cell phone to use the Internet and using your computer for verbal communications like using a phone. The functions for the devices are becoming similar and each is becoming the other. Not only does this seem to be a competitive disadvantage for each it seems to me to border on being duplicitous.

Cell Phone as Internet Router

Cellular phone manufacturers, in their fever to be everything to everyone, have now figured how to turn the cell phone into an Internet router or even a ‘hot spot’ for multiple computer connections. Using USB cables or BlueTooth, I can use my cell phone same as I would an Internet wireless router.

Hook My Cell Phone to Internet Router

I can also hook my cell phone up to my Internet wireless router to surf and download data. I’m not even going to try to explain the ‘how to’ in this article. there are many websites that can do this much better than this blogger. My only interest in this is from my prospective as a financial consultant in the cellular industry, advising those who wish to renegotiate or sell their cell tower or rooftop leases. That interest is: what’s going to happen to these leases, now and in the future.

Valuations of Cell Tower Leases

In order to stay ahead of what’s coming I need to get a sense on where the two industries (cellular vs WiFi) are headed. Here are my questions hen I look at the evolution of the relationships between computers vs cellular bring. Will the need for cell towers diminish or increase? Will cellular transmission of WiFi continue to grow? Will VOIP continue to cut into cell phone business? Or will each industry merge with each other or grow separately into to unique forms?

We haven’t got into television yet. Will we get TV over our cell phones? Be able to make calls on our TVs? That discussion is for another day.

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Cellular on Your Portable: WiFi on Your Phone

I tell my two teenagers to use WiFi (wireless fidelity) when they use their cell phones in our home when they use the internet. WiFi is normally a flat fee vs the carrier fees they use when they download data via cellular minutes.

The two methods used on our devices are becoming interchangeable to the point that our cell phones can be our computers (Internet receptions) and our computers can become our phones. You can get Internet on a cellular phone and make calls on a portable device or desktop computer.

You can use your computer to talk to friends or business associates or you can get an actual hand held phone for home or business use complete with a phone number to communicate with the world. There are a plethora of each of these programs/devices available.

Want to talk or video chat using just your computer? Yahoo Messenger or more than 80 other programs that will allow ‘phone calls’ or video and chat capabilities.

The only point is that each medium is becoming the other and they are both becoming the same.

What will this do to cell tower and cell tower lease values?

It is this telecom consultant’s opinion that in the near future WiFi will dominate the telecommunications industry for both data transmission and voice communications.

Presently the cellular industry has the coverage advantage and are very aggressive in extending their lead. Sometimes the aggressive is the enemy of the wise. In an attempt to maximize income on their cell site (rooftops or towers) they allow competition to infiltrate their bases by way of microwave equipment that can send/receive data, thus allowing WiFi competition.

Dead zones or poor reception areas are being ‘filled in’ with the advent of smaller cells instead of the looming towers. “While giant macrocell sites have been the industry norm for years, carriers are increasingly turning to a range of smaller cell site options as a way to reduce costs and speed network expansion. These include microcells, picocells and femtocells.”1/28/15 – Michael Harris – http://www.unisonsite.com/resource-center/resource.html?article=23

Coverage and cost seem to be the two keys in this battle of reception of the Internet and verbal communications. Who will be the winner? My guess is that it will be us, the public.

Now, how about security? That’s an entirely different problem. Stay tuned.

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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!

Posted in cell phone coverage, cell site lease value, cell site leases, cell tower lease buyouts, cell tower lease value, cell tower multiples | Tagged , , | Leave a comment

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!

Posted in cell site lease value, cell tower buyers, cell tower lease buyouts, cell tower lease termination, cell tower lease value, cell tower leases, Uncategorized | Tagged , , | Leave a comment

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!

 

Posted in cell phone coverage, cell site lease value, cell site leases, cell tower leases, Uncategorized | Tagged , , | Leave a comment