Cell Tower Site Lease Negotiations

When it comes to cell tower site leases, there are two types: the original lease that is put together before the site is built and then if you decide to sell there is a lease that 'wraps' the original lease and often times extends well beyond the original lease term.

An original lease for a cell site, whether it is a pole, tower, camouflaged, steeple or a rooftop site, all contain provisions that are considered 'boiler plate' (not normally negotiable). These 'boiler plate' provisions include: the original term, right to sublet, easements ; legal descriptions of the site and property; payment terms for electricity, insurance and real estate taxes the right to terminate with notice; and the tenant's obligations under the lease.

Items that will come up that are negotiable: an escalation clause possibly a 'right of first refusal' or ROFR; the carrier or tower company's 'permission' for you to sell your lease.

Orginal Lease Term: Don't Be Fooled

The original term for a typical cell lease is 5 years with 5 five years options, although this 'red herring' is normally followed closely by the, non-negotiable, right to terminate with 30, 60 or 90 days notice for any reason. This 'right to terminate', from their point of view, makes a lot of economic sense due to technological advances or mergers in the industry that could make your site economically unfeasible.

Cell Site Legal Description & Easements

The legal description of the property and specifically the description of the site along with easements. This may seem okay, but the devil is in the details. Unknowingly, if you grant them a 'general easement', you are granting them the right to do whatever they need to do and whenever they feel they need to do it. Your cellular lease consultant will probably offer them a 'specific easement' with the proviso that since you are sharing the sub-lease rents and if they need more space and “why would you not grant them additional space?”.

Cell Site Maintenance

Typically, the care, maintenance, insurance, cost of power and the carrier's share of the real estate taxes are to be borne by them. There are usually penalties if these provisions are not met in a timely fashion.

Co-location Rents for Your Cell Lease

The tenant will not normally bring up the subject of co-location rents or fees, but you, or better yet, your cellular lease consultant, should. Under the tenant's right to sublet, they will try and entice other carriers or even users that are not necessarily cell phone companies (police, military, radio stations, etc). These rents or fees can often dwarf what you are receiving, making the cell lease a money making proposition for the tenant, besides the service it is offering their customers. Hey, the tenant probably has a hundred thousand into the permit process and at least two to 4 times that building the tower and installing the equipment, so don't begrudge them a little greed. You can however, negotiate a share of those sublease payments.

Right of First Refusal (ROFR)

“The right of first refusal' or ROFR, no matter what is said, is not in your best interest. Your cell lease attorney or consultant will explain in detail. This prevents outside buyout firms from being interested in ever giving your cell site lease consideration, should you need to or decide to sell. Without an outside offer for your cell site lease, why would the carrier want to give you a bunch of cash when they already have control of the cell site with a modest monthly payment? They will buy it if they have to, but only if you can come up with a legitimate offer that is acceptable to you.

This pretty much covers the big provisions or an original cell site lease. I hope I made you aware of the fact that you need to consult an expert who is familiar with cell site leases. Your attorney is probably not a cellular expert, no insult intended.