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Imagine presenting a residential, commercial or industrial property to a back
most of or all of their down payment. Think you may have a captive and
Existing cell sites have long been an enigma to real estate buying and selling.
Problem is that few understand the great cash value AND the inherent risks
associated with cell sites.
Let me explain. Although the 'algorithm' Telecom buyout firms use when
evaluating a cell site lease purchase is complex, they are universal. I won't even
try to give you hard numbers for each of the value categories because each
firm associates risk/rewards due to their experiences and market conditions that
What I will do is try and make you aware of the main ingredients that go into the
evaluation of a cell site lease, whether the site is a tower, camouflaged pole or
a rooftop site.
Like real estate, number one is location. In order for a cellular site to have top
value it needs to be placed in an area that has heavy cell wireless traffic.
Number 2 is who the lessee is. A large carrier such as Verizon or AT&T demand
some of the largest pricing as a lessee. That said, an awful lot depends on the
financial terms of the lease: monthly rent; escalation percentage and frequency
of the escalations; does the landlord share in additional rents (co-los)?; how
long left on the lease; etc.
These are but a few of the ingredients that go into pricing. Let's get into the risk
side of the equation. VIRTUALLY ALL cell site leases have 'termination clauses'
in them. This gives the lessee the right to cancel the contract with as little as 30
days notice. This doesn't happen very often.
Need more information? Visit 1st-CellTowerBroker.com and send me your
questions or give me a call at (760) 470-1782.
Although only 1 to 3% of cell sites are ever canceled, it does happen. Just ask
the T-Mobile cell site owners after the company was taken over by AT&T. Ten
thousand site owners may lose their leases if AT&T already has one of its own
dishes on their site. Redundancy, or unnecessary duplication of cellular
transmission, is costly and these are 'for profit companies'
Now let's get down to how you as a real estate professional can benefit greatly
with the little information that I've laid on you.
How would your buyer feel about getting his/her down payment back? Probably
a pretty easy answer. They'd love it.
Let's cover all the bases with one explanations. Why would anyone want a cell
site that can be taken away with 30 days notice? Well, the only answer is they
love the monthly rent. Cell sites, on average, bring in $1,000 to $1,500 a
month. Nice but what is that worth to a seller or even a buyer for that matter.
The enigma is as follows:
1. A property seller is afraid to sell the cell tower off before the sale of the
property because they feel one of two things. The first is they think that the cell
site lease will be a great selling point and the second is they are afraid that a
buyer won't want to not having some control over the property.
2. A buyer won't pay extra for a property with a cell site because, as we
discussed, the lease can be canceled. This is the same reason why a bank
won't lend on a cell site lease.
How can you benefit from this?
You could try and explain to the seller (maybe one of your listings) that he/she
will get more for the property by selling the property and the cell site separately
or that they can lower the asking price because they would benefit from the
sale of the cell tower. I've become blue in the face trying to convince sellers of
The best action would be not to argue with the seller but find a buyer who would
like to buy at a discounted price maybe getting all of their investment back at
the close or soon after the close of escrow.
When this situation occurs, and it will more times than you think, your strategy
should be: 1. get multiple offers for the cell site contingent upon your buyer
closing the real estate transaction.
How much is a cell site worth to a cellular buyout firm? I've gone over the major
factors in evaluating a site, but I've saved the best for last.
A cell tower lease can sell for as high as 140 times the monthly rent
(uncommon). $1,000 a month rent translates into $140,000 (less your 6%
commission of course). I just finished a deal where the rent was over $5,000 a
month and the transaction brought in around $900,000. What's 6% of that?
Must read - "RE Brokers: 2nd Commission"
Existing Cell Tower Lease
Own a cell site? Do you know what it is worth? We set record prices.
Cell Tower Leases Have Been An Enigma
Cell Tower Leases: Cancellations
Banks Won't Lend on Cell Tower Leases