One dollar more in monthly rent can increase the cash value of the lease being negotiated by $160 to $200. What if I could get you $100, $200, or even $500 more?
Negotiating a cell tower lease is not for those that figure that they will learn as they go through the process. This is usually a very expen$ive proposition.
Cell Tower Leases
The original lease is normally for five years, with 4 to 5 five year options. If you decide to sell the contract, there is an assignment that 'wraps' the original lease and often extend it well beyond the initial lease term.
An initial lease for a cell site, whether it is a pole, tower, camouflaged, steeple or a rooftop site, all contain provisions that are considered 'boilerplate' (not usually negotiable). These 'boilerplate' 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.
Don't Be Fooled
The term for a typical cell lease is five years, with 5 five years options. This term may seem definite; however, this is a 'red herring' is typically 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. You got to give them this; it's boilerplate.
Cell Site Legal Description & Easements
The legal description of the property and specifically the easements are intricate. If you grant the tenant a general easement, you may be allowing them the right to do whatever they want and whenever they want. Your cellular lease consultant will probably offer them a specific easement. With the caveat that if you were sharing the sub-lease rents (colocation rents) and if they need more space and “why would you not grant them additional space?”.
Cell Site Maintenance
The tenant bears the cost of the care and maintenance of all the telecom equipment, insurance covering liability, injury and property loss, price of their electrical power usage and their share of the real estate taxes. There are usually penalties if these provisions are not met in a timely fashion.
Colocation Rents for Your Cell Lease
The tenant will not usually bring up the subject of colocation rents, but you or your cellular lease consultant should. Under the tenant's right to sublet, they will have the right to add other carriers to their site.
These rents or fees may dwarf what you are receiving. Hey, the tenant probably has a hundred thousand dollars or more into the permit process and at least three or four times that were building the tower. Don't begrudge them a little return on their capital. You may, however, be to able 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 clause prevents outside buyout firms from being interested in ever giving your cell site lease consideration, should you need to or decide to sell. They may or may not buy the lease if you get an acceptable offer, but this clause dissuades a lot of interest in the opportunity.
These alerts pretty much covers the significant provisions in a cell site lease. Insurance coverage, right to enter (easements) and the detailed site map will also be included. I hope I made you aware of the need that you need to consult a consultant who is familiar with the intricacies of negotiating a cell site lease.
One dollar negotiated increase in your monthly rent can add $150 to $200 to the cash value of your lease. What if I can arrange an increase of $100, $200 or even $500 to the contract?