In this Tower Genius blog post, Steve Kazella gives his opinion about an article that was recently published by a digital infrastructure online magazine called “Dgtl Infra” (that’s not a typo!) about cell tower lease rates, lease agreements and lease buyout values, and we will link here to the cell tower lease rates article if you want to reference it.
Steve:
Hey, YouTube, this is Steve over at Tower Genius. I wanted to do a quick, important video. So, if you go over to Google and you search for “cell tower lease rates”, when you see the results for cell tower lease rates, you’ll see that as of this month here, or maybe August at some point, there was an article published by a fellow named Adam Simmons on August 9th. He’s a staff writer for a Digital Infrastructure Magazine and it’s online article, and talks about cell tower lease rates. And it is a very well-written article, it’s got some nice graphics in it. It kind of breaks things down.
I printed out a copy and I have it here in front of me. I’m looking at it. And so, on its face, this is an informative, unbiased article. There’s really no hook or agenda here. He’s talking about what is a cell tower lease rate and gives other information that is available to the public. The article lists Master Agreement cell tower lease rates for Tower Owners (like Crown, American Tower and SBA), and he breaks it down. What are the drivers of cell tower lease rates? And on its face, I mean, it is an informative article talking about 5G cell tower lease rates, cell tower lease rates by wireless carrier, breaks it down. It’s focusing on TOWER OWNERS, not on PROPERTY OWNERS.
So the question is, who is searching for this type of information? Really, this article is written based on publicly available information on MLA’s (Master lease agreements), not on landlord cell tower lease rates that Mr. or Mrs. Landlord or property owner are getting paid. The type of people that are actually searching for the information on Google are not people from American Tower or Crown Castle or AT&T or T-Mobile. People who search for this are in the situation where they’re looking for information in a scenario like, “Hey, I’ve been contacted for a new cell tower. What is it worth?” Or, “Hey, I have a Crown Castle lease and single carrier Crown Castle tower on my rural property out in Texas with AT&T on it and it’s in the year 19 of a 25 year lease agreement. What is that worth if I renew the cell tower lease agreement?”
“Or I have a two carrier SBA Communications cell tower in whatever state, that’s in year 23 of the 25-year lease contract with two cellular carrier tenants that have been there for over 20 years each. What is it worth?”
So the problem for the reader is that the article doesn’t dive into this type of information. The article is written for the Google keyword that people use when they are looking for information for their particular situation so they can get a fair contract. Instead it reads as a factual article on what lease rates are, but it is only partially correct because it’s watered-down a general overview of MLA master lease values, and it’s really written for people that are maybe invested in companies like Verizon or they own shares (stocks) with American Tower, or SBA Communications, or Crown Castle, and they wanted to really understand the business from a 30,000 foot level.
The article lists rent values from publicly available information based on MLA’s. So if you are a property owner or a cell tower landlord, this article isn’t going to help you.
So, if the article was titled properly, it would be renamed, “Cell Tower Master Lease Agreement Rates”. Because what it doesn’t do at all is the scenario, “Well, what if you have a tower on your property?”
Let’s say you’re a Crown Castle landlord and I’ll give you a perfect example.
A Crown Castle cell tower landlord gave us a call with AT&T on their property and they were getting revenue share as part of their negotiated lease agreement.
And based on my calculations with what the revenue share percentage was that this property owner had in their lease with Crown Castle (AT&T), we were able to figure out very quickly that AT&T in a very rural property location was paying Crown Castle over $8,000 per month, based on the percentage of revenue share that property owner was getting from Crown Castle every month.
If you look here in the article, it says AT&T and Crown Castle, they have 9,708 towers, where AT&T is paying Crown $1,900 a month, 2% fixed. So, I’m sure that the tower industry loves to have this information out there in the public domain, it helps to keep people from getting delusions of grandeur with their cell site rent values. I guess when they are acquiring a large bucket of cell towers they have an agreed upon rental price they are receiving, but the rents being paid out to the landlord are not based on these numbers, they are what they are, and it’s just on these grandfathered cell towers where Crown is getting $1,900 from AT&T to start out.
So, it’s a well-written article, but it’s written for the general public investing on Wall Street in the cell tower sector, and it is not written for the cell tower or cell site landlord who is looking for information. That’s an important distinction to make here.
I did actually reach out to the author of the article, and he did respond to me, so I give him credit for that. But as far as people searching for help regarding their cell tower’s rent value, maybe you’re going to have to read the article twice and you’ll figure out for yourself that this is not written for anybody that actually has a cell tower on their property. This is just cannon fodder for the general public.
And I don’t want to say it’s clickbait, but the thing is, who searches for cell tower lease rates? Who’s REALLY looking for that kind of specific information? It’s not the shareholders that have hundreds of thousands of dollars worth of American Tower stock, it’s the people that need help with their cell tower lease agreement. The author told me his article has “no angle”. But I would disagree.
So that’s my angle as a Partner at Tower Genius. Yes. We are looking to help you if you have questions about a cell tower lease valuation or the values of a new cell site on your rooftop, or if you’re looking to sell the cell tower lease income and enter into a lease buyout transaction. We can also help you with all of that.
The article also goes into cell tower lease buyout valuations towards the end of the article, it says here, “Recent precedent M&A transactions for cell towers in the United States indicate that leases are being valued at the cash tower flow multiples of 30X and higher.” Again, that “CTF” 30X M&A multiple has nothing to do with what they’re paying a landlord who needs information when planning to sell a cell tower lease perpetual easement. And this is where I believe the article misses the mark.
If company like Everest Infrastructure for example, has a thousand cell towers and is looking to sell it to Warren Buffett, the 30X multiple is the type of multiples they’re talking about when talking about lease buyout values. Not the onesies, two-sies where a property owner is looking to cash out of their cell phone tower or cell site rental stream.
So again, this is why finding credible information is essential when you are finding yourself inside of the bizarre esoteric cell tower lease industry. Maybe it’s okay if you are a Wall Street type, but you are a property owner or landlord, almost nobody really knows anything about cell towers, it’s just a very few limited amount of people in the United States who really understand this industry from a rent valuation perspective. And the article didn’t go into private cell tower lease rates just because it’s not available publicly, it’s not out there. You’re not going to find that information by doing research on the internet as it was clear here. The article did a good job for curiosity seekers, or cell tower enthusiasts based on the publicly available master lease agreement information that the industry puts out, but that’s all it really accomplished.
And yeah, I’m sure Crown Castle, SBA and American Tower love to have an article like this because it says, “Hey, we only get 1,900 bucks a month escalating at 2% a year so we can’t pay you more money.” Well, it’s always good to get a second opinion. Thanks, and visit us at towergenius.com or give us a call if you have questions at 888-313-9750.
