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Why Do Companies Want To Buy Cell Tower Leases?

Why Do Companies Want To Buy Cell Tower Leases?
Steve:
Hey, YouTube. It’s Steve with Tower Genius. So we get this question a lot. Why are so many people wanting to buy my cell phone tower lease? Why do I get so many calls? Why do I get so many letters? Why are so many people interested in purchasing that cell tower lease future rental stream?

Well, probably the easiest way to explain it is, I’m sure you’ve seen these commercials on TV or radio, 877-Cash-Now, sell your structured settlement payment or annuity to JG Wentworth. And God bless those folks, it’s the same type of idea. They are with a structured settlement or an annuity payment, or even with like a mortgage note. Instead of waiting 20, 30 years to pay out every month, they’re going to give you a lump sum upfront. Just like if you win the lottery ticket… A little noise here in the background.

But let’s say you win the lottery and you take the cash upfront, they’re not going to give you the full hundred million dollar payment. They’re going to deduct, obviously they hit you for taxes, but they’re going to give you a smaller amount. With a cell tower, let’s say, I don’t know, let’s say you’re getting a thousand bucks a month, 12 grand a year, and you got a multiple of, let’s say they offered you $180,000, a multiple of your annual rent. So they’re not going to pay you the full 25 years’ worth of $12,000 escalating at 10, 15% a year. They’re going to give you a smaller portion of that. And the reason they do that because these people are capitalists. They’re here to make money. They’re here to turn a profit. They’re not Habitat for Humanity where they’re handing out something interest-free.

So they’re going to purchase, so let’s say they might give you, depending on the carriers, the location, the type of site it is, the provisions in the lease, right of first refusal for example, they might give you a multiple anywhere from about 14 times your annual rent to about 15, 16 times your annual rent. And if it’s a more attractive site with better language in the lease, then you might get multiples higher than that. But they’re not going to give you 25 years’ worth of rent. Because they’re looking to hopefully take possession of this lease and renegotiate at some point. And if you’re getting a thousand bucks a month, well, maybe the tower company or the hedge fund or whoever buys this thing might renegotiate the lease and get 2,500 a month, 3,000 a month. Really depends on the site-specific values there.

So that’s why people are looking to buy your cell tower lease agreement, because there is an arbitrage spread potentially if they can renegotiate this thing and get better terms. So you have a valuable asset, a valuable lease. Make sure that you get advice if you’re considering selling it. And a lot of people don’t need to sell these things. And if you’re in one of these situations where you need to sell, you’re not in a good spot, because they can smell blood in the water usually. And if you have an urgent need to sell, that’s usually not a good negotiating position. So a lot of these rural sites are going to be around for a long time. You can hang onto them, pass them on to your heirs at some point when you assign the property.

So anyway, if you have questions about a cell tower lease buyout, if you’re getting calls, you’re not sure about the offers, you can always have us take a look at it for you and give your opinion. Visit us at towergenius.com or you could book a free consultation with us. Our number’s 888-313-9750. Have a great day.
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Steve Kazella

I was recruited out of Enterprise Rent a Car in 2000 by Kevin Donohue, who is my business partner today, to be a real estate site acquisition manager in the NYC Metropolitan Area for his company that was contracting for Verizon Wireless, T-Mobile and Sprint. In 2008 I founded a consulting firm know today as Tower Genius, LLC where Kevin and I have helped many thousands of people and existing cell tower landlords get the help and information they need to succeed at the cell tower negotiating table.

Carriers & Tower Companies Have Their Hired Guns. Shouldn't You?

Negotiating a cell tower lease, trying to figure out what the correct cell tower rent value for your property needs to be, or evaluating the broad range of proposals and offers received by most cell site landlords in 2022 can be very confusing. Connect with Tower Genius or submit your info below, and we'll evaluate your situation, answer your questions and even make a few recommendations you may benefit from.

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