“LEASE VALUE CALCULATOR FORMULA = What they want you to know ÷ WHAT WE KNOW”
Comparing Cell Tower Lease Agreements Isn’t Always Like Comparing Apples to Apples.
Both Partners of Tower Genius are former real estate site acquisition project managers who acquired and developed sites for Verizon Wireless, T-Mobile, and Sprint PCS over two decades ago. Kevin Donohue oversaw the acquisition and development of 10,000 new cell tower and cell sites and their lease agreements as an employee of Bell Atlantic NYNEX Mobile (today’s Verizon Wireless) in the Northeastern USA.
A million-dollar cell tower development project (including up-front soft costs, tower construction costs & carrier equipment) will never see the light of day without first having a long-term lease agreement, including an easement secured and recorded on the deed of the land parcel it is to sit on. Before you can effectively negotiate a cell site lease agreement, you need to know what type of contract you were presented with. Here’s the kind of newly proposed cell site lease agreements typically offered:
- Tower Developer / Tower Lease OR Option and Lease
- Carrier / Communications Site Lease OR Option and Lease (Rooftop, Billboard, Water Tower, Transmission Tower, Smokestack)
- Carrier / Ground Lease OR Option and Lease
- Carrier / Rooftop Lease Or Option and Lease
- Carrier / Water Tower Lease
- Carrier / Transmission Tower Lease
- Carrier / Small Cell Lease (Master Lease)
- Individual Rooftop Small Cell Lease or Option and Lease
How about all “them apples”? What type of cellular tower lease agreement were you offered? About 90% of the people that got on a daily basis to talk to daily have NO IDEA about what type of lease agreement they have been offered. If you don’t know what the diagnosis of the patient is, you aren’t ready for the procedure. It is a very common mistake made by people when they start to blindly negotiate a cell tower lease when they have no idea what kind of contact they were offered. The cell tower property acquisition people know that you probably have very little “cell tower knowledge” so the deck is stacked against you from Day One.
You need to go in “loaded for bear” BEFORE you start to negotiate your cell tower lease agreement. Information is power. Don’t allow yourself to get drawn into discussing lease rates of business terms. If you are contacted, a simple “Yes I’m interested… where do you want to put the cell tower…” is probably enough. When they bait you with a rent amount, just let them know you will think about it. Then contact Tower Genius so we can evaluate your offer and provide you with practical strategies to improve the chances of your site being selected.
LEASE AGREEMENTS WILL EITHER BE DIRECT CARRIER LEASES OR THEY WILL BE TOWER DEVELOPER LEASES
- Wireless Carrier Lease will be a direct lease agreement between you the Owner, Landlord, or Lessor, and the Carrier, Tenant or Lessee — namely Verizon Wireless, T-Mobile, AT&T, US Cellular, or DISH Wireless. It can be for a Cell Tower Lease Agreement, Ground Lease Agreement, Rooftop Cell Site Lease Agreement, Water Tower Lease Agreement, Utility Transmission Tower Lease Agreement, or other direct carrier contract. There is nobody between you and the carrier, so you will typically be able to secure a better rental price and better terms.
- Cell Tower Developer Lease will be a direct lease agreement between you the Owner, Landlord or Lessor, and the Cell Tower Owner or Tower Developer, Tenant or Lessee — namely American Tower Corporation, Crown Castle International, SBA Communications, Vertical Bridge or other Cell Tower Companies. The tower company has placed itself between you and their subtenant, the carrier (Verizon, AT&T, T-Mobile, US Cellular, DISH Wireless). Their carriers’ subtenants will typically pay the Tower Owner about $2,000 per month, escalating at 3% annually to lease the tower and ground space inside the Leased Premises (footprint). The anchor tenant or subtenant helps the developer recoup their development costs over a 7-year depreciation cycle in most cases and you get paid out of what’s left over. This is why you will rarely see a cell tower developer pay a property owner “$2,000 per month” because it’s what they are generating on the tower with one subtenant.
- Communications Site Option & Lease agreements have an “Option Period” where the carrier or developer ties up your property for 1 to 3 years for a nominal annual fee ($500 is usually offered) and they use that time to get their due diligence, zoning and permitting completed. The Option and Lease Agreement looks just like a normal Wireless Telecommunications Lease Agreement but it contains option language that they can exercise by sending you a letter that they are “exercising their option” which ** POOF ** just like magic turns the Option into a Lease. So you need to pay close attention to the Option. They can also let the Option period expire and not move forward.
A cell tower developer has zero incentive to propose a rooftop cell site lease agreement because your rooftop is the tower. This is why owners of residential apartments, condominiums, and commercial buildings should not sign rooftop leases or management contracts with cell tower management companies. You are the cell tower. Why give away your leverage to a direct competitor?
NEED CELL TOWER LEASE AGREEMENT ASSISTANCE?
- Verizon Wireless lease agreements
- AT&T lease agreements
- T-Mobile lease agreements
- U.S. Cellular lease agreements
- DISH Wireless lease agreements
- American Tower lease agreements
- Crown Castle lease agreements
- SBA Communications lease agreements
- Vertical Bridge lease agreements