A cell site lease term provision states the maximum length of time the lease will be in effect. When negotiating a new cell tower lease or lease extension, the tenant or potential tenant will push for a lease term that extends as far into the future as is attainable. In fact, at Vertical Consultants, we routinely see lease proposals with total terms in excess of 50 years, and sometimes terms that run through the year 2099! The reason for these excessive terms is that they provide a crucial level of security for the tenants and subtenants who want to use the property.
Excessively long terms are great for communications companies and tower companies; however, as a landowner, it is best to push for as short of a term as possible. A shorter term puts the landowner and tenant into a more even commitment balance, and provides an easier path to renegotiating the cell site agreement.
If a landowner signs a 50-year agreement with a telecommunications or tower company, the landowner likely has no means of terminating the lease unless the tenant is not paying its rent. This is in stark contrast to the tenant’s termination rights. A typical cell tower site agreement might permit the tenant to terminate the agreement at any time and for any reason. In short, the landowner has locked themselves in for 50 years, while the tenant has not committed to any period of time! One way to combat this imbalance, among others, is to maintain a shorter term on the lease.
The ability to renegotiate a lease is particularly important due to the long-term nature of a cell tower lease coupled with how rapidly an area’s usage patterns can change. As a lease’s term reaches a critical point (usually around 10 years remaining), the tenant must secure additional years or face the possibility of removing the cell tower and losing subtenant revenue streams. Every time a tenant must approach a landowner for an amendment or extension, the landowner is in a great position to increase their rent and property rights to better reflect the value of the cell site.
If you have been contacted by a company wanting you to enter into a new cell tower lease, or if you have been contacted by your tenant for a lease extension, consider contacting a leasing expert at Vertical Consultants. Vertical Consultants has an excellent track record when it comes to negotiating shorter leases, new amendments and finding hidden paths to renegotiate important lease provisions. We may be able to do the same for you, so contact us today for a free lease review consultation!
In 2016, Vertical Consultants averaged an immediate 322% increase in rents being received by its clients, and since 2010, has been able to assist its clients in the recovery of over 300 years worth of combined underpaid, and, in some cases, unpaid rents and other expenses that were rightfully due to these property owners located throughout North America.
To learn more about our services, visit https://www.celltowerleaseexperts.com or contact Vertical Consultants at info(at)vertical-consultants(dot)com or 877.456.7552.