Is your tower company tenant looking to buy out your existing cell tower lease? Has your tenant made a dedicated effort to contact you to offer you this buyout option? If so, Vertical Consultants can assist you through this process.
Cell tower companies will typically structure a lease buyout as a simple, one-time payment for both assigning a property owner’s remaining rights under the lease and also converting the current lease to a long term or perpetual easement. The motivation for a cell tower company is mostly driven by the need of that company to secure time it requires at the site. This transaction is also beneficial to a cell tower company or cell phone carrier as it is financially advantageous in that it secures revenue streams, which is the primary motivating factor for that company, and it also makes their investors happy.
A cell tower company will suggest that future technology will make the current telecom equipment on the cell tower location obsolete and that the corresponding near termination of the lease may be eminent. Moreover, especially in today’s environment, with companies announcing merger deals, tower companies will sometimes allude to the fact that because of consolidation, a property owner’s lease may ultimately be substantially shortened.
As a result, before a landowner decides to move forward in considering a lease buyout, he or she should obtain certain information. The following are questions you need answered before you agree to any lease buyout:
- If the cell tower or rooftop lease can be terminated, why does the tower company want to buy it from me?
- What are the major differences in a lease and an easement, and how will this change the rights and obligations of both the landowner and the cell tower company?
- The cell tower company wants a perpetual easement. What are disadvantages to do this, and how can I avoid any pitfalls surrounding this transaction structure?
- I have been offered a 50/50 split of any new rents. What are the odds I will receive anything, and how do you monitor going forward?
- After I sell the lease, does the purchaser pay any real estate taxes on the property?
- What are the income tax advantages and disadvantages to a lease buyout?
- Can proceeds received from a lease buyout be used in a 1031 exchange?
The cell tower companies have years of experience structuring these transactions, and have both the information and experience to take advantage of a lease buyout. Subsequently, the worst mistake you can make is not having the information and proper counsel when you are presented with such a deal. You could be leaving tens of thousands of dollars on the table, if not more. Cell tower companies rely upon landowners not having the same knowledge they do, nor do they want you to be properly represented.
The tower company buying your lease has experts on their side trying to make the best deal for them, shouldn’t you have the same? Vertical Consultants encourages you to contact us today to discuss any cell tower lease buyout offer you receive. We will be glad to discuss what services Vertical Consultants can provide you.