Should I consider the sale of my lease?

  • If you are considering selling your property in the short term, you might consider selling your lease separately. In our experience, traditional buyers of property don’t pay the same amount as third party lease buyout companies.

  • If you can’t get financing elsewhere, the sale of the lease might be your only way to take money out of your property. You are essentially taking a high interest loan against your lease payments.

  • If your lease(s) is/are subject to higher risks of termination, you might consider selling rather than possibly losing the lease income in the future. A timely example of this is that there are a number of Nextel leases that are in the process of being terminated this year specifically because of the merger of Sprint and Nextel.

  • If you believe that capital gains taxes are going to increase in the near future, it might make sense to sell your lease now provided that your CPA is on board.

There are also some situations

where we advise against selling your lease(s).
  • If your property has a significant probability that it will be developed (or redeveloped) and the tower site or rooftop cell site would deter that development or redevelopment, you are better off not selling. Lease buyouts are typically for a longer term than the lease and once you have entered into the agreement, you have burdened your property.

  • If your lease is set to expire in less than 7 years, we recommend against selling because there may be an opportunity to renegotiate a higher rent even before the actual expiration. Rather than selling that upside to another party, you should negotiate the extension first and then sell.

  • If you are the tower owner and the lease is a collocation lease, we don’t recommend selling it in most cases. By selling the leases on your tower, you sell the revenue but you keep the operating expenses. Thus, your expenses could go up in the future, but you are no longer receiving any revenue from the tower.

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Many landowners assume that because of the frequency of contacts that their cell site or tower has something unique about it or that there is some “event” that is occurring that is driving the interest. The simple fact is that in 90% of the cases, there is nothing unique occurring and the landowner is simply getting contacted because of the increased competition. Now that isn’t necessarily a bad thing unless you don’t want to be contacted.

At a minimum, it helps landowners understand that there is value in their cell tower or cell site lease(s) and makes them
question whether they truly understand with the value of their lease.

Why are these companies contacting me so frequently?
Do they know something I don’t?

They contact you because they have found that landowners who are contacted repetitively will tend to wear out and start to believe their rhetoric (or in some cases, outright misrepresentations). Furthermore, most of the third party agents receive additional compensation for getting a deal done. In some cases, they receive no salary or compensation unless they sell. It is strictly good salesmanship, albeit annoying. For the tower companies, they prefer to get to you before someone else does because the price for the lease goes up. They also hope that by pressuring you into a decision, they can force you to avoid researching the situation (say, by hiring a reputable consultant like Steel in the Air, Inc.) and realizing the true value of your lease agreement. Lastly, the lease buyout industry is very incestuous in that many of the agents have moved from one company to another and have taken contact information for landowners with them. Each company reaches out to as many owners as they can.

3

A company that is not connected with the lease makes an offer to acquire the lease payments. In this case, the landowner conveys future rent payments that they would otherwise receive to that company. We call these companies third party lease buyout companies because they aren’t affiliated with the company to whom the landowner is leasing property.

2

A company that is not connected with the lease makes an offer to acquire the lease payments. In this case, the landowner conveys future rent payments that they would otherwise receive to that company. We call these companies third party lease buyout companies because they aren’t affiliated with the company to whom the landowner is leasing property.

1

A company that is not connected with the lease makes an offer to acquire the lease payments. In this case, the landowner conveys future rent payments that they would otherwise receive to that company. We call these companies third party lease buyout companies because they aren’t affiliated with the company to whom the landowner is leasing property.

What is a Lease Buyout?

A lease buyout is a transaction whereby a company pays a one-time fee to a landowner, and in exchange the company receives the right to the collect rent under the landowner’s cell site lease agreement. It is important to note that a lease buyout doesn’t extinguish the landowner’s obligations under the lease, just their right to collect rent. The landowner still has to honor the lease agreement, including granting the tenant access rights, keeping the rest of the property maintained, paying real property taxes, etc.
Lease buyouts typically occur in one of three ways

Choosing a Buyout Offer

Have you received one or more offers to buy your cell site lease? We recommend caution when dealing with revenue sharing offers or free property evaluations. If you were selling your home, you wouldn’t let the potential buyer also act as appraiser – the same case is true here.