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:
- 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.
- The company who is leasing the property makes an offer to buy the lease. In doing so, they typically take long term rights to be on the property without having to make any payments. We call these tenant buyouts because it is the tenant who is making the buyout offer.
- The third scenario is where a third party is retained by the company leasing the property to make an offer to purchase the lease. The buyout offer might be made by the third party optimization company along with a proposal to reduce the rent. Md7 and Blackdot Wireless are examples of two companies that are optimization companies.