When I sell, how long will the transaction take?
The typical buyout transaction takes approximately 60 days from start to finish. This is an average, with some taking less (down to 45 days) and some taking longer (up to 180 days). Some buyout companies promise quicker turnarounds- but if the company hasn’t done their due diligence, it is rare that they can close until they complete it, which typically takes 30 days or more. It is important to establish a realistic timeframe within any letter of intent and purchase agreement that you sign.
Is there a better time to sell?
The lease buyout market fluctuates along with the general economy. You can assume that when interest rates go up, that the offers that lease buyout companies make will go down unless they have locked in the cost of their capital. This occurred in 2008 when the economy tanked and the lease buyout industry almost shut down. You can also assume that offers will go down when a material event occurs in the industry. An example of this is when AT&T and T-Mobile announced their merger in 2011; the lease buyout industry hiccupped for a few months while trying to figure out how to gauge the risk of future terminations due to the consolidation of both sets of cell sites. Fortunately for almost all landowners, the merger was not approved by the FCC and Department of Justice, and as a result, offers climbed back to their normal rates.
Right now (4Q 2012), we believe that the market is as high as it is likely to ever get. There is currently a confluence of events occurring all together that are driving offers to amounts that haven’t been seen previously. It is definitely a seller’s market these days and we are well situated to help you take advantage of this unique market.
What happens after the sale of my lease?
During the first or second month after the sale of your lease, you can expect to continue to receive monthly rent checks, since it usually takes 30-60 days for the carrier to redirect the payment of rent to the lease buyout company. Typically, the lease buyout company will deduct the first two months of rent from the purchase price at closing to account for the likelihood that you will continue to receive up to two months of rent after the sale transaction closes. In the event that you do not receive one or both payments of rent from the carrier, the lease buyout company should be obligated to pay you as the property owner for the rent not received from the carrier. This may take an e-mail or phone call to the lease buyout company to inform them that the deducted rent was not received. Most of the lease buyout companies have been fairly responsive in paying property owner the redirected rent payments. Make sure you include a provision to capture the reimbursement of such payment in the event the carrier redirects payment for one or both months to the purchaser of your lease(s).
Will the lease buyout company sell my lease?
After your cell site lease buyout transaction is completed, depending on the acquiring company, many lease buyout companies hold onto the assignment and easement for a period of months until they have a portfolio of leases that are able to be resold or re-traded on the open market. The buyout companies like to aggregate leases and securitize them as a package, and then sell the package. Thus, it is unlikely that the company you are dealing with will be the eventual owner of the lease.