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 historical example of this is when Sprint and Nextel bought in 2004. There were a significant number of Nextel leases terminated specifically because of the merger of Sprint and Nextel. We currently see the same thing happening as of this year with the T-Mobile and Sprint merger.
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 leases.
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.