Cell Tower Leases Are Gold Mines – Don’t Give Them Away!
Cell tower leases are gold mines. But it’s easy to inadvertently give away the gold mine when you sell the property where the cell tower is located.
Here’s how not to give away the mine. When you sell property that has a cell tower on it (or a building with a cell antenna on the roof), you have three options:
- sell the cell lease and future leasing rights before you sell the property or building;
- sell the property or building, but keep the lease;
- sell the property and the cell lease together.
Only the first two are good options.
The first option is to sell the cell lease and future leasing rights before you sell the property or building. You can probably get a sales price on the order of 17.5 times annual revenues. This will add dollar for dollar to the sales price of the underlying property or building.
Your second option is to sell the property or building but keep the lease – and the future communications antenna leasing rights. For example, first you “sell” the cell lease/future leasing rights to a new LLC you own. Then you sell the building or property. We have helped clients do this both for cell towers on open land and for cell antennas on the roof of buildings. This way you get the full sales price of the property or building, and you get to keep rental income from the cell tower lease. If you decide to sell the lease in the future, you can do so.
The third and not so good option is to sell the property and the cell lease together. This is not a good idea because purchasers will rarely give you full value (17.5 times annual revenues) for the cell lease. They mistakenly think that because the cell company can cancel the lease on short notice it is not worth much. Wrong! The companies that buy cell leases know that leases can’t be cancelled because then the cell company would have a hole in its network.
So when you own a gold mine, don’t give it away. Maybe you sell the property, but first sell the gold mine and get full value for it. Maybe you sell the property but keep the gold mine. But don’t sell the property and gold mine together – you’ll get almost nothing for the mine!
We have helped clients sell nearly 100 “cell lease gold mines,” sometimes to themselves. The process and documents to accomplish such sales are somewhat unique. We’ve seen mistakes that seriously harmed the value of the "cell lease gold mine” or the property on which it is located. If you would like assistance on selling or keeping your cell lease, contact John Pestle at 616/336-6725 or email@example.com
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- Cell Tower Advisory, July 28, 2020
- Cell Tower Advisory, February 26, 2020
- Cell Tower Advisory, October 29, 2019