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Cell Tower Leases Can Help With Current Financial Problems

March 31, 2020
Cell Tower Advisory

Cell towerSelling a cell tower lease can generate large sums of money but not affect an organization’s ongoing operations. Businesses or other entities with cell leases that are facing financial challenges due to the COVID-19 virus may want to consider such a sale.

Cell tower leases have sold in the range of 200 times monthly rents, despite the lease having terms allowing cancellation on short notice. Purchasers, including large publicly-traded companies, ignore such terms because they know cancellation would lead to a gap in cell service.

Very importantly, a well drafted sale will not affect the lease owner’s continued use or development of the building or property on which the cell tower is located. A lease sale can provide a financial bridge to help an organization get through the current economic situation.

Varnum has helped clients sell nearly 100 cell leases. Some sales were by clients with financial issues, such as a city and a school district under emergency management who sold assets to generate funds but without affecting ongoing operations.

Getting the best price and terms (property use unaffected) usually requires getting bids. This also assures owners, lenders and creditors that the sales price is the best possible.

If a lease sale may be something you would like to consider, contact John Pestle (jwpestle@varnumlaw.com, 616/336-6725) or Pete Schmidt (paschmidt@varnumlaw.com, 616/336-6411). Time is of the essence since such sales usually require title insurance, surveys, environmental assessments and mortgage holder approval.

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