A cell tower lease brokerage is only as good as its closing rate. At Nexus Towers we close 100% of the lease buyouts we negotiate. Want to know our secret for how to negotiate a cell tower lease buyout successfully? It’s not magic.
It’s knowledge. Knowledge that we put to use on your behalf. So, you always come out of a negotiation a winner.
What do we know that others don’t?
We know the buyers. We know their level of risk aversion. We know their lease duration preferences. We know who can buy on a tight margin and who can’t.
Knowing all that, it’s simply a case of matching the right buyer with each seller.
Think about it this way. Would the owner of a luxury condo in Manhattan try to sell apartments at a gathering of frontline fast-food employees?
Of course not. Trying to sell high-ticket condos to low-earning individuals is a mismatch. There might be lots of interest, but it wouldn’t lead anywhere.
And that’s a waste of time for everyone.
It’s the same thing when it comes to negotiating a cell tower lease buyout.
We never want to see a property owner through the tribulations of the negotiation and closing process, only to have to do it again because the first attempt fell through.
This means we’re not going to try and sell a cell tower lease on a building with a high LTV to a risk-averse buyer. Nor will we try to sell your lease to a buyer we know wants a 55-year timeline if you’re only looking to sell for 30 years.
Curious about our matching criteria?
Here are a few things we consider when matching a buyer and a seller in order to negotiate a cell tower lease buyout successfully.
There’s nothing better for our clients than a confident buyer.
Confident buyers are sure of their choices and don’t try to hedge their bets by attaching strings to the deal.
This is particularly important to our clients who have both Sprint and T-Mobile towers on their roofs. (Because T-Mobile owns Sprint, industry expectations are that the company will eventually shut down most of the Sprint towers.)
A confident buyer will select one tower lease to purchase (usually the T-Mobile lease). Leaving the property owner in full control of the other.
Here’s how this is better for you.
Let’s say the buyer purchases the T-Mobile tower and leaves you with Sprint. So long as the Sprint tower is operating, you’ll collect the full rent on it. Once the Sprint lease is terminated, you have full ownership of the tower and can market it to other wireless carriers.
If, for some reason, the T-Mobile lease was the one terminated, the lease buyer is out of luck. They only have ownership of the tower lease if it’s operated by T-Mobile. If T-Mobile backs out, rights revert back to you and now you have both towers again.
All the risk is on the buyer. None is on you.
Asking yourself how much rent can I get for my cell site lease? Find out more.
On the other hand, a risk-averse cell tower lease buyer will try to hedge their bets.
They’ll choose one lease to buy but they’ll put an easement on the other tower. This essentially means they get paid the rent for both towers. However, because they don’t technically own the second tower, they’ll pass along the rent from the lease to the property owner.
Here’s how this can play out in a way that some property owners don’t like.
Say the purchaser buys the T-Mobile lease and is entitled to $5000 a month in rent. The Sprint lease brings in $6000 in rent, which gets passed on to the property owner. If T-Mobile decides to terminate its lease, the purchaser then claims $5000 in rent from the Sprint lease, leaving the property owner with only $1000 a month, even though they still own the Sprint lease.
Not all property owners are ok with this option and it can be a breaking point during negotiations.
But we know which lease buyers prefer this arrangement and we won’t approach them if you tell us this isn’t an option for you.
One quick note: Since the chances of the T-Mobile tower being shut down are slim, these hedged bet purchases usually pay off for our clients despite the strings attached.
Not sure if selling your cell tower lease is the right move for you? See how selling your lease can save you from many hassles.
Loan to Value (LTV) Ratio
When it comes to how to negotiate a cell tower lease buyout, high LTV ratios can be a firm line in the sand over which many investors won’t cross.
Here’s what this means for you. If you have an LTV of 70% or higher, an investor is not going to buy out your lease unless you get an SNDA from your bank lender that exempts the cell phone towers or antennas from any foreclosure sale. Not such a big deal you might think. Except, not all lenders will sign an SNDA.
But here’s where our expertise comes into play. We know an exception to this rule of thumb. One investor that’s willing to take a bigger risk and accept a tighter margin.
Translation: even if you have a higher LTV and can’t get an SNDA, Nexus Towers may be able to help you.
Our in-depth knowledge of the buyer market means we know each investor’s comfort level and can steer your opportunity in their direction.
Lease Duration Preferences
Another sticking point when it comes to negotiating a cell tower lease is the duration of the lease.
Many of our clients prefer coterminous durations. Meaning, if the original lease was for 30 years but there are only 15 years left, they want the lease buyout to be for 15 years. Or, if they’re renewing the original lease for another 30 years, they want the buyout to be for 30 years.
Some investors react badly if you present them with coterminous requirements, often in the form of a horribly low bid.
Other investors are more flexible. They don’t need 99 years to justify their investment model and they won’t lowball their offer.
If you tell us you’ll only sell your lease on a coterminous basis, we know which investors to throw into the bidding mix and which to avoid.
Successful lease buyouts start with matching a buyer with a seller. Knowing the right potential buyer takes knowledge and expertise. Trying to do it alone or with the wrong broker can waste time and money.
If you’re thinking about selling your wireless tower lease, contact us today and let us put our expertise to work for you.