facts you should know about cell tower leases

Here are five facts you should know about cell tower leases before signing one… From real cell tower lease experts… Tower Genius.

If you have been approached by a wireless site acquisition agent working for a wireless carrier or tower company interested in signing an option to lease out your land for their cell tower, you probably have a bunch of questions.  For starters… Is their offer fair or is it a lowball offer?  

Negotiation is the key.  Negotiating a fair cell tower lease is important but should you start negotiating right away? Probably not. You don’t want to negotiate yourself out of the deal in the initial discussion. Ask them to make you and offer. Ask them to provide details. When a cell tower developer wants to put steel in the air make sure they don’t end up stealing your money with a lowball cell tower lease offer.

If you’re open to having a cell tower installed on your land, remember it is an encumbrance on the property that you will need to likely deal with for the rest of your life or for as long as you own it. Consider the following before you sign any and all cell tower leases they place before you. 

What is the underlying reason for the cell tower being proposed?

 

 

Is the tower developer trying to get you to sign an “Option” for a period of 3 to 5 years when most options should be no longer than 2 years? This is usually a red flag that the tower company is a developer that may simply be looking to sign an Option to Lease and then flip the contract to a larger cell tower management firm like SBA, Crown Castle, Vertical Bridge or American Tower. We’ve seen “interesting” language in cell tower lease options from cell tower companies like ATLAS and TILLMAN INFRASTRUCTURE that we encourage land owners to take a very close look at before signing. 

 

What’s a good rental escalation rate for a cell tower lease?

 

Cell tower lease rents should at a minimum escalate at or slightly above the rate of inflation so you don’t lose money over time. The Consumer Price Index (CPI) can be used although many carriers and tower management firms complain that it is difficult to calculate CPI. That is just a lazy excuse and should be disregarded if it comes up in your negotiations.

 

The industry standard for the past decade has been 3% annual rent escalations per year, however tower companies have pushed for 2% annual rent increases and for terms such as 10% every five year rental terms or even worse such as 7.5% every rental term.  Occasionally we see new cell tower proposal completely omit rental escalations. Let the cell tower landlord beware! 

Who pays the property taxes?

 

How long should the cell tower lease be for?

 

 

The industry standard is a 5-year initial term with 4 additional automatically renewing 5-year extensions, for a total of 25 years.

Are there any other details I should discuss?

 

Typically we make 2 to 3 dozen modifications on every new or existing wireless lease agreement we touch. Some are minor changes and some are significant.

Have more questions? You can always reach out to Tower Genius. We are experts in Cell Tower Leasing and will provide you with guidance and consultation. We have extensive experience in helping clients and their attorneys with equipment upgrades, cell site lease rate valuations, amendments, lease extensions, and cell tower lease buyouts. 

Give us a call at 888-313-9750.