Cell phone tower lease is a common investment by tower companies and wireless carriers. Such companies often lease parcels of land from property owners, who in turn receive ancillary income on agreed periods. The amount paid to the owner depends on a number of factors including location of the system, the population density of the area, and nearby traffic.

Separate from a cell phone tower lease, many property owners also sell the pieces of land directly companies, third-party investors, and private investors that are interested in buyout.

Different from real estate leases

Unlike conventional real estate leases, a cell phone tower lease can improve in value when it nears its expiry period. This happens due to the inclusion of deconstruction and relocation costs if the parties do not renew the lease.

Besides, cell phone tower lease agreements do not only follow real estate agreements and provisions. In addition, they also depend on telecommunication agreements as well. Both the seller and the company or investor involved in the lease should be aware of all the provisions for the smooth running of the lease.

Cell tower leasing basics you need to know

A cell phone tower lease usually involves ground lease, as agreed between the property owner and the company or investor. The agreements usually revolve around the main ground and sometimes include an adjacent ground.

Besides, cell site leases often include other clauses such as government approvals, construction fees, permits, termination, and option fees, among others. For instance, such clauses often include a one or six-month option period, five or ten-year initial lease term, and the option for the extending the term to thirty or fifty years.

Cell site leases also come with cancellation provisions, which allow a company or investor to terminate the lease without penalty. However, early cancellations are rare, especially when the space involves more than one tenant.

Cell tower ground leases should have a positive effect on the value of the property. However, sometimes a penalty is possible where the rights are transferred to a third party.

Important buyout considerations

For both buyers and sellers, there are important buyout considerations, which can influence the lease value now or in future. Such consideration may also affect the value of the real estate behind the lease. In addition to cell site lease rates, here are top considerations.

Right of First Refusal: this can affect the cash flows, sale of the property or even both. Parties involved should exempt this consideration from the sale of an underlying real estate or apply it only where lease rights are not together with the property

Rent: if the parties involved cannot determine the appropriate rental for the location or configuration, it is advisable to consult the local investors with similar towers for rent comparables.

Periodic escalators: this may be a technical part for the property owner, especially those without adequate knowledge on cell tower leases. However, engaging experts in cell tower leases can provide insight and solutions regarding rent escalators.

In the end, when both the investor and real estate owner are equipped with tower lease essentials, the process becomes easy.