Mobile Phone Tower Leasing: Sell, Joint Venture, or Refinance?
Cell Tower Lease: Charge It Or?
There are several ways to convert your cell tower or rooftop lease into cash without giving up the title. As with any other real estate, you can choose to sell your lease, go into a joint venture with your lease, or recently the option to refinance your lease is now possible.
This gives you, the landlord, more options than you’ve ever had to get the cash you need, when you need it, no matter why you need it. Let’s explore these and see if one of these is for you.
Sell your cell tower lease
For the past twenty years, selling a cell phone tower rental was the only method to convert that cash flow into a lump sum. Private and Wall Street buyers paid cash for the leases, giving investors an above-average income stream. There were risks that some leases would lose their value due to carrier mergers and acquisitions, but these were discounted and the reward proved to be worth the risk.
As this set of telecom-based assets has evolved, risks have skewed downward and buyers tend to pay more for basically the same assets. There are also more players who are willing to bid even higher on purchase prices that are actually allotments of these leases ranging from 30 to 99 years. During these periods of time the buyers obtain the benefit of receiving the income that is produced. They also run the risk of a partial or total loss if a carrier or a set of carriers choose to abandon or finish a tower or rooftop.
Joint Venture the lease of your tower
What? Yes, sell part of the property on your lease or sell part of the time you have left on your lease. Almost anything is possible, as long as it makes sense to someone who is willing to pay for the reward they might receive. Remember, you own a cash flow that can be sold if it is discounted enough to allow someone else to make a profit.
What I like best about the JV (joint venture) possibility is that you can get your cake and eat it. Sell half and still receive half of the income. Here’s the sweet part; It has a professional manager on board who will take care of this lease until, forever, if planned correctly.
When the time comes to renegotiate the lease, your ‘manager’ will do the best he can because he has an interest (just like yours). Whatever other operator your ‘manager’ can attract, the more revenue you will get.
And you have a built-in buyer in case you ever decide to ditch your lease balance.
Refinance your cell tower lease
This is new and huge. Until recently, a bank wouldn’t lend you a penny on your cell tower lease for good reason; it had a release clause. This meant that the cell phone carrier, its tenant, could, for any reason, just 30 days in advance, withdraw from the lease.
We have discovered a source who has learned the risk / reward calculations (probably former cell phone tower buyers) and is willing to loan money to build new towers, loan money to buy a tower lease, or even group leases. They will loan up to $ 25 million for the appropriate project.