Cell Tower Lease Kiss of Death

The excitement of being presented with a cell tower lease from a cell tower developer is quickly replaced in many instances once the property owner realizes that the nice person talking to them does not have their best interest in mind at all, nor are they interested in selecting the best site from a zoning and coverage perspective, they are just looking for which property owner will accept the lowest and worst offer.

There is a shortage of professionalism amongst tower developers and they are keen to the fact that in today’s bad economy, many property owners are too scared to walk away from a low-ball offer, which is usually in the $500 per month range with rental increases ranging from 0% to 10% every 5-year term. They don’t act surprised when the property owner asks them the simple question of why they would encumber their beautiful piece of land with a tower for that little amount of money. The bottom feeding parasite…. um… cell tower leasing representative usually smiles and walks across the street or looks for a site next door, leaving the landowner scratching their heads and wondering what went wrong, as they are now forced to look at the cell tower for the next 25 years instead of collect rent from it.

One of the buzz-words for tower developers is that they can get you a better rental price if you give them back a “clean lease”, that is, a “clean lease” is a cell tower lease that is not marked up, has little if any changes, is completely one-sided in favor of the cell tower companies, and that usually takes advantage of the property owner. The sales tactic used by the majority of these tower developers is fear. It is not illegal, only repulsive. It is mostly practiced in middle America, and now even some of the major carriers are getting away with rental rates that are below fair market value.

The majority of these small-time cell tower development companies have owners or partners who came out of one of the big carriers like AT&T, Verizon Wireless, T-Mobile or Sprint, and are trying to cash in on the cell tower boom. Many of them have friends still working on the inside who feed them proprietary information from the inside and are back by some silent partners or private investors. they are told where the open “search areas” are where the carriers need to build a tower — again not public information — and they build a few towers as cheaply as possible with as many “clean leases” as possible, and they flip their tower companies and small tower portfolios to their friends a t the bigger tower companies, and walk away with seven figures.

When a tower developer offers you only $500 (or less) per month to encumber your property with a cell tower, and they kick and scream when you tell them that you want a piece of the subleasing revenue, you should know that they are making money hand over fist on your site, and are only paying you a very small portion of what they are making from all of their cellular carrier tenants.

What can a property owner do if approached by a local cell tower developer and presented with a low-ball cell tower lease offer? They can tell the representative that if they do not reconsider their offer, that as soon as they drive off, they will contact other major tower developers like Crown Castle, SBA, American Tower or GTP who are more likely to make an amicable offer. Also, many times the cell tower lease rate will be slightly negotiable, but not by much. Property owners then face the dilemma of hiring an expensive attorney to look over the lease for a few thousand dollars that they might not even get, as the tower acquisition representative is trying to get the property owner to hurry up and sign the lease.

Last year we negotiated a cell tower lease for a property owner on the East Coast with a major wireless carrier inside a big city on a critical coverage site. The site acquisition representative originally offered the landlord $500 for a cell tower ground lease, the owner wanted $1,500 but was willing to take $1,250 but the carrier was only willing to go up to $1,000, and walked away from the deal, and actually had a tantrum just like a two year old child would when they don’t get their way. The purpose of the cell tower site was to cover a 70,000 seat NFL stadium. Instead, the carrier ended up spending almost $10,000 per home game plus ground rental (almost $100,000 in 2010) to provide a temporary C.O.W. cell on wheels to make sure that the venue was properly cover. Yes, they spent $100,000 because the leasing representative was haggling over $250. The carrier came back to the landlord this year and the first question that they asked her was, “We still like your property, are you going to be working with a cell tower consultant? Here is a clean lease.” Well, you can’t fix stupid I guess.

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