Cell Tower Lease: Cash It In or?
There are several ways of turning your cell tower or rooftop lease into cash without giving up title. Just like any other real estate you can opt to sell your lease, joint venture your lease or just recently, the option to refinance your lease is now possible.
This gives you, the lessor, more alternatives 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 are for you.
Sell Your Cell Tower Lease
For the past twenty years or so, selling a cell tower lease was the sole method of converting that cash flow into a lump sum. Private and Wall Street buyers paid cash for the leases giving investors an income stream that was above average. There were risks that some leases would become worthless due to mergers and acquisitions of carriers, but these were discounted and the reward proved to be worth the risk.
As this set of telecom based assets has evolved the risks have achieved a downward bias and buyers are prone to paying more for the basically same assets. There are also more players that are willing to further bid up the purchase prices that are actually assignments of these leases ranging from 30 to 99 years. For these time periods the buyers get the benefit of receiving the income that is produced. They also take the risk of a partial or complete loss if a carrier or set of carriers choose to abandon or terminate a tower or rooftop.
Joint Venture Your Tower Lease
What? Yeah, sell a part ownership in your lease or sell part of the time you have remaining on your lease. Just about anything is possible, as long as it makes sense to someone who is willing to pay for the reward they could receive. Remember, you own a cash flow and that can be sold if it is discounted enough to make it possible for another to make a profit.
What I like best about the JV (joint venture) possibility is, you get to get your cake and eat it to. Sell half and keep receiving half the income. Here’s the sweet part; you have a builtin professional manager that is going to handle this lease until, forever if planned right.
When it comes a time for a renegotiation of the lease, your ‘manager’ is going to do the best they can because they have an interest (same as yours). Any other carriers your ‘manager’ can attract, the more income you will get.
AND you have a builtin buyer should you ever decide to let go of the balance of your lease.
Refinance Your Cell Tower Lease
This is new and huge. Until recently, a bank would not loan you a nickel on your cell tower lease for one good reason; it had a termination clause. This meant that the cell carrier, your lessee, could, for any reason, with as little as 30 days notice walk away from the lease.
We have discovered a source that has learned the risk/reward calculations (probably former cell tower buyers) and are willing to lend money to construct new towers, loan money to purchase a tower lease or even a group leases. They will lend up to $25M for the right project.