If you are looking for a cell tower lease or if you already have a lease, what is your strategy? Your tenant has a game plan in mind and things they want to accomplish. Do you know what they are trying to achieve and how their goals affect you?
Understand The Value Of Your Land
The biggest mistake property owners make is not understanding the true value of their land. Often landowners will make the mistake of asking the guy down the road what he is getting for his cell tower. That is not how cell towers are valued. Each tower has it’s own unique value depending on the location, owner, tenancy, and more.
Maybe your land is on a higher high or adjacent to a major highway system. Land is rarely like for like and your land may be worth much more than nearby parcels.
Once you understand the value of your land and what is worth to the cell tower company, then you will have tilted the scales of negotiation in your favor.
Make Sure You Are the Landlord, not your tenant
Too often in cell tower lease agreements we see property owners have signed whatever was put in front of them. Remember the majority of cell tower leases have been drafted by the tenants and are very one-sided in favor of the tenant. So much so, it would seem as if your tenant is now in control of your property and you are but a servant on your property.
Always have any draft lease agreement or amendment reviewed by a cell tower lease expert. They will know what to look for in the contract to make sure you are in control at all times.
Never Grant Your Tenant A Right Of First Refusal
Furthermore, never agree to restrictive language that remove your ability to freely assign your lease. If a property owner agrees to restrict their rights to freely assign their cell tower lease it could cost that property owner tens-of-thousands of dollars come time to sell the contract. A property owner may not want to sell today, however, sometime in the future they may want to sell. At that time, there is nothing worse than being handcuffed because the property owner agreed to bad language in the lease agreement.
Secure Revenue Share With New Tenants
If the cell tower company is putting new tenants on the tower such as AT&T, Verizon, Sprint, or T-Mobile, you should get a piece of the action! Do you want to receive a percentage of the future rent, or a flat-rate? Typically a percentage of the future rent is preferred by most property owners.
Make Sure You Receive A Market Rent Escalator
Often new cell tower agreements will propose the rent increasing every five years. This is ridiculous! You experience inflation annually. In response any income you receive should adjust annually. Ideally that income would increase with the Consumer Price Index which is meant to mirror the rate of inflation. When agreeing to a multi-decade lease or license agreement, make sure to lock in a favorable rent escalator so the value of the dollar you receive increases over time.