Have Cell Tower Values Peaked?Posted October 23, 2014 by admin
Could it be cell site tower and lease values have finally peaked? Well, let’s just say they have appeared to have reach a plateau. Buyout lease values remain well ahead of pricing from 2 years ago but have seen a slight pullback recently.
“We have seen escalations move from 3% annually or 15% per 5 year term to 2% annually or 10% per term on new cell site leases. The MLA’s (master lease agreements) are becoming more slanted toward the tower companies and carriers,” stated Christopher Bland, Founder of Cell Site Capital.
“Two lease buyout companies have recently lost their funding and had to partner up with new funding sources or go out of business. Both firms had to liquidate their portfolios to tower companies. The biggest reason for the pullout from the PE firms is simple, the margins are getting compressed on cell tower buy-outs and private equity firms require a much larger returns than 8% – 10% IRR.”
“The fact that Verizon Wireless is looking to liquidate all the tower assets should be a strong indicator that values may well have peaked” stated Mr. Bland. “If the big four wireless carriers continue to spend billions of dollars in upgrading equipment and network growth over the next several years, they need to raise that capital from someplace without getting overloaded with debt. A great way to do that is to sell the tower assets, which everyone else has already done”.
Cell Site Capital is a cell site consulting firm specializing on maximizing values for cell site assets for landowners.