Rent Reduction Companies becoming active again cell sitesPosted April 8, 2015 by admin
Rent Reduction Companies are starting to become very active again. Companies like Blackdot Wireless and mD7 have been contracted by tower companies and carriers to help reduce the cost of cell site locations. Usually they will give it a official sounding name like “lease optimization” but make no mistake it is a clear cut rent reduction to benefit someone other than the landowner. Basically they are paid commission to lower the cost of cell sites. Usually they do this by sending a letter telling you they are “re-evaluating” certain cell site leases or you might get a call from a representative.
– Usually they will have a “rent guarantee” period. This is usually a gimmick to make you feel like they are doing you a favor.
– Ironically, they will ask for a longer term while telling you they cell site lease is in jeopardy of going away.
– They will ask for a change in terms that will benefit the tower company or the carrier but will dramatically lower the valuation of the lease in some cases by $100,000 or more. This could include lowering the rent and cutting the escalations below market rent.
At Cell Site Capital we specialize in giving a real evaluation of risk on cell towers and rooftop leases. In almost 90% of the cell sites we evaluate, the data suggest to not take a rent reduction on a cell site lease and in some cases you should be getting a increase! Never adjust a cell site lease without getting a professionals assistance.
Here are some data points to think about.
– Smart phone penetration rates are still in the 50% range up from the 20% range. So what does this mean for cell site owners? There is still a ton of room for tower growth with demand certain to grow over the next 5 years.
– Sprint is set to build about 9,000 sites.
– Verizon and AT&T are upgrading thousands of cell site in the U.S. in order to keep up with the demand.
– Currently the 3 big tower companies stocks all hold “buy” ratings.
– Tower companies have spent over $11B in the last year purchasing cell tower locations from carriers in the U.S.
At Cell Site Capital we are industry experts that are here to help you make the right decision with market data. We are cell site tower and wireless lease owners as well. We understand the challenge of making the best decision and will help filter through information and educate you on you specific site.