Help! My cell tower lease is expiring…
Back in the early 1990’s when the first cell phone towers were built and the first tower leases were signed, the average property owner was not thinking about subletting the ground space within the enclosed equipment shelter area. If the cellular antennas were deployed on their rooftop they didn’t think much about how the anchor carrier was or wasn’t able to sublease rooftop space. They had no idea that instead of one or two cellular carriers there could be five or six or more wireless service providers in the marketplace.
So what happened? The owner/landlords in many cases ended up entering into horrible cell tower lease agreements and leased ground or roof space to a tower company or cellular provider, but ended up either not controlling the ground space or rooftop site. When Carriers B, C and D came to the site, the main wireless carrier allowed them to co-locate on the site, but kept most or all of the cell tower rental income.
The cell phone tower lease might also have only paid the owner a percentage of the rent in proportion to the square footage of the actual ground space footprint that the original carrier was receiving if the owner didn’t negotiate subleasing terms properly.
Did your property taxes increase significantly after the tower was built? Unfortunately many of the tower leases did not provide proper protection against tax increases resulting from the telecom improvements assessed on-site.
Did you agree to something like 3% yearly rental increases or did you agree to 15% increases every five years? It makes a significant difference over time.
Owners with expiring cell tower leases will be tempted to accept buy-out offers of lump-sum payments or attempt to renegotiate the terms of their agreement on their own.
The cell tower industry and the leases used by tower companies and wireless carriers are extremely specialized and complex.
At the end of the day, many of these cell tower site owners are making little or no profit from these sites. If your tower lease or rooftop lease is going to expire in the next year or two, start to plan ahead.
Have your tower lease agreement analyzed to identify terms and language that need to be corrected in your next lease. Would you let your Ferrari’s engine be worked on by a lawn mover repair shop? The same holds true for tower leases about to expire.