Lease Buyout Companies
A cell tower or cell site lease buyout is a transaction whereby one company pays a lump sum to a landowner or building owner (“leaseholder”) in exchange for the right to future rent payments. Lease buyouts do not extinguish the landowner’s obligations under the original lease, or the lease itself. Effectively, all that is happening is that a third-party is being brought into the mix.
Various types of companies are interested in buying cellular leases, including tower companies, lease optimization companies, and lease buyout companies. Lease buyout companies are typically not affiliated with the tenants (the wireless carriers or cell tower companies) with whom landowners are party to the lease agreement. For example, if AT&T is the tenant leasing a parcel of property and someone not affiliated with AT&T wants to buy the lease, that someone is acting as a 3rd Party Lease Buyout Company. However, in the case where a tower company is leasing land and wants to buy the lease, they are acting as a tenant who simply wants to own the long-term obligations under the lease. In rare circumstances, tower companies also seek to purchase leases as a third party; this happens primarily with rooftop leases. Typically, we find that 3rd Party Lease Buyout Companies do not pay as much as Tower Companies when it comes to buying the tower companies leases.
How Lease Buyout Companies Operate
Lease buyout companies have been very aggressive as of late, due to current market dynamics (the low cost of capital) and a surge in competition. When competition is high, and cost of capital is low, the value paid for lease buyouts is high. Currently, lease buyout offers are at a historical high. Steel in the Air is unique in that we have been tracking lease buyout data for over 10 years. Unlike most of the other consultants, we were in business before the lease buyout companies were. We have watched as the industry niche grew from small, independent companies into large, established entities, some of which have a few hundred employees.
Lease buyout companies exist, for the most part, to aggregate leases that they can resell to other companies, including tower companies and large investment banks. We estimate that there have been between 8,000 and 10,000 leases bought by third party lease buyout companies. Many of these have been sold (and resold) by the lease buyout companies. In short, if you sell your lease, don’t expect that the company buying it will own it for very long.
Steel in the Air Can Assist You
Steel in the Air advises landowners and building owners what the likely relative value of their cell site lease is to the lease buyout companies. We know the players well, having worked on the opposite side of the proverbial negotiating table many times. We have assisted more clients with more buyouts than any other consulting firm. We track all offers that come to our clients (and to potential clients) and use this information to provide substantive, data-driven advice.
And unlike other consultants who will push you to sell your lease from the first call, we will make you aware of all available options, including when the best time to sell might be. If you have received an offer from a lease buyout company and already know you want to sell, we can help you get the best price. If you aren’t sure whether you wish to sell or not, we will help you make an informed decision based upon the pros/cons as they relate to your specific site. Furthermore, we will advise you on which companies are easiest to work with and live up to their promises (and which don’t).
Steel in the Air takes great pride in the work that we do – and we plan on being around for the long haul. Contact us today. We’d love to help.
Buyout companies are in the business of making profits. They buy and sell cellular assets, however they are not the only interested parties. If you have been contacted by one that is interested in purchasing your lease, you should presume that it’s because your lease if valuable. But before you sell, we advise you to investigate other offers.
Companies often provide “drop-dead dates,” stating that if an agreement isn’t made by that time, then it will be off the table. These dates are rarely as inflexible as they would like you to believe.
While there may be valid reasons to consider splitting the lump sum payment into a few payments, you should never agree to accept payment terms that stretch beyond three years.