Executive Summary
A private property and restaurant business owner had leased space on their property to Verizon for some ground equipment supporting their installation on a nearby utility tower. The primary business serves the hospitality industry and due to the COVID-19 pandemic, the site owner was searching for ways to strengthen the balance sheet and help weather a sustained downturn in demand from the business’s customers.
Challenges
• Business Operations – The site owner’s business served the hospitality industry which has been dramatically affected by the COVID-19 pandemic. They wanted additional funds to cover overhead costs and invest in assets for future operation.
• Cell Site Risk – Equipment-only leases that don’t include a ground lease for the tower itself present more risk to the property owner. Since the site owner didn’t control the ground underneath the utility tower where Verizon’s antennae were located, there was greater risk of the lease being terminated.
Objectives: To mitigate the challenges, the cell site owner partnered with TowerPoint to achieve the following
• Access to Capital – The cell site owner wanted sufficient capital to establish further security for the business and employees during a sustained downturn in demand from customers during the pandemic.
• De-Risk – Acknowledging the additional risk associated with the equipment-only lease, the site owner wanted to transfer 100% of the termination risk to TowerPoint without any future recourse.
Solutions: TowerPoint worked with the cell site landlord to support the objectives and mitigate the challenges listed above.
• Provide an aggressive valuation of the cell site to meet the site owner’s financial goals.
• Work with the mortgage holder on the property to secure an SNDA allowing the transaction to close.
• Structure a long-term easement and assignment agreement that places 100% of the future decommissioning risk with the TowerPoint, which would absorb 100% of any losses associated with the equipment lease terminating at the site.
Results:
The overall transaction achieved the site owner’s objectives including a substantial lump sum buyout price providing sufficient liquidity to the site owner to help support ongoing business operations. The transaction structure successfully transferred 100% of the risk to TowerPoint going forward.
