Cell site lease values have long been known for their resilience, even in volatile real estate markets. However, as interest rates remain elevated and more owners seek to liquidate assets, there are signs that these values are beginning to soften. This inflection point in the market presents a unique and perhaps more urgent opportunity for those considering selling their ground leases.
The Federal Reserve’s unwavering stance on maintaining higher interest rates is likely to persist, potentially leading to two significant trends that directly impact values in the cell site lease market:
- Tightening Credit Conditions: As access to credit becomes increasingly restricted, refinancing risk increases and asset values decline. This dynamic could force property owners to sell assets to avoid substantial equity calls or bank foreclosures.
- Abundant Redeployment Opportunities: The resulting market dislocation will create an abundance of opportunities for those with liquidity to redeploy capital. While some owners may face challenges, others can capitalize on the situation.
One compelling indicator of the current market shift is the rumored plan of a top-three U.S. publicly traded tower company to sell over 3,000 cell tower easements, aiming to raise up to $2 billion to fund future endeavors. Additionally, the big three U.S. Tower Companies are now trading at tower cash flow multiples as low as 15X – a clear market harbinger for cell site lease holders who’ve grown accustomed to significantly higher multiples from private buyers.
Ultimately, the decision to sell a cell tower lease hinges on timing and circumstances. Given the current market transition and emerging opportunities, those considering selling their cell tower lease should seek expert guidance now to maximize their returns.
