5 Opportunity Costs of Not Selling a Wireless Lease
What is opportunity cost? Opportunity cost refers to a benefit that a person could have received but gave up to take another course of action. It is the difference in return between a chosen investment and one that is necessarily passed up.
How does this apply to your cell site lease? When applying opportunity cost to your wireless lease, it means that your lease buyout cash invest today may provide significantly stronger growth over the next 10 – 30 years compared to the cumulative valueof monthly rent in the same period. Ultimately, when it comes to selling a wireless lease, landlords don’t do it because they need the money now but they sell their lease because they want to achieve the best possible growth over the long term.
Risk?? And that is comparing it to the full term of the wireless lease and does not put in the added risks of site decommissioning and technological obsolescence.
Here are 5 example opportunity costs of not selling a wireless lease:
For the base comparison, we will be using this example lease of $1,000/month for 30 years. Assuming the lease comes to full term, at the end of the 30 years you would have made $360,000. For these examples, the lease was from 1987 to 2017. The site owner had the opportunity in 2000 to sell their lease and decided not to. What would their portfolio look like now if they did sell their lease?
1. AMT stock
2. Treasury bond
3. S&P 500
4. Buying another property/Capital Gains
5. Pay off debt
*Not putting into account inflation and taxes
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