In most cases a cell site requires a lease with the owner of the property. A cell site lease is an agreement between a wireless service provider or Tower Company and the land or building owner. The wireless provider or Tower Company installs equipment on the landlord’s property in exchange for monthly rent.
Cell site leases can be complex lease rates can vary greatly. The rent of a cell site lease is determined by many factors: Location, Area Population, Zoning Laws, Tenants, etc. Additionally, cell site leases have inherent risks and clauses that might be unfamiliar and difficult to spot. It’ important for landowner and building owners with cell tower leases and rooftop leases to understand the common elements and what drives value or risk in their wireless lease.
Understanding your cell site lease
A cell site lease can be a complicated and intimidating document to understand. TowerPoint encourages landlords to understand their cell site lease so that when they are ready to sell, they will have a better idea as to what factors can impact the value of their cell site lease.
Below are key factors that determine the value of a cell site lease:
1. Lease Rate/Rent and Escalator
The lease rate or rent is the amount the landlord is receiving in exchange for the tenant to be using their land for the cell site. The escalator is the percentage the rent will increase annually.
2. Lease Terms and Renewal Rights
Cell site leases are often drafted with one or two six-month options periods, an initial 5 to 10 year lease term, and multiple 5 year lease option terms, extending the potential lease to a total term of 30 to 50 years or more.
3. Location
Cell sites can be found in varying locations: urban, suburban, rural, industrial, heavily wooded areas, and shopping malls. Towers and antennas located adjacent to interstates, major intersections, and other high traffic roadways and most importantly areas with prohibitive zoning requirements are considered premium locations.
4. Utility of Leased Site
The utility of a cell site is determined by how important the cell site is to a carrier’s wireless network and the revenue being produced from the cell site. If the tenant is a wireless carrier, the first priority of the site is how it serves the needs of the wireless network in the immediate area.
5. Tenant
Cell sites have at least one wireless tenant on a site (AT&T, T-Mobile, Sprint, Verizon, etc.). More likely than not, it would be advantageous for a site to have more than one carrier on the site.
6. Alternative Cell Site Availability
Are there nearby sites owned by the same tower company or carrier? Close proximity of like-kind cell sites can reduce a site’s desirability. Redundant cell sites often occur as a result of wireless mergers or acquisitions and are one of the primary causes of site decommissioning.
