If you have a cellular ground lease for a tower or other installation on your property, chances are you’ve considered selling it at one time or another. High cellular ground lease prices, news of lease cancellations and the desire to obtain a large cash buyout are among the most frequently noted reasons when a ground lease owner approaches us to find out how much capital a cell tower acquisition could net them. We’re happy to present you with five good reasons to consider selling your cellular ground leases.
And even if you haven’t ever thought about selling your ground lease, you may want to see why other owners think this might be the right time to consider a cell site lease buyout.
- Timing – Cellular Lease Values Are At Historic Highs But Beware Of Rising Rates
As with most investments, timing is a crucial element in profit maximization. The booming economy and the great increase in cellular bandwidth have created a growing demand for more, better-placed cell tower sites. This has been good for some site owners, However, recent concerns about rising interest rates and the negative effect that it could have on the prices cellular ground leases is causing some concern that site valuations may not be as high in the near future. The math is simple: rising interest rates cause cellular valuations to decrease in value. The CEO of JP Morgan Chase has raised concern that interest rates may nearly double over the next few years having a dramatic downward impact on cellular lease buyouts.
- Need For immediate Capital
A steady income from a ground lease is nice, but some site lease owners find themselves in a situation where it is to their advantage to sell their cellular lease for a large cash payout to enable them to address other investment opportunities or needs. Unlike banks or other lending institutions, cash from a cellular buyout doesn’t come with restrictions on its use or future debt obligations. It can provide significant capital to help your start or expand your business, pay off debt, buy a second home or better diversify your investments portfolio.
- Fears Of Lease Cancellations
While lease cancellations haven’t been very common in the past few years, new pressures brought on by telecom mergers and new technologies could make this a more common occurrence moving forward. Papers filled concerning T-Mobile/Sprint merger call for a reduction of 35,000 existing cell sites as a method of cost reduction. Telecoms are also investing in new technologies that can replace existing cellular installations with smaller placements that won’t require freestanding towers.
- Concerns About Rent Reductions
Competition has been fierce among telecom companies over the last several years. Consumers want more speed and bandwidth for less dollars. This increased the pressure on cellular companies to look for ways to lower their expenses and cell tower leases have come under pressure. Some tower owners, have been met by the unpleasant reality that their lease incomes will be lower in the future because of these cost reduction pressures. In some areas, new technologies, which require smaller footprints, will force owners to accept reduced rents or face having their installations at a price disadvantage.
- Control And Future Upside Opportunity
Some cell site lease owners like the idea of eliminating risk, getting a large capital payout while still enjoying the possibility of future income streams from their cellular site. Those owners should consider the possibility of entering an ongoing partnership with a lease capitalization firm like Crescendo Capital Partners. With Crescendo, you receive a significant upfront payment for your site lease and can participate in future revenues from new leases on your site. Crescendo manages monitoring the tenant activities on your site as well as marketing and negotiating new leases.
To Sell Or Not To Sell
If you are considering selling your cell site leases or would like more information or a free valuation, contact one of our ground lease experts at 203.972.3200 or email us.