How to Secure the Best Price and Terms in a Cell Tower Lease Sale
When it comes to selling a cell tower lease, price and terms are key, and going out for a bid is how you can get the best for both. Bids are currently coming in around 19 times annual revenues, generally much higher than unsolicited offers, making it the obvious option for securing the best price. By using a well-drafted request for bids, which sets forth key terms for inclusion or exclusion in final documents, the seller can also secure the best terms to protect themselves and their property.
A property owner selling a cell tower lease is not likely to get the terms they want if they are not set forth in a request for bids. Should a purchaser dig in their heels by insisting on their terms and form of documents, the property owner’s bargaining chips to get needed changes quickly disappear. But with key terms set forth in the bid, the purchaser will generally agree to their inclusion in final documents or, at most, make minor changes. This expedites document negotiations and, ultimately, the closing process.
Securing favorable terms is particularly important if the building or property with the cell tower is valuable, as its value, use and future development need to be protected. Bad terms can reduce or altogether destroy a property’s value.
One example of a good term is requiring relocation of a cell antenna on the roof of a building if necessary to replace the roof, repair the building, replace it or redevelop it. Similar provisions apply to a tower on land that may be developed. Another example is a requirement for property owner approval of changes, especially for antennas on rooftops, with a list of reasons why approval may be denied. Other desirable terms include minimizing property owner representations and warranties about the property with the cell lease, addressing revenue sharing for new cell companies coming on the property, and requiring the purchaser to pay most transaction-related costs and taxes.
Bids are thus advisable for cell antennas on commercial buildings, such as on the roof of a multimillion-dollar office complex, or for cell towers located where the value, current use, future use and development of the property with the lease needs to be protected. However, not all situations warrant going out for bids. When the offering price is good, for example, or the property with the lease is rural, out of development paths and thus has lower value or requires less protection, forgoing the bid process can be more practical. Sometimes in these circumstances, we have been able to adapt good documents from a prior sale to the current transaction, especially if it is with the same purchaser.