REAL ESTATE (CELL TOWERS) | Marc Cunningham LLC

Real Estate (Cell Towers)

Managed the legal aspects of real estate projects related to the development of multiple wireless infrastructure projects (such as coordination with site acquisition specialists, site surveyors, sourcing and procurement specialists) through all project phases, from site identification, initiation and acceptance through release and construction implementation.

Close coordination with network project teams to provide legal support for all cell tower site tasks, such as administration of leases pursuant to Financial Accounting Standards Board (FASB) Statement No. 13, distributed antenna system (DAS) initiatives, equipment and tower dismantlement, ground lease administration, lease buyouts, lease extensions, lease renewals, master lease agreements (MLAs) between cell tower companies and various carriers, rent reduction initiatives, small cell initiatives, various transmission agreements (such as co-location, fiber exchange, interconnection, line sharing, resale, telecommunications, transmission) and vendor contract management.

Provided legal support for administrative functions, processing project and payment documentation, special project initiatives and updating project databases with current information.

Drafted, negotiated and administered various construction agreements (such as for environmental, land use, permitting and zoning) and real estate agreements, easements, leases and licenses (such as for acquisitions, amendments, cell tower leases and easements, non-standard leases, lease supplements, proforma leases, site leases, small cell access and attachment license, pole access and attachment license, rooftop access and attachment), reviewing invoices and payments and ensuring the integrity of compliance data.

Review of the critical payment term report (payment terms to ensure continuity of the rent obligations and avoid expiration of site agreements that are critical to the network).

Negotiated the resolution of tax-related issues in collaboration with landowners, regional and local real estate teams, taxing authorities, and opposing or outside counsel.

Legal support as required to reconcile tower company accounts to minimize aging (payment delays and discrepancies).

Reviewed the accuracy and timely submittal of all Federal and state required compliance documents.

Managed vendors and reviewed due diligence documentation related to compliance and real estate activities.

Familiarity with the technology behind cellular networks, which basically have two major components: radio spectrum – the radio frequency (RF) portion of the electromagnetic spectrum – and various supporting infrastructures – network deployment areas, called cells or cell sites, including towers, poles and other structures and facilities that support signal transmissions, increase network capacities and expand network coverages.

Familiarity with the difference between mobile network operators (MNOs) – currently in the United States Verizon Wireless, Sprint, AT&T Mobility, T-Mobile and U.S. Cellular, which own portions of the radio spectrum purchased from the Federal government and who may build, own and maintain their own infrastructures – and mobile virtual network operators (MVNOs) – there are many (including Cricket Wireless, Metro PCS, TracFone, Straight Talk and Total Wireless), which do not build their own infrastructures but rather lease access to radio spectrum and infrastructures from the MNOs through co-location agreements, allowing multiple users at a particular cell tower location, and which market their wireless plans to specific geographic areas or population niches (generally in more densely-populated areas) and attempt to offer contract-free or less expensive connectivity plans than the MNOs.

Cell tower companies (such as American Tower Corporation, Crown Castle, SBA Communications, United States Cellular Corporation and Vertical Bridge) generally either purchase or lease land for prospective cell tower sites from landowners, and if such cell tower site is leased from the landowner, the cell tower company becomes a lessee to the landowner, and any MNO or MVNO which leases space on the cell tower site from the cell tower company becomes a sublessee to the cell tower company and the cell tower company retains the direct relationship with the landowner.

MNOs may also either purchase the land for the cell tower site directly from a landowner, or more commonly may lease the required cell tower site land from a landowner through a cell tower lease (a type of ground lease, which conveys property interests in the leased premises to the lessee, such as the right to occupy the premises exclusively during the lease term, even to the exclusion of the landowner, and is typically transferable and irrevocable), in which case the landowner is the lessor and the MNO is the lessee, and if an MVNO then leases space or bandwidth on that tower from the MNO through a co-location agreement, the MVNO becomes a sublessee to the MNO, and the MNO retains the direct relationship with the landowner.

In some situations where the landowner wants more control over the relationship and the landowner may have more leverage than normal over a cell tower company or MNO (collectively hereinafter “cell tower operator”) perhaps because of the particularly-advantageous location of the potential cell tower site for cellular operations, the landowner and the cell tower operator will enter into a license rather than a lease, in which case the landowner is licensor and the cell tower operator is the licensee, and which grants to the licensee only the right to use and occupy the premises for specific purposes, does not transfer any interests in the premises to the licensee, and is typically non-transferable and revocable at licensor’s discretion (and sub-licensing would not be allowed).

Interpretation of “search ring” drawings for the prospective landowner, in which the prospective cell tower operator may have already identified several potential advantageous sites for placing new towers with RF antenna arrays or for acquiring existing towers (for example, to plug coverage gaps in the cell tower operator’s service area), and seeks to make whatever types of deals may be necessary with landowners as close as possible to such advantageous locations, without having to rely only on one landowner who may attempt to hold up the deal by demanding exorbitant rent for what that landowner may feel is the most desirable property in that area for locating the cell tower.

Negotiations on behalf of potential landowners against disclosed site acquisition agents (sometimes called “site acq’s”) representing prospective cell tower operators, who invariably make below-market lease or purchase first-offers to the landowner, perhaps to gauge the landowner’s interest in making a deal.

Familiarity with the technologies of the four main types of cell sites: cell towers (also known as macro sites or macro cells, are elevated, vertical structures built on land, on and around which at the top carriers install high-powered antenna arrays and supporting transmission equipment, providing the widest coverage radius, and can accommodate the equipment of numerous carries if co-location is allowed), rooftop sites (high-powered antenna arrays for densely-populated areas, providing the second-widest coverage radius, including installations on rooftops, bell towers, church spires, water towers, and any tall structures), small cells (single carrier-owned, low-powered, with limited coverage radius, self-contained cell site nodes, which consist of single antennas and supporting transmission equipment, intended to increase the density of coverage in areas where topology or tall buildings may interfere with coverage, and can be installed on existing utility poles, transportation vehicles such as airplanes, cruise ships or trains, or in closed areas such as building lobbies), DAS (low-powered cell sites, interconnecting multiple antenna nodes within defined geographical areas or buildings to hubs containing transmission equipment that all antenna nodes use collectively, can be used both outdoors and indoors in areas of high wireless use, such as sports stadiums).

Familiarity with the construction issues for the three main types of cell towers: self-supporting (free-standing towers of open steel components, may be at least 400’ or taller, with antenna arrays towards the top, also known as lattice towers because of the open construction method of connecting the three or four corner legs by angled braces interconnected to the adjacent legs, built on either one massive concrete pad foundation, or three or four individual concrete footings under the legs), guyed tower (single mast steel towers, may be at least 300’ or taller, stabilized by steel cables or guy wires connected to anchors in the ground, requiring separate foundation footings for the mast and each guy wire, and also requiring easement rights for each individual guy wire), monopole (a self-supporting single steel tube mast without stabilizing guy wires, may be up to 200’ or taller, often disguised as trees, flag poles or indigenous vegetation).

The type of tower construction to be used will determine the ground area needed at the base not only for the tower, but also ancillary space for buildings, and will be a major factor for the cell tower operator in determining how much land must be leased or purchased from the landowner.

Depending on the type of cell tower construction, the ground area required to support the cell tower may range from about 100 square feet for a monopole installation, or for the center foundation for just the mast of a guyed tower (exclusive of the much larger ground area needed to encompass the footings for the guy wire anchors), to perhaps 10,000 square feet to accommodate either the massive single foundation for a self-supporting lattice tower or for the individual footings at each leg.

All cell tower sites will also require additional ground areas for ancillary equipment and utility buildings, the square footage of which must be calculated by the cell tower operator to allow for future expansion and buildings for co-locator equipment, and must be enclosed for safety reasons, generally with an industrial-strength wire mesh fence, high enough to discourage people and jumping animals from entering the cell tower site.

In general, cell tower operators require landowners to grant any access easements as may be required for the cell tower operator (and its lessees or sublessees) to construct, inspect, repair, maintain, upgrade and enhance the tower and equipment at the cell tower site.

Surface easements (generally at least 30’wide) are required for unobstructed, continuous access from the nearest road accessible to heavy equipment to the cell tower site, without any prior notification required to the landowner.

Underground easements (as wide and as numerous as may be required by the various applicable building codes and design guidelines) are required for electrical supply cables, fiber optic cables, drainage pipes and whatever other sorts of utility-related installations may be required to operate the equipment at the cell tower site.

Above-ground easements are also required for each guy wire in a guyed mast installation.

Thus, cell tower operators require broad easement language in their proposed purchase or lease agreements, which conveys to the cell tower operators some acceptable combination of underground rights, surface rights and above ground rights, to accommodate any possible construction requirements that might be necessary during the term of the lease (and to avoid having to go back to the landowner during the term of the lease to negotiate permission to address some unforeseen condition that requires consent from the landowner).

The cell tower operator will require the landowner to allow a licensed site surveyor to make a detailed survey and property description of the cell tower site and all easements thereto, and such detailed survey and property description should be included as an exhibit to the cell tower site purchase contract, ground lease or license.

To avoid possible interference from the landowner during the lease term (and any renewals or extensions thereto), claiming that the cell tower operator has changed the uses of the cell tower site and has thus breached the purchase or lease agreement, cell tower operators require broad permissible use language in their proposed cell tower purchase or lease agreements, allowing the installation and use of all known and usable technologies on the purchase date or the lease inception date, as well as any associated or derivative technologies that may be invented during the term of the lease and any extensions thereto, or even further technologies known and contemplated for future use but not used or usable at the time of the purchase or the lease inception, as well as technologies not contemplated or known at the time of purchase or lease inception.

If the cell tower operator contemplates allowing co-location at the cell tower site, the cell tower operator must require assurances from the landowner in the purchase or lease agreement that cell tower operator’s ownership or lease rights grant MNOs and MVNOs similar absolute and unrestricted rights to increase, decrease, maintain, replace, modify, amend, upgrade and expand their antennas and supporting transmission equipment within the cell tower site.

Since the prospective cell tower operator has the advantage of being the party which is offering the proposed purchase or lease agreement on their own templates (landowners do not generally have their own customized purchase or lease agreements, since there are too many variables to be considered for a cell tower purchase or lease that it would be prohibitive for the landowner to attempt drafting a form purchase or lease agreement template that would favor the landowner), it is always necessary to analyze any proposed cell tower purchase or lease agreement and then provide a custom digest of each such proposed agreement to the landowner for consideration.

Negotiation and drafting of non-standard (AIR CRE is generally considered the industry standard for a commercial real estate sale and lease agreements involving a telecommunications transaction) cell tower purchase and lease agreements (each MNO and cell tower company has their own customized agreements, favoring their own particular business models, and structured almost in the inverse of an AIR CRE purchase or lease agreement, in that they are more of a telecommunications transaction involving a commercial real estate purchase or lease) offered to landowners by prospective cell tower operators.

Familiarity with the non-standard forms of cell tower lease agreements proposed by prospective cell tower operators.

Developed a thorough understanding of the landowner’s long-term goals (for example, if the landowner wishes to pass his/her property on to future generations of family members, in the case of a lease situation that landowner would want the most flexible disposition options for the lease, such as being able to sell such lease separately from the property, thus allowing the price of such lease perhaps to increase higher than market value through competitive bidding by interested prospective lease buyout companies).

Critical issues are reviewed with the prospective landowner when considering a proposed cell tower lease offered by a prospective cell tower operator, such as the current and future monetary needs of the landowner (whether there should be an immediate lump sum cash payment as opposed to monthly rental payments), the prospective cell tower operator’s right to terminate the lease on 30 days’ notice (standard in almost all leases proposed by prospective cell tower operators), possible obsolescence (current cell tower technology incorporates Long-Term Evolution (LTE) as a standard for wireless broadband communication for mobile devices and data terminals, based on the GSM/EDGE and UMTS/HSPA technologies, so if the prospective cell tower operator is ever able to leverage some new future technology to provide wireless broadband communications – such as hotspots on all airplanes, or a space-based network of tens of thousands of low-orbit satellites – then the cell tower operator will no longer need the cell tower and will terminate the lease, leaving the cell tower and equipment in place for the landowner to remove, unless the lease imposes that burden on the cell tower operator), the changing needs or aspirations of the landowner (due to the lengthy term of a typical cell tower lease – generally 10 to 50 years – the landowner lessor must attempt to project into the future and determine how he/she wishes the property to be used, perhaps even after his/her death, and what interference a long-term cell tower lease may impose on such projections), eliminating the right of first refusal (ROFR) clause if at all possible (unless the prospective cell tower operator is willing to increase the proposed monthly rent as compensation to the landowner lessor for the subsequent commercial difficulties caused to the landowner by such clause), to not allow automatic renewals or extensions of the lease (or rather to allow perhaps only a few, short automatic renewals or extensions or to allow only negotiated renewals or extensions accomplished prior to the expiration of the current lease term), to allow for tower relocations requested by the landowner without the ability of the cell tower operator to refuse (as long as the landowner pays all the relocation costs), to allow for tower relocations or expansions of the cell tower site as may be requested by the cell tower operator (as long as the cell tower operator pays all the relocation costs or the expansion costs, as determined at the discretion of the landowner lessor), aesthetics (how will the cell tower itself affect the perception of the landowner’s property due to the massive size of the cell tower structure, considering that the cell tower might be there for decades and the landowner may want to develop the surrounding property sometime in the future, will the presence of such a huge, unnatural, man-made object negatively affect the value of any proposed development, perhaps to the extent of making the proposed development unfeasible).

Negotiation of all critical terms in the non-standard purchase and lease agreements proposed by prospective cell tower operators, such rent, rent escalations, the length of the lease term, holdover language, taxes, insurance, lease renewals and lease amendments.

Retained cell tower lease subject matter expert (SME) advisors and accountants to offer detailed opinions (with financial calculations and scenarios) to the landowner, based on his/her own particular tax situation, regarding the value of the lease and to provide a variety of disposition strategies so the landowner can make informed decisions regarding the current negotiations and future disposition of the property and the proposed lease.

Strong focus on countering the leasing strategies of prospective cell tower operators which may attempt to negotiate a low starting rental rate with a promise to the landowner that there will be rent increases or more co-locators sometime in the future, thus providing opportunities for the landowner to capture more rent flows, but then demanding strong language in the proposed lease restricting and narrowing under what terms and conditions any new or additional rent may be paid to the landowner.

Particular attention to the negotiations related to three of the most critical variables affecting the value of a cell tower lease: the current lease rate (if any, or if not, what might be comparable rents in that area – which admittedly would be an informed guesstimate, based upon current research performed by cell tower SME advisors, since there are so many variables that affect cell tower rent, even among cell towers close to the proposed new cell tower, that rents may vary dramatically); the specified rent escalation schedule and escalation variables (“escalators”); the remaining term of the lease (if any, or if not, the initial term and number and length of any extensions proposed by the prospective tenant lessee).

Cell tower operators strive to negotiate fixed cell site rent in monthly installments for the entire initial lease term, with escalators (typically predetermined percentages of the then-current rent amount) only at the inception of each renewal or extension (unless the site is of particular value to the cell tower operator), with the rent rates calculated as a result of applying various factors (such as the amount of ground space required at a site for the cell tower and equipment, the particular site’s network coverage values to potential carriers, the relative ease of obtaining zoning and permitting approvals for the site, the relative ease of access and proximity to utilities for the site, the relative ease of having heavy machinery and construction equipment access the site, comparison to other sites within the search ring) to their proprietary formulae, which keeps the cell tower operator’s monthly cash expense at a minimum and facilitates a rapid exit for the cell tower operator from the lease (generally a 30-day termination notice period) without concern for trying to recover reimbursement for any accelerated rent payments to the landowner.

Optimally for the cell tower operator, the initial term of the lease may be at least 30 years, with at least three automatic 10-year renewals or extensions, but if the cell tower operator encounters an uncooperative landowner of an attractive potential cell site, the cell tower operator might be amenable to shortening those terms, or in reverse, the cell tower operator might attempt to acquire an easement in perpetuity to the attractive potential cell site by offering what might seem to be a large one-time lump sum payment, and such a perpetual easement might actually benefit the landowner in the future if the landowner ever wants to do an Internal Revenue Code (IRC) § 1031 (26 U.S.C. § 1031) like-kind exchange (“1031 exchange”).

Legal support for landowners regarding the use of a 1031 exchange of income-producing real property (perhaps by structuring the proposed lease as an easement with a very long or even perpetual term, so that it may be considered a viable interest in real property that might qualify for an exchange of like-kind with other income-producing real property of comparable value, even if not comparable form), to defer recognition of capital gains and related Federal income tax liability resulting from the sale of such income-producing real property (perhaps from the proceeds from a lease buyout), by reinvesting the proceeds from the sale of such income-producing real property into some income-producing real estate assets comparable in value, identified by the individual seeking to effectuate the exchange (the landowner) within 45 days from the date of the sale closing (the identification period) and then to acquire one or more such income-producing real estate assets aggregating to comparable value, up to 180 days from the sale closing (the exchange period), providing that such proceeds are wired to the designated 1031 exchange provider and not to a personal or business bank account controlled by the individual seeking to effectuate the exchange (the landowner).

Negotiation and drafting for any rent assignment (when the landowner who holds a cell tower lease that pays a guaranteed rent stream, sells their right to receive such rent to a buyer through an assignment of rents for an agreed-upon price – generally a lump sum, not in installments – valued through factors such as the current rent the landlord lessor is receiving, the rent escalation over the term, the lease expiration date and time period for the assignment – generally for a period of years or even in perpetuity for the lease term, since the landowner lessor will receive the best price for the longest-term transaction, rather than for a short-term, such as 20 years or less).

Cell tower operators propose the terms most advantageous for exiting the lease as rapidly as possible, the most common of which is the 30-day notice period for termination with or without cause, whereas conversely, by having the landowner agree in the lease to a long initial term and many renewals or extensions, the cell tower operator makes it difficult for the landowner to terminate the lease easily, so the object of negotiations on behalf of the landowner would either be to lengthen the period required for the cell tower operator to give notice of termination of the lease, or to make the notice period the same for each party under the same terms and conditions for each.

The cell tower operator’s proposed lease will have an effective date (the date certain on which both parties have executed the lease) that is generally much earlier than the commencement date (the date on which the cell tower operator must begin paying rent to the landowner, generally the earlier of either some date certain specified in the lease or the undefined date generally triggered by the cell tower operator commencing construction operations on the cell tower site), so a landowner might attempt to negotiate some upfront immediate lump sum payment to the landowner or a schedule of monthly payments to the landowner commencing on the effective date, both to compensate the landowner for neutralizing the income-producing value of the leased property to the landowner until the cell tower owner commences construction, and also to possibly create some incentive for the cell tower owner to begin construction as soon as possible after the effective date.

The proposed lease will specify that any electronic interference between any equipment on the cell tower (whether equipment of the cell tower operator – if the cell tower operator is also an MNO – or equipment of an MNO or of any co-locator MVNOs) must be resolved by the respective parties themselves, and the landowner’s responsibilities are to prevent electronic interference from any electronic equipment the landowner may be operating in proximity to the cell tower or that other third-parties may be operating on the landowner’s land in proximity to the cell tower and to cooperate with the cell tower operator if necessary to resolve any issues with electronic interference on the tower itself (such as allowing professional equipment testers onto the property).

Both the cell tower operator and the landowner will be required under the proposed lease to ensure their respective interests for standard commercially-available amounts (for example $1,000,000 per occurrence and $2,000,000 aggregate commercial general liability, auto liability and workers’ compensation, with $5,000,000 excess) and with each party specifying the other as a named additional insured on their respective policies.

Cell tower operators prefer not to indemnify landowners for claims resulting from the cell tower operator’s use and occupancy of the cell tower site, but after negotiations, indemnification obligations tend to be mutual, except that landowners often request environmental indemnities from cell tower operators, since any environmental contamination is more likely to emanate from the equipment on the cell tower site, which from the landowner’s perspective is all the responsibility of the cell tower operator, regardless of who actually owns the polluting equipment (and the cell tower operator may always implead the offending MNO or MVNO as required to compensate the cell tower operator for any damages suffered by the cell tower operator as a result of litigation commenced by the landlord due to environmental pollution caused by equipment owned or operated by such MNO or MVNO).

If the landowner has encumbered the property with mortgages or deeds of trust, the cell tower operator’s proposed lease will require the landowner to obtain each secured lender’s consent to the proposed lease and to assist in obtaining subordination and non-disturbance agreements from each secured lender, and the cell tower operator will in turn agree to subordinate their leasehold interests to the interests of the secured lenders in the leased premises, in exchange for the secured lenders granting absolute recognition to the cell tower operator’s lease interest for the entire term of the lease, regardless of foreclosures or related actions.

Through aggressive negotiating the landowner will attempt to remove (or at least to shorten) the cell tower operator’s proposed onerous ROFR language (also be known as a Rental Stream Offer provision), allowing the cell tower operator to decide (perhaps for some abnormally-long option period) whether or not the cell tower operator will pay the landowner for the then-existing remainder of the lease an amount equal to the amount and under the same terms conditions specified in any written lease buyout offer from some third-party (and typically requiring the landowner to furnish a copy of such lease buyout offer to the cell tower operator), which has the commercial effect of decreasing the marketability of the lease from the perspective of potential lease buyout investors, who may not even want to make an offer for any lease with ROFR language favoring the cell tower operator, since the deal could be delayed for at least the term of the option period or even longer due to the cell tower operator vacillating about whether proceed or pass on matching the lease buyout terms proposed by the third-party.

The proposed lease will require the cell tower operator to pay personal property taxes assessed upon their equipment and other personal properties at cell tower sites (whether theirs or equipment owned by any MNO or MVNO sublessee to the cell tower operator, in which case it is the responsibility for the cell tower operator to require reimbursement from such MNO or MVNO in the respective agreements between the cell tower operator and the MNO or MVNO), and the landowner is required to pay all real estate taxes on the leased premises, even though the assessed value of the leased premises will have risen dramatically since the evolution of the leased premises from vacant land to a developed cell tower site with a valuable cell tower erected thereon.

The cell tower operator will attempt to have vague language in the proposed lease requiring only minimal removal of equipment (often the proposed language will allow the cell tower operator to leave the foundation pad and all footings visible and in place, or just to cover them over with dirt, or to remove only the first foot or so of the footings, filling the holes with dirt), but perhaps not the cell tower itself, upon termination or expiration of the lease, in which case the landowner must negotiate to have the property returned to the condition it was on the effective date within 90-120 days after the termination of the lease or the expiration, particularly since the Federal Aviation Administration (FAA) imposes strong penalties on landowners for abandoned cell towers (which are considered hazards to the glide paths of airplanes, particularly at night, since the abandoned cell towers will most probably not have any operating warning lights) that have not been completely demolished down to ground level and removed.

The cell tower operator will have language in the proposed lease requiring the landowner to allow the cell tower operator to record a lease memorandum (which should have at a minimum the basic lease terms, including the lease parties’ identities, effective date, commencement date and renewal or extension term lengths, and incorporating any surveys and property descriptions as exhibits to the memorandum) in the local recording office to give the public constructive notice of the cell tower operator’s lease rights, but the landowner may demand in exchange a limited power-of-attorney from the cell tower operator, allowing the landowner to prepare and sign termination statements to be recorded upon the termination of the lease by the cell tower operator or the expiration of the lease (if the cell tower operator is unwilling to grant the limited-power-of attorney, a compromise might be for the cell tower operator to prepare and sign the termination statement on the effective date of the lease without dating that termination statement, and then to have an escrow agent hold that termination statement until the actual termination date, at which time the escrow agent will date the termination statement and record it), since the landowner will not want a cloud on his title caused by an apparently active lease that has actually been terminated.

The proposed lease will require each party to pay their respective utility costs, which will be accomplished by allowing the cell tower operator to have separate meters installed on the cell tower site.

Cell tower operators may require the absolute and unrestricted right to assign the lease and sublet the leased premises (to co-locator MNOs and MVNOs) at any time during the lease term or any renewals or extensions thereof, except that the cell tower operator may allow some limiting of their assignment rights regarding mergers, consolidations, conversions or acquisitions in areas subject to Federal Communications Commission (FCC) approval, and the landowner will try to have consent rights (which consent shall not be unreasonably withheld, conditioned, delayed or denied by the landowner) over as much of the cell tower operator’s lease-related activities as he can negotiate.

Cell tower operators may also relinquish some assignment rights, if their absolute and unrestricted rights include affiliated company assignment and assignments resulting from sales of all or substantially all of the cell tower operator’s assets in applicable markets for sites, mergers, conversions and consolidations that may be governed by the FCC.

Analyzed existing cell tower purchase or lease agreements affecting the landowner’s land, and then provided a custom digest of each such existing cell tower purchase or lease agreement to the landowner.

Consultation for a potential relocation (requested by the landowner) of an existing tower to accommodate a proposed planned unit development (PUD), through first reviewing the existing lease to see if it had a relocation provision and if yes, following all the conditions precedent required in the lease to engage the tenant lessee, or if no, then opening negotiations with the cell tower owner to accomplish the relocation (the landowner would pay all the costs of relocation, including an amount to compensate the cell tower operator for lost income due to disruptions in service).

Encouragement to landowner lessors to identify and take advantage of “trigger events” (such as in an existing lease when the cell tower operator requests site upgrades, site expansions, modifications of lease terms or lease extensions), which are the best opportunities for the landowner to leverage that situation to either request rent increases in return for whatever the cell tower operator is requesting, or to take that opportunity to renegotiate whatever terms in the lease that may be unfavorable to the landowner or to request some new favorable terms.

Consultation for lease extensions (also known as lease renewals), whether automatic or triggered by some event, often proposed by cell tower operators long before the expiration of the existing lease (sometimes up to twenty years ahead of the lease expiration), attempting to preclude the extremely expensive possibility for the cell tower operator that the lease will expire and the cell tower operator would then be liable to remove the cell tower and equipment, and return the property to the same condition it was on the effective date.

Attempts through negotiation to leverage the landowner lessor’s advantage, since besides the monetary expense to the cell tower operator to remove the tower and equipment and restore the property to its pre-lease condition (including but not limited to any environmental remediation for issues that may have occurred during the lease term due to any equipment issues), the cell tower operator would be disadvantaged by the loss of revenue resulting from the lost coverage during the time it would take for the cell tower operator to receive corporate internal budget approval for a relocation, identify new properties, negotiate a new cell tower lease with terms favorable to the cell tower operator, and finally to complete any required local, state or Federal review process, receive all required governmental approvals and permits to construct the new tower, and then to commence operations.

During lease extension negotiations, attempts to renegotiate and lengthen the required notice period for the cell tower operator to terminate the lease (generally initially some short period, perhaps in as little as 30 days), and simultaneously to decrease the number and terms of such extensions, since the very long term resulting from numerous extensions (perhaps longer than the time it will take the landowner lessor to pay off the mortgage, or even the landowner’s lifetime) will hamper any flexibility the landowner may have had to dispose of the property in the future, so any perceived benefit the landowner may have derived from requiring a longer notice period for the cell tower operator to give notice of termination would be completely neutralized by allowing the cell tower operator to insert numerous extensions that may add decades to the term of the existing cell tower lease.

Lease buyout negotiations on behalf of the landowner from first contact with the lease buyout proposer through closing.

Negotiations for a landowner against “aggregator buyers” (lease buyout speculators seeking to purchase cell tower lease agreements at significantly below market value and then resell them at a premium to investors as quickly as possible).

Spearheaded discussions and negotiations with insurance brokers and reinsurance brokers.

Understanding of the capitalization rate (cap rate) – the metric (net operating income ÷ property asset value = cap rate %) generally used to help assess an investor’s potential return on investment (ROI) on a property, if one were to pay all cash for a piece of real estate – as may be applied by analogy to prospective lease buyout transactions to assist a landowner perhaps more-familiar with cap rates to determine what price to ask for a lease buyout relative to market conditions in his area (although lease buyout investors generally make lease buyout offers based on a specific multiple of annual or monthly rent and other market factors, rather than on a particular cap rate).

Due diligence on behalf of landowners for lease buyout transactions, including reviewing the existing cell tower lease (including any and all amendments, the current rent, and the landowner’s strategy for the future disposition of the property exclusive of the cell tower lease), submission of the request for bid (RFB) to any potential buyers who are prequalified to make at least the minimum offer required by the landowner, review of each offer with the landowner to select the winning offer, then negotiation and drafting of all documents required to close the transaction and finally, verification that the landowner has received an Internal Revenue Service (IRS) Form W-9 at the closing, since it is the responsibility of the landowner (seller) to pay the Federal taxes resulting from such transaction.

Compliance in the lease with Federal Communications Commission (FCC) ruling FCC-07-177A1 (in response to Hurricane Katrina), requiring back-up generators at all tower sites, to provide at least 24 to 48 hours of emergency power to the communications equipment in the event of a local or regional loss of power.

Last updated 200611_1501