Want a Kinder Less Aggressive Tower Company Leasing Specialist? Just Fill Out a Survey!

Image of surveyOne of our client's called us yesterday to let us know that they had been beleaguered by a tower company rep who was perhaps too anxious and aggressive regarding a lease extension for a lease that wasn't set to expire for another 8 years.   This particular client has a Mona Lisa tower- a phrase American Tower used previously to refer to 4-6 carrier towers.   In other words, it wasn't going anywhere.   For some reason, the tower company rep felt that being aggressive and making all kinds of threats to move the tower and to cease discussions would make the landowner agree to the proposed terms.   

The landowner received a survey from the tower company- a generic one that asked about how the landowner felt about the tower company and whether lease payments were coming on time.   The landowner filled out the survey and added comments at the bottom that he didn't appreciate the rep's aggressive nature and angry demeanor.   Within a few days, the agent called him and apologized and the negotiations took a decidedly more friendly turn.    Perhaps that was because our client's tower is a very valuable tower.   Perhaps not.  Either way, if you are having a problem with your tower company rep and their negotiating tactics, fill out a survey or let the company know directly.   While the rep will and should continue to make threats about moving the tower, they should be able to do it in a less aggressive and cordial manner.  Both parties should remember that these negotiations are not personal, they are just business.  Treat the discussion as a business discussion, remove the personal aspect, and if you need help determining the business terms, consider contacting us.  

Everest Infrastructure Partners: The Phoenix of Tristar Investors?

Illustration of Phoenix Rising from AshesHISTORY OF TRISTAR INVESTORS

Back in 2008-2013, a company called Tristar Investors was attempting to acquire ground leases under American Tower Corporation (AMT) and Crown Castle (CCI) cell towers. They had some success acquiring the leases using a unique acquisition model where they would "buy out" the tower ground lease by paying the landowner an additional annual or monthly payment above and beyond their current rent through the expiration of the cell tower lease. Tristar would then offer the landowner 50% of any revenue from the operation of the tower after the expiration of the lease. The marketing pitch? At expiration, Tristar assumes ownership of the tower and the landowner becomes a "partner" in the revenue generated on the tower. This was an effective pitch to landowners, and our best guess is that Tristar acquired 300-500 leases under valuable multi-carrier towers.   

In 2013, Tristar settled litigation with American Tower and after that, they shut down. We surmise that Tristar agreed to non-compete and non-solicitation language in their agreements that barred them from purchasing leases from under American Tower. We also believe that Tristar executives previously agreed to language with Crown Castle that provided for similar restrictions on acquiring Crown Castle leases.  

THE RISE OF EVEREST INFRASTRUCTURE PARTNERS

Flash forward to 2017 and it appears that these non-compete/non-solicitation agreements have expired, because a landlord of ours with a multi-carrier American Tower Corporation tower received a purchase offer from a company named Everest Infrastructure Partners that looks suspiciously like previous offers from Tristar Investors. Upon further review of the signatory and the agent who contacted our property owner, it appears that someone has gotten the old Tristar team together and is now attempting to acquire leases under the Everest Infrastructure Partners name. Both the agent and signatory list previous positions with Tristar in their LinkedIn profiles .  

Here is what the offer from Everest looks like: 

Everest Infrastructure Partners, Inc. (“Everest”) is pleased to present to you (“Owner”) this offer letter (“Offer”) for Everest to acquire an easement to the cell tower real estate you own at _____________________(“Property”).    

1. Current Lease.  The Offer is based on the following terms of the current lease for the cell tower operated on the Property:

Current Rent:   $xxx.00 /month    Final Lease Expiration: xx/xx/xx

2. Payment to Owner.  Everest will pay to Owner the sum of xxxxx Thousand and No/100 Dollars ($xx,000.00) per year until the expiration of the Current Lease.  Owner will keep all rents generated by the Current Lease until expiration. Additionally, commencing at the expiration of the Current Lease, Everest shall thereafter pay to Owner ongoing payments equal to Fifty Percent (50%) of the rental revenues received by Everest from any lessee(s) of the Property.

 3. Easement. In exchange for the consideration above, Everest will be granted an easement to the property. The easement area shall be the portion of the Property currently leased for wireless telecom use, and shall include access and utility easements thereto. 

RECOMMENDATIONS FOR CELL TOWER LEASEHOLDERS

There are a few concerns that landowners should have about this offer. First, a landowner who receives this offer should clarify with Everest whether they intend to take over the ownership of the tower at expiration, whether they plan to sell the lease back to the tower company, or whether they expect to renegotiate the lease with the tower company and take 50% of the rent for doing so.   

In the first scenario, these types of offers can be attractive to landowners. Our clients who previously sold to Tristar were generally better off for doing so.  

In the second scenario, we believe the landowner is better off just selling or renegotiating the lease with the tower company. Otherwise, at expiration, if Everest sells the lease to the tower company, the tower company could just decide to offer below market lease terms and the landowner would get the very short end of the deal.   

In the third scenario, we also believe that the landowner is better served by selling to the tower company or renegotiating the lease with the tower company. Unless the "buyout" amount exceeds the present value of 50% of future rent from the extended tower lease, the landowner would be better off just keeping the lease and negotiating its own extension or sale with the tower company.   

Accordingly, if you receive an offer from Everest, we recommend confirming with them whether they intend to take over the tower at expiration. If not, we suggest asking Everest about their explicit intentions with the lease. In either of the latter two scenarios, we recommend contacting us so that we can help you determine the value of the lease and explain fully all of your options – not just those presented by Everest.   

Please note that we are not affiliated with Everest. Everest Infrastructure Partners may be a registered trademark. If you found this post while searching for Everest Infrastructure Partners, please direct your browser to www.everestinfrastructure.com.   

CCI expresses interest in buying Verizon towers

Crown Castle (CCI) is the largest of the Big Three U.S. tower companies, and currently owns 40K towers nationwide (followed by American Tower with ~28K and SBA with 15K).   In September 2012, CCI bought 7,200 cell towers from T-Mobile, and in October 2013 it purchased 9,700 from AT&T.  CCI spokesperson says the company is now open to buying 6K towers from Verizon, which would be a $3B acquisition. [Read more…]

Tristar Investors Lawsuit Against American Tower Corporation

On Feb 16,  2012, Tristar Investors sued American Tower Corporation alleging that American Tower had violated the Lanham Act, unfairly competed, disparaged Tristar’s business, tortuously interfered with an existing contract and with prospective business relations, and lastly had breached a contract.   The suit was filed in Federal Court in Dallas.  The suit was quickly posted on the internet.  Tristar alleges in a lengthy complaint full of hyperbole that American Tower has prevented Tristar from purchasing assets that American Tower owns or subleases by using misrepresentation and unfair practices. [Read more…]

Best Practices Guide for Lease Buyout/Optimization Companies

Author’s Note: The following article is written tongue in cheek- I was just feeling a little rambunctious today about the myriad of “strategies” that we come across every day that lease buyout companies, tower companies, lease optimization firms, and wireless carriers use to try to convince landowners to do something that is not in their best interest. Hopefully, this will help at least one landowner realize that they aren’t alone and that they don’t have to make hurried and rash decisions.  Please realize that no company does all of these things and not all salespeople at these companies do them.  [Read more…]

Crown Castle and Nextel Revenue Sharing

On a few occasions now, clients of ours with Crown Castle tower ground leases have received proposals to either purchase or extend their ground leases.   These lease extension or lease buyout offers are attempts by Crown Castle to tie up long term rights under their towers.   This is nothing new, as they have been making these offers for years now to every one of their landowners. [Read more…]

When People with Good Intentions Make Poor Decisions Out of Ignorance

A gentleman contacted me this past week, a bit upset in that his church board had decided to sell a cell site lease to Wireless Capital Partners.   The Board had heard the pitch from the lease buyout company and was persuaded by Wireless Capital’s pitch that they would market the site to other carriers and get additional tenants to use the property.   The gentleman had pleaded with his church board to use our services or at least consider the alternatives, but they directed him to “let it rest”.   In this case, this was a bad decision by the church board on many fronts, and they will end up paying for their ignorance many times over. [Read more…]

Fox Guarding the Henhouse: Allentown and a Misguided RFP

We recently received a Request For Proposals from the City of Allentown, PA. This RFP was intended to procure a “consultant” to assist the City with the sale of its cell tower lease income. The City of Allentown wants the consultant to review the city’s cell tower leases and advise the City on whether it makes sense to sell them. Then the “consultant” is supposed to solicit offers to buy the leases. [Read more…]

How will cell tower leases be impacted by the current market conditions?

The last month has been a tumultuous time in the cell tower lease industry, primarily on the side of lease buyouts. With the plummet of the stock market, rising concerns about the availability of credit, and consumer confidence very low, the industry is starting to see the impact. Through our consultations, we have already started to see tangible evidence of a declining market especially in the lease buyout side. [Read more…]

Are Crown Castle and WCP Working Together?

In a tale of “strange bedfellows”, we are starting to wonder whether Crown Castle and Wireless Capital Partners are working together. A letter that Crown Castle is sending out to its landowners warns of the pitfalls of dealing with various lease buyout companies. However, the letter has one noticeable buyout company not included in the list- Wireless Capital Partners. [Read more…]