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.   

Comcast Wireless 2.0- Maybe It Won’t Fail?

On September 20, Comcast’s Brian Roberts announced that Comcast Wireless a second iteration wireless venture is scheduled to roll out in mid-2017. While details have been limited so far, here is what we anticipate based upon 20+ years in the wireless industry. [Read more…]

Crown Castle (CCI) Small Cell Initiatives and Reporting

Crown Castle DAS Node
Picture of Crown Castle DAS Node from FCC Presentation by Crown

So as a clear indication that Wall Street is very focused on small cell initiatives by the public tower companies, Crown Castle
started reporting their small cell financials separately from their tower financials in the Q1 2016 quarterly earnings and call.   They must have been receiving a significant number of questions from the analysts because the earnings call presentation is carefully crafted to show a rosy picture even though Crown hasn’t been completely transparent on their small cell financials.

SOME VISIBILITY- BUT QUESTIONS STILL REMAIN

In general, we are excited to see them Crown add this reporting, as we have been suggesting to the various analysts that retain us that it is difficult to measure how successful their small cell efforts are without this breakdown. Unfortunately, Crown still isn’t distinguishing between small cells and DAS in the breakdown preferring to treat all DAS nodes and small cells as if they are the same and have similar financial attributes.  Interestingly, an analyst from Bank of America specifically asked this same question in the Q&A without getting a substantive answer.

What we do know from the earnings call is that Crown’s small cell business still amounts to approximately 12% of their consolidated site rental revenue similar to what it was in late 2015.  Crown indicates that new small cell builds amount to 75% of their small cell systems’ incremental revenue – while 25% is additional collocation on existing fiber routes/DAS networks. They suggest that they have 16,500 miles of fiber, but don’t disclose how many miles are actually used for small cell nodes or DAS.   CCI says they are focused on the top 25 markets which isn’t surprising given the location of Sunesys fiber in these same cities. This suggests a few obvious questions for CCI that were partially addressed in this call and should be expanded upon in future calls:

1.  How do they expect to grow once those 25 markets are complete?

2.  Now that the world is fully aware of the value of dark fiber and surplus capacity, is it reasonable to expect another fiber company acquisition?

3.  How many nodes are in top 25 markets or Central Business Districts (CBD) as opposed to non urban core areas? [Read more…]

Comparison of Large Tower Company and Wireless Carrier Tower Deals

We compiled a comparison of the three most recent wireless carrier tower company deals.   It is important to note that these numbers aren’t exact. For example, the Tower Cash Flow for Verizon/American Tower are projections from the first year of operation. On the AT&T/Crown transaction, the number of towers is rounded off.   Lastly, some like the Verizon/AMT transaction don’t include the net present value of the options to acquire these towers in the future. [Read more…]

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…]

How Will the Data Tsunami Affect You?

It makes sense that subscribers with access to 4G LTE use more data – because faster connections result in a better user experience. According to  Mobile data information company Mobidia,  in Hong Kong, for example, LTE subscribers used nearly 100% more data than 3G subscribers. [Read more…]

American Tower Lease Extensions – DELAYED!

A good portion of our business comes from landowners who have received offers to extend their leases from the large tower companies like Crown Castle or American Tower.   We evaluate the proposals and recommend what the tower lease is actually worth to our clients.   [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…]

Global Tower Partners is Up for Sale

Global Tower Partners

While we had heard about this previously, the news was not public until yesterday.   Reuters is reporting that MacQuarie has put Global Tower Partners up for sale.   Global Tower Partners owns 6,400 towers and manages or leases another 9,600 properties across the US.  Some of these properties are not active cell site locations, they are just large property owners who signed up with Global Tower Partners to market their sites.  Others are active cell sites, but ones where Global Tower Partners only owns the rights to the ground lease, not the towers.

 

[Read more…]

AT&T-T-Mobile Merger Impact on Tower Companies 2

A follow up story by the Wall Street Journal mentioned reports from American Tower and SBA who confirmed the number of leases impacted:

  • American Tower has 3,100 towers where AT&T and T-Mobile are both on the tower out of 36,000 sites or 8.6% overlap.   American Tower’s lease agreements with T-Mobile have between 5 and 6 years remaining on them.
  • SBA has 1,533 of the company’s 9,260 towers with duplication between T-Mobile and AT&T or 16.5% overlap.   The average lease has 3 years remaining on it.
  • Crown has 4,000 of the company’s  22,000 towers with duplication.   The average AT&T lease has 12 years remaining while T-Mobile has 7 years remaining.

[Read more…]