Cell
Tower Valuation and Appraisal
Here at SteelintheAir.com, we get multiple requests
for the valuation of cell towers. Many requests come
from real estate appraisers who have been called upon
to evaluate a cell tower for eminent domain purposes
or or taxation purposes. If you are just leasing property
and do not own the cell tower, please see our Cell
Tower Lease Buyouts and Reductions page for more
information on valuation of cell tower leases.
Cell towers have been traditionally sold
on the basis of a multiple of net cash flow. The multiples
range according to the buyer and can be manipulated
by the manner in which they are calculated. It must
be noted that cellular tower multiples are at the highest
point since 1998 and 1999. Unfortunately, tower purchasers
are more savvy and the formulas for calculating tower
annual revenue has changed to the advantage of the purchaser.
Nonetheless, this year has represented
a banner year for a number of sellers. Many tower owners
who have held on to their tower assets over time have
recently decided to sell due to the red hot tower market.
Two of the reasons the market is so hot is the abundance
of capital available and the presence of a number of
new tower companies who are determined to get market
share by acquisitions.
The point of all this is that the valuation
of towers is high. Many appraisers who contact us believe
that they can apply traditional real estate appraisal
techniques to tower valuation. By looking at comparables,
ie sales of similar towers, they can establish value.
Unfortunately, traditional real estate does not have
the same level of federal protection as vested in the
Telecommunication Act of 1996, nor are other commercial
types of real estate subject to the low churn our industry
sees.
The multiple established for cellular
tower purchases is a combination of a number of factors:
1 Current
Tenant Base on the Tower: Are any of
the tenants likely to terminate their lease prior to
the last term? Are any of the tenants a financial credit
risk?
2. Zoning
Protection: Is the tower in an area
where local zoning regulations will prohibit competing
towers from being built up?
3. Location
of Competing Towers: Are there other
towers within a given distance that offer competing
service to wireless clients? If there are nearby towers,
are they really competing for the same clientele?
4. Structural
Capacity of the Tower: How many tenants
was the tower originally designed for? How much capacity
remains?
5. Ground
Space Availability: Is there ground
space available for future tenants equipment?
It should be clear from the factors above
that cell tower valuation is based not only on existing
tenants but on future capacity for tenants as well.
While the valuation of an existing tower that is fully
loaded is relatively straight forward, the valuation
of a existing tower with significant capacity remaining
is not.
That is why attempting to
appraise a cell tower on the basis of comparables fails
to provide proper valuation. Each tower is unique as
the parcel of land it is on. We can assist you in evaluating
a tower or portfolio of towers. Please feel
free to contact us for additional information.
If you own a cell tower (not
a lease) and are curious about its value, please contact
us for a free cell tower valuation.
We will need copies of your leases on the tower with
the wireless carriers. If you do not have a PCS or cellular
carrier or TV or FM/AM broadcasters leasing your tower,
we can't provide a valuation because it is outside of
our expertise. Please note that this offer only extends
to the direct owner of the tower.
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