| Valuing
Sublease Agreements on Cellular Towers
A sublease is when a tenant leases out the whole or
part of the property rented by him a to a third person.
In the case of a cellular tower lease or a rooftop cellular
site lease, the sublease is a lease between the cellular
or wireless carrier (tenant) and another wireless carrier
or vendor, (sub lessee). Many cellular tower leases
between the landowner and a tower company allow the
tower company to sublease the tower to third parties.
A cellular tower lease agreement may allow for subleasing
or it may not. In many cases, the landowner is not entitled
to revenue for consenting or allowing a sublease. One
thing is for sure. The tower company will not tell you
whether you are due compensation for a sublease. We
have seen many cases where the tower company forwards
a letter of consent to the landowner without indicating
to the landowner that they are under no obligation to
sign the letter of consent.
Some leases simply require that the cellular tower
company "notify" the landowner that they are
going to sublease the tower. Alternatively, the cellular
tower company may simply sublease the tower without
coming to the landowner for consent. If the landowner
signs the letter of consent, they may be giving up rights
to revenue that would otherwise be due to them due to
the sublease. If the landowner fails to object, they
may waive their rights to object to the sublease. If
you have questions about whether you are obligated to
consent to a sublease, review your lease agreement and
look for the Assignment and Sublease clause. (It may
be called something else).
If the cellular tower company is required to gain your
consent prior to subleasing or the lease area is not
of sufficient size to provide space for equipment, it
is common for the landowner to get compensation. This
compensation can be for allowing the sublease or can
be for the expansion
of the lease area. The amount of compensation ranges
widely. There is no standard answer because every tower
site is different and every sublease is different. Certain
tenants may not be worth much, others quite a bit more
on a monthly basis.
To further complicate matters, there are many different
ways to compensate a landowner for consenting to a cellular
tower sublease. These can range from a one time payment
to a ongoing monthly rental payment or a revenue share
on a percentage basis. There are other options that
we believe are better for the landowner that we won't
share without being retained.
Steel in the Air has assisted numerous landowners with
sublease issues. Over the last four years, Steel in
the Air has accumulated thousands of cell tower leases.
We have assembled this data in a database that includes
the location of the lease and whether there is compensation
for subleasing. We have been retained as an expert witness
multiple times by attorneys who are litigating matters
related to improper subleasing. Furthermore, we have
developed, owned, and built cellular towers and understand
the tower industry revenue model backwards and forwards.
We can provide an estimate of sublease revenue for a
cellular tower by looking at pictures of the tower.
(Most of the time)
Some free advice: Don't feel obligated to extend your
lease agreement just to receive sublease revenue. Furthermore,
don't assume that just because a cellular tower company
tells you that you need to consent to a sublease agreement
that you are required to. Check with your attorney and
if you find that you may ask for compensation, please
contact us to help you ascertain
what your cellular tower sublease rights are worth.
[Steel in the
Air]
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