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.   

4 comments

  1. thanks for this info. We have an original tri star agreement from 2011 that ATC wants us out of as they have it till 2027. Then its the tri star agreement that ATC got back. Their problem is by contract starting in 2027 we have to get P and L statements every 90 days and we get 45% of gross revenue plus the maint. on the tower cannot be over 10% of net or they eat it. But now they want to buy us out for about 20% as best as I can figure. I told them to pound sand as math don’t lie but they will; send me the P/L statements and we will see, the ATC guy said no way. As I am under no obligation to not post them on the internet or mail them to ATC’s competitors. I love that part. Thank you for the info.

  2. Glad to provide the article. We have had a handful of clients who previously signed Tristar revenue share agreements that were then assigned back to American Tower. ATC is also contacting them and asking them to sell their leases. They like to do this early before the landowner knows how much they are really going to get from the revenue share.

  3. I have an American Tower lease that runs until early 2034. I did do the Tri Star deal in early 2011. Of course that Tri Star agreement is in the hands of American Tower now. Tri Star was paying us an annual sum and giving us 50% of revenue sharing, with a minimum floor rent when the current ATC lease expired. ATC is pressuring to buy out the lease or they claim they will move the big 3 carriers and take down the tower. I don’t think they would like sharing 50% of the revenues in 2034. I have gotten a call from Everest Infrastructure Partners with a minimum floor and the 50% of revenue sharing when the lease expires in 2034.. I am trying to figure out how serious ATC is about moving the carriers. Any comments or information would be greatly appreciated.

    Thank You,
    Arthur “Gary” Johnson

  4. Gary,
    Our clients have been receiving threats as well from American Tower to relocate the tower. There are a number of things that are funny about this.

    1. The whole reason that Tristar offered to buy your tower is that they felt it would be costly or difficult to relocate. So ATC’s threats about moving the tower are likely empty.

    2. Some clients have been receiving threats that due to the 50% revenue share, that the subtenants will move from the tower because of the high rent. This is absurd. The only reason that the rent is too high is because American Tower is going to backbill the tenant for the additional 50% revenue share so that they don’t lose any profit.

    3. American Tower had the option to not buy this tower lease (and the other Tristar acquired leases) back from Tristar or Crown Castle (who also acquired some Tristar leases). Yet they bought the rights to the Tristar agreement anyway knowing full well there is a 50% revenue share. If ATC didn’t see value in the lease- why buy it? Perhaps to see if they could attempt to do what they are attempting to do here- negotiate their way out.

    4. American Tower does not HAVE TO bill the wireless carriers an additional 50%. If I were a carrier on a tower that ATC failed to purchase or extend before and they tried to jack up my rent by 50%…. I would be mighty frustrated. That might cause me to investigate using another tower developer to build a tower near the ATC tower. But if this occurs, ATC is out of the rent from that carrier AND possibly other carriers if they can be convinced to move to the new tower.

    All this being said, there are some attractive offers coming from American Tower (and other entities) to purchase these types of leases. I would not agree to any type of minimum rent type buyout as proposed by Everest- if you sell, you might as well sell it all.

    If you are content to keep getting the payments, then continue to do so without fear that ATC is going to move the tower, especially in the next 14 years before expiration.

    If you need more guidance – please reach out and we would be happy to help.

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