Renewing Monopole Site From 50 Year Term to a 10-Year Guarantee
For most property owners, the generated income from adding a cell site to existing property can seem like an easy revenue stream. And like most property owners, Boyer Industries felt the same when they began researching the advantages and disadvantages of adding a cell site to their own property. After some initial research and considerations about possible inconveniences, Boyer Industries weighed their options and decided in 1999 to add a tower to their existing property that would create an additional revenue stream.
As agreed, the 100-foot monopole was quickly erected in 1999 by Sprint Spectrum, which was later assumed by Crown Castle Inc., the second-highest-ranked cell tower company in the nation. Tower companies such as CCI sublease space on the tower to wireless carriers such as T-Mobile, AT&T, Verizon, and Sprint. In this particular case, we also had to keep in mind that T-Mobile closed their merger with Sprint in 2020.
Initially, there weren’t too many hassles with the cell site and for the most part, Boyer Industries was pleased with the additional revenue generated from the site lease. In 2020, twenty-one years into the lease, Crown Castle presented Boyer Industries with an offer to purchase a 50-year term for $125,000 (equivalent to 68 times the monthly rent). To Boyer Industries, the offer was lower than previous offers. However, Crown Castle implied that the tower was likely to be terminated due to the T-Mobile/Sprint merger. Boyer Industries didn’t want to pass on the lease buyout only to have CCI terminate the lease. To further complicate the situation, the lease was set to expire in 2024. Having worked with SITA in 2008 on a different project, Howland Boyer of Boyer Industries reached out to Steel in the Air for a review of the offer and to get recommendations on what steps to take next.
THE STEEL IN THE AIR APPROACH
As experience has taught us, cell site companies have been actively contacting their landowners and requesting they extend their lease or agree to a lease buyout. Either arrangement is an attempt by the tower company to tie up the long-term ground rights to the underlying ground leases under their towers to secure or protect profits. The issue for the lease presented to Boyer Industries is that CCI was threatening that T-Mobile was not going to take over his lease, thereby leaving the tower as an empty tower. SITA suspected that CCI might have been using the merger as a pretense to convince landowners to agree to low lease buyout offers.
For the team at SITA, we believe every cell site is uniquely positioned and no situation is the same and should be valued on a case-by-case basis. After meeting with Mr. Boyer from Boyer Industries, the Steel in the Air team began to evaluate the lease terms, answered the questions Howland Boyer was unsure about and explained the impact the cell site lease and the possible buyout would have both short-term and long-term.
THE SCOPE OF WORK
Getting right to work on the cell site lease assessment, SITA completed a cell site evaluation, reviewed the existing lease agreement, and conducted a comparison of competing towers nearby. Specifically, SITA reviewed the location of other T-Mobile and Sprint sites nearby to determine the probability of T-Mobile (and therefore CCI) not renewing the lease.
Our assessment revealed that the nearest T-Mobile site was some distance away and that it was more likely than not that T-Mobile would keep the Sprint site. We suspected that CCI knew this when they threw out their low-ball offer. We also felt there was some possibility that even if Sprint terminated their sublease of the tower, that DISH might eventually decide to lease the tower. With these factors in mind, we recommended that Boyer Industries not accept the CCI lease buyout offer and wait to see if a higher offer is presented or a renegotiation of the current lease. While there was some risk to the client, our client was happy to wait it out a little longer.
In 2021, T-Mobile assumed the site and upgraded their equipment. That’s when Boyer Industries was presented with a renegotiated lease contract. The new offer came with a 10-year guarantee for the monopole cell site to remain on the property with a much higher monthly lease. The value of the renegotiated lease is now triple what CCI originally offered.
FROM THE CLIENT
As stated by Howland Boyer, “Steel in the Air was so easy to work with. During much of this process, I was sick with COVID and was even hospitalized for some time. I’m so happy Steel in the Air did not pause their work with me and worked directly with my daughter. Overall, I felt confident the entire time that our company made the right choice in reaching out to Steel in the Air. We could not be happier with the results and the relationship with everyone on the Steel in the Air team”.
Steel in the Air was pleased with the outcome as well and that our original instincts about the lowball offer proved accurate. Mr. Boyer received significantly greater value in return for the flat fee he paid Steel in the Air. And that’s exactly how we like it here at Steel in the Air. Since 2004, Steel in the Air has been the expert in negotiating cell tower leases and managing the contracts for more than 4,000 private and public landowners and municipal governments. The above success story is a perfect example of how the Steel in the Air team can put their experience to work for you.