Crown Castle and Nextel Revenue Sharing
On a few occasions now, clients of ours with Crown Castle tower ground leases have received proposals to either purchase or extend their ground leases. These lease extension or lease buyout offers are attempts by Crown Castle to tie up long term rights under their towers. This is nothing new, as they have been making these offers for years now to every one of their landowners. What is new is that Crown clearly doesn’t have much faith in the longevity of their Nextel leases. On lease buyout offers for leases where Crown Castle is paying a share of the sublease revenue they receive from Nextel, Crown is trying to buy the lease but exclude the revenue share from Nextel in the calculation of the purchase price. They are offering to buy the base lease and revenue sharing rent from other carriers, but not from Nextel. The landowner would sell the underlying ground lease, but would keep the rent from Nextel. In situations where Crown is trying to get an extension of the lease and there is no revenue sharing, they are offering to share the revenue with the landowner, but only for the Nextel lease, not other current leases on the tower.
It seems pretty clear that Crown isn’t willing to buy Nextel revenue share rent but is freely willing to give up a share of the Nextel rent when they are extending a lease. This indicates that Crown doesn’t believe that these particular Nextel leases will be around much longer. If Crown is just guessing which leases are going to be terminated, then that may just be smart business on their behalf. If, however, they know which leases are being terminated, they are taking advantage of landowners’ ignorance by offering to share revenue or declining to buy rent from Nextel leases they know will be terminated.
If you have received an offer from Crown to buy your lease but not your Nextel revenue share, think twice before you agree to it. There are other buyout companies who are still buying all rent whether from Nextel or not. If you are considering extending your lease because Crown has offered to share the revenue from a Nextel lease, we suggest that you carefully consider what you are getting if the Nextel rent goes away shortly. If you need help figuring out what you should do, please contact the professionals at Steel in the Air. We are happy to provide a free quote for our services.