I have been contacted by numerous landowners who have received calls or letters from Crown Castle. These calls or letters attempt to convince the Crown Castle ground lease owner that the tower is “under-performing” and that the landowner needs to accept a reduction in rent to assure the continued use of the tower. Crown Castle actually goes as far as sharing their revenue from the tower and their expenses to operate the structure.
This tactic- previously used by Blackdot on behalf of Cingular, Sprint, and TMobile- creates doubt in the mind of the landowner who negotiated a fair deal in the beginning and now is being asked to evaluate the reduction. Unfortunately, this tactic preys on the ignorance on the behalf of the landowner who are ill-prepared to understand how to evaluate the “offer” if you can call it that.
To be candid, there are situations whereby the tower is underperforming, or there is possible risk to the lease should the landowner choose not to accept the reduction. But in many cases, these towers are “under-performing” only in the sense that there are better performing towers in the Crown Castle portfolio.
Landowners who are approached should evaluate two aspects of the Crown Castle tower.
1. Current value- demonstrated by the lease rate and expenses
2. Future or potential value- the possibility of future collocation/revenue on the tower
Lastly, they should consider whether there are specific risks to the tower revenue due to the Sprint/Nextel or Cingular/AT&T mergers. If Crown is not making money on the tower they could terminate the lease.
In any case, it is foolish to extend the lease 50 years- this is a one sided obligation which the landowner will undboubtedly regret in the future when the property becomes more valuable or the tower does.
If you are unsure of what to do- please
contact us. We can assist you in evaluating the risk of not negotiating as well as counsel you on the true value of the tower to Crown Castle.
Please note that Steel in the Air is not affiliated with Crown Castle in any way shape or form. Crown Castle is a registered trademark of Crown Castle International.