MD7 and the Value of a “Guarantee”
In the last 6 months, Md7 has been offering landowners a guarantee on their T-Mobile ground and rooftop leases equivalent to 10 years. What may not be clear when they offer this guarantee is that T-Mobile is not the company making the guarantee- instead a subsidiary of Md7 named Md7 Capital Three is making the guarantee. Some of our clients have started negotiations with Md7 believing that T-Mobile is the one who is actually guaranteeing the lease and did not know until retaining our services that Md7 Capital Three is actually the guarantor.
The obvious problem with this is that the value of the “guarantee” is only as good as the long term viability of Md7 Capital Three. Suppose that Md7 Capital Three is undercapitalized and T-Mobile terminates a significant number of leases held by Md7 Capital Three after 4-5 years. Then Md7 Capital Three could simply file for bankruptcy and the landowners who agreed to accept less rent in exchange for the guarantee won’t even receive the guaranteed rent. Please note we aren’t saying that Md7 Capital Three is or is not well capitalized nor are we implying that Md7 set up Md7 Capital Three to avoid its liability under the guarantee. We really don’t know. However, if you are considering a guarantee from any company that they will pay rent for 10 years, we believe it is prudent for you to do your due diligence and review the assets and liabilities (short and long term) of the company that is offering the guarantee. If Md7 is unwilling to provide this information, then that signifies a warning sign to us that you might want to really consider your options.
If you need help assessing the value of your lease and whether the implications from Md7 that T-Mobile might consider terminating your site if you don’t accept their “guarantee”, please see our page on T-Mobile Lease Renegotiations. We are not and will never be affiliated with Md7 in any way.