In March of 2014 Peppertree Capital Management committed to investing up to $80 million to create Blue Sky Tower Partners, LLC, which will be spear-headed by the principal of Wireless Realty Advisors (WRA) and the former vice president of Global Tower Partners (GTP). The newly formed company will focus on the management of wireless infrastructure, including aspects such as development of new towers, rooftop management, and cell site lease buyouts.
Like other third-party lease buyout companies, Blue Sky Tower Partners makes a profit by purchasing cellular lease agreements from property owners, public entities (like schools) and municipalities. Since as early as May, 2014, we have seen solicitations from Blue Sky that offer to purchase existing lease contacts. It appears that they are targeting rooftop owners.
Blue Sky will offer a one-time payment to property owners in exchange for the right to receive future revenue from the cellular lease (including rental payments through the duration of the lease, as well as any additional revenue that might happen as a result of carrier collocation). This lump-sum payment is typically discounted from the future value of the cell tower or cell site lease, in exchange for BlueSky carrying the risk that the lease might be terminated in the future.
In addition to the lump-sum buyout offer, many buyout companies claim that they will proactively “market” cell site locations to other carriers, in an attempt to increase carrier collocation (sharing of equipment) on cell towers. They say that this will result in additional revenue that will be split with the property owner. We caution our clients to beware of offers such as these for two main reasons: 1. Other companies might be willing to purchase your lease, as well, and offer much better terms; and 2. There’s no real reason to give up a portion of future revenue that might happen if and when additional carriers choose to collocate on your tower location.
If contacted by Blue Sky, a good question to ask is how many employees they have on board whose sole job is to market acquired cell tower sites to wireless carriers. Ask them if you would still have to split revenue with them if the interested carrier were to contact you directly.