The cell-tower companies rely on property owners viewing a cell-tower lease as a simple real estate transaction and not understanding it’s really a telecom transaction. That's where the value lies to them and, if you’re smart, to you as well.
A Flexible Agreement
The second step in making sure you have a smart cell-tower lease is recognizing that as important as it is to get the most when it comes to rent, it’s just as important not to give up too much in return. Much like a good magic trick where the magician uses misdirection to perform the trick, a cell-tower company will rely on a property owner being focused on rent and not paying attention to the overall terms of the lease.
Remember, a typical cell-tower lease is binding on you, your company and your property for decades, with almost no way for you to terminate. Think about that for a moment. How many agreements will you or your company sign that will commit you to 30 or more years with no way for you to even renegotiate? Even if you enter into a bad long-term financing deal, you can refinance. You’re not so lucky with a cell-tower lease, so you better get it right the first time.
Most self-storage owners think the cell-tower lease only affects a small portion of their property and presume it cannot do them much harm. The truth is the terms of new leases and amendments to existing ones are now being structured in a manner that can have a negative impact on your property and business.
You need to review any agreement with an eye on the probabilities as well as the possibilities relating to your property and the lease. Again, we’re talking about an agreement that’s going to last for decades. Are you 100 percent certain what your business or property is going to look like in five or 10 years, much less 30? You want a lease that provides flexibility to adapt to changing conditions.
This can include changes such as the need to relocate the cell tower, tower access or utility easements. It can mean a need to have liability, environmental, insurance and other sections of the lease that account for an ever-changing world. You want to make sure you don't enter an agreement that limits your ability to assign, sell or otherwise transfer the cell-tower lease or the parent parcel, in which the lease is a part. Believe it or not, a cell-tower lease can put you in breach of your current financing terms or limit a potential facility buyer in obtaining certain financing.
You can have a smart cell-tower lease, but you must realize that this is a telecom transaction, not a real estate transaction. The cell-tower companies want self-storage operators to look at these leases the same way they have since the late 1980s, and why not? It continues to be extremely profitable for them. A smart cell-tower lease is your way to start leveling the playing field between you and the cell-tower companies.
Hugh D. Odom is president of Vertical Consultants, a telecommunications-consulting firm currently working with approximately 1,200 self-storage facilities across North America to place telecommunications equipment and optimize existing leases. Mr. Odom has more than 15 years of legal and telecom experience, including representing AT&T as an attorney for more than 10 years. For more information, call 877.456.7552; visit www.vertical-consultants.com .