Selling Your Cell Tower Lease in the 5G Era
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Learn how to respond when someone offers to purchase your cell tower lease.
Property owners with a lease for a cell tower on their property routinely receive six-figure offers to buy the lease and future leasing rights. While attractive, those offers pose unusual legal, financial, and technical risks that the property owner and its regular attorney typically are not familiar with. For example, is it true that the advent of 5G cell service is a reason to sell leases now. The program will also cover cell lease sales as a source of funds for water system and other municipal capital projects, such as projects too small to warrant a bond issue. This program will guide property owners and their attorneys as they evaluate and respond to such offers. It includes covering what drives the offers, current sales prices, how to evaluate financial terms to determine whether selling makes sense (and when it doesn't). You will be better able to evaluate purchase offers, identify and modify the very one-sided documents offered by purchasers, and address some of the risks involved in a sale. Such risks include making sure the property owner is not hindered in developing or using its property, insurance and bankruptcy protections. Local governments face all of the preceding issues, plus special questions of municipal authority, bond covenants/IRS restrictions, compliance with procurement statutes, prohibitions on waste, and risks of accidently triggering property reverters.
AuthorsJohn W. Pestle, Esq., Varnum LLP Dr. Jonathan L. Kramer, Esq., Telecom Law Firm, P.C.
Cell Lease Sales Basics
• Financial Basics - Current and Renewal Rents, Additional Tenants
• Legal Structure - Easement and Assignment of Lease
• Lease Sales as Source of Funds for Municipal Capital Projects, Examples
Key Factors Affecting Lease Sales
• Typical Sales Prices - Bid Process to Get the Best Price
• When Cell Lease Sales Make Sense, and When They Don't
• Selling Property With a Cell Lease - Sell the Cell Lease First
• Protective Terms for Sales of Leases on Water Towers, Buildings
• Avoiding Terms That Limit Future Property Development
• Length of Time for a Sale, Start to Finish
5G Cell Service and Cell Lease Sales
• What Is 5G?
• Why Are Thousands of Small Cells Needed?
• When Will 5G Be Available? Where?
• 5G's Effect on Prices for Cell Lease Sales
• Lease Terms That Impair or Prevent a Sale
• Addressing One-Sided Deal Documents
• Bankruptcy Protections
• Insurance Provisions for a 50+ Year Deal
• Buyer Compliance With Building, Safety Codes
State and Local Government Issues
• Bond Counsel Approval Usually Needed
• Dillon's Rule, Governmental Authority for a Sale
• Property Specific Restrictions, Reverters
• Procurement, Waste Issues
Drafting and Counseling Issues
• Business Pros and Cons
• Visualizing the Deal (Ground Level Sites; Building Sites)
• Getting Multiple Offers via a RFP Process
• Reimbursement of Property Owner's Legal Fees and Other Transactional Fees