I have been contacted by numerous property owners who have received possible termination notifications from their telecom tenants or third party rent optimization companies working on these tenants’ behalf. These companies will often indicate the property owner’s cell tower or rooftop lease has been marked for termination due to many market and industry factors. As a result of this termination threat, your telecom tenant will ask for, or have a third party ask your client for, a rent vacation. This means the cell tower company would like to stop paying rent under the lease for an extended period of time (usually 1 to 3 years). According to these companies, the property owner benefits by simply being able to keep the cell tower lease without termination as the telecom tenant seeks additional subtenants to make the site a more valuable location.
However, here is what they won’t tell you:
If a property owner signs an amendment as provided above and the tower company is unsuccessful in garnering a subtenant, the property owner will be responsible for removing the tower, its foundation, the underground cabling or the equipment/shelter the tower company leaves behind. The cost of such removal could total $50,000 or more. It is imperative that you and your client know who will be responsible for the removal of such equipment. If your client encounters this situation, make sure your client is aware of this issue and ask questions. You will be surprised to find out the answers and these companies’ expectations of your client.
If the company leasing your client’s property is successful in gaining subtenants, this can increase the cell tower or rooftop telecom revenue significantly. So, why would your client, the property owner, not receive any increase in rent? Again, it is important to pose questions to these companies so that your client receives full and fair value for the use of his/her land. If the telecom tenant’s revenue is increasing, so should your client’s.
It is not easy for a company to move a tower from one location to another. It takes time and a substantial amount of money. There is both the cost to remove the actual tower and to migrate the telecom equipment to another site. In addition to this, they must still pay rent to another property owner for equipment placement on a different property.
Consider this information when your client is approached to amend his/her cell tower or rooftop lease. Armed with facts, your client will make more informed, advantageous decisions and this will help facilitate a better overall lease for your client.