Cell Tower Lease Rates are the lease amount payable by the cell tower companies to the landowners. Cell tower land is a common thing for cell tower companies or carriers. Tower companies and wireless carriers manage or cell towers on land they lease from property owners on a cell tower lease rate. Landowners get ancillary lease income.
Determination of Lease Rates
The lease rate usually depends on the location of the tower, nearby population density, traffic counts, etc. The initial lease rate depends on the duration of the contract, rent, etc. However, cell tower leases’ rates can increase at the final part of the lease option term as there are potential costs of deconstruction and relocation of the tower.
Basics of Lease
Tower leases are mainly subleases of the ground lease. Most contracts between the landowners and tower companies are land leases. While determining escalator, cell tower lease rate, and rent clauses, they have to allocate responsibilities for construction, government approvals, permits, equipment installation. There are also responsibilities like option fees, option periods, access, assignability, termination, removal, revenue sharing, option areas, etc. The potential lease can be a total term of 30 to 50 years or even more. Cell tower leases also have cancellation provisions, but it happens infrequently.
Considerations for Lease Buyout
While buying or selling a cell tower lease, some factors can affect the current or future lease value. Right of First Refusal clause should not be in the next sale of the underlying property. A low rent escalator can adversely impact the lease value rate of a cell tower. It’s better to renegotiate periodic escalators in such cases. Tower owners and property owners have to make a good agreement on revenue sharing. The Decommissioning of rooftop antennas should have a lower rate for a better market value of the antennas. While negotiating the sale of a tower lease, it’s better to consider the time of the lease term sold and the objectives of the prospective property. Otherwise, the sale of the right of a cell tower lease can restrict a property.
Location Factors
Determining the appropriate lease rate is also essential, according to the tower location and other factors. In some areas, determining the proper rent may become difficult due to various complexities. In the areas with high density, the demand for signal and bandwidth is high. Lands having towers and antennas near significant intersections, interstates, and highway traffic roadways are prime locations.
When negotiating on the lease rates, landowners and tower companies should mutually agree on the lease amount before entering a contract.
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