Getting an accurate cell phone tower valuation of what your cell phone tower or rooftop cell site should be worth is not as easy as talking to a real estate appraiser. Most real estate appraisers don’t know anything about vertical real estate. There are no databases of cell tower lease rates from surrounding towers or cell sites. That information is site-specific and proprietary, and is not available to real estate appraisers. In fact, even seasoned real estate attorneys have little or no idea what the appropriate values of cell tower assets are once the steel is in the air. This is the basic cell tower valuation formula we use to determine rental rates for homeowners in the US and Canada.
High demand for coverage + low supply of available cell sites = higher profitability for the owner.
To determine the value of a particular cell tower site, it is crucial to analyze how that specific cell site connects to the operator’s wireless network. Since each wireless operator, while using the same rooftop or monopole tower locations, has different criteria to meet its coverage and radio frequency goals, as each set of frequencies offers various levels of signal penetration within buildings and coverage areas, so the values of the Leases will also differ in most cases, if other aspects such as zoning, land use, topography and the provision of alternative locations are taken into account. High demand from carriers with a low supply of available sites that can be rented equates to a higher rental price for the owner. We’ve seen major wireless service providers pay anywhere from $ 100 per year for a cell tower (yes, $ 8.33 / month) to $ 14,000 per month for a single cell site.
Typical Questions and Answers About Cell Site Assessment …
Q: Our rooftop cell site has multiple operators renting space. Technicians are constantly in and out of our building, and some of these rooftop antenna leases have changed hands more than once. I have no idea what infrastructure we have there, and if we are getting the right rental amount, does it seem like they keep adding more equipment?
TO: This is a typical question that we hear every week. Our answer may surprise you, but we have found that at least 30% of all rooftop cell sites fail to meet the terms of their leases, and landlords are not adequately compensated as a result. We have also encountered many problems with cell phone tower leases, although not as frequent or severe as the problems seen with rooftop antenna sites that we have seen in the United States and Canada. We estimate that the values of approximately a quarter of cell phone leases are undervalued for this reason. When there is a deviation in the place that favors the lessor, he gains an advantageous position from the negotiating point of view. A properly performed cell tower audit or rooftop cell site audit can significantly affect the future value of a wireless lease to the owner and affect the actual value of your lease with the operator.
Q: You may be wondering what your monthly rental rate should be on your tower or rooftop site if the carrier is trying to expand or upgrading to 4G LTE antennas. Do you determine the value of the upgrade to the square footage of the expansion in proportion to the area they are currently occupying, or do you count the number of antennas they are adding?
TO: There is no database of cell site rental rates; furthermore, cell phone operators are not comfortable with public disclosure of the rent they are paying for a given cell site lease. If you look hard enough, you can see what municipalities are getting from providers like Verizon Wireless, T-Mobile, US Cellular, Metro PCS, and AT&T because cities publish the information. Occasionally, when a landlord plays rough with a carrier in a negotiation, their real estate department or their attorneys will reveal a short list of addresses of properties where they are paying $ 1,000 per month, for example. But these lists are never accurate or complete if the carrier provides them to the owners to sign on the dotted line. The value of the LTE upgrade or 4G upgrades that Verizon and AT&T are primarily doing can be worth an additional hundred dollars to owners. However, with site expansions and ALL cell tower leases, the lease rates are site specific and should be reviewed on a site-by-site basis. The determining factor is what they are trying to cover and the availability of alternative sites willing to take less money per month than you, and the cost of developing that alternative site. It’s all about leverage.
Q. If my cell tower is so important to the carrier’s wireless network, and they recently added more equipment and raised the rent when they signed the LTE lease amendment, why then are they trying to lower the monthly rent just a few months later?
TO. Your cell site is probably very important to the operator’s network, but they will never admit it because you don’t speak telecommunications in all likelihood. Would you think that multi-million dollar corporations had the foresight to plan 5 or 10 years in advance when they built a cell tower?
Q: What about this right of first refusal (ROFR) clause that they are trying to get you to sign? Does that affect the value of the tower in the future?
TO: Since a cell site lease is a commodity and is bought and sold like any other commodity. On Wall Street, when someone wants to buy a Right, they pay money for that option to make the purchase. When you give up the right of first choice, you are essentially giving up your right to allow the free market to determine the value of your cell tower rental income stream. If you’re going to agree to that, shouldn’t it be worth something? Do you think that if a lease purchase company sees that Carrier X has a ROFR on its lease, it will make you an aggressive offer? Why should they? The carrier with the ROFR only needs to match.
So what is the real value of your cell tower asset?
Owners in the United States, what is the fair market value of your Verizon Wireless, AT&T Wireless, Alltel, Cingular, Clearwire, LightSquared, West Central Wireless, Cricket, Alaska Communications, Cox Communications, GCI Communications, Cellular One, Frontier Wireless , US Cellular Leasing, MetroPCS, or Sprint Nextel? Canadian owners what’s your Aliant Mobility, MTS Mobility, Bell Mobility, Mike (Telus Mobility), Fido (Microcell), Mobilicity, PC Mobile, Primus Canada Wireless, Public Mobile, Rogers Wireless, SaskTel Mobility, Telus Mobility, WIND Mobile ? rooftop or tower lease rate valued at? What good is it if they want to expand the premise and add an improved range of antennas? Well … That’s the sixty-four thousand dollar question, right?
And don’t expect cell phone operators to give you the answers or any guidance on the site-specific values of tower or rooftop leases. Owners will never know the true lease values of their cell sites until they have a comprehensive cell tower lease audit.