What to do with the lump sum from a cell site lease buyout?

Posted April 2, 2014 by admin

We recently completed a cell site lease buyout for a client. The next questions was “what should I do with the proceeds?” First, talk to a financial planner if you don’t have a plan for the capital. Look at all your options. Although we don’t give financial advise to our clients but when this subject come up we can look at the history of the big 3 tower companies to get a indication of past stock performance since Nov. 2008 through Q1 ’14.

The BLUE line is the S&P 500 stock performance – The RED line is American Tower (AMT) – The GREEN line is Crown Castle International (CCI) –  The BROWN line is SBA Communications (SBAC)

tower co stocks

 

The S&P 500 is the standard measurement for some investors, all the tower stocks performed very well during the same period. You would have a 100% return on your money with the S&P 500 since Nov. 2008. During that same period American Tower (AMT) produced at 200%, Crown Castle (CCI) at over 400% and SBA Communications (SBAC) at an eye popping 500%.

The next question is why are they doing so well? The biggest reason is the cell tower company model is based on adding additional tenants or additional upgrades to the current tenants. In most cases the revenue produced is not shared with the current land owners which mades for extremely high profit margin. 80% of Cell Site Capital’s clients call to help extract additional revenue from the current leases since more tenants have been added, which changes the economics for the tower companies. Most land owners are surprised when they see what a large lump sum looks like invested over 10, 20 or 30 years verses holding on to a lease that is taxed at a very high tax rate.

Let Cell Site Capital review your current or new lease to make sure you are getting a great return on your cell site location.

One response to “What to do with the lump sum from a cell site lease buyout?”

  1. […] term value prospects of transferring their small monthly rent into a large lump sum. In one of our earlier blogs we compared the returns from the “big 3″ tower companies vs. the S&P. American […]

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