Sneaky Tower Company contract language.

Posted April 15, 2014 by admin

Yesterday we entered into a contracted to negotiate a new cell tower lease. The language that the tower companies are adding to the lease are getting more brazen. This was from one of the “Big 3” tower companies. Think Crown Castle, American Tower or SBA Communications when I say that. Here is the clause:

9.  Assignment and Subleasing.  Lessee may sublet all or part of the Leased Space or may assign or transfer this Lease in whole or in part without Lessor’s consent.  Upon such assignment, Lessee shall be relieved of all liabilities and obligations under this Lease.  Lessor may not assign the Rent or the Agreement or any rights hereunder, or grant any interest in any portion of the Property, except in connection with conveyance of fee simple title to the Property, without the prior written consent of Lessee, in Lessee’s sole and absolute discretion.  Any action taken by Lessor as part of a scheme or contrivance to circumvent the intent of this Section will cause the monthly Rent payable to Lessor or its successors or assigns to be reduced by fifty percent (50%) for all terms remaining under the Agreement.  Notwithstanding the above, a transfer of fee title to all or a portion of the Premises to a member of the family shall not trigger the terms of this section.

Here is the issue, if you agree to this clause you will lower the liquidation value of the cell tower lease contract by 50%. Lets use an example here:

Recently we completed a transaction for a cell site with $2500 a month in rent with Cell Site Capital purchased the lease for $390,000. If this clause had been in the lease, the value of the transaction would have been reduced by $195,000. That is a large “haircut” to take if you decide to sell the lease. This should be a deal breaker for you. The tower company will take the rights to sell or transfer the cell tower or cell tower lease but they don’t want you to have that same courtesy.

Cell Site Capital has been able to negotiate language similar out of new cell tower lease contracts. Small issues like this can cost you hundreds of thousands of dollars on a cell tower lease. This could have been a very expensive mistake of left in the contract. Engage Cell Site Capital to help you and your advisors to make the right decision. 

Leave a Reply