Cell Tower Valuation & Appraisal | SteelTree Partners
Cell tower valuation can be complex. Whether you are a long-term holder of tower assets or more opportunistic, knowing what your assets are worth in real time is very important, especially where a divestiture, merger, or financing is concerned. Most tower owners have a rough idea of what their tower is worth based primarily on information that other tower owners have shared about the sale of their tower assets or information available in the public domain.
How Tower Owners Try to Establish the Value of Tower Assets
The average tower owner might review the public tower companies’ valuations to see what the average tower in their portfolio is worth. They will scrub any news stories they can find about the sale of tower portfolios. They may even contact the public tower companies and inquire about tower valuations. Or they have likely received unsolicited offers in the mail or from unfamiliar tower buyers. Yet, after all of this, they still don’t know the “true” value of their tower assets. The only way to truly know the value of a tower is to enlist a cell tower broker/advisor who thoroughly understands the tower market and what tower assets are worth.
There are a number of reasons for this. Just as with the sale of any asset, it is crucial that the seller has access to comparable data from the sales of other similar assets. The key is that the data must be current, complete, and comparable. Simply looking at the deal multiple or purchase price per tower indicates nothing other than the unqualified sale value of those specific towers to that seller. Time and time again, a sale without the benefit of the full story behind the transaction from a qualified broker/advisor reveals nothing useful and, in many cases, can cause a seller to set its expectations too low or, worse, too high.
What Factors Influence Cell Tower Valuation?
The main factors that influence cell tower valuation include the following:
- Type and Quality of Tenants: Ultimately, buyers of cell towers are trying to predict the future revenue from the tower. They calculate and estimate the future revenue from current tenants from the tower and from future unknown tenants. Some tenant classes, like cellular and government tenants, are deemed to be long-term tenants. Towers with long term tenants are more valuable.
- Tower Location: Historically, towers in urban and suburban areas have experienced greater revenue growth than those in rural areas.
- Zoning Protection: Some municipalities have ordinances or regulations that limit the number of towers in a given area. This creates a monopoly of sorts for existing towers. Buyers prefer to acquire towers in areas where it is difficult to build a new tower nearby.
- Structural Capacity of the Tower: If the tower won’t support additional tenants, then the revenue upside will be limited. Cell towers without additional structural capacity are valued at a lower price.
Accurate Cell Tower Valuation
SteelTree Partners maintains a merger and acquisition tracker that contains data about each portfolio where we represented the seller, along with numerous other transactions completed by others. The tracker includes standard information about the price per tower, the overall purchase price for the portfolio, the geographic area of the tower, the number of tenants per tower, the type of tenants, and other factors that SteelTree believes are crucial to understanding tower valuation. When a potential seller contacts SteelTree Partners for valuation, SteelTree endeavors to find similar tower transactions with similar geographies and characteristics.
Without the level of data that SteelTree possesses, it is impossible for tower owners to truly analyze the market and determine the current valuation of a cell tower portfolio. Contact us if you are interested in finding out how the value of your tower or tower portfolio compares to our comparable tower transaction data. SteelTree will provide a free, no-obligation verbal assessment of the value of the subject towers based on the current market. “We sell peace of mind.”
Please note that SteelTree does not sell or exchange its data with other entities or appraisers, nor are we qualified to provide an appraisal. If you need an appraisal, SteelTree can provide a letter of opinion upon which your appraiser or one we can refer you to can “wrap” their appraisal around.
Contact us for more information on SteelTree’s cell tower valuation and appraisal support services.