Sale of Rooftop Cell Site Leases

If done properly, rooftops are highly sought after cash cows whose value should not be discounted. There are a number of companies that approach building owners with offers to purchase their cell site leases. These companies will typically make an offer to buy a perpetual lease on the rooftop. They will offer a lump sum in exchange for the easement and will also promise to “market” the rooftop in order to encourage other wireless companies to use the rooftop. If the building owner sells their lease(s) to the lease buyout company and another wireless company comes along, the lease buyout company gets 50% of the revenue from the new tenant regardless of whether they did anything to encourage the tenant to use the property.

Under this type of lease buyout agreement, the building owner is essentially selling the existing leases and giving away 50% of the future leases. Since the lease buyout companies pay a nominal amount for the future value, the building owner is unwittingly selling future revenue at a tremendously high discount rate.

There are better options available to rooftop owners. For example, there are companies that would be interested in purchasing the rooftop as a whole. In this regard, they would pay for the present and future rights to the rooftop. The building owner would grant the buyer a fixed term easement to operate the rooftop facility. The buyer would have the right to add additional tenants to the rooftop without further compensation to the landowner. However, unlike with lease buyout company offers, the buyer would also pay a premium for this right. The buyer would take on the burden of negotiating with the existing tenants and future tenants. The building owner would not get future payments from additional users but would also not lose rent if any of the current leases terminate their agreements.

The sale of a rooftop is not appropriate for everyone. It does come with a minimum 25-year obligation. While this is shorter than the lease buyout companies offer, it still restricts the ability of the building owner to tear down the building. The building owner would give up some future rights to the rooftop. However, if there are plans to sell the building in the short term, we believe that building owners would be better off selling the entire rooftop rights provided that there is a low likelihood that the buyer would need to tear down the building.

If you are interested in finding out more about this option, please send us information about your building including the current tenants, lease rates, and offers you have received. A member of our team will contact you to discuss what options are available to you. If you are interested in just selling a lease without the remainder of the rooftop, please refer to our colleagues at Steel In The Air at Cell Tower Lease Buyouts.

If you do not currently have rooftop leases or have not been approached by a tenant, SteelTree Partners cannot assist you in either finding tenants for your rooftop or selling the rooftop rights.