Crown Castle Lease Negotiations
Cell Tower Lease Expirations and Extensions
To begin with, Steel in the Air, Inc. is not affiliated in any way, shape or form with Crown Castle. If you are interested in visiting their website, please go to www.CrownCastle.com. Crown Castle and Crown Atlantic are registered trademarks owned by Crown Castle international.
Steel in the Air, Inc. has assisted many landowners with negotiations on the expirations of their cell tower lease. Crown has been actively attempting to extend their cell tower ground leases with landowners often offering a small, nominal increase for the lease extension. There are a number of reasons for this.
First, the stock market looks closely (and negatively) at the number of cell tower ground leases that they have that are due to expire in the next 5 years. That is because without the cell tower ground lease, they stand to lose the revenue generated by the tower.
Secondly, the cell tower lease extensions are essentially a one way commitment by the landowner who receives no guarantee that Crown will continue the lease but now has an obligation to lease his/her property for 20 to 50 more years. Since there is no commitment on the their behalf, why wouldn't the tower company try to convince you to extend the lease? The answer is they will try to get as many years as possible but provide you little, if any, guarantee on their end. Many leases grant them the right to terminate with as little as 30 days. A 50 year commitment versus a 30 day commitment…Who is favored in that scenario?
Third, Crown Castle bought two thousand towers from Bell Atlantic, GTE, and Airtouch (now Verizon) and formed a joint venture with the previous companies that now make up Verizon called Crown Atlantic. Many of these cell towers were built in the 1980s, and the cell tower leases are now coming up for expiration. The landowners are being contacted by company representatives to negotiate extensions to the lease or sell the lease out directly.
Fourth, Crown Castle has been offering to extend the lease along with asking for an expansion of the current lease area. By asking for the expansion along with the offer to extend or buyout the lease, Crown hopes the landowner will not question whether the expansion has value in and of itself.
Fifth, Crown Castle has stopped their easement purchase project meaning that if you had an offer to purchase your lease , they will no longer honor it. This is due to the changing capital market and Crown’s internal assessment that they need to preserve capital. So while they can’t buy your lease, they are hopeful that you are ignorant enough to simply renew it for a small one-time fee rather than assess the true value of the lease.
All of these are good reasons why they would extend the lease but not necessarily good reasons why you should. That is where we come in. We have provided other owners good advice and negotiated numerous lease extensions on behalf of landowners. We can provide a detailed revenue projection of what they are actually making in profit on the tower as well as what expenses they have. We can help you evaluate what they can afford to pay for their lease.
You should be aware that your lease is most likely worth more now. This is due to the fact that Crown now has a tower that may be impossible or difficult to relocate or replace. Many of our clients assume that they can simply check what other landowners are getting in the area and use that for fair market value. Unfortunately, this rarely equates to what the tower lease is actually worth to Crown. Please take a look at our Increase in Lease chart to see what the difference of receiving just $100 in increased lease payments means over 25 years. Please contact us for a free quote on the cost of our services.
We can also provide comparable data on what other landowners have successfully renegotiated their leases for. This isn't the same comparable data that Crown's agents will attempt to utilize. Their agents will draw upon a list of what other Crown owners are getting within a 5, 10, or 20 mile radius; whichever distance yields the most favorable (meaning lower) average rent. The Crown agent will attempt to suggest that your offer is at market value or that you are already getting a better rate than the market average. Be aware that Crown only shares this data when it is favorable to them. If the rates nearby are significantly higher, you won’t ever know. Our comparable data is based upon what Crown has agreed to pay our clients when pushed in negotiations. In this comparable data, we track how many users are on the tower, how long there was to expiration, how much the original rent was, and how much the renegotiated rent was. It is our strong belief that our comparable data is a much better indicator of value because it is relative to market conditions for expiring leases- not new leases.
We can analyze the risk there would be that Crown chooses to rebuild the tower elsewhere because you don't agree to their offer. Most importantly, we can tell you which negotiation strategies work and which don't. If your cell tower lease is set to expire or you have been contacted by a Crown representative to extend your lease, call us to discuss how we can help you increase your Crown Castle lease. We can make sure you get the best lease rate possible. One that you are comfortable living with for the next 25 years.
Lastly, Crown often suggests that if you fail to renew your lease, they will look at terminating and moving the tower elsewhere. We can help you asses this risk and help you make an informed decision about what to do.
If your lease is not set to expire and you are evaluating an offer to extend the lease, ask yourself what you get out the extension. Ask Crown whether they would be willing to increase the lease rate going forward. If not, then there typically isn’t much of a reason to consider the extension. If they are willing to make concessions, contact us and we can help you maximize your lease revenue.
If your lease is set to expire, please see our page on Negotiating Expiring Leases that includes a detailed explanation of our process on how we evaluate leases that are near their expiration.