Cell Phone Towers: Time For A Buyout?

Smart co-op and condo boards are always looking for ways to generate revenue, and about 20 years ago a lot of them started to realize that their rooftops were a lucrative asset. Verizon, T-Mobile, and other mobile phone carriers were willing to pay to put cell phone towers on urban roofs. Boards and landlords began negotiating leases, and their rooftops turned into money machines. 

“Everybody wanted to get on those tall buildings I represent,” says attorney Tara Snow, a partner at Novitt, Sahr & Snow. “But that happens less frequently now. Now my clients get mailings about renegotiating the terms of their rooftop leases.” 

Welcome to the changing world of cell phone technology. The so-called macro-cell towers, located both in rural areas and on urban roofs, are being supplemented by a rising technology in urban and suburban areas called small-cell nodes. Roughly the size of a fuse box, they’re placed close to the ground on light poles, the sides of buildings, bus stations – just about anywhere. While macro-towers provide the coverage, small-cell nodes increase the ability to deliver better coverage, as well as increase capacity, a prime consideration as carriers try to move increasing amounts of data, including video. 

“The towers don’t need to be on high buildings anymore,” says Kevin Donohue of the consulting firm Tower Genius. “Because they work in conjunction with these small-cell nodes, carriers can put these big macro-cell towers on a four-story building.”

But macro-cell towers have not gone the way of the Tin Lizzie just yet. They will remain the only option at so-called “unique sites,” such as historic districts that frown on positioning small-cell nodes at street level or on building exteriors. 

Some boards may consider selling their leases to third parties, known as tower companies or cash-flow companies – in effect cashing in now instead of receiving the revenue over the contracted number of years. If a board received $3,000 per month from a cell phone carrier, selling the lease at the customary 12 times the annual revenue would yield a $432,000 payday.

Boards with towers on the roof should begin investigating if it’s more profitable to keep their monthly revenue stream or negotiate a buyout. If a mobile carrier offers a new lease, boards should negotiate the terms.

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GLOSSARY
[steward]

[SteW-erd] noun: a person or group appointed to care for an institution or an object, such as an architecturally significant building. Verb: to manage; to act as a steward. this issue has two stories about co-op boards that act as stewards of their venerable buildings. (see “Taking Charge” page 8, and “My turn,” page 10).