SiteBid’s Market Analytics provides current, real-time insight into the infrastructure market to assist property owners and utility tenants in determining potential lease rates and easement valuations.
Valuations and Historical Prices for Wireless Leases and Towers.
SiteBid’s analysts track the offers for wireless leases and tower purchases made by aggregation firms to property owners allowing us to predict the overall trend of value for the leases in the industry. Based on a review of lease data, we compile the following information and trends:
Market Outlook for 2023 for Wireless Leases and Cell Towers:
What does the future look like for the value of wireless leases and tower assets? Here are some of our thoughts:
- In the short-term, prices are likely to have stabilized at the current level. While few alternative investments are available that have the security of tier one, investment grade, parties like the remaining carriers (AT&T, Verizon, T-Mobile and Dish), we believe current multiples / cap rates have peaked.
- In the long term, prices for the assets will come down for the following reasons:
- Inflation and the increase in the cost of borrowing will result in decreases in prices to sellers.
- Commercial real estate businesses and values will be negatively affected. Properties reliant on rent from retail, office and apartment buildings will likely see significant reductions in their cash flow. This will result in defaults and reduced debt-service-coverage ratios that may mean banks that hold mortgages on commercial properties that have cellular revenue will be less likely to consent to the sale of those assets.
- The number of buyers may eventually be reduced as firms that are not capable of competing exit the business or fail. Less competition will mean lower prices.
Landlords and tower owners should consider monetizing these assets while the market continues to be hot. Further, if a property owner is also looking to sell the underlying property / business / building that wireless infrastructure is on, they should sell the wireless leases/tower first and THEN look to divest the actual property. The cap rates on wireless leases are typically much lower than they are on the underlying property and combining the assets will lower the overall appraised value for the property.
Other Valuation Considerations:
Buyer Focus is on Possible Upside via expansion of the size of the easement being purchased and shorter remaining terms on the leases:
The most significant differentiation in pricing for both rooftop and tower ground leases can be seen in offers structured with upside potential for the buyer. The highest prices in the market today for lease/easements are available to sellers if;
- Their lease and all renewals expire inside of 10 years, providing an opportunity for the buyer to increase rents.,
- Their escalations are at 3% per year or 15% every 5 years or higher,
- They are willing to accept a general or expanded easement purchase structure. The highest offer prices for tower ground leases and rooftop leases are coming with general and/or expanded easement areas that hope to capture either new tenant or expansion needs by existing tenants down the road. Offers to share with the seller in this potential future upside tend to only be structured for new tenants and range from 50/50 to 70/30 in the sellers favor.
Disclaimer: Information provided is based on public available resources, experience in the industry, as well as frequent conversations with industry professionals. It is opinion and thus should not be relied on for financial purposes.
Request a Free Market Valuation
After you complete your request, our valuation team will analyze your site to determine
- The estimated market rent for your tower or antenna location
- The equity valuation of your wireless site when converting your lease to a telecom easement
- The estimated value of selling your real estate with a telecom lease
Your assigned Site Advisor will receive the valuation and provide guidance on how to obtain the highest price possible for your telecom site based on feedback from our nationwide tower investor network.
The valuation of a telecommunications site depends on the rent being received under the existing lease, the wireless carriers on the property, the terms of the lease, the cell tower or rooftop antenna location, the duration of the period for which a tower investor has the right to collect cell site rent on the property, and a number of other variables that make up our risk assessment.
Once your site has been listed and your lease has been verified, your site will be sent out to carriers and tower investors to make a bid. If interested, you will receive a formal letter of intent (LOI) with offer terms that will be sent to you for review and signature. When you’re ready to move forward, your LOI will be electronically signed and escrow will be opened.
During escrow, your Site Advisor will work with you to obtain any documents needed to complete the transfer. This may include proof of rent, carrier or lender information, etc.
Once the transfer documents are complete, funds will be wired to escrow and the documents will be recorded. After escrow has closed, funds will typically be wired to your account within 24-48 hours.
If there is no mortgage on the property, an easement conversion can typically be completed within 14 days after all due diligence items are received.
If there is a mortgage on the property, lease restrictions or a fee simple real estate transaction, the escrow process will likely be between 30-90 days.