From CEO’s Desk

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Letter from Tower Capital Advisors CEO Michael A. DeMita

 

michael-demitaAs founder and former-CEO of one of the first and largest buyers of cell-site leases in the U.S., I have for the last thirteen years monetized (bought for a lump sum) the rents received by property owners (commonly referred to as Landlords, Ground Owners or Site Owners) that have cell towers on their property or cellular installations on their rooftops.  If you have one of these sites or a portfolio of them, you have undoubtedly heard from some or all of the firms that are in this business.  Some of the firms are well capitalized and some are not.  There is little to no public information on these firms, so it is not easy to tell the difference.  Each of these businesses use a variety of nearly identical tactics to raise capital and communicate with Site Owners. They each have sales forces based on salary or commissions or both, they each have call centers, and they each mail site owners regularly.

The common objective among all of these firms is to offer as little for the assets they purchase as possible.  We at TCA know this, because we helped start the industry and have bought more than 1000 sites for hundreds of millions of dollars since 2001.  When the firm I founded in 2007 sold our last portfolio in 2013, we sold the business as well – which continues aggregating leases with the same, low price objective.

Unlike other financial decisions a business person makes, the decision to sell a wireless lease revenue stream has in the past been made in an informational vacuum.  There has been no ‘BankRate.com’ where a Seller can go to find out what discount rates are used to value his lease and calculate a lump sum amount.  There is no ‘Zillow.com’ where a Seller can see what assets in his/her local area, or anywhere for that matter, are bought and sold for.  Our new venture (formed in April, 2013), Tower Capital Advisors, has changed that.

While TCA does charge institutional investors for buy/sell advisory services relative to portfolio purchases or raising capital, we provide pro bono advisory services to site owners, small businesses and municipalities about the value of their wireless infrastructure leases and the offers that are made for them by the aggregation firms.

TCA uses the data about other offers and our offers to publish regularly updated statistics on average offer prices by carrier tenant to site owners so that they know how the market for their lease may be changing.  No other firm does this to our knowledge.  I doubt many of the aggregation firms like it either.

We provide the above services to site owners, municipalities and small businesses for free for two reasons:

We hope that you will give us a look at buying your lease if and when you decide to sell it. 

And… 

Providing honest advice today about whether to sell, how much to expect and how to fairly structure a sale often results in future opportunities for us to work together.

While most if not all of the other aggregation firms in the space buy, pool and flip these leases into securities or portfolio sales, TCA’s investment partner holds the leases for the long term, and TCA doesn’t charge the Seller anything.  The leases are worth more to us than they are to any individual property owner because, via the law of large numbers, we build a diversified portfolio of the assets across geographic, technological and tenant boundaries.  That is why we are comfortable that, in 90+% of all cases, we can offer more money than any of the other firms in the space.

The objective of changing the wireless lease buyout business by de-layering the industry and bringing sellers of the individual assets closer to the institutional investors that want to hold, not flip, them will take place in slow measured steps.  We are dedicated to making it happen and hope sellers will take advantage of it.

Please do feel free to give me a call personally if you would like any of my advice or if I can share my experience or understanding of the business with you.

Sincerely,

Michael DeMita

9/4/2014

 

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