To Wireless Industry and Real Estate Professionals
Over the last decade, purchasing the rent landlords to the wireless carriers receive for a lump sum of cash has become a huge business. This ‘monetization’ offer in effect gives a property owner that has either a cell tower or rooftop installation on their property an opportunity to take the ‘cash option’ of their own ‘lotto’. It can provide the property owner with needed cash to expand, remodel or do anything they choose with.
As CEO of Tower Capital Advisors, and the former CEO and founder of one of the largest buyout firms in this industry, I have been in the business of monetizing these ground and rooftop leases under wireless infrastructure since 2001. During that time, I have raised and/or advised on the deployment of more than $700 million in capital for such wireless lease ‘buyouts’.
Since 2001, the cash prices paid to property owners by the numerous aggregation firms in the business have gone from an average of 5-8 x the current annual rent at the time of purchase to 13-14 x that same annual rent. The average assignment term of the rents acquired by the buyer have gone from 15 years to more than 50.
The buyout firms that acquire these leases have enjoyed record profits by pooling, packaging and re-selling these leases to either the tower companies or to Wall Street. The value of lease pools in the secondary markets have gone from as low as 10 x the annual rent to multiples that are tracking towards an exit that looks more like the public tower company stock multiples (18-19x+). Recently, however, the profit margins of the aggregation firms that ‘flip’ the assets have been squeezed as they have been forced to pay more to the property owners while supporting large, in-house call centers and sales staff.
Why then, after a dozen years in the space and after a profitable exit of our last portfolio in 2013 have we decided to re-enter the buyout business at such a competitive time? Because we are doing so with a uniquely different approach. That approach is made possible by a combination of TCA having been funded to acquire leases by an institutional investor that holds the assets rather than flipping them and our use of a network of otherwise employed wireless industry and real estate professionals to make the offers to property owners for us. This keeps our overhead lower than the other aggregation firms and does not require us to build in large spreads in anticipation of a portfolio sale.
Our business model for lease purchases revolves around three core principles and services:
- We publish data on offer prices and trends so that property owners who are considering selling can intelligently evaluate their offers for the first time in a decade. We are the only firm to do so.
- We provide free, honest advice and analytical services to site owners about selling their lease and about the offers they have received.
- We pay more than our competitors to a site owner that wants to monetize his lease and to the individual that brings the transaction to us.
We “put our money where our mouth is” by providing the first two of the above services at no charge in the hope that a site owner, when and if he/she is ready to sell his lease, gives TCA a ‘last look’ at the best offer he has received from the other aggregation firms. Then we make him a better one.
Just as importantly, we share in the value of our acquisitions with a growing network of independent originators who bring us these opportunities. We encourage and train people that are in contact with property owners as part of their daily routine and are from outside the business to discuss a purchase with wireless landlords and make an them an offer. Whether you are a telecom professional, a real-estate broker or in tower construction; we provide a profit sharing arrangement for you where the compensation is aligned with our interest as buyer. It is a model that can pay quite well either as a full or part-time activity.
What we buy: TCA will offer to purchase for a lump sum of cash tower ground lease or rooftop installation leases with AT&T, Verizon, T-Mobile and Sprint as tenants as well as the ground leases of the public tower companies (e.g. Crown Castle, SBA and American Tower).
Our prices for the leases equate to real estate cap rate equivalents that range from 6 to 8%, despite the unique, cancelable nature of the leases by the tenants with little to no notice. Our origination partners enjoy uncapped compensation / fee structures that range from 6% to 15+% of the purchase price paid.
For originators or firms that demonstrate the ability to grow a buyout business and consistently deliver signed options to us, or to develop a team, the compensation is adjusted upwards accordingly.
If you are interesting in learning more about bringing opportunities to purchase leases to TCA and are not otherwise contractually prohibited from doing so, please contact me personally at email@example.com.
I look forward to hearing from you.
Michael A. DeMita
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