Valuing Sublease Agreements on Mobile Towers / HOME

Valuing Sublease Agreements on Mobile Towers

A sublease is when a tenant leases out the whole or part of the property rented by him a to a third person. In the case of a mobile tower lease or a rooftop mobile site lease, the sublease is a lease between the mobile or wireless carrier (tenant) and another wireless carrier or vendor, (sub lessee). Many mobile tower leases between the landowner and a tower company allow the tower company to sublease the tower to third parties, with notification and probably consent conditions.

A mobile tower lease agreement may allow for subleasing or it may not. In many cases, the landlord is not entitled to revenue for consenting or allowing a sublease, and typically cannot withhold their consent to the subletting as a result. A tower owner or carrier may not voluntarily inform you whether you are due compensation for a sublease. We have seen cases where a company sent a letter of consent to the landlord without indicating to the landowner that they are under no obligation to sign the letter of consent. If the landlord signs the letter of consent, they may be giving up rights to revenue that would otherwise be due to them due to the sublease. If the site owner fails to object, they may waive their rights to object to the sublease.

Some leases simply require that the mobile tower owner simply "notify" the landowner that they are going to sublease the tower. Alternatively, the mobile tower company may sublease the tower and a portion of their leased land without coming to the landowner for consent.

If you have questions about whether you are obligated to consent to a sublease, review your lease agreement and look for the Assignment and Subletting clause. (It may be called something else).

If the mobile tower company or carrier is required to gain your consent prior to subleasing or the lease area is not of sufficient size to provide space for equipment, it is common for the landlord to get additional compensation. This compensation can be for allowing the sublease or can be for the expansion of the lease area. The amount of compensation ranges widely. There is no standard answer because every site is different and subleases vary. Certain tenants may not be worth much, others quite a bit more on an annual basis of rent and every sublease is different.

To further complicate matters, there are many different ways to compensate a landowner for consenting to a mobile tower sublease. These can range from a one time "bonus" payment to a ongoing annual rental payment. There are other options that we believe are better for the property owner that we are happy to point out as part of our analyses and report.

SiteXcell has assisted numerous landowners with sublease issues. Over the last five years, SiteXcell has accumulated several hundred sites of mobile tower lease data. We have assembled this information in a database that includes the location of the lease and whether there is compensation for subleasing. Furthermore, we have been involved in the development, ownership, and management of mobile towers and understand the tower industry revenue model comprehensively.

Some free advice: Don't feel obligated to extend your lease agreement just to receive sublease revenue. Furthermore, don't assume that just because a mobile tower owner tells you that you need to consent to a sublease agreement that you are required to. Check with your solicitor and if you find that you may ask for compensation, please contact us to help you ascertain what your mobile tower sublease rights are worth.