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Avoiding ROFR in New Leases or Amendments
ROFR (Right of First Refusal) negotiations can be frustrating for property owners seeking a lump sum payment. Typically, the tower company has 30-45 days to match an offer, often taking their time in deciding. To maximize your lump sum payout, it is advisable to avoid including a ROFR in new leases or amendments. Including a ROFR can decrease your payout by at least twice the annual rent and revenue share. For property owners looking to secure the best financial outcome, steering clear of ROFR clauses in new agreements is essential.
Strategic Considerations for ROFR in Renegotiations
Only consider including a ROFR in a renegotiation if it's a great deal that significantly benefits you. A ROFR can complicate and delay the process of selling your lease, reducing your immediate payout and potential future earnings. If you plan to sell the lease, avoiding a ROFR can save hassle and avoid complications in property sales. By being strategic about when to agree to a ROFR, you can ensure that your interests are protected and your financial returns are optimized.
Expert Assistance with ROFR Matters
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Navigating ROFR negotiations requires careful consideration and expertise. All language related to ROFR should be reviewed by a telecom attorney to ensure your rights and interests are fully protected. JP Tower Consulting can assist with ROFR-related matters, providing expert guidance to help you make informed decisions. By leveraging professional advice, you can effectively manage ROFR negotiations and secure favorable outcomes for your property agreements.
ROFR Negotiations FAQs
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What is my cell tower lease worth?The value of your lease depends on several factors. If it has over 15 years left and escalates at 3% annually, its market value is roughly 19 times the annual rent. However, lower escalations or a Right of First Refusal (ROFR) can decrease its value. For leases within 15 years of expiration, tenant composition and lease duration are critical. Closer expiration dates increase value, especially with multiple carriers. Sites with less than 5 years left are valued based on a multiple of what the perceived negotiated rent would be at final lease expiration. While a site under 2 years from expiration is based more on a multiple of tower cash flow.
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How long will the process take to sell my tower lease?The timeline for closing depends on any title defects and how quickly attorney redlines are resolved. It's crucial to clear any lines, judgments, or back taxes before starting the process to sell your lease to avoid complications. If there's a mortgage, discuss an SNDA with the lender as it's often required for closing, especially if the loan amount matches or exceeds the purchase price. Properties without a ROFR are simpler to transact. Typically, closing takes 3-6 months, but unforeseen issues might extend it beyond a year, especially with ongoing negotiations between attorneys.
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When is the best time to sell my tower lease?Consider selling your lease if it has less than 10 years remaining, as it's often valued differently by tower and third-party buyout companies. Another opportune moment is just before or after an escalation hit if your lease is long-term. Ensure you have a plan for the proceeds before selling.
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Should I have an attorney review this lease buyout?Absolutely, I recommend getting legal advice. If you sell the property without proper consideration for the tower lease, it could complicate the sale or burden the buyer with unexpected costs like property taxes. That’s why you’d want to account for a reimbursement for property taxes so a future buyer wouldn’t be on the hook for taxes on a tower they receive no benefit from. Contract terms will always favor the tower company and hiring a telecom attorney for that piece of mind is crucial.
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How long is the buyout for?Lease buyouts are often structured as perpetual or 99-year easements. If you prefer shorter terms, third-party buyout companies offer options with 50- or 60-year easements.