Wireless carriers typically build cell towers and rooftop sites on property they do not own, and therefore usually enter into a lease agreement with the property owner to allow their equipment to be placed on premises. The carrier benefits by being able to build out their network without owning the underlying land, and the property owner benefits in the form of rent as described by the cell tower lease agreement.
A cell tower lease buyout, commonly referred to as a lease prepayment, is simply a lump-sum payment given to the property owner in exchange for the right to receive the cell site rent from the carrier moving forward. It does not in any way affect the ownership of the property, nor the rights that the wireless carrier has in the lease agreement.
Much like a real-estate transaction, the specific terms of a cell tower lease buyout are captured in a contract that is recorded with the local land registry. This ensures that even if the property changes hands or if the carrier decides to decommission the cell tower at some point in the future, everyone’s rights are protected.
While location is a consideration in determining the amount of the lease buyout, there are numerous other variables and risk factors involved as well. The terms of the site lease agreement, prevailing interest rates, the carrier(s) on the property, the time value of money, and of course the rent, are just some of the many aspects considered when placing a value on a cell tower lease.