Real estate investors buying foreclosures are increasingly finding apartment buildings with existing cellular antenna leases. Cell tower leases can be a foreclosure buyer’s best friend. However, buying foreclosed properties with a cell site lease isn’t easy, but the deals are there. Even the savvy real estate investor who buys a lot of foreclosures probably won’t be an expert in telecom leasing, and frankly, even real estate investment experts don’t know how to handle a cell tower lease when you’re buying a foreclosed building.
A cellular antenna lease will either be attached to the cell tower on virgin land or to the installation of a cellular antenna on the roof of a commercial or residential property. If the property is foreclosure and the bank is not yet the receiver, it will be difficult to get the information unless the landlord/lessor is cooperative and trusts you enough to let you look at the lease. There really is no way to identify these types of foreclosure properties. These types of offers are very hard to find, and we recommend that you don’t waste your time chasing those rainbows. Focus on the low hanging fruits: residential apartment buildings and bank-owned commercial properties.
It is much easier to search for REOs with existing cellular tenants. If the property is owned by a bank, as receiver they must disclose every existing lease on the premises before the sale, and it is in their interest to provide details of the lease or, if you are lucky, leases to several carriers.
You need to determine the value of the lease. You want to know the start date of the lease, which is the date they started paying the landlord after cell site approval. You want to know how much rent they pay monthly, what annual increases the previous landlord agreed to, and how many years are left at the end of the lease. The particular cell carrier will also determine the value of the cell tower lease on Wall Street.
How can real estate investors find foreclosed properties that have mobile carriers as tenants?
This is where you need to be creative. Good foreclosure investors have their bird dogs sending them offers. Chances are they never thought to search for foreclosures with cellular antenna site leases. Your best bet is to network with your bank’s foreclosure specialist or REO manager.
All the major banks have buildings on their books with cell site leases that they don’t market to investors. They’re just too busy to build a database of foreclosed properties with tenants from existing wireless carriers.
Successful real estate investors who want to find these deals should leverage their existing relationships with banks that do business in the territory in which they operate to identify potential deals that have existing cellular leases and where the bank is acting as than sequestration. Ask your banker to scan their database of foreclosure/REO properties for terms such as Verizon Wireless, T-Mobile, Omnipoint, Cellco, Sprint, Nextel, Alltel, Cingular, AT&T, Metro PCS, Crown, Towerco, SBA or American Tower. If you find a foreclosed property or building with a cell tower lease attached, you can sweeten the deal considerably for yourself because you can take money out of the cell lease – often six-figure amounts – and l assign to the mortgage or the purchase of another building.
It’s also a very good idea to have a cell tower leasing expert review the terms of your lease, which disqualifies 99% of real estate lawyers.