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Trading in your rent for a one-off payday

December 21, 2021
Author: JD Stride

A lump sum offer may be attractive, but you may be significantly underselling your site. 

How direct access to players in the ‘site aggregator’ market paid off for this landowner.

Background 

Lease aggregators, such as APWireless, Landmark Dividend Corp (LDC), Lease Advisors, Everest Infrastructure and other investment companies aren’t specifically interested in telecommunications equipment per se. They are interested in the recurring revenue streams resulting from infrastructure such as mobile carrier installations (mobile phone towers and building-mounted antenna).

Site aggregators don’t simply pull a number from thin air when making an offer.  The offer is the product of a calculation using specific variables based on the aggregators’ financial parameters and risk appetite. Likewise, getting a better offer is not as simple as asking for more.  Landowners need to justify why their site is worth more. They also need to know how to feed those variables into a calculation that aggregators can understand.   

One such aggregator recently approached a repeat client of siteXcell with an offer to trade in their annual tower revenue for a lump sum.

Our approach

With our client having been contacted by an aggregator, we knew this was the perfect time to trade the lease. The result was a bidding war.

To get the best deal for our client, we:

  1. Conducted a thorough review of the site, including reviewing tenure documents, equipment on-site and other vital site attributes.
  2. Calculated the value of the site using the same methodology as the aggregators but applying variables that reflected current market conditions (and not the internal KPI’s of the aggregators).
  3. Advised the client what we believed would be an appropriate lump sum and terms in exchange for the annual rental.
  4. Went out to the market, offering all the aggregators the opportunity to bid for the site in a competitive tendering process.
  5. Negotiated with each of the aggregators until we were confident we had the very best offer for the client’s consideration.

A successful outcome

Getting more for your site is not simply a matter of asking for more.  Calculating a site’s lump sum worth can be akin to the “dark arts”.  Not only does siteXcell understand how to calculate the value of a site, but we also keep a very close eye on the aggregator market and are therefore able to factor in other less tangible variables such as the cost of capital, competition in the market, and each aggregator’s fluctuating appetite for risk.

In this case, the client was thrilled with the outcome; an offer $200,000 higher than the original proposal.

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