ATC's lease buyout figure seems awfully high

Discussion in 'Wireless Estimator Site Discussions' started by Janfree, Sep 14, 2011.

  1. Janfree

    Janfree Industry Observer

    Thanks for the detailed article about the ATC / Unison agreement. However, I found your statement, "ATC paid $277,000 per site for the lease interests. At a 10X multiple of annual rent, the average monthly rent would have been $2,300," to be somewhat confusing.

    The $2,300 per month is what could be expected in a high demand urban environment and I'm sure that all of the Unison sites didn't meet that criteria.

    You said that was also based upon a 10x cash price. I can assure you that Unison or any of the other buyout firms are not coming close to those multiples. It's probably more towards 8X and the average monthly rent would be closer to $1,500.

    So the average buyout price for a ground lease would be more in line with $145,000 - or that's what Unison might have paid.

    The $277,000 per site shows approximately a 90% premium paid by ATC. Am I wrong?

    If there isn't an underlying agreement that the companies are not publicizing, it would make sense in the future if you were a landowner to go directly to ATC if you're thinking of cashing in.
  2. Proximity

    Proximity Friend of the Community

    It does appear to be a big price to pay, but it all depends upon the length of the lease and the number of tenants and other factors.

    Littlestown PA is looking at an offer from American to buy their lease for $200k. It has 23 years left on it. They are offering a multiple a little over 9. They're currently getting $1,800 a month.

    It would be doubtful that Unison or others would offer 10x. They are not going in to bidding wars. They are only going to do what makes financial sense to securitize their leases.

  3. Ken Schmidt

    Ken Schmidt Friend of the Community

    First off, consider that some of the sites are AMT towers. AMT will pay more for their tower ground leases than Unison paid. So the blended multiple will be higher.

    Secondly, the actual multiple paid for these leases is certainly higher than 10X. The rumors I have heard place it significantly higher than 10X. So the per site (notice they say per site- not per lease) amount is less than $2,300/mo.

    Third, what Unison pays on the street for leases and what they would have sold them for are two different things. They still have to recoup operating expenses and due diglience expenses on purchasing the leases.

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