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Why Banks Dislike Lending on Cell Tower Sites
You own a commercial property and your cell site tenant AT&T has been paying rent like clockwork for five years. An investment opportunity arises, and you decide to raise the capital by doing a cash-out refinance. After a meeting with your bank, you learn that they will not include the cell tower site income in the equation. This is frustrating; AT&T is a solid tenant, more so than some of your brick-and-mortar ones, so why isn’t your cell tower lease income leveragable? Banks have the mindset that this cash flow is risky because they notice that there is a 60-day “at-will” termination clause in your cell site lease. This means that on a 60-day notice, AT&T can vacate the site and terminate the cell tower lease with no penalty. A brief search on the Internet for news of consolidation will further your bank’s apprehension. What if there is a Cingular site in the vicinity of your cell tower? And, if there is one, will you be even more at risk of losing your AT&T lease due to redundancy? These are fair questions to ask. But without a deep understanding of the cellular industry, banks in general will either severely discount your cell site lease income, or not consider it at all when structuring a loan. The cure for this one-sided lending practice is to find capital providers such as Wireless Capital Partners who use only the cell site lease as collateral and do not require personal guarantees. So don’t be handcuffed by a local bank that doesn’t understand the industry – let us help you maximize your wealth opportunities.
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May, 2012
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