December 2012 » Dr. Jonathan L. Kramer on Wireless Siting & Law

(Updated 4:41 p.m.; added AGL Magazine story link.)

Well, it’s almost over. Clearwire, that is.

Clearwire will sink from site, er, from sight as SoftSprint (or someone else depending on the investor law suits will will claim insufficient value to be paid by Sprint) ponies up the relatively small bucks to buy the rest of Clearwire that Sprint doesn’t already own.

So Clearwire’s WiMax is dead. Clearwire’s shift to LTE is dead. Clearwire’s microwave sites will soon be dead.

Clearwire is all but dead. The corpse is worth more dead, mainly if not entirely because of the FCC’s spectrum licenses it presently owns…and soon will transfer. My gut says that the existing sites are mostly useless expect for some possibility of site-to-MTSO backhaul.

I bet Google’s sorry it jumped ship in February of 2012, receiving only $1.60 for each of its 29 million shares (something greater than a 90% loss on its original investment). With the current buyout at $2.97 per share, that’s nearly $40m that Google would have relieved had it not jumped early. Still quite a loss over what they paid for the shares originally, but $40m is still a lot of money for Google…like a couple of hours of revenue. Okay, maybe Google won’t care so much.

Expect that if you are negotiating with Clearwire now, those negotiations will freeze. The REALLY cold freeze.

A lot of Clearwire site landlords should expect the ‘really bad news’ letter in about 6 months or so. If Sprint wins control of all of Clearwire, and it’s true to form, then they’ll offer landlords sucker deals to take on the liability for the non-removal of portions of Clearwire’s equipment. (See my posting on this subject HERE.)

AGL Magazine has good story coverage with quotes, which you can read by CLICKING HERE.

Another one bites the dust.

jlk

In an interesting twist on a wireless site lease buyout, Global Signal (a unit of Crown Castle) has not only bought out an existing cell site lease in Fort Myers, Florida…it bought the entire underlying property and the existing commercial office building as well.

Crown Castle paid $1,000,000 for a property recently assessed to be worth about $620,000. The property was originally listed for $1,200,000.

Here’s what the seller’s listing agent, Kevin Fitzgerald of NAI Southwest Florida said about the deal, “I think [Crown Castle] liked the property location, and they have an interest in the cell tower in the back of it,” he says. “To the best of our knowledge they are going to try to lease [the building] out.”

Was Crown Castle crazy?

Yeah. Crazy like a fox.

The site is located to serve the Midpoint Bridge as well as Page Field, the local airport. It is certainly in a great location for commuter and fixed high capacity/volume wireless traffic. There appear to be six levels of antennas on this legacy monopole, which is no doubt subject to the relaxed Sec. 6409(a) collocation rules.

The current cell site income was reported as being about $5,500 per month. Using the usual valuation benchmarks, this would have meant that a likely offer on just the lease and easement would be in the range of $792,000 to $990,000, with the higher number being more likely closer the a deal point. The lease buyout value might even be higher if the underlying lease is within 10 years of its natural expiration.

When you look at the rent that Crown Castle was paying, nearly $5,500 per month (presumably tied to the collocations at the site, and also likely to be effectively increasing 2 to 5% per year), as well as the residual value Crown Castle can recognize by flipping the property minus the cell site ($620,000ish minus some value for the internal portion of the building that will continue to be used by one or more of the collocators) plus the short or long term tax loss from the purchase price, the deal seems to make a lot of sense from Crown Castle’s standpoint. A lot of sense, actually. It’s like Crown Castle got the property thrown in nearly for free on top of the wireless lease buyout.

Yes, a sweet deal for Crown Castle.

Likely not so sweet a deal for Peninsula Associates LLP, the seller, which probably also paid a 7% real estate sales commission to NAI while apparently leaving a whole boatload of money on the table on the way out the door.

Reported information regarding the sale (believed to be accurate but not guaranteed):

BUYER: Global Signal Acquisitions IV LLC, Canonsburg, Pa.

SELLER: Peninsula Associates LLP

PROPERTY: 1421 Colonial Blvd Fort Myers, FL 33907 (building constructed in 1965); Alternate address: 1421 Cr 884 W, Fort Myers, FL 33907

LISTED: August, 2012; Contract in October, 2012.

CURRENT SALES PRICE: $1 million (7855 square feet/$127 per square foot; Lot size: 0.83 acres; about 850 square feet inside building used by cell tower tenants.

PREVIOUS SALES RICE: $420,000, December 1988

ASSESSED MARKET VALUE (2011): $620,302 ($404,302 for building; 216,000 for land)

READ NAI’S LISTING FLYER: Click Here.

View Larger Map (and zoom+ satellite view to see the entire tower)

Month: December 2012

Clearwire to sink from sight/site

Forget the Cell Site Lease Buyout – Buy The Whole Property