blackdot Archives » Dr. Jonathan L. Kramer on Wireless Siting & Law

As you may have heard, Sprint Nextel is shuttering a substantial number of its legacy Nextel iDEN tower sites. These sites are no longer necessary in light of Sprint decommissioning of the Nextel iDEN service and combining technologies through its grand Network Vision Project (for more on Network Vision, click here).

For impacted Nextel tower site landlords, lease terminations translate to the loss of anticipated lease income. This is why I tell my landlord-clients that they should always view most wireless leases as being enforceable for only months on the tenant side, but for decades on the landlord side.

Getting back to Nextel’s current round of terminations, to add insult to injury Nextel has employed third-party vendors to call and ‘convince’ landlords why, on the way out, they should execute a novel “Lease Termination Agreement and General Release” document. I first heard about this from my peer, friend and trusted colleague, Mike Ritter, Esq. of TowerSeekers, a firm specializing in serving wireless landlords in the religious and non-profit segment.

So it seems that Nextel, when terminating a lease, would prefer to save lots of money by not removing most of the equipment, wiring, conduits, cables, and other things it installs. Removal of these items is typically required by most wireless leases, as is returning the leasehold to the landlord in the same basic condition that existing just prior to the lease. Nextel’s preference now seems to be to abandon the equipment in place and transfer title of the abandoned equipment, with no warranties whatsoever, to the site landlord. With the abandonment goes all of the legal liabilities, as well, which may include liabilities imposed by the local governments on Nextel, but transferred by this agreement to the landlord.

‘Just sign right here on the dotted line and YOU get to take on all of OUR discarded stuff and legal risks, and you save us a boat-load of money, too!‘ is just one way to think about this proposed deal. Such a deal!

What’s even better is that BlackDot suggests in writing–but does not guaranteey–that they can find a replacement carrier quickly because these decommissioned sites will be “plug and play” solutions for other carriers…IF…the landlord will give up a 25% commission for the life of the revenue stream BlackDot can negotiate. Such a better deal!

‘Plug and play?’ Huh? I’m a radio frequency engineer as well as an attorney. I don’t think much of the pitch is remotely believable. By the way, if you’re interested in this deal, give me a call: I have a famous New York bridge for sale that’s priced for quick sale.

Take a look at a redacted copy of the Agreement document, here’s one. If you’re half-a-lawyer, you’ll see why this deal is no deal at all.

If you are a Nextel landlord and you’ve received a notice of termination (as have some of my clients), go back and pull out your lease documents, including amendments. Look at the termination terms and restoration terms. (They may be in several places in the lease.)

Even if you don’t get the follow-up sales pitch call to do the exit agreement, do talk with your attorney. If you don’t have one, I happen to know of some good ones! Just call me on 310-405-7333, or give Mike a call on (760) 917-1123.

Jonathan

Increasingly, wireless telecommunications landlords are being approached by firms representing their wireless carrier tenants for the purpose of securing a reduction in the rent and/or rent escalator the carrier pays to the landlord. Sometimes the demand is for a ‘rent vacation’ for up to several years.

Generally, the process described above is called, “Lease Optimization.”

Two well-known firms that perform Lease Optimization on behalf of the wireless carriers are Blackdot Wireless, and MD7.

In fact, Blackdot states on its website that it “pioneered the first expense reduction” program, also known as lease optimization. Lease optimization may seem innocent enough. After all, Blackdot is “substantially reducing carrier and tower company operating cost, while securing billions of dollars in rent guarantees for landlords.”

Securing billions of dollars in rent guarantees for landlords?

Lease optimization though results in substantially under market rents for unsuspecting landlords.

The approach is generally the same, as a landlord, you may be told that the wireless carrier is reducing the number of sites it operates and it has been determined that your site is one of those sites the carrier can live without.

That is, unless the landlord is willing to substantially reduce the monthly rent, and skip rent increases for some number of years, or even waive rent payments altogether for a period of years.

What’s in it for the landlord? Not much in reality. The usual ‘carrot’ is that if the landlord complies with the tenant’s demands, he or she will receive a ‘rent guarantee’ that will run for a few years. This is interesting, since the lease is the best indication of the rent that the landlord is supposed to receive.

I can see that a landlord is generally unwilling to lose all the rental income from the site and buys into the lease optimization story – at least there’s still some income, right?!?

If you are approached by a company interested in ‘optimizing’ your lease (and you), be suspect. Discuss the proposed terms with an attorney who is knowledgeable in the area to determine what the best step is forward for your situation. If you need a referral to a knowledgeable attorney to advise you, why not contact us.

In the end, don’t be afraid to trust your instinct: It’s usually the case that if a proposal doesn’t feel right to you, then it’s not right for you.

Tag: blackdot

Nextel kick’n ‘um on the way out…

Lease Optimization – that old familiar story