What is Lease Optimization?

All lease contracts are subject to modification and renegotiation. With a rapidly changing business landscape, leases are also being modified to reflect new demands. Your site may be seen as an overlapping facility, where two or more sites are duplicating coverage. Only one site may be necessary to provide cellular service or other services. So what does that mean to your own site lease optimization strategy?

It is important to remember that an estimated 90% of all sites are under short-term leases. Some can be terminated with only 30 days written notice.

Lease optimization is not only about the value of the lease, but every aspect that improves the quality of service. Carriers and tower companies are businesses that compete for customers, and need to constantly improve and upgrade their service in order to remain competitive. Some of the other areas of attention that encompass lease optimization are related to greater site access and consents for equipment upgrades. These help the carriers and tower companies to offer the best services possible, and by addressing these requirements during the lease optimization process can help increase the value and attractiveness of your site.

Possible lease options:

• Negotiate a New Agreement
  The lease agreement may be renegotiated to make it more financially appealing to a wireless carrier or tower company. By granting concessions, such as a reduction in rent and/or modification of the automatic annual rent increase, or operational enhancements, a landlord may make the site more financially viable. Rather than terminating an economically favorable cell site, a more expensive site would be considered. Some of the previous lease terms or conditions would change, but you would gain a much more important benefit- security.
  
• Repackage For Sale
  Leases may be repackaged with other sites and put up for sale. Another telecommunications company may buy individual or multiple sites to support their wireless services. Rent may be temporarily stopped for a specified time period, to allow time for the repackaged site to be sold to another wireless telecommunications company.
  
• Upfront Payment
  Another option may involve the assignment of the lease rights to a third party for a specific cash amount. This enables the landlord to receive an immediate single cash payment instead of monthly lease payments.
  
• Decommission the Site
  Of course; the landlord also has the option to forgo the cell site lease optimization process with the hope that the terms of the lease will remain the same. Unfortunately, this is not a realistic option. A nearby cell site may offer more attractive terms in order to remain in the network. Overlapping coverage and operating expense reviews are a fact of life.
  

Why Consider Lease Optimization?

Wireless carriers and tower companies continue to consolidate. They are becoming increasingly competitive with each other, and are looking for any way to improve their service and satisfy their customers. Offering new services, better service, lower operational costs, and lower expansion costs are all issues that are driving the cost cutting in the wireless industry. It is often a confusing landscape.

At the same time, a wireless carrier or tower company may be cutting costs in one area, then expanding facilities to offer new services in the same area. This activity may eventually affect cell sites throughout the country. Carriers may be adding new sites, adding to existing sites, and at the same time reducing overlapping cell site coverage. Telecommunication companies are constantly balancing capacity to coverage. This has a direct impact on the types of lease terms they are looking for, and other considerations such as co-locating capabilities or regulations, proximity to other sites, cost to operate, proximity to the transmission back bone and zone issues.

Every cell site leaseholder has unique financial considerations and circumstances, as well as many in common. It is important to find a lease optimization partner who is well versed in details of your particular classification.

Landlord Classification Types:

• Individual Property Owners
  Individuals, more than any other type of landlord, could possibly be affected by abrupt changes in cell site lease income. We all face economic issues, such as retirement needs, unexpected health problems, financial crisis, college tuition and escalating costs of homeownership.
  

  
  The ongoing income of a cell site lease is a welcome addition to any budget, and we tend to rely on the predictability of the payments. It is extremely important to recognize that the lease is not a permanent arrangement. Through the lease optimization process, you can proactively address the current terms of your lease, and create more security by making the lease more competitive in today's cell site market. Short-term adjustments can help reap long-term rewards.
  

  
  By restructuring a lease to provide an upfront payment, you can address immediate cash needs. Or, by making the lease terms more attractive to a wireless carrier or tower company, you can protect future income and eliminate the risk of losing it. Whatever you choose, you can turn an unpredictable situation into a more predictable one.

• Municipalities and Government Agencies
  Municipality officials are under intense pressure to balance financial needs with a challenging economy. Funding infrastructure rebuilding and improvements such as schools, roads, communications systems and water plants are an expensive fact of life. Additionally, there is an increasing demand to budget for emergency services and homeland security requirements. Municipalities find themselves in a constant scramble to finance basic needs.
  

  
  Municipalities with cell site leases must not only deal with the demands of lease renegotiations, but also with internal approval processes. For example, cities and larger towns may require full review of the proposal by a finance committee, who then submit the contract to a full city council for approval. Smaller towns and boroughs often have a person responsible, such as a controller, who submits a recommendation to a finance board for approval. Make sure that your lease optimization partner is very experienced with the municipality lease approval process. This is very beneficial to help keep the lease optimization process progressing.
  

• Commercial and Residential Property Management
  Property owners must constantly reevaluate the balance of costs associated with facility management, maintenance, repair and service. To achieve a profitable R.O.I. all sources of income must be critically examined and assessed in light of the business conditions that may affect the value of the cell site lease.
  

  
  A cell site lease not only provides a steady income, but also enhances the overall value of the property. It is critical to position your cell site lease to keep it attractive in the market, and to achieve the optimal income and value it can generate.
  

  
  A cell site lease optimization partner with extensive experience in lease optimization can assist property owners through prior knowledge of the process.
  

• Religious and Non-Profit Organizations
  Religious groups and non-profit organizations are in a continual process of balancing income and expenditures. Your organization depends on donations and contributions and are critical in the support of your financial needs. There are few opportunities to generate income from other sources, and when these opportunities are found, they should be viewed as extremely valuable assets, and must be treated with care. Cell tower leases must be strategically viewed, in light of the volatile wireless business environment. By taking action today, your organization can position your lease asset more favorably in today's wireless environment.
  
• Education Institutions
  The quality of education is directly linked to the budgetary challenges of any school or university. Schools are seldom presented with opportunities to generate a large amount of income outside of traditional fundraising and tuition. It is extremely important to strategically evaluate the options for the preservation of income generated by these valued assets. By capitalizing on the value of existing cell site lease revenue, a school district or institution maybe able to tap into the current cash value of the lease for the immediate use of financial proceeds. Or, the lease can be optimized to provide guarantees to alleviate termination risks.
  

Benefits of Lease Optimization

“Peace of Mind comes from a position of knowledge”

The world economy is changing and this affects everyone. If you take the point of view that as a landlord, you are not an outsider, but a significant part of this industry, then you can make better decisions regarding the future of your lease. Actions today can make the future more predictable and help preserve your peace of mind.

Our three-step process for generally understanding cell site lease optimization helps to position you, the prudent cell site leaseholder, for a more secure financial position.

First - Fully understand your existing lease terms. A lease is a complex legal document that sets the stage for future actions, whether you know about them or not.

Second - Think of your lease income just like any other financial asset that you own. Stocks, bonds, property. Return on these investments is never guaranteed. Just like a cell site lease. How can you position that asset to bring in the greatest return? In your own mind, establish the difference between the immediate value of the lease vs. the over-time value of the lease. You should focus on the long-term value of the lease, not the short-term "month-by-month." With a rapidly changing business environment, your lease value may not be the same as when it was first negotiated. What you are benefiting from today may not be possible tomorrow.

Finally - Be a part of the solution. Consolidations, mergers, acquisitions, cost cutting and increasing competition are occurring in every industry. If you accept the fact that these are conditions are happening, and are affecting lease values, then you stand a better chance of making the most prudent decision.

Partnering with Black Dot

“Our Expertise is our Advantage”

We have invaluable experience at knowing both sides of the issue, having been involved in over 80% of the lease optimization negotiations taken place. We know the issues that landlords seek advice and guidance on. Our partnership with carriers and tower companies give us a valuable and unique perspective, “bridging the gap” between landlords and carrier/tower companies. We know the issues and concerns of both sides, and we provide a way to equitably structure lease optimization efforts.

By understanding the issues, everyone can make better decisions. It is a simple philosophy that has guided Black Dot in all our business operations. As respected leaders in the lease optimization industry, we have pioneered effective solutions for landlords, carriers, and tower companies. Our value is to provide insightful advice and effective service to an industry that is rapidly changing.

Our value is proven on a daily basis, as we are in constant contact with major wireless telecommunications companies. Black Dot currently provides site lease optimization solutions and other services for all the leading wireless telecommunications companies. We also conduct detailed assessments of existing, newly acquired, and future sites.

Our values are also very simple. Treat everyone with honesty and integrity in searching for fair solutions.

What to Expect During the Lease Optimization Process

Our process is the result of thousands of lease optimization transactions. You can rest assured that our team of experts will provide the highest quality of service at every step. Our staff is one of the most highly trained in the business and we are dedicated to providing fair and equitable solutions for all parties involved in lease optimization.

Black Dot Lease Consultants will review your lease terms and conditions currently in place with a carrier or tower company. In addition to the lease economics, discussions may also include site access, site expansion, removal, restoration, or termination provisions.

The result of the lease optimization process is to fairly restructure the existing arrangement. This improves the operational and financial flexibility of the carrier or tower company and also gives you guarantees on the term of your lease.

First, you will receive a letter of authorization that confirms that Black Dot has been engaged to speak with you on behalf of the carrier or tower company.

Then, Black Dot Lease Consultants will contact you, and propose the available options being offered by the carrier or tower company for your consideration. We also take the time to help you understand the options, and explain, in detail, any proposed provisions that need clarification.

Once agreement is reached, Black Dot Closing Specialists will assist you through the entire lease amendment process and answer your questions. We ensure that everything needed to complete the transaction is in place before it is submitted to the carrier or tower company for their final approval.

Every site is unique and many factors are considered along with the economics. Black Dot is dedicated to making sure everyone thoroughly understands the proposed adjustments to your current lease arrangement. By helping you to understand the issues, you can be in a better position to make the right decisions.