All Forum Posts by: William Jenkins

I have a very good friend of mine that strictly deals with SBA lending and I am fairly certain that the building has to be an asset of the business to qualify for the SBA program. There are also restrictions in terms of how much of the building you must occupy.  In general the occupancy requirement is designed to keep SBA loans more in the small business lending domain, and not in the real estate investor domain.  

My friend lends nationwide and could certainly give you more information on the program if you would like.  Feel free to PM me if you would like his contact information.    

I would just like to echo what Nick stated coming from years of experience in the industry.  If they contact you, then its a go, but otherwise you will be wasting your time. 

I saw your thread and thought I would offer a little insight into your situation.  For the past 10 years I have developed towers for all of the major carriers on a national level, although predominantly in the Midwest.   

Unfortunately there is a very slim, and I mean slim, chance that you are going to be able to approach a carrier (AT&T, Sprint, T-Mobile, Verizon, Etc.) or a tower company (ATC, Crown, Etc.), detail your property location, and get them interested in leasing the property for a tower.  Unfortunately that is not how they work.  

Before a tower is ever built, a need for coverage has to exist. Even if service is horrible in your particular location, that doesn't always translate into a "need." Carriers, like any other business consider the ROI, current CapEx budget, etc. Assuming that a carrier does need a site in your area they will (1) analyze their coverage need and select a very specific tower location and (2) deploy a real estate team to secure the ground and construct the tower at that specific location. If you do not have a very specific type of property (coverage need exists, meets coverage objectives, able to be zoned/permitted, and you are a willing landlord) you will not be considered.

I certainly don't want to discourage you, but also wanted to give you an idea of what you are up against.        

The lease terms vary widely depending on the carrier/tower owner and when the lease was executed.  The leases have become vastly more complicated in recent history as well. 

Every lease (I am sure there are some very rare exceptions) is written as a long term agreement (usually 25 years or longer), and they are structured with 5 year terms, and 5 year options.  Many times the lease is able to be terminated by the carrier/tower owner for any reason at any time.  That holds true mid lease term as well.   

That part of the business has evolved over the years as well.  In the beginning there were a few third party companies that were going around trying to acquire the rights to ground leases.  The business model of these companies was to make a low offer to purchase a ground lease, and their main target was a landlord that needed money immediately.  The offers that they were making at the time were not very good for the landlord financially, but some people agreed either (1) out of ignorance or (2) out of necessity.

This segment of the business has changed in the last 10 years, and now there is a lot of institutional money chasing these deals which has driven offers up substantially. You now have 2 types of companies chasing these deals, the tower owners themselves as well as the third party companies. Institutional investors now view these as NNN investments with additional perks. I would say for the most part, that todays investors are more geared towards chasing yield, although speculation does play a part in their business model. The biggest players in the market now are the actual tower owners themselves. Most have acquired REIT status and have substantial cash flow that they need to deploy somewhere in their business. Buying out their ground leases is just another way for them to "reinvest" their capital into their business.

I am currently representing a property owner that is selling his ground lease.  There are so many players to work with, and ways to structure a deal so that it works for both parties.  If you have a ground lease and you are looking to sell it, I would highly advise that you get help negotiating the deal.  There are a lot of hidden opportunities and pitfalls to look out for.            

There are a couple of dynamics that are currently going on in the market that I can speak to:

When I first entered the business in 2005 there were many more wireless carriers than there are now.  Since 2005 the industry has consolidated to the "big 4," being Sprint, Verizon, AT&T, and T-Mobile.  The empty towers you are referring to are likely remnants left from the AT&T/Cingular buyout, Sprint/Nextel buyout, or a number of other smaller deals that have taken place over the years.  When these companies merged, they would sometimes decommission their equipment on a redundant tower. 

So the big question is what does the future hold...........

In general the wireless business has moved from voice (selling mins) to data (selling GB).  In the beginning days of wireless the carriers needed tall towers spread across a geographical area so they could offer "coverage."  Their main goal was to cover as many people as possible with a site.  For this, think tall tower with large coverage area.  In todays world the carriers are generally working on what we call "capacity."  When I say capacity, think bandwidth and ability for many users in a concentrated area to utilize the services of a tower.  In order to offer capacity, the carriers are now needing an increased number of sites, generally lower in height, in areas that are very close to where the users are (downtown areas, shopping malls, busy intersections, etc.).  These are all areas where "coverage" may already exist, but additional "capacity" is needed because of the number of people in that area. 

In terms of opportunity from a ground or building owner standpoint, there will certainly be opportunities available to lease ground or rooftop space to these carriers in the future.  Future opportunities will be more skewed towards large metropolitan condensed populations, although there will still be some opportunity for those in more rural areas where coverage is needed.          

I develop wireless towers for the major carriers in the Midwest, and recently joined the bigger pockets community.  I have been in the business now for about 10 years and I though I would share a little of what I know about the business for those of you with existing or potential future wireless tower/rooftop leases. 

There are obvious limitations regarding what and how much detail I can provide in response to your question(s), but let me know what you have for me.  I look forward to seeing the questions.         

There is no "catch," but you do get what you pay for. I invest in St. Louis, MO and purchase in what I would consider to be B & C neighborhoods. I consider a C neighborhood to be one where it is (a) relatively safe and (b) most tenants, although not all, are government subsidized. I have a very high ROI, but those returns do not come as easy as it would in some better neighborhoods. I look for 20-25% cash on cash unlevered returns, which includes vacancy, taxes, insurance, etc.

I would not suggest investing in these "higher yielding" areas unless you are personally familiar with the area and the specific house for which you are investing. These are not NNN properties and they should not be treated or sold "turnkey" as such.

There is certainly money to be made in this segment, but you have to treat it like a business and not like a financial product with a predictable rate of return and fixed value.                 

I hear a lot of discussion on all cash purchases and how properties are not nearly as levered as they were during the crash.  I think one is naïve if they think that the money that has come into the market is simply a surplus of cash that has just been sitting around in peoples accounts for the last decade.    

I see many people (mom and pop investors) purchase all cash and then pull their cash out with a refinance. Many times the "all cash purchase" is money that is coming in the from a HELOC on another property. Cash purchase.... yes. Cash hold with 100% equity...no.

Next question you may ask is, "what about all of the hedge fund cash.  I know they are paying all cash and not refinancing the properties."  Wrong.  You would be correct that they do not finance them in a traditional way (mortgage), but make no mistake, there is debt on their books, it is just at the corporate level. God knows how levered these funds holdings are but I am 100% certain that they are not composed of 100% equity. 

I think as a whole the market is set for a downward trend but everything is going to be regional/local.  I would not be investing on the east or west coast at all.  Prices on the coasts do not track any rational family income to purchase price model.  I know it has been like that for years, but things always seem to work until they don't, and I wouldn't want to be there when it doesn't.  I think the Midwest as a whole will trend slightly downward.  The hedge fund moratorium on purchases has slowed the market, and other investors have become more selective.   

I have probably dealt with over 200 jurisdictions over the years on various zoning matters although I have never worked in that particular county.   

I would highly suggest that you confirm the zoning with the County before you close on the property.  There is probably a very low chance that there will be any issues, but why would you take the chance?  This is such a small property in such a large County that I doubt you would be "drawing any unnecessary attention." unless something was truly off.