You’ve signed a long-term lease for a cell tower or solar farm on your property, and now the checks are coming in. It’s easy to assume your work is done. But effective Lease Management is a continuous process. Ignoring the details of your lease and the market it operates in can lead to missed opportunities and costly mistakes that erode the value of your property.
Overlooking the True Market Value of Their Lease Without Proper Lease Management
Many landowners receive a monthly check and assume their lease is generating its maximum potential. This is a common and costly mistake.
- Accepting Low Rent Escalators: Lease agreements often include rent escalators, but these may not keep pace with market value or inflation. A 2% annual increase might seem fair initially, but over a 30-year term, it can lead to a substantial loss compared to what the market would bear.
- Underestimating Site Demand: The demand for a specific site from wireless carriers, fiber companies, or solar developers can fluctuate dramatically. A landowner with a cell tower on their property might not realize that a carrier merger or network expansion has made their site significantly more valuable. Without proper Lease Management, this opportunity is missed.
- Failing to Renegotiate at the Right Time: Lease agreements are not set in stone. Market changes can create opportunities to renegotiate terms, including rent. Failing to engage in a timely and informed negotiation means you are not maximizing your asset’s value.
Ignoring Critical Lease Terms That Impact Long-Term Returns
The language in a lease agreement is complex and often favors the tenant. Overlooking these critical terms can have long-lasting, negative consequences.
- Granting Unlimited Rights: Some leases give the tenant broad rights to expand their equipment, add new technologies, or sublicense their space to other parties without increasing your rent. This means the tenant can generate more revenue from your property without you seeing a cent of it.
- Permitting Uncapped Expansion: Similar to unlimited rights, a lease that allows a tenant to expand the size of their compound or add new equipment without a clear plan for compensation can devalue your land and restrict its future use.
- Weak Buyout Provisions: Some leases contain clauses that make it difficult for you to sell or monetize your lease in the future. A well-managed lease should provide flexibility for a potential buyout, which can be a key financial strategy.
Proactive Lease Management is the key to protecting and maximizing the value of your property. If you’re a landowner with an existing lease and you want to ensure you’re not making these common mistakes, it’s time to get a professional evaluation. Partner with GAMZs Ground Lease Buyout today to unlock the full potential of your asset.