CNBC is reporting the sale by Mobilitie, LLC of 2,300 cell sites for a record $1.1 billion. The buyer was SBA, a major player in cell site leasing and site development. Not many details of the sale were revealed.
What I do find revealing, reading between the dollars, is that there are two major clues that history buffs should support. First individual cell sites have gone from monthly multiples (price divided by monthly rent $) 80 times rent just a few years ago to this record sale of 176 times monthly rent. More than a 100% increase. A bubble is nearing?
When I ask myself, “How far can prices rise?”, I’m reminded that at some point, investors/buyers, who buy cell tower leases for the rent as a return on their investment, are going to not only lose the incentive (returns) to chase prices, but very well could decide to become sellers themselves. The cell tower buyers are sitting on a great deal of profits at this point and they are inherently aware of how a window of opportunity can close quickly.
Individual cell towers prices could be affected, but don’t use 176 monthly multiple, Mobilitie’s sale had some special circumstances I’m sure. However looking at pricing of 130 to 150 times monthly is definitely in the ballpark
I believe, that at these pricing level we’ll see a ‘rolling bubble’. Profits taken in the US cell site market will roll
into foreign cell site purchases where multiples are still close to 1oo times monthly rents. Rates of returns are much higher. We’ll see.
Before you try and negotiate any cell site lease transaction, get a quote. You will be money ahead. 760 470-1782
Andrew G Kellerman’s financial background includes: VP, Thomson McKinnon, Stocks; US and Corp Bonds; Insurance; Commodities; Options; Real Estate; Mortgages; Cell Site Lease Consultation and Sales