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Updated over 11 years ago,
Cell Income Stream Included
Need some help determining the value of a two of cell leases on a building I am looking at.
One lease is with Sprint and the other is with MetroPCS. Both leases have termination clauses; The Sprint lease is a one year notice and Metro PCS one 30 days notice. Both have multiple 5 year options with 10% bumps per option. One has 3 years on the current term and the other has 2 years on the current term.
The property is definitely the tallest structure for miles around and it is unlikely that given current construction costs and rents, that another tall building would be built.
I read @Joel Owens comments from last year which if I understood correctly says that the most the income stream is bought out for is 15 - 20 cents on the dollar for a guaranteed 10 year stream. That translates into a 1.5 - 2 times current income (I am not taking the bumps or inflation into account since they more or less cancel each other). In this case, there is no longer term guarantee but the likelihood of termination is, I think, not high for quite a few years to come.
Anyone have any advice, thoughts or experience valuing cell leases.