Difficulty with a Cell Tower Lease Agreement for Self-Storage Property

[Trevor Hummel]

My group and I just recently backed out of what could have been our 1st CRE investment. It was a self-storage property in a small town in Central Illinois with a recently underway residential development adjacent to the property, so lot's of upside. Toward the end of the due diligence period we received the final piece of critical info to make our decision: a lease agreement for a cell tower on the corner of the property. There were several issues but here are the big ones that ultimately led to us backing out of the deal. (1) The right of first refusal provision which mean't the seller had to convey the sale info to the cell tower company and then receive written permission for the sale to go through. The lender of course required this for financing and the seller, out of ignorance I assume, refused to obtain a written notice from the cell tower company. (2) The cell tower was not paying monthly rent but rather paid an upfront payment of $75k for the 41 years remaining on the lease term. The purchase contract stated our group was to receive a prorated portion of rent. This mean't a $43k credit against the purchase price ($605k purchase price). Again, the seller refused (although I'm not sure if this would've been resolved legally at settlement regardless). (3) The cell tower was additionally paying a portion of real estate taxes which we were unable to confirm how much they were responsible for and if they had held up their end in recent years. (4) Cell tower had the right to purchase the lot for $1 at anytime during the lease and the right for an additional 2,500 SF of ground space.

In the end we backed out at the end of the due diligence period in order to recoup our earnest money. But in retrospect, should we have gone through with the deal and trusted our real estate attorney to execute according to the purchase contract? If we had gone through with the transaction and somehow obtained right of first refusal written notice, would the seller be legally held accountable without us forcing litigation? Are these terms typical for cell tower leases or are they as bad as I think?