Structuring Rooftop Lease Agreements: Legal and Business - - PowerPoint PPT Presentation

Structuring Rooftop Lease Agreements: Legal and Business Considerations

Negotiating Leases for Telecom Equipment, Solar Energy, Commercial Farming, and More

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

The audio portion of the conference may be accessed via the telephone or by using your computer's

• speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

Wednesday, January 7, 2015

Presenting a live 90 minute webinar with interactive Q&A Stephen A. Kisker, Member, Wolff & Samson, West Orange, N.J. Hugh D. Odom, Founder & President, Vertical Consultants, Nashville, Tenn.

Tips for Optimal Quality

Sound Quality If you are listening via your computer speakers, please note that the quality

• f your sound will vary depending on the speed and quality of your internet

connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-866-871-8924 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.

FOR LIVE EVENT ONLY

Continuing Education Credits

For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps:

• In the chat box, type (1) your company name and (2) the number of

attendees at your location

• Click the SEND button beside the box

If you have purchased Strafford CLE processing services, you must confirm your participation by completing and submitting an Official Record of Attendance (CLE Form). You may obtain your CLE form by going to the program page and selecting the appropriate form in the PROGRAM MATERIALS box at the top right corner. If you'd like to purchase CLE credit processing, it is available for a fee. For additional information about CLE credit processing, go to our website or call us at 1-800-926-7926 ext. 35.

FOR LIVE EVENT ONLY

Program Materials

If you have not printed the conference materials for this program, please complete the following steps:

• Click on the ^ symbol next to “Conference Materials” in the middle of the left-

hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a

PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.
• Print the slides by clicking on the printer icon.

FOR LIVE EVENT ONLY

Str tructuring ucturing Ro Roof

• ftop

top Le Leas ase e Ag Agreements: reements: Le Lega gal l an and d Bus usiness iness Co Cons nsiderations iderations

Presented by Stephen A. Kisker, Esq. skisker@wolffsamson.com January 7, 2015

6

 Types of rooftop leases

 Cell towers and other communication equipment

 PCS, broadband, FM and TV

Rooftop Lease Applications and Current Trends in Rooftop Leasing

7

Types of Rooftop Leases (cont’d)

 Solar panels and micro wind turbines

 On-site consumption or grid feed  Distributed generation of clean, renewable energy

8

Types of Rooftop Leases (cont’d)

 Solar panels and micro wind turbines (cont’d)

 United States now 5th in the world in installed solar capacity  United States has over 16,000 MW of solar capacity, which is enough to power more than 3.5 million homes  The US solar industry now employs more than 150,000 people fulltime nationwide  Micro wind turbines are small, lightweight and can be made

• f plastic

9

 Rooftop bars and restaurants  Rooftop farms

 Distributed generation of high quality produce in urban areas  Rainwater recapture and reuse  Decrease heat gain – Lower heat loss  Vancouver, New York and Philadelphia

Types of Rooftop Leases (cont’d)

10

 Rooftop Oasis

Types of Rooftop Leases (cont’d)

11

Current Trends

 Site / lease buyouts

 Lump sum up-front payment for existing leases and/or locations  Developing secondary market

 Options to lease

 Small income stream reserving rights to lease in the future  Allows company to “lock up” territory

12

Current Trends (cont’d)

 Rooftop management companies  Solar, Solar, Solar

13

Benefits of a Rooftop Lease

 Income – either up front or over time  Benefits of the use itself  Roof repairs and/or maintenance at little

• r no up-front cost

 Increase value of remainder of building

14

Detriments to a Rooftop Lease

 Forgo future opportunities for easy cash up front  Roof repair and maintenance  Loss of flexibility (casualty, condemnation, financing, sale, redevelopment, expansion)  Frequently requires use of more than just the roof (staging areas, utility easements, parking, access, data rooms, inverter pads and cable runs)  Structural issues

15

Deal Structures

Simple Single Lease  Benefits

 Monetize your roof with lump sum up-front payment or periodic rent payment  Condition lease on roof repairs or upgrades up front and/or place burden of roof maintenance on tenant  Little effort for building owner

 Detriments

 Sacrifice future opportunities  Roof leaks / maintenance issues  Redevelopment / sale / reconstruction restrictions or complications  May not maximize value of entire roof  Financing

16

Deal Structures (cont’d)

Multiple Leases for One Roof  Benefits

 Opportunity to maximize value of roof  Monetize your roof with lump sum up-front payment or periodic rent payment  Condition lease on roof repairs or upgrades up front and/or place burden of roof maintenance on tenant

 Detriments

 Coordination of and interference by multiple tenants  Maintenance/repair obligations and disputes – who caused that leak?!?  Much more effort to put together and manage  Multiple seats at negotiating table upon sale, redevelopment or major reconstruction

17

Deal Structures (cont’d)

Buyout of Existing Leases and Location  Benefits

 Monetize future income stream now  Eliminates future management/administrative burden  Removes the risk of payment defaults

 Detriments

 Long term agreements that are very difficult to terminate  Sacrifice future opportunities  Greater redevelopment / sale / reconstruction restrictions or complications  May not maximize value of entire roof  Frowned upon by lenders

18

Deal Structures (cont’d)

Option to Lease  Benefits

 “Free” money  Very little effort and limited obligations

 Detriments

 Loss of future opportunity  Disputes and litigation

19

Rooftop Lease, License or Easement

Lease  Benefits

 An estate in land that provides the tenant with greater protection and an alternative financing method (leasehold mortgage)  If properly perfected it can be binding on future property owners  In some states it offers landlord protection from construction liens filed by a tenant’s contractor

 Detriments

 Frequently more difficult to terminate and regain possession  Subject to state and municipal lease formalities and tenant protection measures such as a duty to mitigate damages and statute of frauds  Frequently requires lender approval

20

Rooftop Lease, License or Easement (cont’d)

License  Benefits

 Not an estate in land but rather a right in contract  Frequently easier to terminate and regain possession  Not subject to state and municipal lease formalities and tenant protection measures such as a duty to mitigate damages and statute of frauds  Does not always require lender approval

 Detriments

 May subject owner’s property to construction lien resulting from licensee’s non-payment for licensee improvements  May not be sufficient protection to get the deal done

21

Rooftop Lease, License or Easement (cont’d)

Easement  Benefits

 An interest in land that provides the holder with greater protection  Not an executory contract subject to termination in bankruptcy  Runs with the land  Not subject to state and municipal lease formalities and tenant protection measures such as a duty to mitigate damages

 Detriments

 Difficult to terminate and regain possession  Not easily financeable  Unorthodox  May be subject to technical state formalities applicable to estates in land, such as the statute of frauds  Almost always requires lender approval

22

Practical Considerations in Structuring a Solar Rooftop Deal

 Roof warranty  Roof leaks / maintenance issues  Casualty and condemnation  Staging and parking  Term  Bonds, guarantees or other security

23

Practical Considerations in Structuring a Solar Rooftop Deal (cont’d)

 Insurance  End of term obligations  Termination rights  Indemnities  Sale of host property  Taxes  Assignment

24

Financing Considerations for Solar Rooftop Deals

 Subordination, Non-Disturbance and Recognition Agreements  What is the lender’s collateral?  Timelines

25

For more information, please contact: Stephen A. Kisker, Esq.

Chair, Renewable Energy and Sustainability Group Member, Real Estate Group

Wolff & Samson PC One Boland Drive West Orange, New Jersey 07052 Phone: (973) 530-2074 E-mail: skisker@wolffsamson.com www.wolffsamson.com

Thank you!

26

Rooftop Leases- How Important Are They To Wireless Carriers?

Hugh D. Odom hugh@vertical-consultants.com

27

Increased Dependency on Wireless Services= Capacity Issues For Wireless Carriers

28

Rooftop Lease Purpose- To build out wireless network infrastructure in urban locations

29

Telecom companies are focused

• n both securing

existing rooftop leased sites and developing new sites.

30

How does a property

• wner Optimize their

rooftop agreement with a telecom company?

31

A rooftop antenna agreement is not a “Real Estate” transaction… it is a “Telecom” transaction.

32

The Value of a rooftop lease should be tied into the Utility garnered from the space being used and not the amount of space itself.

33

There is no such thing as “Market Rent”. Every cell site has a different value..

34

Overall Lease Structure is the key to maximizing the value of any agreement… it is a Marathon, NOT a sprint.

.

35

Protect your property by understanding why certain provisions are in any agreement and how they are being used by telecom tenants.

36

Rooftop Lease vs. Rooftop License- What real choice do you have? What does it really matter?

37

Permitted Use- The “Gateway” to maximizing the value

• f any agreement and

minimizing the impact to your property.

38

Relocation Rights- Make sure a landlord’s use of the property does not become Subordinate to a telecom tenant’s use

• f the property.

39

• Compliance

Issues- Who is responsible? How does one monitor this

• ngoing obligation?

40

Building Access- The most abused and problematic day-to-day issue for building owners.

41

Insurance- A telecom rooftop lease is a long-term agreement…DO NOT have a Stagnant insurance section.

42

Indemnification- How a standard indemnification provision can open you up to un-capsulated liability

43

Assignment/Subleasing- Control the use of your building and value being derived from such use.

.

44

Lease Buyout Offers- More common; more undervalued; more misunderstood; and more detrimental for property owners

45

Conclusion- Telecom Rooftop Agreements can be a win-win transaction.

46

Thank You. Hugh Odom President and Founder Vertical Consultants, LLC 4005 Aberdeen Suite 100 Nashville, Tennessee 37205 Phone: (877)456-7552 E-mail: hugh@vertical-consultants.com Website: www.vertical-consultants.com