In his last column out of home leasing and development expert Andy goodman talked about what to do when you get a condemnation letter. Today he talks about accessory uses and out of home leases.
People want to lease space on billboards for cell phone antennas, weather cameras and data devices. How should an out of home lease handle this?
The Lessee should have all the possible accessory uses listed in the lease. When it comes to cell antennas, if the Lessor has a cell tower on their property the Lessee can expect to encounter some resistance. Most of the time the Lessee can overcome that hurdle by letting the Lessor know the following; the cell antenna is not going to interfere with any of the other cell service that they have on the property, and the Lessor will receive 50% of the net amount of any revenue that comes in from those accessory uses. We’ve done that in the past with Lessors and the next hurdle is obtaining the necessary permits from the City. If the City has a Development Agreement process, they want to know what their share of the revenue will be. And prior to negotiating with the City, the Lessee has confirmed with the Lessor that they will receive a portion of the net amount of what comes in off of the accessory uses not the gross amount. It is the Lessees’ responsibility to pay the City from the gross revenue and then share 50% of the net revenue remaining with the Lessor. We are also seeing a new trend in the business, Cities and Counties want to place their own emergency communications and video uses on the sign. Although the Lessee gives the City and County the opportunity to place the equipment on the sign for free, it is a good bargaining chip to get something back from the City. The Lessee needs to make sure that the Lessor understands that it is something that we give away without charging and its a goodwill gesture.
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