Structuring Rooftop Lease Agreements: Legal and Business Considerations

Transcription

1 Presenting a live 90 minute webinar with interactive Q&A Structuring Rooftop Lease Agreements: Legal and Business Considerations Negotiating Leases for Telecom Equipment, Solar Energy, Commercial Farming, and More Wednesday, January 7, pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Stephen A. Kisker, Member, Wolff & Samson, West Orange, N.J. Hugh D. Odom, Founder & President, Vertical Consultants, Nashville, Tenn. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

2 Tips for Optimal Quality FOR LIVE EVENT ONLY Sound Quality If you are listening via your computer speakers, please note that the quality of 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 and enter your PIN when prompted. Otherwise, please send us a chat or 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.

3 Continuing Education Credits FOR LIVE EVENT ONLY 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 ext. 35.

4 Program Materials FOR LIVE EVENT ONLY 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 lefthand 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.

5 Structuring Rooftop Lease Agreements: Legal and Business Considerations Presented by Stephen A. Kisker, Esq. January 7, 2015

6 Rooftop Lease Applications and Current Trends in Rooftop Leasing Types of rooftop leases Cell towers and other communication equipment PCS, broadband, FM and TV 6

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 7

8 Types of Rooftop Leases (cont d) Solar panels and micro wind turbines (cont d) United States now 5 th 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 of plastic 8

9 Types of Rooftop Leases (cont d) 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 Rooftop bars and restaurants 9

10 Types of Rooftop Leases (cont d) Rooftop Oasis 10

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 11

12 Current Trends (cont d) Rooftop management companies Solar, Solar, Solar 12

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 or no up-front cost Increase value of remainder of building 13

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 14

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 15

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 16

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 17

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 18

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 19

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 20

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 21

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 22

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 23

24 Financing Considerations for Solar Rooftop Deals Subordination, Non-Disturbance and Recognition Agreements What is the lender s collateral? Timelines 24

25 Thank you! 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 Phone: (973)

26 Rooftop Leases- How Important Are They To Wireless Carriers? 26 Hugh D. Odom

27 27 Increased Dependency on Wireless Services= Capacity Issues For Wireless Carriers

28 28 Rooftop Lease Purpose- To build out wireless network infrastructure in urban locations

29 Telecom companies are focused on both securing existing rooftop leased sites and developing new sites. 29

30 30 How does a property owner Optimize their rooftop agreement with a telecom company?

31 31 A rooftop antenna agreement is not a Real Estate transaction it is a Telecom transaction.

32 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.. 33

34 34 Overall Lease Structure is the key to maximizing the value of any agreement it is a Marathon, NOT a sprint..

35 35 Protect your property by understanding why certain provisions are in any agreement and how they are being used by telecom tenants.

36 36 Rooftop Lease vs. Rooftop License- What real choice do you have? What does it really matter?

37 37 Permitted Use- The Gateway to maximizing the value of any agreement and minimizing the impact to your property.

38 38 Relocation Rights- Make sure a landlord s use of the property does not become Subordinate to a telecom tenant s use of the property.

39 39 Compliance Issues- Who is responsible? How does one monitor this ongoing obligation?

40 Building Access- The most abused and problematic day-to-day issue for building owners. 40

41 Insurance- A telecom rooftop lease is a long-term agreement DO NOT have a Stagnant insurance section. 41

42 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.. 43

44 44 Lease Buyout Offers- More common; more undervalued; more misunderstood; and more detrimental for property owners

45 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 Phone: (877) Website: 46