Landlord’s Checklist for Verizon’s $3.3 Billion Tower Deal With Vertical Bridge
Cell site property owners should be on alert to enforce Verizon’s and Vertical Bridge’s transfer and conveyance obligations.
Verizon Wireless signed a $3.3 billion deal with Vertical Bridge, a growing cell site manager, to lease, operate and manage 6,339 of Verizon’s cell towers across the country.1 The deal exemplifies a growing trend in the wireless industry where wireless carriers are transitioning from the ownership or management of cell towers into a subtenant role with cell site managers. Vertical Bridge, a cell site manager will take over day-to-day operations and control of cell sites, investing the transaction’s proceeds in additional spectrum.
In addition to dealing with new parties, landlords of property on which Verizon towers are located should anticipate a change in operations. Most cell site managers’ business goals and operations tend to significantly differ from wireless carrier led operation of sites. The business plans of cell site managers such as Vertical Bridge are simple: bring more carriers to the site.
Below is a checklist for landlords to consider:
Enforce Transfer Approval
The governing real estate documents for most cell sites require a tower company to obtain written landlord consent before such a transfer can be made. If you have property included in this large portfolio transaction, please carefully review your agreement(s) to ensure compliance with all transfer requirements.
Preserve Rights in Writing
Reserve the right to approve any and all cell site deployments and changes on the tower or site, and require tenants to obtain written consent prior to modification. Most operators will readily agree to the property owner’s prior approval of plans or changes. However, most provider-created agreements shared with landlords rarely include landlord consent clauses. It is essential that landlords ensure the inclusion of such rights in final agreements.
Ensure Wireless Tenants Follow Assignment Requirements
When transactions such as this occur, where wireless carriers transfer large portfolios involving thousands of sites to tower management companies, there is a tendency for tenants and site managers to overlook the mandatory notice, consent, and assumption requirements in the cell site agreement. If your site is included in such a transaction, it is important to carefully review the transfer and conveyance sections of the underlying agreement to ensure tenants and sub-tenants strictly comply, or the proposed transfer may be void.
Require Assignment and Assumption Commitments With New Tenant
It is essential to ensure the new tenant completely assumes all rights and obligations under the cell site agreement prior to releasing the former tenant including providing documentation of insurance and any performance measurements. Be sure to obtain and carefully review such assignment and assumption agreements to confirm assumption is binding on the new tenant. If history teaches us anything, there is a very good chance the transfer will be made and you will not be informed. You need to proactively protect yourself and ensure you have a relationship of privity with you new tenant.
In response to a similar major transaction in which a global carrier transferred its interests in cell towers to a global site manager, BBK encouraged our clients to require the new site manager to execute a site manager representations agreement. The site manager representation agreement created privity between the parties, required a deposit to cover the community’s legal and administrative expenses and included an obligation to provide proof of the site manager’s insurance.
Don’t Go It Alone
Landlords of both private and public property have basic common law property rights regardless of Federal Communications Commission (FCC) or state siting regulations. If a wireless property owner is uncertain of whether there are regulatory limitations, they should seek legal advice. Never rely on guidance from cell tower operators or their counsel.
For more information please contact Bennett Givens, Claire Copher or Gerard Lederer.
1Verizon and Vertical Bridge agree to $3.3 billion tower transaction, Verizon News Center, available at https://www.verizon.com/about/news/verizon-and-vertical-bridge-agree-33-billion-tower-transaction?ref=broadbandbreakfast.com.
Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.
