Should cell tower income be part of an operating budget?

Answer 1

Generally speaking, no. Despite the lease requiring a long term committment by the lessor (landlord), they typically have termination language in them that allows the lessee cancel them at any time for any or no reason. Given that there is a finite number of carriers out there (Verizon Wireless, AT&T, Tmobile and Sprint/Nextel being the only nationwide carriers these days), once the lessee decides to terminate, chances of replacing that revenue stream are slim. It's different than, say, an office tenant. Once one of those tenants leave, there's more of an infinite number of potential renters. Cell tower income should be considered just a little something extra that's better to have than not, but should not be part of an operating budget or considered when calculating cap rate.