The Portfolio:
- 7 telecommunication leases on 4 buildings owned by the Seller under separate entities
The Challenge: The Seller initially approached us to manage his portfolio and we entered into Telecommunication Services Agreements using our affiliated company, BLACKDOT Site Management Company, LLC. We negotiated a lease with one carrier and oversaw the installation of its communications facility. We also assisted the Seller with the termination for default of a master lease and negotiated a renewal amendment with another carrier.
Several months later, the Seller informed us that he wanted to sell his portfolio. Two of his properties carried mortgages. The Seller wanted a fixed price for the portfolio with no prorations, to be closed in a single escrow. He also wanted to use the easements to be granted in the transaction for a Section 1031 like-kind exchange.
The Solution: Knowing how challenging it can be to obtain Subordination, Non-Disturbance and Attornment Agreements (“SNDA’s”) from secured lenders, we immediately made contact with the Seller’s two institutional lenders to negotiate the SNDA’s. We also commenced our comprehensive due diligence process, ordering title searches, environmental and site visit reports and rooftop surveys. We worked directly with the Seller and Buyer’s counsel to draft mutually acceptable transaction documents, including separate purchase and sale agreements, and easement and assignment agreements between the Buyer and each of the Seller’s entities.
One of the Seller’s secured lenders refused to issue an SNDA unless the Seller agreed to use a portion of the proceeds to pay down the loan and to then refinance the balance at a higher interest rate. The Seller refused to do this. We performed a desktop appraisal on the property which showed an acceptable loan-to-value ratio, gathered information regarding the Seller’s financial status and obtained a personal guarantee from the Seller in favor of the Buyer. This demonstrated to the Buyer that the risk of closing on the transaction without the SNDA was minimal.
The Result: The Seller sold the lessor’s interest in 7 telecommunication leases and granted exclusive telecommunication easements over the rooftops of the 4 buildings for a total of $5,000,000.00. Although each of the Seller’s entities entered into separate agreements with the Buyer, we were able to close with a single combined escrow. In order to guarantee the Seller fixed proceeds for his 1031 exchange, we entered into an escrow with the Buyer to sell our Telecommunication Services Agreements, which had given us the exclusive rights to negotiate and enter into new leases on the properties, and that escrow handled the prorations and transaction costs.