How to value rooftop cell site in NYC

[jihyeu]

I am a senior real estate analyst in NYC.

Recently my company bought an apartment building in Brooklyn with a rooftop cell tower.

There is a lease expired 2025 (including automatic renewals) with rent approximately $200,000.

In NYC area, what's the appropriate cap rate or GRM to value the cell site?

Do I apply the same cap rate/GRM as the multifamily buildings' to cell site (say about 7% to 8%)?

I will appreciate any advice you can provide.

Thank you.

 

[LACKLAND27]

Cap rates

I am a senior real estate analyst in NYC.

Recently my company bought an apartment building in Brooklyn with a rooftop cell tower.

There is a lease expired 2025 (including automatic renewals) with rent approximately $200,000.

In NYC area, what's the appropriate cap rate or GRM to value the cell site?

Do I apply the same cap rate/GRM as the multifamily buildings' to cell site (say about 7% to 8%)?

I will appreciate any advice you can provide.

Thank you.

The cap rates are typically from 7-9% for cell towers. I don’t know what part of Bklyn you are located in, however based on the rent of $200K (per annum I assume) it must be a higher end area since rents are typically under $50K per annum for cell towers. Is it a really big cell tower?

A cap rate of 7-8% is pretty high for apartment buildings. I am seeing cap rates more in the 5.75-6.75% range unless you have extenuating circumstances.

Hope this helps

 

[jihyeu]

Thank you.

The rent is about $20,000, not $200,000, my mistake. It's at East New York, not a good neighborhood in Brooklyn.

Someone offered $180,000 to buyout the contract.

My calculation shows that's about 8% discount rate, 10 GRM, 10% entry cap rate.

Do you think it's a reasonable offer? Personally I think it's good enough.

Thank you so much.

 

[LACKLAND27]

Thank you.

The rent is about $20,000, not $200,000, my mistake. It's at East New York, not a good neighborhood in Brooklyn.

Someone offered $180,000 to buyout the contract.

My calculation shows that's about 8% discount rate, 10 GRM, 10% entry cap rate.

Do you think it's a reasonable offer? Personally I think it's good enough.

Thank you so much.

I did a similar setup last year & did a short narrative on it. I have some rental and sales comps that were pretty hard to come by. If you want the info give me a call I'll PM my cell #

 

[LACKLAND27]

I see you have no email option. Send me your # & I'll call you. Email to Harbor27@gmail.com