Digital Infrastructure REITs, Telecom Economics & Unit Valuation
Wireless Cell-Tower REIT Colocation & Yield-on-Cost Formula
Calculate Wireless Cell-Tower Build-to-Suit Tower Cash Flow ($k), Incremental Colocation Margin (%), Unlevered Yield-on-Cost (%), and Public REIT Multiple Valuation ($k).
Why 2nd and 3rd carrier colocations turn a 5% anchor tower into a 24% compounding machine!
A newly built steel monopole cell tower typically barely clears its cost of capital with a single anchor wireless carrier—because ground lease rent, property taxes, insurance, and monitoring are fixed on Day 1. When a 2nd and 3rd carrier colocate antennas on the same vertical mast, ~95% of their lease revenue drops straight to Tower Cash Flow (TCF = Gross_Tenant_Rent - Base_Ground_OpEx - MAX(0, Tenants - 1) * Incremental_Colocator_OpEx), expanding both TCF Margin and Unlevered Yield-on-Cost (YoC = TCF / Tower_Build_CapEx) dramatically!
Verify on a 3-Carrier Build-to-Suit Macro Tower—Tower_Build_CapEx = $300.00k (B2), Active_Carrier_Tenants = 3 (B3), Annual_Rent_Per_Tenant = $30.00k ($90.00k gross revenue, B4), Base_Ground_And_Site_OpEx = $15.00k/yr (B5), Incremental_OpEx_Per_Colocator = $1.50k/yr ($3.00k for 2 extra carriers -> $18.00k total OpEx, B6), and Public_Tower_TCF_Multiple = 22.0x (B7): Annual Tower Cash Flow reaches 90.00 - 18.00 = $72.00k (E2), TCF Margin hits 80.00% (E3), Unlevered Yield-on-Cost jumps to 72 / 300 = 24.00% (E4), and Implied Public REIT Tower Value equals 72 * 22 = $1,584.00k (E5—5.28x build cost)!
| Macro Cell-Tower KPI ($300k CapEx, $30k/Carrier, $15k Base + $1.5k Coloc OpEx) | Formula | Verified Output |
|---|---|---|
| Annual Tower Cash Flow TCF ($k) | Tenants*Rent - (Base_OpEx + MAX(0,Tenants-1)*Inc_OpEx) | $72.00k ($15.00k @ 1 Tenant) |
| Tower Cash Flow Margin (%) | (TCF / Gross_Tower_Revenue) * 100 | 80.00% (50.00% @ 1 Tenant) |
| Unlevered Yield-on-Cost (%) | (TCF / Tower_Build_CapEx) * 100 | 24.00% (5.00% @ 1 Tenant) |
| Implied Tower Valuation ($k) | TCF * Public_TCF_Multiple | $1,584.00k ($330.00k @ 1 Tenant) |
Cell-Tower Lease-Up Unlevered Yield-on-Cost Formula
Validate Build_CapEx > 0, Active_Tenants >= 1, Rent_Per_Tenant > 0, Base_OpEx >= 0, Incremental_OpEx >= 0, and TCF_Multiple > 0!
=LET(cp_k, B2, tn_n, B3, rn_t, B4, op_b, B5, op_i, B6, ml_t, B7, IF(OR(cp_k <= 0, tn_n < 1, rn_t <= 0, op_b < 0, op_i < 0, ml_t <= 0), "Invalid Tower Lease Input", LET(tc_f, tn_n * rn_t - (op_b + (tn_n - 1) * op_i), ROUND((tc_f / cp_k) * 100, 2))))Single-Tenant Anchor-Only Baseline Check (Set Active Carrier Tenants = 1)
Set Active_Carrier_Tenants B3 from 3 back to 1 (Day-1 anchor carrier only): TCF E2 is just 30 - 15 = $15.00k (50.00% margin E3), Unlevered Yield-on-Cost E4 is 5.00%, and Implied Valuation E5 is $330.00k—proving nearly all equity value creation comes from lease-up colocations!
=IF(ISTEXT(E4), E4, ROUND(E2 * B7, 2))Try the example
Use the original values or change them to test your understanding.