Some thoughts and observations from Insider’s 23 years of lending and investing in out of home.

The larger companies in OOH should be safe.  That doesn’t mean that the perceived value of their business, publicly traded or not, won’t take a hit (we’ll discuss stock values later this week), but their lending relationships are solid and in place.  Only exception we see is potentially CCO, but remember they are primarily owned by lending groups coming out of the iHeart bankruptcy.

Lamar gets our perfect timing award.  They timed the debt market perfectly, using their solid operating results and strong REIT market values to refinance in February just before the downturn in the market.  Kudos to Lamar CFO Jay Johnson and his treasury staff.

But what about the rest of us?  Some thoughts:

• Over- communicate – Always our first thought.  You probably have not had to talk much with your banker over the past few years given strong performance, our strong industry position and favorable media coverage.  NOW is the time to get in and talk with your lender about how you are going to operate through the next few months.
• Have a plan.  You’re lender will want to know what steps you will be taking to conserve cash and get your business through the next 3-6 months.
• Have a back up plan – What are you going to do if you lose the confidence of your bank group? You should be thinking about that plan and hope you never have to use it.
• Cash is King – I know we have all heard that before, but we are not talking about availability to cash, but cash in your bank account.  If you normally carry 45 – 60 days of operating cash in your account, increase it to 90 or more.  This does not just mean availability on a line of credit with your bank.  Availability has the potential to disappear in a nervous banking environment.  Insider heard through their sources that Lamar is drawing down on their credit lines to put cash on their Balance Sheet.  It is a smart strategy in uncertain times.
• Lastly know who you can trust.  There are several lenders (including Insider’s Billboard Loans which makes loans of $50k to $1 million)  who’ve been active in the OOH industry through multiple recessions.   Billboard Loans funded two loans this week and has other loans under consideration.  Metro Phoenix Bank and Stark Capital Solutions, two lenders  we interviewed on Monday specialize in OOH and have been reliable in tough markets.

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