Neil Bell of New South Outdoor writes this in response to Billboard Insider readers want long term leases in order to put up billboards.

Dave, I really appreciated the poll from this morning regarding lease term. I completely agree with most readers that long-term leases are a must if you’re going to build a new sign. Our minimum lease is 30 years. How else do you build value without long-term leases?

Billboard Insider’s take: If you have access to capital and a build list, we still think it makes sense to only pursue billboards with long term leases.  A billboard with a long term lease will  sell for 10-14 times billboard cashflow.  A billboard with a short term lease will sell much less.  Noone will pay 10-14 times cashflow for something which could go away in 5 years.  There’s a reason why JCDecaux has an enterprise value of 4.6 times cashflow today while Lamar has an enterprise value of 16.1 times cashflow.  JCDecaux is a collection of short term transit leases.  Lamar is a collection of permanent easements and long term billboard leases.

What’s your take?  Email davewestburg@billboardinsider.com or use the comment form below and we’ll run a followup article.

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