Neil Bell on Billboard Lease Terms

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

Neil Bell, Founder and CEO, New South Outdoor

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?

But…I will pose one scenario to you where I am curious to hear your thoughts. Suppose there was a poster digital site in a high demand, high rate area where I could only get a five year lease secured. Assume an all-in construction cost of $125,000.  What if this site cash flowed $150,000 per year? Would this not be worth doing with the risk you may not be able to extend it at lease term? It seems it would be more of a cash flow play rather than for value.   If I know you, you will say what about the opportunity cost of spending money on a site like this?   But I say think of the other signs you could build with the cash flow. 🤷🪧

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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One Comment

  1. Richard Hamlin
    November 21, 2025 at 6:40 am

    Like every legal and business question, the correct answer is, “It depends.” Are you hoping to renew an expiring 20-year lease with good cash flow, or are you building something new? Are you in an area where you will be able to build another new board? Will your lessor want to bring you along if and when it decides to redevelop the property? Are you planning to sell your plant, or leave it as an ongoing, income-generating legacy?

    These are the big questions that will help you to answer the more immediate ones.