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Anyone have a billboard on site?

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  • Anyone have a billboard on site?

    I have a billboard that someone else owns on my new property. Their lease was up 12/31/16 and I met with him today. My property is on I95 and the billboard is in a pretty prime location. Trying to figure out new lease terms. He wants another 25 year lease. I'm fine with that and willing to be more than fair. Market rents from Lamar are from $2500 to 3850 a month in our area. Probably more toward the 3850 side for a prime spot like this on a major interstate. Going lease rates are around 20% of rental income. That would be somewhere around 9,000 a year. He wants to pay me a lump sum of less than 9,000 for the entire 25 year lease. Any input? Suggestions?

  • #2
    Well it looks to me like he ball is in your court. I have never heard of a rental income split like you are proposing. There are agents that do these kiinds of deals for a fee. It seems to me that if i were going to lease something like this for 25 years I would go to market "IE advertise within the billboard community"... not just take one persons offer. Im not sure how big your sties are but for 25 years I would need in the 100,000s to do that kind of deal. I would think it would be an annual fee agreed over 25 years.. not one lump sum payment. This makes people care about the sign since they pay for it every year. call some big billboard companies and ask how they deal with these type of things. Perhaps you can contact a local leasing firm and ask if they know anyone who specialzies in billboards...


    If you are saying 3k a month, and the guy is offering 9k for 25 years... there is a clear disconnect. We make 1.5M per property in revenue and there is no way we would even think about a billboard just because of the contract implications.. but if i were to do it id go to market.

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    • #3
      They're lowballing like crazy. Tell them what your terms are and if they can't agree to them, then they can take it elsewhere. Surely you've got other businesses that would love to advertise right off I-95

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      • #4
        Since the old contract was done at the end of last year why is the negotiations going on now? I would have thought that would have taken place in Nov or Dec of last year. Doesn't sound like it is a top priority so I would shop the billboard around and see what other places might be interested and at what price.
        "Never let the inmates run the asylum!"

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        • #5
          Originally posted by A&Pstorage View Post
          I have a billboard that someone else owns on my new property. Their lease was up 12/31/16 and I met with him today. My property is on I95 and the billboard is in a pretty prime location. Trying to figure out new lease terms. He wants another 25 year lease. I'm fine with that and willing to be more than fair. Market rents from Lamar are from $2500 to 3850 a month in our area. Probably more toward the 3850 side for a prime spot like this on a major interstate. Going lease rates are around 20% of rental income. That would be somewhere around 9,000 a year. He wants to pay me a lump sum of less than 9,000 for the entire 25 year lease. Any input? Suggestions?
          Isn't it that YOU own the billboard on YOUR property that someone else leases/rents???
          They are absolutely low balling you!!!!
          At $3850. a month for 25 years..did you do the math???
          $3500. each month and yes sign that 25 year lease...
          Nah...it's too long a lease.
          What type of business are they advertising for??
          Do you think they will still be in business say in 5 years? 10 years??

          I would definitely make some phone calls to hammer down exactly what that billboard is worth, monthly and what kind IF ANY discount do people get if they pay in full for 12 months?
          I don't know but a 25 year lease sounds AWFULLY long.
          www.columbiastoragegroup

          Don't put off until tomorrow, what you can do today.

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          • #6
            If they want a 25 year lease then make sure, whatever fee you agree to, they pay in full and is non refundable, if you allow that. Because fee values can change over time, year to year, I would want a yearly non refundable payment. Negotiate each year.
            "Never let the inmates run the asylum!"

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            • #7
              Billboards are typically 15-25 years. so this isnt out of the ordinary.

              I would shop around still. GO TO MARKET!

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              • #8
                You may also want to investigate whether you have room for a cell tower on your Site. Get whatever income you can from your property. Also investigate what use can be made from your setback areas. Parking? Portable storage pods? Ice-Skating on the detention pond? .


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                • #9
                  Originally posted by pacnwstorage View Post
                  Since the old contract was done at the end of last year why is the negotiations going on now? I would have thought that would have taken place in Nov or Dec of last year. Doesn't sound like it is a top priority so I would shop the billboard around and see what other places might be interested and at what price.
                  I bought the property from the owner. She could've signed a new agreement with the billboard owner and cashed out and I got nothing for 25 more years. She wasn't like that and told me good luck when you buy it and see what you can get from him. I didn't close until end of February. Sent a certified letter getting his attention on the matter...so here we are. Him lowballing me.

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                  • #10
                    Originally posted by lady5563 View Post

                    Isn't it that YOU own the billboard on YOUR property that someone else leases/rents???
                    They are absolutely low balling you!!!!
                    At $3850. a month for 25 years..did you do the math???
                    $3500. each month and yes sign that 25 year lease...
                    Nah...it's too long a lease.
                    What type of business are they advertising for??
                    Do you think they will still be in business say in 5 years? 10 years??

                    I would definitely make some phone calls to hammer down exactly what that billboard is worth, monthly and what kind IF ANY discount do people get if they pay in full for 12 months?
                    I don't know but a 25 year lease sounds AWFULLY long.
                    I own the land the billboard is sitting on. He leases the land from me. He wants to do the 25 year lease again. I'm ok with that, but I'm not getting sent away without getting paid. My full time gig is a real estate appraiser, so I am familiar with valuation, which is why I'm now a storage facility owner.

                    After doing more due diligence, I found out that the billboards rent for about $1,000 a month in my area. The $3,850 is just a few miles up the road.

                    I will be offering him a discounted amount right at $36,000 if he wants to pay lump sum for the 25 years. That's based on 15% of the gross revenue he COULD be making if he weren't advertising his own hotels on the billboard. We will see where he goes from there I guess.

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                    • #11
                      Am I missing something here. At $1000 a month for 12 months for 25 years that is $300k. I know you don't charge that but to charge just a hair over 10% of that total is confusing for me. I guess it would also depend on what he is getting from the advertising and what he is advertising and what the going rate is in the area.
                      "Never let the inmates run the asylum!"

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                      • #12
                        He isn't getting "anything" because he's not renting it out for the $1000 a month like others. He's personally using it to advertise his hotels down the interstate. Just because he's not pocketing any money doesn't mean it doesn't have any value. I'm trying to get that through that brain of his. Trying to use "market value" as a starting point.

                        I didn't purchase the property knowing there was a billboard on it, let alone I could get any income from it. Timing was perfect. A typical ground lease would be 20% of gross revenue. He generates $12,000 and I get my 20% cut. So we are talking $2400 a year in my pocket. That would be $60,000 over the course of the 25 years that would be in my pocket. That's assuming there are no changes in rates that benefit me or are detrimental to me. So with the willingness to do 15% instead of the industry standard of 20%, we are talking $1800 a year in my pocket for a total of $45,000 over the 25 years. He wants to do a lump sum, so I am willing ti discount that 20% and take it down to $36,000.

                        Keep in mind...he can take his sign down and possibly move it elsewhere, or just take it down out of spite. I would rather get something than nothing, but I'm not going to roll over. I will not be taking less than $25,000 for payment for 25 years. His $10,000 payment to the owner back in 1992 would equate to about $17,500 today alone.


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                        • #13
                          Ok, I understand better now. I just don't know the ins and outs of all you just shared. I am sure if he decides to take his ball and go home you can find other takers.
                          "Never let the inmates run the asylum!"

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                          • #14
                            There lies the problem. If he takes it down, it's all over. State won't allow another sign in its place since it's not zoned properly now. I'd rather see some cash from the deal than nothing.

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                            • #15
                              Yes and billboard sign owner knows this
                              He wants his sign where it is
                              So.....get that $$$$$
                              www.columbiastoragegroup

                              Don't put off until tomorrow, what you can do today.

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