I'm considering investing in a Billboard, but have never done this before and don't know very much about the Billboard industry. The Billboard is highly visible (can be seen from the highway as well as the local city that it is in). The entire area surrounding the Billboard is being redeveloped (there will be a total of ~700,000 SF of new development consisting of ~700 units and ~20,000 SF of retail. They are not allowed to block the billboard per agreements/development plans) The Billboard generates ~$190k/year and the asking is ~$3mm (~6.3% cap). The lease has 10 years remaining. The way I see it, this is like acquiring a NNN retail/office property at a 6.3% cap rate, right? I would finance at 80% LTV, ~3.5% rate, 5 year I/O period and generate ~18% CoC. After the I/O period is up, I would either continue holding the Billboard and generate 10% CoC (not bad), sell it, or refinance into another I/O loan. Am I missing something about investing in this Billboard? Thoughts?
[编辑]在分析中可能是重要的信息，但广告牌也位于8个单元属性上。总收入率仍然为6.3％（包括该物业的租金）。我最初忽略了此信息，因为我不想向一群随机的人提供太多信息，哈哈（没有冒犯猴子），但我知道如何分析住宅部分的风险
[EDIT] Ended up getting a hold of the billboard lease and understand the property much better and actually feel a lot more confident in the investment. Turns out, the property is very similar to just owning a mixed-use property (retail with apartments above, except reversed. Apartments at the bottom with billboard commercial space on the roof). The property is zoned for billboards, but the billboard company owns the billboard and bears all responsibility for it. I would just be leasing them the space. I'm very interested in the deal and have a 5-10 year strategy for it and if I end up winning it, I will update you guys (if you want)
注释 （18)
没有任何建议，但是您是否介意分享您如何采购此OPP？
Loopnet lol...didn't think i'd actually find a potential deal from there
Do you have a lender and term sheet in hand? 80% LTV seems ambitious. Who is asset managing the billboard? Like who's selling ads, putting them up, and taking them down?
我认为广告牌是一个良好而独特的机会。与电视/在线广告不同，人们无法看到或跳过广告牌。另外，一旦构建，很少会把它们拆除。那里有一些公司在广告牌下购买地面租赁，这将是您的退出OPP。或Billboard公司，例如Lamar，Outfront Media或ClearChannel。
我有一张贷方，但是无论哪种方式，我都会打开融资的偶然性...但是租金/现金流都是真实的（如果我要提出要约，我也会让他们取决于他们，向我发送最后一次价值3个月的租金，租赁和所有费用（公用事业账单，合同等）。我编辑了我的初始帖子，并且有8个单位。该广告牌也位于6.3％的CAP上（这8个单位（总协议为6.3％的上限利率）。广告牌约占总协议的NOI的一半。这不是我拥有建筑物和广告牌的地面租赁。当前的广告客户是一家大麻公司，我不太担心将广告放下并放置，因为剩下10年的租约，但将来仍然需要考虑
I can't speak to the cap rate, but as far as risks, I would just make sure there are no structural issues and that there's clear division of responsibilities between you and the billboard operator w/r/t R&M and access. When they have to change the ad, make sure they're not disruptive to the tenants.
I'd also look into the advertising guidelines in the lease. Some billboard leases have rules around political ads, sexually explicit ads, etc. You might not want to be the guy who owns the building with the strip club billboard, you know? Or maybe you do! Either way, just some good info to have.
EDIT: Forgot to add that if I recall correctly, billboard leases tend to be long term with automatic renewal terms. Like with any commercial lease, make sure the tenant is in good financial standing. The risk is this operator folds, and you'll have to find a replacement.
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Learn moreIf you don't mind me asking, who is the lender? I was thinking you were going to have some difficulty financing with the cannabis company paying ~50% the income. Pretty sure no FDIC lender can lend on cannabis rental income (hemp based stuff is fine / CBD etc.)
Seems a bit too good to be true. Are they any capex requirements? How hard is it to sign up a new "tenant' for the billboard?
在当今的环境中，我觉得6.3％的上限反映了相当高的风险。我只是没有看到风险基于您的描述的位置，这意味着您可能没有确定它
I mean the billboard has been there for a long time (30+ years I'd imagine) and is still standing. I haven't gotten the chance to go up and inspect it yet, but I'm planning on bringing a structural engineer with me when I do. That's what I'm trying to figure out, not sure how hard it is to release the billboard and if I can get the same rents, but I'm in a major city and the city is not granting any more billboards. The company leasing the billboard has been leasing it for a while probably 10+ years (I think the agent told me they have a 30 year lease, but Idk for certain until I get the lease and read it). But if they agreed to pay $16k/month 10 years ago...how much is it worth today...or when the lease is up in 10 years? I can't imagine less...Well that's why I'm here. I'm trying to identify the risk, and I'm going to be honest...I can't. I edited my post to include that the billboard sits on an 8 unit building that I would also own (the total acquisition price is over $3mm...$3mm is just what i'm attributing to the billboard per the NOI and going in cap rate (cap rate for the entire deal is 6.3%)). Assuming the numbers are all true, which I think they are...I view buying this piece of real estate as putting my money into a 18% savings account (albeit illiquid)...I can't believe that the value of the real estate will go down in the future given the development happening
Honestly, it could just be that people don't want to deal with it because it's odd and not the normal real estate type of transaction. I'm sure there are lots of people who would be interested in the small apartment building, but decided to pass because they don't want to spend the time to learn the billboard part. This happens a lot in real estate, there is some weird quirk to the deal and no one wants to touch it because it deviates from the norm. It isn't a standalone billboard for the billboard people to look at, and not a standalone apartment for theMF人们可以看，所以有机会不介意做不寻常的事情。
I suppose other risks/items to look at are;
1.) Not easy. The city is not granting anymore billboards.
2.) Not sure how many, but i read that there are a total of about 300 billboards in the greater area that I am in
3.) Not digital
4.) I'm not sure if it can be converted to digital, but my gut tells me it can't (or it'll be a long process). I imagine the city may have issues regarding safety and distracting drivers on the freeway, so I'm not analyzing this as if I can convert it. If i can, that would be a bonus
5.) I edited my post to include that the entire deal is 8 units with a billboard on top
I agree with you, we have a bunch of development sites affected by billboards and deal with them frequently. As a standalone asset they appreciate in value because cities are generally reluctant to approve new ones...as time goes on there are less opportunities to lease them. The capex costs are super low and are just power/lights. Plus, a future developer is likely going to want to get rid of it so to the extent you can create some negotiating leverage to get bought out for better economics it helps for an exit strategy.
Billboard? Are we in the 2000's? Everything is digital NOW so what makes you think people will reverse that trend and demand physical ads in the future?
They also have some of the worst eye retention on them. Any marketing agency that still spends money on billboards is years behind.
So basically a bet on people continuing to be dumb? Sounds like a pretty good bet.
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