Billboard leases

Does anyone out there have a billboard where you lease the site to the company but do not own the structure? I recently purchased a property and assumed the lease on a tenant-owned billboard. It’s a very old (and terrible) lease and they are in the second option period (15+5+1 years) with no escalations. The sign is in good shape but I really just don’t like it - I think it detracts from the building below it - and they aren’t paying enough rent to make me like it.

What’s a typical lease for something like this look like now? Flat fee or a percentage of revenue? This sign is one of 7 that they lease as a group in this MSA and by my calculations they are getting about 1200/month/side for this one sign.

I have to insert a warning in here also for anyone contemplating getting involved with a sign company. This is a publicly traded company and they are the biggest bunch of jerks you have ever met. I am inclined to not renew this lease for them just out of spite.

I just finished looking at the numbers on a rental property with 2 small one sided billboards on it that I intended to buy. They are old wood billboards on a main road in a low income area of Roanoke City, VA.

The owner said that prior to him buying the property the rent on the “Lamar” billboards was $600 per year for both. He said when he purchased the property he renegotiated them to $1,000 per year.

Personally, I would consider renegotiating the lease and not make your decision based on your anger towards the billboard company. All that should matter to you is cash flow. You can be a jerk too and do some real hardball negotiation with them. Think of the cost of them removing the billboards, loosing the income they were making, and finding another suitable site. Also consider the monthly costs per 30 yr mortgage of them buying a suitable lot.

Thanks for the data points.

I had my lawyer peruse the lease and I can’t do anything with it until it runs it’s term (for whatever reason, the owner accepted their contract without any changes). For 12k/year I could live with it but I am locked into 2400/year now which should explain a lot.

When I broached the subject with them of re-negotiating this I got a pretty big “FU” from them. They can try to move the sign but it’s on a designated “scenic corridor” now and will not be grandfathered to another location whether they own the new site or not. So they have a significantly larger problem then I do if it goes away, not to mention the expense of taking it down and lost revenue.

I am going to bide my time for now - I have 3 years to wait - and we’ll see who comes to the table when I tell them to remove it from the property - and by then I will much less inclined to take a lower number then I am now. Patience is more than a virtue in real estate. :biggrin

I apologize in advance. I don’t mean to hijack your thread but I’m new and didn’t know how to post a new thread and my question is related.

I am currently looking at a property for sale with a large two sided billboard that has 23 years left on a 30 year lease. I would only buy this property with that lease and would have no interest in it without it. The lease is currently at $28,370/yr. and goes up 3% a year for the next 23 years finally ending at $54,361 in the year 2030. My question is wether this is standard or not and what happens if they just break the lease and stop paying?

Thank you.