Whilst most traditional ad mediums saw a sustained decline in demand during 2018, out-of-home (OOH) media bucked this trend.

In fact, the global OOH spend increased by 4.6% last year, and whilst this growth was largely inspired by digital media, it’s interesting to note that traditional adverts still account for an estimated 63% of the total amount invested by marketers.

With this in mind, now may be the ideal time to sell your billboard lease and realise its full potential. But what are the precise benefits of this practice, and how should you go about selling your lease to interested parties?

What are the Benefits of Selling Your Billboard Lease?

In a market where the demand for OOH advertising space is clearly increasing markedly, there’s little doubt that selling your billboard lease will deliver significant financial rewards to you and your business.

In simple terms, this betrays the most obvious benefit of selling your billboard lease, which is the possibility to secure a substantial cash payment and a largely passive source of revenue.

So, if you’re experiencing cash flow issues in your business and require an immediate cash injection that negates the need to take on debt, selling your billboard lease represents the ideal solution.

But what if you or your business isn’t in need of a sizeable cash injection? In this instance, the decision to sell your lease creates a unique opportunity to realise its full value in the marketplace, with this typically driven by factors such as demand and existing billboard advertising costs.

These factors will remain outside of your control regardless of your knowledge or experience as a business owner, but selling your billboard lease negates this issue and affords you far greater influence over its market value. 

Remember, your billboard lease should always be considered as a lucrative financial asset that adds significant value to your business. In this respect, it’s similar to asset classes such as real estate, bonds and stocks, and the way in which you manage it will have a dramatic impact on its short and long-term value.

Given this, it also stands to reason that there are inherent risks associated with your billboard lease. However, selling your lease enables you to minimise these risks, whilst also optimising the potential rewards on offer.

The reason for this is simple; as whilst rent reduction and the decommissioning of your billboard lease is possible, this particular risk remains statistically low. A far greater risk is opportunity cost, which means losing out on the chance to achieve superior growth and profit from the underlying asset.

Make no mistake; selling your lease for a competitive cash sum and investing this wisely can often produce substantial returns over the course of the next 20 years or more, particularly when compared to the cumulative monthly rent during the same period.

billboard lease

You should also consider your billboard lease as a unique niche of real estate, and one that can add significant value to the individual buildings and commercial structures that you own.

Failing to sell your lease and leverage its true value can therefore potentially reduce the yield produced by properties, and these losses can accumulate significantly over an extended period of time.

By adopting this type of informed and long-term outlook, you can begin to understand the numerous advantages of selling your billboard lease in the current market.

Explained – How to Sell Your Billboard Lease and Secure the Best Deal

Whilst the logic of selling your billboard lease may be sound (particularly when the levels of demand are so high), achieving a competitive deal remains far easier said than done. 

After all, there are numerous pitfalls that lease owners must be wary of when entering into negotiations. 

Firstly, a surprisingly large number of firms offer very lengthy contracts when attempting to buy your billboard lease, in exchange for a large, upfront sum. These contracts may extend for a period of between 25 and 40 years, making it incredibly difficult to release any equity that exists over time.

At the same time, it’s fair to say that the cash sum offered is worth less than a total of 10 years’ rent on average, creating a scenario where the value of your billboard lease is significantly underestimated by the precise terms of your arrangement.

Also, some firms may ask to have the rights to the wall where the billboard will sit included as part of the lease sale. 

Now, whilst they may offer an increased lump sum to secure these rights, this can create significant long-term issues in instances where the owner of the property ultimately decides to sell it.

More specifically, they must try to sell the property in question without technically owning all of it, whilst also attempting to negotiate with buyers without having the authority to authorise the removal of the billboard if required.

You may be able to return to the new owners of the billboard lease and negotiate the repurchase of the wall in question, but this will often require you to pay a significant sum of money that reflects the exact length of the contract.

Handshake deal

Of course, the best way to avoid this particular issue is to insert a clause in the lease sale agreement which makes allowances for the removal of the billboard in the event of a future sale. This should also include an agreed amount of compensation for the buyer, creating a transparent and fair agreement that benefits both parties.

In general terms, however, you’ll need to compare the market carefully and identify buyers that offer the most competitive and beneficial terms across the board. 

This is even true in a market that currently favours the owners of billboard leases, as you’ll still need to negotiate hard to ensure that you achieve genuine value for money.

At 75media, we certainly try to enter into lease purchase agreements that are fair and ultimately incentivise sellers. For example, our contracts are typically between seven and 10 years in length, whilst they also include a three-year break clause.

This means that an agreed amount of cash is paid each year for the billboard rights, whilst the terms of the agreement are reviewed in full at the end of the first three year period.

This allows you to negotiate more competitive terms in instances where inflation has increased markedly during the initial stages of the contract, whilst as the buyer we can also suggest changes if the level of supply in the market and begun to outstrip demand.

You also have the right to exit the agreement if brand new terms cannot be agreed, freeing up to pursue for favourable deals in the marketplace.

It’s also fair to say that the sale of billboard lease agreements can be deceptively complex, with the associated contracts likely to include significant amounts of small print.

It’s therefore imperative that you leverage your advantageous position in the market to dictate as many of the contractual terms as possible, whilst also taking the time to review the final small print to identify any potential issues.

For example, some companies may well include a number of hidden terms in the small print, including provisions that require them to ‘repair damages as and when they can’. 

Whilst this clause may seem fair at first glance, it actually creates a loophole in which firms can refrain from accepting responsibility for repairs in various different circumstances (such as instances where the billboard is causing structural damage to the property).

It also fails to outline a time-frame in which firms need to complete repairs, so there’s a clear and pressing need to challenge the small print and alter it to safeguard your key financial assets.

The Last Word

As we can see, selling your billboard lease offers numerous benefits to business owners, whether they’re seeking a short-term cash injection or aiming to maximise the long-term value of the underlying asset.

However, selling your lease also creates something of a challenge, even in a climate where the demand for this type of advertising space remains high.

This is due to the complexity of selling your lease to seasoned companies and OOH advertising brands, who often deploy lengthy contracts and additional clauses that undermine the full value of your billboard.

If you’re to overcome this challenge, the key is to enter negotiations with your eyes open and understand the primary pitfalls associated with selling your lease. You’ll also need to identify buyers that offer the best and most competitive terms, whilst prioritising those that create fair and transparent agreements.