What does it cost for finance your billboard company?
Equity providers want to a return of 15-25% per annum with an ability to realize the return over a five year period. Lamar’s public dividend REIT is trading at a 6.33% dividend yield. Outfront Media’s REIT is trading at a 5.52% dividend yield. A private equity investor in your billboard company will want at least triple that return due to the illiquid nature of the investment.
Private lenders such as my company and the leasing companies want a return of 10-12% per annum. My pricing is no secret: prime plus 6%, floating with a floor at 12%. It’s cheaper than equity but more expensive than the banks. The advantage of private lenders is that they are unregulated and so can respond quickly and creatively to your requests. The leasing companies usually dance around the return. I had one leasing rep say to me “why would I ever want to tell my clients how much their lease costs?” If your leasing company won’t tell you the cost of the lease call me and let me know what the lease amount is and what the payments are and what the residual is and I’ll tell you the cost.
Banks want a return of 4-8% per annum depending on the strength of your company. The bank will take a lot of educating, will be slow to respond to your requests and may pull your loan during a recession when it is exiting industries it doesn’t understand. Also, banks hate to deal with anyone with bad credit or a bankruptcy in the past. This is a problem for many outdoor company owners because their non-outdoor real estate investments bankrupted them during the 2009 recession.
