Billboard Values

What Are Billboard Easements Worth?

Here’s a recent post I put up at about valuing billboard easements.

I get asked what what billboard easements are worth all the time. I’m used to seeing a value of 6-10 times cashflow for billboard easements. 6 times cashflow for fast or distressed sales. 8-10 times cashflow for a normal sale. In other words if the billboard land rent on a property is $500/month, a permanent easement to keep the sign on the property should be worth $48,000-60,000.

I have been hearing anecdotal stories that Landmark is willing to pay more than 10-14 times cashflow for easements.

Many appraisers use a cap rate to value billboard leases. A cap rate is the % at which property income is capitalized to determine value. A valuation multiple is the reciprocal of the cap rate. A 10% cap rate for example is the same as a 10X cashflow valuation for an easement.

I saw an appraisal this week in which the appraiser chose a 9.5% cap rate (10.5 times cashflow valuation) for a billboard easement. Here’s the rationale he used in selecting the cap rate:

“The 9.5% overall capitalization rate is selected after a review within the appraiser’s files of market data on land leases…General market evidence including one in which the appraiser was involved are in a range from 7-9%. Other information from an appraiser website in which other appraisers throughout the country contribute would indicate that the overall capitalization rate for billboards generally is thought to be in the 8-10% range. Information under review about 2 years by the appraiser found that on a national basis, the indication of the overall capitalization rate from available, similar billboard investment type was in the range of 7.5% to 10%.”

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