In a recent Billboard Insider article, a reader posed the following question: “When you are ready to sell your property, is it more advantageous to sell your land along with your structure and include a perpetual easement, or to keep the land and sell it as a whole?”
Paul Wright, the CEO of SignValue, responded that this decision is far from a one-size-fits-all scenario. Instead, it depends on a complex set of factors. These factors encompass urgency to sell, lease duration, market size, competition, growth potential, prospects of digital conversion, escalation rates, and revenue-sharing agreements embedded in the lease.
The following calculations offer some revealing insights into the impact of easements on sale prices. For example, a sign that commands a cash flow multiple of 10x might realize a sale price that falls short of the market value of the sign if an easement is included. However, a sign with a cash flow multiple of 12x would incorporate the easement’s value into the sale price.