From a landowner’s viewpoint, here are a few initial things you need for a good billboard ground lease:
Higher CPI for base rent
When talking about ground leases, the average life span is about 20 years. In such long time periods, predicting inflation is impossible. Therefore, without preparing for situations such as extreme inflation, you are confirming a bad lease. Consumer Price Index (CPI) is a good indicator of inflation and is also very simple to track and validate.
Lease cancellation terms
If a high end company wants to buy your land but only after you remove the billboard from there, how will you cancel the lease? In your lease, always allow for such cancellation terms in case you are presented with an amazing development opportunity for your property. However, don’t just cancel the billboard ground lease for anyone who wants your land. Be fair on the billboard company because it takes them some time to pay off their investment and make profits from it. Therefore, think carefully before deciding to cancel the lease.
Content Control
Imagine the billboard company puts up a sign for competitors to those you have rented the land out to! In your ground lease, make sure you have a final word on the content that goes on the sign. Again, be reasonable in your decisions. Don’t make it difficult for the billboard company to find products that agree to your liking.
Conditions for end of lease term
It is a big risk to have your billboard lease says that the billboard company automatically gets a new term if the landowner does not contact the company at the end of the lease term. If the initial lease is 20 years, you have the pressure of remembering to contact the company at exactly 19 years and 11 months. To avoid that kind of pressure, accommodate reasonable terms in your lease.
