Billboard REITs: In Your Face, But Under The Radar

Summary

• In your face, but still under the radar? Billboard REITs own a commanding share of the nation's 500,000 outdoor advertising displays - a surprisingly resilient business with strong inflation-hedging attributes.
• Unlike other increasingly-cluttered digital formats, there's "only one channel" on the highway. These REITs are well-positioned to capture the steadily rising share of marketing spending towards Out-of-Home ("OOH") advertising displays.
• Underscoring its attractiveness to advertisers that seek to break through the clutter, major technology firms - Amazon, Apple, and Google - are among the largest (and growing) spenders on OOH advertising.
• Traditional billboards - generally those located adjacent to highways - have fared far better than transit-oriented displays with a full recovery expected this year. Lamar's focus on this segment has been advantageous.
• We see value in the billboard REIT sector's supply constraints and see the conversion to digital displays as a catalyst to drive mid-single-digit same-store revenue growth and margin expansion throughout this decade.
• This idea was discussed in more depth with members of my private investing community, Hoya Capital Income Builder. Learn More »

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Analyst’s Disclosure:I/we have a beneficial long position in the shares of RIET, HOMZ, LAMR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This is an abridged version of the full report published on Hoya Capital Income Builder on January 30th. Hoya Capital Real Estate ("Hoya Capital") is a research-focused Registered Investment Advisor headquartered in Rowayton, Connecticut. Founded with a mission to make real estate more accessible to all investors, Hoya Capital specializes in managing institutional and individual portfolios of publicly traded real estate securities, focused on delivering sustainable income, diversification, and attractive total returns. A complete discussion of important disclosures is available on our website (www.HoyaCapital.com) and on Hoya Capital's Seeking Alpha Profile Page. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Please consult with your investment, tax, or legal adviser regarding your individual circumstances before investing. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings is available and updated at www.HoyaCapital.com.