We are going to begin sending occasional CB Capital Field Notes to share observations from across the portfolio — trends we are seeing, small wins, lessons learned, and items that may not always make it into formal updates but still play a role in how value gets created over time.
In this first note, we want to touch on a theme we have focused on since the founding of our company: creating ancillary revenue tied to our core assets.
Because many of our projects are located in fast-growing suburban corridors, we often control sites with additional uses beyond the primary intention. These opportunities typically do not move the needle month to month, but they can add several thousand dollars per month in income and, more importantly, can create meaningful value when that income is capitalized at sale.
In some cases, sponsors separate these types of revenue streams into affiliated entities, leaving the property with only a lease or royalty payment. Our preference has been to keep the economics at the asset level whenever possible, so the upside stays with the partnerships that own the real estate.
Below are two recent examples.
Cell Tower Ground Leases
We are currently working with several wireless infrastructure groups to evaluate tower placements on existing properties. One advantage of our portfolio approach is the ability to offer multiple sites across some of the fastest-growing suburbs in Texas, which tends to attract more attention from operators than a single location on its own.
Ground leases of this type can generate several thousand dollars per month in additional income with minimal capital, and that income can translate into a meaningful increase in value when the asset is sold based on an NOI multiple.
Billboards
We are also continuing to look for opportunities to place off-premise billboards on properties where state regulations allow. This effort goes back to our prior industrial portfolio where we began looking for ways to create additional revenue streams on well-located land. At the time, many of our properties sat along high-traffic corridors, and billboard placement proved to be a good fit. When we later sold the industrial portfolio, we retained the billboard company and underlying permits, which continue to provide a small but steady legacy income stream.
Because we still hold the license today, we are able to identify and pursue new billboard sites ourselves rather than relying on third-party operators. In some cases, recent changes in Texas law allow land to be de-annexed from city limits, which can make billboard placement possible where it otherwise would not be. We are currently evaluating several locations across the portfolio where these conditions may apply.
As an example of the type of value these projects can create, we previously developed a digital billboard in the San Antonio MSA at a construction cost of roughly $250,000. After a couple of years of operations, the asset was sold to a large public billboard company for just under $1 million, illustrating how relatively small ancillary projects can translate into meaningful value when priced off income at market multiples.
Closing Thoughts
These opportunities are not the core of our strategy, but they illustrate how owning well-located land in high-growth markets can create value in ways that are not always obvious at the start of a project. With a little extra effort and creativity, we are often able to uncover additional income streams that ultimately enhance returns for our partners.
