Lamar Advertising Acquires Verde Outdoor Assets in Historic UPREIT Transaction

Lamar Advertising has acquired the assets of Verde Outdoor in a UPREIT transaction, expanding its billboard portfolio by over 1,500 locations. The deal marks the first-ever UPREIT transaction in the billboard industry, allowing Lamar to benefit from tax benefits and efficient capital management. The acquisition is expected to enhance Lamar's market presence and revenue growth prospects.

Lamar Advertising Company (Nasdaq: LAMR) has expanded its outdoor advertising portfolio through the acquisition of Verde Outdoor, marking the first-ever UPREIT (Umbrella Partnership Real Estate Investment Trust) transaction in the billboard industry. The acquisition, finalized on July 2, 2025, adds over 1,500 billboard faces, including 80 digital displays, across 10 states [1].

Verde Outdoor, launched in 2021 by Ernest C. Garcia II, has rapidly grown through strategic acquisitions and organic development. The company's assets were contributed to Lamar Advertising Limited Partnership (Lamar LP) in exchange for common units aligned with the value of Lamar's Class A common stock. This structure allows Verde's owners to receive cash distributions comparable to Lamar's stock dividends and offers the flexibility to convert units into cash or shares, deferring capital gains taxes [2].

The UPREIT structure, which enables tax-deferred asset contributions, is expected to become a template for future acquisitions in the industry. Lamar's Chief Executive Officer, Sean Reilly, expressed optimism about the acquisition, noting its significance as a potential blueprint for future growth [3].

The acquisition enhances Lamar's market presence in key U.S. regions, including the Midwest, Southeast, and Mid-Atlantic. The addition of 80 digital billboards, a segment growing at 8% annually, positions Lamar to capitalize on the shift toward digital advertising, which now accounts for 40% of all outdoor ad spend [3].

Lamar's liquidity remains robust, with $496.3 million as of 2022, and the deal's tax efficiency frees up capital for growth. The company has expanded its buyback program to $250 million and maintained a $1.55 quarterly dividend, yielding ~3.5% at current prices. Lamar reported a 16.4% revenue surge in 2022, despite a slight miss in Q1 2025 revenue estimates [3].

The UPREIT structure shields Lamar from over-leverage, as its REIT status requires distributing 90% of taxable income as dividends, ensuring capital stays aligned with shareholder interests. Historically, positive earnings surprises have driven short-term outperformance, with LAMR's stock averaging a 2.52% return over three days following an earnings beat [3].

While the acquisition offers numerous benefits, potential risks include maintaining REIT compliance, economic downturns, and overexpansion. However, outdoor advertising's recession-resistant nature and Lamar's focus on high-demand markets and digital growth mitigate these risks [3].

For investors seeking exposure to a consolidating sector with strong cash flows, Lamar Advertising offers a compelling opportunity. The UPREIT model allows Lamar to outbid competitors for fragmented assets, solidifying its leadership in the industry [3].

References:

[1] https://ir.lamar.com/news-releases/news-release-details/lamar-advertising-acquires-assets-verde-outdoor-upreit
[2] https://www.gurufocus.com/news/2962252/lamar-advertising-acquires-assets-of-verde-outdoor-in-upreit-transaction-lamr-stock-news
[3] https://www.ainvest.com/news/lamar-advertising-upreit-move-blueprint-tax-smart-growth-billboard-consolidation-2507/