Local firm expects to raise capital in 12 months

TAKE IT AS A SIGN McWhorter planning $150M investment in outdoor advertising

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McWhorter Capital Partners CEO Josh McWhorter sees quite a bit of potential in the out-of-home advertising — i.e., billboard — business.

So much so that he recently teamed up with Bartow Street Capital, a subsidiary of Greenfield Advisors LLC, for a campaign to raise $150 million to increase the footprint of McWhorter subsidiary Horton Outdoor Advertising.

"We went from having nothing to 111 structures and over 450 faces across the Southeast in just a couple of years," McWhorter said. "Other people started taking notice, so Dr. Clifford Lipscomb at Greenfield Advisors and Bartow Street Capital approached us about doing a capital raise for us to continue to expand."

Ironically enough, despite how successful the sector has been for his private equity and real estate investment firm, McWhorter admits he was somewhat reluctant to get into the outdoor advertising space. 

"But Eric Horton — who we named our company for, and I say this lovingly — kept pestering me and said 'let's do this,'" McWhorter recalled.

"We bought a few structures here in Cartersville and really seemed to like the business and made the decision then to expand. We continue to see interest from investors here locally who wanted to be a part of what we're doing that allowed us to move beyond Cartersville and even Georgia into Alabama and Florida."

Greenfield Advisors is a Seattle-based real estate consulting firm with an east coast office located in Cartersville.

McWhorter said they're hard at work raising funds for the Horton expansion — at this rate, he said he anticipates the full $150 million being raised in less than a year.

"They've got relationships with private equity firms, hedge funds, family offices, things like that, throughout the country," he said. "So they've already started making those calls and speaking with those people. We've seen a lot of interest early."

However, McWhorter said he expects about 24-30 months to actually get all of the capital placed.

"We're looking at acquisitions right now that are really $5 million to $20 million in terms of numbers, so it just depends on what comes up and where we're able to place that capital, in terms of how quickly we can get it spent," he said. "Because we definitely want to be smart with it. This is our money, this is investor money, so everyone expects a return."

McWhorter said the plan is to continue to expand throughout the Southeast. He said that includes a mixture of both traditional and digital billboards.

"There's a lot of billboard plant owners that are nearing retirement or looking for an out, so that gives us an opportunity to step in and give them a liquidity event for them to do so," he said. "But looking at our ratio now, in terms of digital to statics, we're sort of expecting we can be as high as over 2,000 structures and roughly 6,000 faces or flips once all of that is fully placed."

There is a lot of strategizing that goes into the acquisition decisions, McWhorter said.

"If you buy a digital location, those are more expensive, so you wind up with just one structure but you may wind up with a potential 16 faces or flips from it," he said. "If you take south Georgia, for example, there's a lot of old structures that have been built down there. Some are wooden structures and you can end up buying a lot of structures and getting very few faces."

Out-of-home advertising is a worthwhile investment, McWhorter said, because a lack of expenses virtually guarantees a solid cash flow.

"You have your back office expense, your commission for your salespeople, but outside of that, you don't have a lot of maintenance issues," he said. "With the government regulations and making it difficult to get new locations, combined with the increased demand for it, it just sort of makes it a good time to be in the middle of this business."

And with that increase in business comes the possibility of permanent out-of-state expansion.

"There may come a time where we may have to relocate people to certain locations, depending on where we're building," he said. "We have a lot of billboards over in Birmingham, and that continues to be a growing market. We think that could be a potential second office for us sometime down the road."

Not that McWhorter has any plans to abandon the Cartersville market — even though local legislation does complicate his firm's outdoor advertising ambitions a bit.

"Obviously, we would love to build more here in Bartow County. It's not the easiest place to build right now because of moratoriums and restrictive covenants, but I get it and I'm not upset by that in any way," he said. "We want to continue to use this community as much as we possibly can, because we think there's a lot of resources here that we can tap into that will be beneficial to us, and hopefully, be beneficial to them."