Veteran CRE Pros Launch Sale Leaseback Advisory Group
The newly launched real estate advisory firm will be focused on sale-leaseback and merger-and-acquisition-related real estate transactions.
A group of commercial real estate and banking veterans have formed New York-based SLB Capital Advisors. The newly launched real estate advisory firm will be focused on sale-leaseback and merger-and-acquisition-related real estate transactions.
SLB’s founders include RBC Capital Markets and Stan Johnson Company alum Scott Merkle, Leggett & Platt and Stan Johnson Co. veteran Matt Wrobleski, Oppenheimer, RBC Capital Markets and Stan Johnson Co. alum Stephen Cheng, former CFO of First Capital REIT Malik Franklin, Stan Johnson Co., LBMC and Ernst & Young veteran Stewart Riggs and Santander, Janney Montgomery Scott and RBC Capital Markets alum Dave Rosenberg.
“In this current market environment, sale-leasebacks are even more topical, as businesses seek attractive means of raising capital,” Cheng says.
Merkle sees a substantial market for sale-leasebacks with private equity firms, in particular, looking to pull all strategic and financial levers to drive returns. “Many have valuable capital tied up in the real estate of their portfolio companies, and most private equity firms prefer to be business investors rather than real estate investors,” he says. “Sale-leaseback capital can be redeployed by operating businesses to fund M&A or internal growth initiatives, and importantly can create real value.”
Wrobleski says the sale-leaseback is more akin to financing than a typical real estate sale. “The expertise required to identify arbitrage opportunities, as well as to develop financial impact and credit analyses, requires specialized expertise not found in the typical real estate intermediary’s business model,” he says.
With historically low interest rates, competition has only increased from groups like high-net-worth individuals, 1031 exchange buyers and institutional investors. “The prices have increased dramatically,” Ken Hedrick, executive managing director at Newmark, told in a recent interview with GlobeSt.com. “We’re probably past pre-pandemic pricing, especially in these essential retail buckets and in transportation and logistics.”
It is important to structure an optimal lease in sale-leasebacks. “The time frame over which a sale-leaseback has an impact typically exceeds the holding period of private equity investors,” Merkle says. “As such, a sale-leaseback should be properly structured to be amenable for a future liquidity event.”