How Matthews™ Unlocked Significant Value for a Private Equity Firm Through a Strategic Sale-Leaseback
Matthews™ agents, Harrison Auerbach and Thomas Wilkinson, were engaged by a large middle market private equity company following the acquisition of a uniform company with multiple locations throughout the Southeast. One of the industrial buildings, located in Charlotte, North Carolina had been purchased as part of a broader operating company transaction, despite the firm displaying little interest in owning real estate long-term. In the absence of internal benchmarks for rental rates, valuation, or optimal lease structure, the client turned to Auerbach and Wilkinson to determine how the asset could be positioned to generate immediate value through a strategic sale-leaseback. Challenge The private equity firm faced several challenges with long-term real estate ownership. They lacked an established framework for assessing market rent, lease terms, or investor expectations in the Charlotte region. Without clarity regarding the relationship between achievable rent levels, lease length, credit profile, and cap rate, the firm struggled to understand the property’s true disposition potential in the private capital investment space. A few years after closing on the operating company, they sought guidance from the Matthews™ agents to uncover the property’s value and identify a path toward maximizing sale proceeds. Strategy To address these obstacles, the agents performed a comprehensive underwriting of the property. They completed a detailed market rent study that identified realistic, supportable rent for comparable assets and created sensitivity scenarios illustrating how different rent levels would influence valuation. Auerbach and Wilkinson then provided recommendations for the appropriate lease term, annual escalations, and operational responsibilities that would attract investors while aligning with the tenant’s functional needs. The agents also produced valuation models that demonstrated how various pricing scenarios would be affected by changes in lease structure and credit perception. Before the lease was officially executed, they launched a targeted national marketing campaign directed at private capital, sale-leaseback investors, institutions, and 1031 exchange buyers. The offering reached tens of thousands of vetted buyers, and the association with private equity ownership enhanced the perceived ‘creditworthiness’ of the tenant. The result? Multiple competitive offers from institutional groups and family offices. Result Auerbach and Wilkinson’s strategic approach delivered an exceptional outcome for the seller. The property achieved an all-cash closing above the initial list price, surpassing both the agents’ original projections and the private equity f irm’s internal expectations. The process moved swiftly from marketing to closing, with no disruptions. Ultimately, the private equity group realized meaningful profit on a piece of real estate they were obligated to acquire with no intent to hold long-term. This transaction demonstrates how the agents’ early involvement converted non-core assets into immediate, quantifiable value. Auerbach and Wilkinson provide clarity and certainty by evaluating a property’s present value, how lease terms impact valuation, and ultimately determining whether to retain, sell, or re-position an asset.
Harrison Auerbach
Senior Vice President & Director
