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Prospective Purchase Due Diligence 

Utilizing Real Estate to Help Finance Purchase

Situation

A private equity company engaged WWM for review of its options to maximize the value of the real estate included in a prospective purchase, in order to subsequently reduce the acquisition financing.

 

 

Challenges

The private equity company needed market valuations of the facility which included the following criteria:

  • Market lease rate for the premises.

  • Approximate sale-leaseback value if the private equity company purchased real estate with the operations, along with the approximate corresponding cap and rental rates for cash flow and other planning purposes.

  • The value of the facility if vacant and poised for disposition, along with approximate marketing time.

 

 

Results

WWM provided market data for rents and purchases in the area, in addition to alternative buildings that could accommodate the operations.  WWM identified preliminary interest to acquire from several sale leaseback buyers, including approximate cap rates and deal parameters that would be required in order to complete a transaction.  Determinations were ultimately made that confirmed a sale leaseback could be utilized as a financing tool for the purchase of the business.  The business was purchased and the sale leaseback was completed a few months later.