Background:
The Ascension Team represents a private equity owned regional express car wash operator based out of the Detroit metro area. The private equity owner was evaluating the acquisitions of a Milwaukee-based 4-unit operator and a Detroit-based 9-unit operator as add-ons to their existing platform. Of the 13 total units, 11 sites were company-owned real estate, and 2 sites were leased real estate. The Ascension team approached the sponsor with the idea to finance a significant component of the business acquisitions with sale leaseback proceeds from monetizing the 11 owned locations.
Client Objective:
The private equity firm engaged the Ascension team to run an expedited investor outreach process in order to bring in multiple sale leaseback offers quickly, given the business transactions were slated to close within 30 days. The sale leaseback would create substantial arbitrage for the sponsor given the multiple they were paying for the add-ons versus the implied multiple of the sale leasebacks.
Solution:
The Ascension team was able to mobilize quickly given their significant experience in the car wash asset class and trusted relationships with sale leaseback investors, and brought in 6 competitive offers within 8 days of being engaged on the assignment. The team emphasized the local market expertise of the private equity firm in the subject MSAs, the strong rent coverage of the sites, and the potential to grow with the platform as the sponsor executes on their buy-and-build strategy in the car wash sector. Our team successfully closed the 11-unit portfolio sale leaseback transaction in conjunction with the business acquisition above asking price at a total purchase price of $40.6 million and a record-setting cap rate for lower middle-market portfolio car wash sale leasebacks. The sale leaseback served as a critical piece of the private equity firm’s financing package that was needed to fund the business acquisitions.
Leave a Comment