Sale Leaseback for Cardinal Cycling Group in Landrum, South Carolina

Introduction:

Ascension Advisory successfully closed a sale leaseback transaction for Cardinal Cycling Group (“Cardinal”) of their mission-critical manufacturing facility in Landrum, South Carolina. This strategic transaction allowed Cardinal to unlock capital tied up in their real estate, fueling their growth plans while solidifying a long-term operational presence in this highly tech-enabled facility.

Client Objective:

Cardinal Cycling Group, a globally recognized leader in carbon fiber road and gravel racing bicycles, sought to optimize their balance sheet by monetizing the value of their Landrum, SC facility. The site, a cornerstone of Cardinal’s operations, represents the company’s commitment to cutting-edge manufacturing technologies, including Resin Transfer Molding (RTM), which sets them apart as the only scale operator in the industry using braided carbon structures.

To continue their growth trajectory and fulfill government-backed investment initiatives, Cardinal needed a financing structure that would secure long-term operational control for the business's operations while generating significant funds to fuel their expansive operational enhancements at the site.

Solution:

Ascension Advisory partnered with Cardinal to structure a bespoke sale leaseback solution. Leveraging its deep network of investors, Ascension identified a buyer experienced in industrial sale leasebacks and familiar with the growth potential of the global bicycle market.

The sale leaseback agreement featured:

• A long term absolute triple-net (NNN) lease: Cardinal retained full operational control of the property while providing for a low-maintenance structure for the landlord.
  
  
• Below-market rents: The starting rent provided significant cost savings for the business as the company continues to scale, providing healthy headroom to the company's cost structure.
  
  
• Annual rent escalators: The contractual rent uplifts provide predictable rental growth for the new landlord.

Conclusion:

The sale leaseback transaction enabled Cardinal Cycling Group to unlock significant capital that it can now use to reinvest into a variety of transformative growth initiatives for the rapidly-expanding business. With a strong operational presence in the Greenville-Spartanburg metro area—a hub for advanced manufacturing—Cardinal is well-positioned to scale its operations and cement its status as the largest RTM carbon fiber bicycle manufacturing facility in the country.