The Firm Focuses on Sale Leaseback Transactions for Private Equity Firms and Corporate Real Estate Owners
Leveraging Investment Banking Experience and Corporate Finance Expertise to Unlock Capital, Strengthen Corporate Balance Sheets and Enhance Private Equity Returns
A team of experienced investment bankers, real estate and M&A professionals has formed SLB Capital Advisors, a real estate advisory firm focused on sale leaseback and M&A-related real estate transactions.
The group, with backgrounds at RBC Capital Markets, Bank of America and Salomon Smith Barney, as well real estate brokerage firm Stan Johnson Company, among other top tier firms, serves private equity firms and public and private corporations in evaluating their real estate capitalization alternatives. Collectively, the SLB team has closed over $140 billion of capital markets and sale leaseback transactions across a variety of industries.
Commenting on the utility of sale leasebacks, SLB Co-Founder and Managing Partner Scott Merkle said, “Corporates and private equity firms use sale leasebacks as an attractive capital allocation tool. Private equity firms in particular are 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. Sale leaseback capital can be redeployed by operating businesses to fund M&A or internal growth initiatives, and importantly can create real value.”
At the Convergence of Real Estate and Corporate Finance
SLB Co-Founder and Partner Matt Wrobleski noted that, “SLB Capital Advisors operates at the convergence of real estate and corporate finance. Differentiating from other general players in the space, our team uniquely brings the corporate finance and M&A experience needed to comprehensively analyze a sale leaseback and its impact on a company.”
Wrobleski added, “Given institutional investors are entering into a long-term financial arrangement with a sale leaseback counterparty, the sale leaseback is really more akin to a 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.”
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Specialized Expertise and Rising Importance
Regarding the firm’s formation, SLB Capital Advisors Co-Founder and Partner Stephen Cheng said, “We leverage our team’s extensive investment banking and corporate finance experience to focus exclusively on the advisory and execution of sale leasebacks and M&A-driven real estate engagements.”
Cheng continued, “In this current market environment, sale leasebacks are even more topical, as businesses seek attractive means of raising capital. Our broad fluency in sale leasebacks, real estate, corporate finance and M&A enables us to provide a distinct advisory perspective to every engagement.”
Bringing a Holistic View to the Sale Leaseback
Merkle said in most property transactions, the asset is held by a real estate investor and sold to another real estate investor. Sale leasebacks differ in that the seller is not a traditional investor, but rather an operating business, and is selling it to achieve corporate objectives such as enhancing earnings or unlocking value.
In addition to the traditional capital allocation decision, Merkle noted that a key element of a sale leaseback process is structuring an optimal lease. “The time frame over which a sale leaseback has an impact typically exceeds the holding period of private equity investors. As such, a sale leaseback should be properly structured to be amenable for a future liquidity event.”
Further sale leaseback considerations include the pro forma credit impact, optimal rent structure and tax impact. “Any company contemplating a sale leaseback should be as concerned about the credit, coverage and tax impacts of an associated real estate transaction as they are about how they will deploy the capital they have extracted from the sale.”
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A Strategic Advisor to Corporates
SLB Co-Founder and Partner Malik Franklin said, “We are at an interesting point where corporate real estate owners are looking for creative, cost-efficient capital sources, re-evaluating their strategic footprints, and looking to proactively demonstrate their ability to deliver value to their shareholders. A sale leaseback allows a company to unlock capital trapped in operationally important assets and reinvest into other areas of the business where it can earn a higher return for shareholders. Partial sale leasebacks can also be a particularly effective tool for unlocking value from underutilized facilities whereby the company sells the facility to a real estate investor and leases back only the portion needed to support their operations.”
He continued, “On the other hand, you also have corporates interested in on-shoring segments of their traditionally international supply chain, acquiring businesses with domestic facilities, in essence expanding their footprint. Sale leaseback capital can be used to finance that acquisition cost.”
Experienced Key Personnel, National Footprint
SLB Capital Advisors is headquartered in New York City and has a national presence with six founding Partners and Principals across the U.S.
Scott Merkle, SLB Capital Advisors Co-Founder and Managing Partner, has more than 20 years experience in real estate and investment banking. Prior to SLB, he was with RBC Capital Markets and Stan Johnson Company.
Matt Wrobleski, SLB Capital Advisors Co-Founder and Partner, has more than 15 years experience in M&A and corporate development. Previously he was with Leggett & Platt, Inc. and Stan Johnson Company.
Stephen Cheng, SLB Capital Advisors Co-Founder and Partner, has more than 16 years investment banking and real estate experience. Previously he was with Oppenheimer, RBC Capital Markets and Stan Johnson Company.
Malik Franklin, SLB Capital Advisors Co-Founder and Partner, has more than 15 years in real estate, healthcare and technology investment banking and five years as an advisor and independent sponsor in private equity. Previously served as CFO of First Capital REIT, and an investment banker at RBC Capital Markets, Bank of America and Salomon Smith Barney.
Stewart Riggs, SLB Capital Advisors Co-Founder and Principal, has more than 12 years of real estate and advisory experience. Prior to SLB, he was at Stan Johnson Company, LBMC and Ernst & Young.
Dave Rosenberg, CFA, SLB Capital Advisors Co-Founder and Principal, has more than 12 years of investment banking and real estate experience, focused on M&A and corporate advisory. Prior to SLB, he was at Santander, Janney Montgomery Scott and RBC Capital Markets.
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