Real Estate Acquisition
Unlocking the Value for Business Owners
Royal Oak looks for opportunities to acquire commercial real estate through brokered and non-brokered opportunities. The monetization of real estate assets may make strategic and financial sense to separate the value of the real estate from the value of the business.
Selling your real estate to Royal Oak Realty Trust allows property owners – who frequently also own the business occupying the property – to monetize a commercial real estate asset and redeploy that capital into their core business.
Working with Royal Oak to acquire your property can potentially provide potential tax efficiencies as well as the ability to use the proceeds of the sale to pay off a mortgage or other long-term debt – which can strengthen the company’s balance sheet.
Real Estate Acquisitions Criteria
Profile: Single-tenant, triple and absolute net leased properties (individual buildings or portfolios)
Building Type: Primary focus on Industrial (manufacturing /distribution) but will also acquire Office, Call Centers and Medical
Transaction Size: $5 to $35 million
Tenants: Credit-worthy tenants, including public, private or P/E owned, operating in a broad range of industries
Lease Term: Long-term leases, typically with a remaining term of 10+ years and structured at or below market rents
Geography: Typically located within 25 miles of a top 75 MSA with a focus in the Northeast, Midwest, South and Southwest
Why Work with Royal Oak to Sell Your Real Estate? – “Win-Win” Outcomes
Royal Oak is a well-capitalized, all-cash buyer with no financing contingencies. We have an extensive, proven network of third-party and legal due-diligence experts that allow us to close real estate transactions quickly and efficiently.
Royal Oak offers flexible leaseback terms that help business owners (the former property owners) to achieve at or below market rental rates, more attractive renewal options, and certainty about future obligations.
Sellers also benefit from locking in a clear, long-term plan for the use of their real estate, which can help with business succession and ownership transition in the future.
Structuring Your Real Estate Acquisition
Royal Oak offers creative and flexible leaseback structures and work towards “win-win” outcomes with each transaction.
Here are some of the most common acquisition structures:
At Royal Oak Realty Trust, we value our relationships with commercial real estate brokers and encourage them to make Royal Oak the first contact when a reliable, all cash buyer is needed.
In a sale-leaseback, a business owner sells the real estate it owns to Royal Oak while simultaneously signing a long-term lease to continue to occupy and use the property. This is the most common acquisition transaction for Royal Oak. Royal Oak then acts as a stable and supportive landlord willing to continue to invest additional capital for upgrades and improvements.
Such leases are frequently structured on a “triple net” basis. In a triple net lease, the business owner continues to retain operational control over the property and is responsible for the majority of property and operational expenses, including property taxes in exchange for a lower monthly rent.
A sale-leaseback transaction allows property owners – who are also the owner of the business occupying the property – to monetize the value of their real estate and reinvest in their business or pay down debt.
A Section 721 UPREIT exchange is a tax deferral/tax avoidance strategy for property owners facing capital gain tax liabilities on the sale of appreciated property with a low tax basis. In an UPREIT transaction, property owners exchange their real estate for operating partnership units (“OP units”) from Royal Oak. OP units can be converted to common shares over time.
An UPREIT exchange offers property owners the ability to convert illiquid, long-term assets (i.e., real estate) with low tax basis into more saleable securities while diversifying their real estate holdings from one property into a portfolio of properties.
Sellers benefit from strong portfolio diversification, monthly income distributions, professional management, as well as tax and estate planning flexibility.
Royal Oak will also partner with institutional investors, real estate developers and other firms to acquire portfolios of single tenant, net-leased real estate assets that fit our acquisitions criteria. Royal Oak has also worked with private equity firms to provide acquisition support through a simultaneous acquisitions/sale-leaseback transaction.
The success of Royal Oak Realty Trust is largely based on our ability to provide net lease real estate solutions to property owners and tenants. If you are seeking to monetize a commercial real estate asset; find a landlord who works as your partner; or develop a creative real estate solution to fit your specific business situation, Royal Oak can help.