Our Investment Philosophy
Focus on the mission critical real estate assets of lower middle-market businesses which have been historically underserved by larger private equity firms which provides an opportunity to achieve some of the most compelling risk-adjusted returns available across the sale leaseback spectrum.
Commonwealth is active in the market with a robust pipeline of acquisition targets that involve mission critical real estate, strong underlying businesses, and ownership profiles with significant net worth tied to operations. On a case-by-case basis, Commonwealth will also pursue opportunistic deals that meet or exceed target expectations. These select deals may include distressed assets or near-term lease expirations.
Why Net Lease Real Estate?
- Strong cash flow in a highly passive manner
- Protected credit position behind ongoing tenant operations, corporate guaranties, security deposits, and ultimately backstopped by the land and building improvements
- Tenants self manage property
Benefits of Real Estate Investing
- Inflation hedge
- Uncorrelated/low correlation to other strategies
- Earn current cash flow
- Offset of depreciation for certain investors
- Physical assets in strong locations are durable stores of value
Structuring a Sale Leaseback
- Structure lease to optimize return between real estate investors and operating company. The real estate value also increases if the Tenant continues to grow and profit
- Lease can be tailored to be more intensive from a controls and monitoring standpoint
- Liabilities of historic ownership remain with Tenant
Opportunistic Real Estate Transactions
- Opportunistic real estate transactions allow for select deals that meet or exceed the target returns
- Deals can include assets with near term lease expirations, distressed assets, new development, or redevelopment
- Create unique opportunities to further diversify investment portfolio