CHALLENGE

Hospital Laundry Services (“HLS”), a non for profit hospital consortium, owned a 310,000 SF industrial building and hired Jack Rosenberg and Fred Regnery to explore real estate disposition options as they looked at selling the business. After HLS selected a buyer, the successful sale and leaseback of the facility to a real estate investor became a critical component of the company sale transaction.  Jack and Fred identified the best buyer to execute the real estate purchase which allowed the company sale to proceed as planned.  The transaction was complicated by the necessity of the purchaser of HLS to close on the real estate sale and company purchase concurrently.

STRATEGY

Jack and Fred used their experience with similar transactions in the area to quickly identify three buyers who would understand the value of the asset, had the capital structure necessary to close expediently, and had a reputation of not “re-trading” deals.  Although the purchaser had solicited offers directly from buyers previous to Fred and Jack’s involvement in the transaction, Fred and Jack identified an investor who had been overlooked.  After conducting several rounds of auctions among all parties, the investor Fred and Jack initially identified as a top buyer submitted the highest bid with the lowest lease rate to HLS.  A major challenge of the project was the virtual collapse of the real estate capital markets during the transaction in Q4 2008.  During that time period, many real estate investors found themselves unable to close transactions due to lack of available capital.

RESULTS

In a real estate market where sale/leaseback transactions had come to a halt due to the credit crisis, Jack and Fred were able to identify a buyer with the funding to close the transaction in a difficult market without re-trading the terms.  Jack and Fred’s successful management of the sale/leaseback transaction allowed HLS to close on the sale of the company.