Real estate firm helps QSRs acquire financing to scale through tailored sale-leaseback solutions
“Any franchisees that signed development agreements in the last few years are facing tremendous pressures in getting their new stores funded, built and open. It’s an ongoing and complex challenge that we dedicated our company towards solving,” said Matt Kramer, Managing Partner at Century Partners Real Estate.
Feasibility is an ongoing concern for QSR operators, between construction costs, permitting delays and high costs in capitalizing the project have made new developments expensive and time-consuming, while competition for prime sites—particularly for freestanding drive-thrus—continues to intensify.
“Funding has been a continuous sticking point since rates and volatility ramped up after the post-COVID boom.” said Kramer. “The lowest cost of capital, generally, is the sale-leaseback. If it makes strategic sense for the operator, sale-leasebacks are a great choice. We’ve been able to help our clients get their expansion “snowball” rolling by structuring a repeatable and marketable lease, then transacting the property to a new owner sourced through our national network of real estate investors,” said Kramer. “We’re on track to unlock $250M for various operators through sale-leasebacks this year.”
The key to Century Partners’ success has been securing sale-leasebacks for smaller operators. The majority of the firm’s clients have less than 50 units.
“We’ve worked with brand-new 1-unit operators to a 380-unit publicly traded operator. In the case of the 380-unit operator, we’ve recycled around $20M in capital in total for them over the course of the relationship and that number will continue to go up as time goes on — they’re on a pretty steady expansion rate, with many of these stores being brand-new ground-up builds.”
For operators without in-house development departments, Century Partners can connect operators with appropriate capital providers.
“Operators are blown away when they realize that they can recycle capital to grow this quickly. For example, we helped a 7 Brew operator scale from 1 to 6 units in a single year. We helped another client go from 1 to over 20 units in a single year. Many operators that we talk to are surprised that sale-leasebacks were even an option for them — either they didn’t even know about the method or they were unsure that it would work for their particular business. We build a specific plan spend a lot of time getting it right, specifically with the lease structures, to ensure the best possible outcome for the client.”
“We’re not a one-trick pony, however,” said Kramer. “We have several other tools in the belt that we can use to secure funding for operators. Our core business is finding creative financing solutions — unlocking the capital to help operators expand. Essentially, let us handle wrangling the real estate element, and let you focus on your core focus, which is running a successful day-to-day operation.”
For more information, contact Matt Kramer at [email protected] or visit www.centurypartnersre.com.