Real estate advisor

What this seat actually does

In private companies the operating business and the property it occupies are frequently owned by the same family through different entities, often with a lease that was never negotiated at arm’s length. Separating them is a transaction of its own, and the terms of the lease that survives can be worth as much as a turn of EBITDA.

The advisor values the property independently, tests whether the current rent is above or below market, and helps structure the lease the buyer will inherit. A below-market rent flatters the operating company’s earnings; a buyer’s diligence will find it and normalize it, and it is far better to have understood that yourself first.

When you need one

Whenever the business occupies property connected to the owner, which is most of the time. Start early on the sell side, because the lease structure is easier to fix before a buyer is reading it.

How they charge

Fee for valuation and advisory work, sometimes commission where an actual property transaction results. Ask which applies to which part of the engagement.

What to ask before you hire

• Is the current rent above or below market, and by how much?
• What lease would a buyer of this business expect to inherit?
• Should the property be sold with the business, retained and leased, or sold separately?
• What does the property’s condition oblige someone to spend in the next five years?

How to compare candidates

• Local market knowledge is the whole product. National reach is irrelevant for a single building.
• Prefer someone who has advised on a property held alongside an operating business, which is a different problem from a straight investment sale.

The mistake owners make

Treating the building as a separate matter to sort out later. The rent is inside the earnings a buyer is pricing, so it is not separate at all.

What this is not

Not environmental diligence, though the two frequently meet. Not your transaction counsel, who will paper the lease once the terms are decided.

The Institute accepts no payment from any advisor, takes no fee tied to any transaction, and does not place or refer professionals for compensation. This entry describes a role, not a recommendation of any firm.