The Background

This Tractor Supply net lease sale closed at $5,400,000 to a publicly traded REIT. The asset is a freestanding 21,700 square foot building on 3.13 acres at 1988 East Florence Boulevard in Casa Grande, Arizona, corporate guaranteed by Tractor Supply Company at an S&P rating of BBB, with the lease running through September 1, 2030, four 5-year renewal options and 10% rent increases every 5 years. With 320 feet of frontage on a corridor carrying more than 25,000 vehicles per day, it was exactly the investment-grade profile institutional buyers target.

The Problem We Had to Solve

Roof issues surfaced after the property was already in contract. With a private buyer, that is a negotiation. With a publicly traded REIT, it is closer to a wall. Institutional buyers hold firm on asset condition, and their approval process leaves very little room for an informal handshake about who pays for what. The three realistic outcomes in front of us were a full reopening of the negotiation, a price reduction, or a dead deal with a buyer we could not easily replace at that pricing.

What We Did

We kept the conversation off the price. Rather than reopening the purchase price and sending the deal back through the buyer’s approval process at a new number, we worked out an agreement with the seller to credit the buyer at closing to offset the cost of the roof. The REIT got what it actually needed, which was to not absorb an unbudgeted capital expense. The seller kept the deal, the timeline and the contract price intact.

How It Closed

The sale closed at $5,400,000. The REIT acquired a long-term, corporate-guaranteed asset with contractual 10% increases every 5 years, and the seller closed without a re-trade or a lost buyer.

The Silber Difference

A due diligence finding is a structuring problem, not a pricing problem, and the difference between those two framings is often the difference between closing and starting over. Physical issues surface on a meaningful share of the deals we close. Knowing how an institutional buyer’s approval process actually works is what lets us solve them at the closing table instead of at the negotiating table.