NEW JERSEY • PENNSYLVANIA • DELAWARE

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Case Studies

 

Jiffy Lube

Acquisition and Leaseback of 25 Jiffy Lube Locations

Situation:

Jiffy Lube International wanted to repurchase the Houston market stores from one early franchisee. However, it did not have the borrowing capacity to purchase the franchisee rights and the real estate for 25 site locations in Houston that were owned by a single operator. Hill and his prior firm, Interstate Commercial Real Estate, were handling build-to-suit sites for Jiffy Lube in four states and were asked to assist Jiffy Lube. 

Execution:

Hill and his partners created a structure whereby the operating value would be separated from the real estate and then utilized their credit sources to purchase the 25 locations for $15 million. The team then leased the sites back to Jiffy Lube International, when the net worth of Jiffy Lube was only $50 million. 

Result:

Twenty-five sites were purchased within six months from the current owner, and 25 separate leases were granted to Jiffy Lube International for 20 years. Despite the tenant’s net worth of only $50 million, Jiffy Lube was able to regain control of the fifth-largest metropolitan market and grow its store count from 25 stores to more than 75 stores, with minimal capital outlay.