How Matthews™ Advised a Sponsor-Backed Outdoor Recreation Platform on a Sale Leaseback in Colorado

Background

Our client, an established private equity sponsor with over 25 portfolio companies, had assembled a platform of leading, year-round outdoor recreation businesses. One of its recent add-on acquisitions included the company’s mission-critical real estate. The property, strategically positioned along the Colorado River within Colorado’s broader Vail-Aspen Mountain corridor, served as a mission-critical operating base for the portfolio company’s rafting and adventure operations.

After several years of ownership, Matthews™ Corporate Advisory identified an opportunity for the sponsor to strategically separate the real estate from the operating business. The objective was to unlock embedded equity, reduce leverage and further optimize the company’s balance sheet while preserving long-term control of a location integral to the business.

The timing followed a softer operating season influenced by external factors, including a less favorable winter snowpack and resulting river conditions. Rather than viewing the real estate as an asset to sell, the agents approached the carve-out as a deliberate capital-allocation decision designed to strengthen the business and position it for future operating seasons.

Matthews™ Corporate Advisory was engaged to structure and execute the sale-leaseback through a confidential competitive process.

The assignment carried an additional layer of complexity where a meaningful portion of the property consisted of an underutilized self-storage operation, creating a second source of value with a fundamentally different investor profile.

Matthews™ ultimately generated multiple offers and identified a buyer capable of underwriting both the long-term tenant credit and the operational upside embedded in the self-storage component.

The transaction closed within roughly 60 days from launch to closing and established a tailored longterm lease structure aligned with the sponsor’s operating and capital objectives.

Location-Driven Mission Criticality

The property’s mission-criticality was driven less by specialized building improvements and more by its geographic positioning and experiential value.

The operating company’s rafting and outdoor recreation business relies on direct access to the Colorado River, customer staging, equipment movement and proximity to some of Colorado’s most established mountain resort and tourism destinations.

The location supports more than occupancy. It is part of the customer experience itself bolstered by tangible reviews, knowledgeable staff, and irreplaceable “drive-times” to resorts and hospitality points of interest.

That created a form of mission criticality that was highly location-specific but difficult to quantify through conventional real estate underwriting. Unlike a manufacturing facility where machinery or specialized infrastructure may make relocation impractical, much of the irreplaceability here was tied to geography, river access, surrounding tourism infrastructure and the experience associated with the location.

Real Estate & Credit Underwriting Challenges

The transaction required investors to understand a business whose operating performance naturally carries greater variability.

Outdoor recreation can be influenced by:

Seasonal Concentration
Broader Consumer and Economic Conditions
Tourism Patterns
Weather Conditions, River Flows, Wildfire Activity

Matthews™ worked with investors to place the most recent operating season within the context of multiple years of historical performance, demonstrating the underlying durability of the company rather than allowing a single season or external disruption to define the credit.

The company also maintained activity extending beyond the core rafting season, providing additional operating diversification and helping investors evaluate the tenant on a broader annual basis.

The strength and institutional nature of the sponsor were also important components of the underwriting story. Investors were evaluating a portfolio company owned by an established private equity platform with multiple investment vehicles and a demonstrated history of institutional ownership, rather than an independent or lightly capitalized operator.

Together, historical business performance, institutional sponsorship, sustainable occupancy economics and the strategic importance of the property supported investor conviction.

Execution & Party Outcomes

Sponsor/Portfolio Company

Converted company-owned real estate into approximately $2.45 million of gross liquidity, transforming illiquid real estate equity into immediately productive capital to support the sponsor’s objective of materially reducing companylevel debt and strengthening the balance sheet, while preserving long-term control of a mission-critical location without disrupting the operating business.

Lease Structure

Matthews™ helped structure and negotiate a tailored leaseback designed around the company’s operating requirements and the sponsor’s long-term planning.

The lease addressed occupancy costs, operating expenses, access, parking, shared infrastructure and seasonal operating requirements while clearly separating the tenant’s mission-critical areas from the buyer-controlled self-storage component.

Initial annual Base Rent for the operating business translated to a purchase price exceeding 15x initial Base Rent, with additional economics available to the buyer through the offered self-storage operation.

Buyer

Matthews™ identified a buyer positioned between the traditional net-lease and self-storage investor universes sophisticated enough to underwrite institutional sponsor-backed tenant credit and sale leaseback economics, while sufficiently hands-on to recognize and operate the ancillary storage opportunity.

That buyer profile proved critical to maximizing the combined value of the property.

Result

Matthews™ Corporate Advisory conducted a fully confidential competitive process, generated multiple offers and managed an accelerated diligence and closing timeline.

The Matthews™ agents worked alongside the sponsor through the following: