Sale and leaseback acquisition funded through debt substitution
Sector
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Finance
Deal type
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Acquisition
Value
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£12m → £17m
Location
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Keighley, West Yorkshire

In this record
A private equity house in Leeds had bought a business and wanted a sale and leaseback on its property to help fund the acquisition.
What made the transaction work was something we were already holding, and it had nothing to do with the mill.
We had borrowed long-term money from an insurance company. When you take out fixed debt and repay it early, you compensate the lender for the borrowing period they expected and did not get. On this loan, that early redemption payment was around £1.5m.
Most owners treat a figure like that as the price of moving on.
Rather than repay, we looked for a substitution property. Sell building A, replace it with building B, and provided building B has the right dynamics for the lender, the debt moves across. The redemption payment is never made, because the loan is never redeemed.
That turns the question into a different one. Instead of asking whether the mill was a good buy in isolation, we were asking whether it satisfied a lender who already had money out and would rather keep it out.
The mill itself was a very large piece of old industrial property in Keighley. Standing empty it would have presented development proposals, but that was not what this deal was about. The tenant was.
The occupier was a large trading organisation supplying products into the UK retail sector. The mill was never going to be ideal for them permanently, but the strength of the company paying the rent was such that they would always be able to afford it.
We paid £12m, with stamp duty on top. Against that we had £10m of debt sitting on deposit, plus the £1.5m redemption payment also on deposit, so £11.5m was already in place before we put a penny of fresh equity in.
The lease ran twenty-five years at £1.5m a year with fixed uplifts, and the asset valued at around £17m, which the bank was comfortable lending against.
The effect of the substitution was that the cash we had to put in, fell from roughly £3m to roughly £1.5m.
The yield on the property was high enough to carry a higher cost of borrowing, and after finance costs the asset threw off a surplus of around £700k a year on £1.5m of equity.
The redemption payment had stopped being a cost and started being equity. A redemption penalty is only a cost if you redeem the loan. Handled properly, it is the capital you already own, sitting in a place most people never think to look.
Speak to our team
A redemption penalty, a fixed loan, an asset you no longer need: handled properly, each can become equity rather than cost. If you are weighing a sale, a refinance or a debt substitution, we would welcome a conversation.
Key insights
Real estate sits alongside equities, private equity and fixed income in most family office portfolios – but it behaves differently to all of them, and that's exactly why it earns its place.
Real estate is one of the core asset classes in most family office portfolios, alongside public equities, private equity, fixed income and increasingly private credit. Family office asset allocation to real estate has grown in recent years, driven by its long-term yield, its role as a diversifier against public markets, and its suitability for multi-generational holding periods that few other asset classes match.
Family offices typically hold a mix of private equity and direct investments, real estate, public equities, fixed income and alternative investments, with the exact split varying by size, generational stage and risk appetite. Real estate tends to justify its place in that mix for reasons other asset classes don't share: a steady, long-term income yield; a long holding horizon that matches how families think about multi-generational wealth; and enough direct control that a family can shape an asset's performance rather than simply hold a position and wait.
Once real estate earns its place in the allocation, there's a separate question of how to access it – directly, or through a fund or REIT structure. That decision affects fees, control and liquidity in more depth than an allocation discussion needs to cover; the trade-offs are set out in full in our guide to financial planning for property investment. What matters at the allocation level is simpler: direct ownership is what lets a family actively shape a property's performance rather than passively hold a position in it, which is a large part of why real estate earns a place in the portfolio in the first place.
Discovery Park in Kent is a clear illustration of what that control can achieve. Brought under active management, the science park's capital value grew from around £20m to more than £75m over two years – restructuring leases and separating out service charges rather than simply holding the asset and waiting. A passive fund position, with no say over how the asset is run, couldn't have delivered the same outcome.
UK real estate remains a core allocation, but the mix within it is shifting. Portfolios are diversifying into student accommodation, retail parks and leisure assets alongside the more traditional office and residential holdings, and branded hotel and hospitality assets remain in favour where they carry a strong covenant. Family offices weighing new allocations are also factoring in wider considerations earlier than before – joint venture and asset management arrangements, transparency requirements such as the Land Registry's Persons of Significant Control and Overseas Entities registers, and planning and tax implications specific to the deal.
Maritime Capital's own track record reflects the same pattern of diversification: self-storage and leisure conversions such as Storage Box in Hersham, branded hospitality including The Forbury Hotel in Reading and Raithwaite Sandsend in Yorkshire, and retail assets alongside the more familiar office and residential holdings. The common thread isn't the sector – it's a covenant and a business model resilient enough to justify the allocation in the first place.
Few asset classes hold up as well across multiple generations as real estate. A well-managed property can be improved, repositioned and passed down without a fixed exit forced by a fund's term, which matters to families thinking in decades rather than years. That said, realising the benefit depends on active management – a passively held property doesn't generate the same value as one where lease strategy, service charge control and repositioning decisions are being made deliberately.
Hungerford Park shows what that looks like over a genuinely long horizon. Acquired in 2005 as a 300-acre estate, it's been built over two decades into a working farm, a holiday-let business and an events venue – the kind of layered, multi-generational value creation that a fund's fixed term could never accommodate, and that only comes from treating the asset as a long-term project rather than a static holding.
Most family offices don't carry deep in-house real estate expertise alongside their wider investment team, which is why property is often the asset class most commonly brought in through a specialist partner rather than managed entirely in-house. Maritime Capital works alongside family offices and their existing advisers – wealth managers, investment managers and private banks – on the UK commercial property portion of the portfolio specifically, from acquisition through to ongoing asset and property management.