Real Estate in Search Fund Deals?

November 18, 2025

by a searcher from IE Business School in Amsterdam, Netherlands

Hey SF-ders, I am wondering since investors want asset light investments and are usually not interested in the real estate, would it make sense for the searcher to buy the real estate using a Mortgage (EU usually goes up to 90% of value) and then even if he has 0 money to ask the seller to finance the other 10% (with a promise to buy that within 5-10 years) and pay interest only over the 10% or is that not normal? How do you normally make sure investors are not getting too scared? Like the company pays rent to the prop co, but I do see some friction and conflict of interests here. That being said, if you have a 20 year lease...what can go wrong? I do see it as an opportunity for the Searcher to get control of both the company and the real estate the company is housed in. That last part can be important, but also generates risk. So if we can get the good, the bad and maybe the ugly that would be great.

Reply by a professional
from IESE Business School in Amsterdam, Netherlands

Thanks ˆredacted‌^ for the tag. ˆredacted‌, I covered Real Estate Finance in my IB days and structured some sale and leaseback transactions. It will probably depend on the value of the real estate compared to the overall deal size and the how big the rent is. The primary play is to buy and run a company, so if the RE becomes a chunk of it, it will lean more to financial structuring than generating more returns for the business. Negotiating for the business and RE in parallel may impact the terms you get on the business which will impact the deal returns. An interesting angle could be: get the RE [for cheap] bundled with the deal, and then get more value from it... e.g. if the company only uses 40% of the space, you can rent out the rest to other businesses etc etc... then that becomes a value add to the deal, but may not be significant enough... Again, considerations will differ by investor....

Reply by an admin
from Massachusetts Institute of Technology in Portland, OR, USA

^redacted‌ might be able to help here. Or if you know someone else that can help ^redacted‌ with Real Estate question (bonus points for EU), please tag them here. [press Shift 6 to tag someone]

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