Real estate is a Day One problem.

The real estate map of every carve-out.

The first step is the map. Every site occupied by the carve-out perimeter is listed. Owned property, leased property, and shared facilities are coded separately. The map is built from the seller's lease schedule, the asset register, the facilities cost center, and the headcount mapping. The four sources rarely match. The disciplined buyer reconciles them in diligence and surfaces the gaps.

Each site is then coded by use. Office sites support general staff. Production sites run manufacturing or operations. Distribution sites house warehousing or logistics. Data centers run IT. R&D sites are often regulated. The use matters because the relocation timeline, the permit risk, and the regulatory exposure all vary by category. A regulated R&D site cannot move in 12 months. An office site usually can.

The map ends in three buckets. Sites that move to Newco at closing. Sites that stay with the seller and are vacated by Newco employees. And sites that are shared and require a real estate TSA. The shared bucket is the source of most of the work. The pattern of mapping discipline overlaps with the broader carve-out Day One readiness approach.

Owned, leased, and the assignment problem.

Owned property transfers in the SPA. The mechanics are clean. Title moves to Newco at closing. The buyer pays stamp duty or transfer tax where applicable. The seller delivers a deed. The work is in the diligence to confirm clean title, no liens, and no encumbrances. The structural cost is low compared to the leased portfolio.

Leased property is where the work concentrates. Every lease has an assignment clause. Most leases require landlord consent. Landlords often use the consent moment to reprice, to extend the term, or to demand security. The disciplined buyer reads every lease in diligence and codes the assignment risk. Critical leases with strict consent clauses are the first issue to surface in the seller deal team.

Landlords are not always the obstacle. Many landlords welcome a credit upgrade when Newco is backed by a strong sponsor. The conversation is commercial and tactical. The buyer should approach landlords through the seller's legal team with a coordinated message about Newco's identity, capital structure, and operating plan. A weak first impression on the largest landlords can shut down options that should be open.

Shared sites and the reverse TSA pattern.

Shared sites are the hardest category. A single building houses both Newco staff and seller staff, served by a single facilities contract, a single utility account, and a single front desk. The site cannot be split immediately. The TSA needs to define how each party operates inside the shared envelope.

The two basic structures are the forward TSA and the reverse TSA. In the forward TSA, the seller continues to provide facilities services to Newco for a defined period. In the reverse TSA, Newco continues to provide facilities services to the seller. The choice depends on who holds the lease, who employs the facilities team, and where the operating cost base sits.

The reverse TSA pattern is more common in real estate than in any other workstream. The carve-out unit often holds the lease and employs the facilities staff. The seller becomes a tenant for a defined period until the seller relocates its own staff. The pricing follows a cost-plus model. The structure is covered in the broader carve-out reverse TSA explained pattern.

The lease assumption and consent risk.

Every leased site that transfers to Newco is a separate landlord conversation. The standard package includes a deed of assignment or a tripartite agreement, a personal or corporate guarantee from Newco's sponsor where required, and any side letters that vary the original lease. The package needs to be negotiated by the seller's legal team but the buyer has to drive the commercial position.

Common landlord asks include a longer term, a higher rent, a stepped rent increase, a security deposit, a guarantor, or a release fee for the seller. The disciplined buyer prices these asks in diligence and reserves capital. Without that reserve, the negotiations end up funded out of operating capital in the first 90 days, when Newco is least able to absorb the impact.

Some leases will not be consented. The buyer needs a contingency plan for each. The contingency may be relocation, sublease from the seller, or a short term occupancy agreement while the buyer finds new space. The contingency cost is part of the diligence model. The pattern overlaps with the broader cost discipline of carve-out stranded costs.

Stranded space and the exit cost.

Stranded space appears when Newco leases more square footage than it needs after Day One. The cause is usually a shared site where Newco occupies part of the lease but is the named tenant on the whole. When the seller vacates, the unused space sits empty and Newco pays the full rent. The cost is real and recurring.

The disciplined buyer addresses stranded space in three ways. First, negotiate a partial lease assignment where the lease is split into two leases or a head lease and a sublease at closing. Second, negotiate a vacate fee from the seller for any space occupied by seller staff after closing, with a step up after a defined date. Third, plan a sublet or surrender if the local market supports it.

The exit cost for any site that Newco ultimately surrenders also belongs in the model. Lease break fees, dilapidations, restoration costs, and broker fees can be material. A buyer that models only the rent during the TSA and ignores the exit cost will understate the total real estate burden by 20 to 40 percent. The post-close cost discipline is part of the broader value creation work covered in carve-out 100 day plan.

The 100 day plan for real estate.

The first 100 days set the trajectory. Days 1 to 30 are about stabilizing the occupancy. Confirm every site is operational, every utility account is paid, every facilities contract is honored, and every safety, fire, and access protocol is documented. The goal is no operational disruption, not strategic optimization.

Days 31 to 60 are about resolving the landlord consents that did not close at signing. The buyer drives a coordinated landlord workstream with the seller's legal team. Each open consent has an owner, a target date, and an escalation path. The data is reported weekly to the operating partner.

Days 61 to 100 are about the optimization. The site-by-site review identifies space that can be sublet, surrendered, or relocated. The model is built against the value creation plan for the business. Real estate moves from a Day One stabilization workstream into a value creation workstream. Specialist support on this work is part of the Day One Readiness Program when the seller cannot resource it themselves.

More on carve-out advisory.