Marr: We look for institutional-quality assets in high-quality markets. When evaluating an acquisition target, we conduct a very detailed analysis of the asset’s location, access and visibility, surrounding demography, macroeconomic conditions, and supply and competitive dynamics. Location in a core market is paramount, as CubeSmart is focused on deepening its presence in those markets characterized by attractive long-term growth prospects and significant barriers to entry. There is no magic formula, though. Every opportunity is unique, and we welcome the opportunity to discuss and evaluate any opportunities that may arise.
Piegza: Location, quality of construction, market area, and how well the property fits with our overall portfolio and operating strategy.
If an owner wishes to sell to your company, how should he initiate the process, and what can he do to prepare?
Doll: It’s easy ... Give us a call. Between Google Earth, our understanding of markets and the resources of our system, we can quickly evaluate our interest in the property.
As for what to prepare, the more information the seller has available, the less “guessing” a buyer has to price into his offer. At a minimum, you should be prepared to share your trailing 12 months of operational results, a unit-mix report (by size, number of square feet, in-place rents) and any information on debt that may not be extinguished at closing.
Halverson: The owner simply needs to reach out to Jim Stevens, senior vice president of real estate, or his team. They can be reached directly or by calling 801.365.4600.
Marr: He or she could start with a simple phone call to Jonathan Perry, senior vice president of investments, or anyone else on the CubeSmart investment team. Owners find that we are open, honest, and fair to deal with, so making that first call, while a huge step, is an easy one. We can quickly evaluate the location and quality of a facility, and usually provide an indication of interest during the first phone call. If we transition to underwriting the asset, we will request a set of specific due-diligence items from the owner; but these requirements are very straightforward and generally include financials and a variety of operational reports that should already be at the owner’s fingertips.
On average, what’s the time frame on a facility acquisition?
Doll: Generally, we can complete a transaction in 30 to 45 days, assuming there are no debt-assumption requirements. Title survey and environmental reviews are generally the drivers of time, so if a seller wants a shorter time frame, get this work done in advance.