Being Bought by a Self-Storage REIT: Where to Begin and What to Expect

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Halverson: The typical acquisition cycle is somewhat dependant on the complexity of the transaction and the required due diligence. On average, the process takes between 60 and 120 days.

Marr: We pride ourselves on and have developed a reputation for moving quickly. We have the capital available to transact without financing contingencies and a streamlined due-diligence process that results in a condensed yet thorough period from contract to close.

What’s your policy on existing facility staff when you acquire?

Doll: We are always looking for qualified personnel to run our properties. Where owners are willing to allow us the chance to interview their personnel, it is a great opportunity to acquire local knowledge. From the employees' perspective, coming on board with Public Storage provides the financial security of a larger company, with opportunities outside the specific site.

Halverson: Employees are evaluated on a person-by-person basis. They are interviewed and evaluated on the same criteria as every Extra Space employee.

Marr: We generally make a concerted effort to successfully integrate the existing facility staff into our platform and are generally successful in doing so. However, we take pride in having talented, friendly, and service-oriented employees. Therefore, recognizing that our strong culture and customer-service reputation starts with our employees, we will make a change when there is not a fit.

Piegza: We like to keep the existing staff whenever possible. Of course, the decision works both ways. Each associate needs to decide if Uncle Bob’s is a good fit for his or her career goals as much as Uncle Bob’s needs to decide if the associate can meet our high level of performance expectations.

How do you decide the amount to offer for a facility?

Doll: There is not a set formula. The market and the location inside the market have a lot to do with the pricing. An “A-quality" asset in a great location in New York is going to be priced differently than a similar asset in Houston. The rents are different, the barriers to entry are different, and so the pricing is going to be different as well. Physical condition, risk and costs to drive occupancy and debt factors, interest rate, time to maturity, and assumptions costs and requirements are additional factors that will be considered if these are issues that the buyer must bear.

Halverson: Each property is evaluated and underwritten based on its trailing 12 months of performance,. And using proprietary data collected from 30-plus years of storage operation, Extra Space will model expenses to operate the property and potential revenue growth.

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