This site is part of the Global Exhibitions Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Informa

Preparing Your Self-Storage Property for a Life-Changing Event: The Sale

Comments
Print

By Colliers International Self Storage Group

Now’s a great time to sell your self-storage property. Pent-up buyer demand is significant—in other words, there’s more cash available in the market than properties. Interest and capitalization rates are also at an all-time low, allowing investors to be as aggressive in their pricing and purchase of a property as ever before.

If you’re interested in selling your facility, do it now while buyers are buying. Here are some tips on preparing for that life-changing event.

Facility Value and Brokerage

First, how do you know the value of your property or portfolio? The best advice is to engage a broker who specializes in self-storage to provide you with a broker opinion of value (BOV). A well-done BOV will establish realistic pricing expectations based on real-time market conditions.

The right broker will consider all aspects of the investment market, which is particularly important with so many non-traditional storage buyers recently entering. He’ll evaluate the positive features of your property, mainly its current and projected financial performance relative to the market metrics. Finally, he’ll close the transaction effectively using all tools of experience, including inside knowledge of the buyer.

The Proactive Seller

To prepare your property for sale, ensure you’re operating with industry-current management software, your financials have been prepared using standard accounting procedures, and your facility is operationally efficient, well-maintained and in good condition. Taking the proactive approach on these items is going to bring incrementally if not significantly higher pricing to the transaction at closing.

Here are some financials you should be prepared to provide:

Income and expense statements. Three years of statements can show established financial trends and allow the buyer to make a quick analysis of the property’s performance. Income and expenses should be itemized in as much detail as possible. Capital expenditures for major replacement or repair, i.e., HVAC units, asphalt, fencing, video cameras, etc., are typically of a nonrecurring nature and shouldn’t be included as operating expenses. Presenting this information in Excel format will allow those analyzing the deal to do so more quickly.

Be prepared to present your profit-and-loss statements on a trailing 12 months (T-12) from any month within the year. This will take into account any recent rent increases that could show an improved net operating income.

Management summaries. A T-12 management summary will offer the buyer a quick look at information he’ll find useful, including monthly and year-to-date move-ins, move-outs, security deposits, delinquencies, unrentable and vacant units, total bank deposits, etc.

Rent roll. A true rent roll provides a tenant roster at the end of each month including the unit-mix dimensions, actual rent charged vs. advertised rent, rent paid, and length of stay. Again, present it in Excel format.

« Previous12Next »
Comments
comments powered by Disqus