EPO Center, a 31,300-square-foot self-storage and office property in Port Orchard, Wash., recently sold for $1.43 million. Built in 1971, the center originally consisted of three office buildings totaling 18,230 net rentable square feet. In 2002, a self-storage facility was built on 1.03 acres in the rear of the property, consisting of 13,070 net rentable square feet and 67 units.
As of March 1, the office building was 63.5 percent physically occupied and the storage facility was 77.6 percent occupied. At those rates, the assets were 10 percent to 15 percent less occupied than the average office and self-storage properties in Port Orchard. The facility has excellent visibility along Southeast Mile Hill Drive with a traffic count that exceeds 18,000 vehicles per day. The self-storage rents at the site are 15 percent to 25 percent lower than those of its closest competitor.
Based on the current net operating income, the new buyer would immediately achieve 10 percent cash-on-cash return, with the opportunity to lease the vacant office and storage spaces.
The seller, a private investor, was represented by Joel Deis and Christopher R Secreto, senior self-storage investment specialists in the Seattle office of Marcus & Millichap Real Estate Investment Services. Because the asset was free and clear, the seller was willing to provide interest-only financing for 120 months. The rate for the first 30 months was to be 5 percent and would increase 50 basis points every 30 months through the end of the term.
Founded in 1971, Marcus & Millichap is one of the nation’s largest firms specializing in commercial real estate investment services. With more than 1,200 real estate specialists in 70-plus offices, the company closed 4,302 transactions in 2010. Marcus & Millichap includes a National Self Storage Group that specializes in self-storage real estate transactions.