The occurrence of buyers coming directly to owners with purchase offers is standard operation in this industry. They are looking to buy these properties off market in hopes to get a good or below market deal. What we do for owners looking to sell and/or test the market is we put an opportunity in front of all major self storage owners, large private equity investors, Real Estate Investment Trusts (REITS), operators and developers. This is the only way to ensure you are receiving the maximum amount of cash the industry is willing to pay for your asset(s). Taking this approach has proved successful too many times to count for owners. A few recent examples are outlined below:
· We sold a four property portfolio in November 2018 in a primary market. We consulted with the owners and gave them our market valuation. However, they decided to try and sell these assets on their own to a large operator who approached them directly. After going through significant time and retrading by the purchaser, the owners came back to us and asked us to exclusively list their portfolio. We did so and had significant interest and several offers immediately after taking this deal to market. The result of our efforts was we were able to move the price up $11,000,000 from the retraded figure the off market buyer reduced their offer to. After our buyer negotiated the price downward to account for necessary repairs or account for the condition of these properties (through due diligence discovery), the owners still made $9,000,000 more than what they would have made from the attempted off market deal, a whopping 20% difference between accepting an off market offer and using us to market the property.
· Another deal we were involved in sold for nearly $100 per square foot more than a very comparable property that sold in March 2019 (i.e. based upon rentable space). These two properties are in the same market and are very close to one another. They are both industrial conversions with strong/stabilized occupancies and similar rental rates. Really there is not many differences at all between the two properties other than about 30,000 square feet. We point this out because the sale in March 2019 for nearly $100 PSF less was a sale to an off market buyer. The deal we got our current client was the result of the owners giving us an exclusive listing, which allowed us to take this opportunity to the entire self storage industry. Pitting several buyers against one another really drove pricing!
· An owner in the Midwest had received an offer from a mid size operator on a property that had physical, economic and surrounding market challenges. In others words a true Class C property! While presenting our valuation to the owner we learned the offer on the table was about $800,000 below the lower end of the range we said we could achieve from the industry. We closed at $900,000 above the direct offer.
Thru an exclusive listing agreement with a self storage broker you’ll not only get the maximum price paid by the market, but you’ll enjoy a valuable relationship with your broker. If your thinking about selling now or in the near future we would be happy to provide to you a market valuation of your property. Please contact us at [email protected] 216-409-3186 or [email protected] 440-570-9003 or visit our website at www.TheSelfStorageTeam.com.
