Whilst every experience, strategy and outcome is different, there are two critical elements to selling your self storage facility:

• Choosing the Right Agent; and
• Having the Correct Strategy

Choosing the Right Real Estate Agent

Selecting a real estate agent to represent you in a divestment of your business and real estate is a critical decision. The right agent will streamline the process, maximise your investment, and ensure a successful transaction. Here’s what to consider when making your choice:

Look for Specialised Expertise

Self storge is a unique asset class that requires a specific skill set. It’s important to work with an agent that not only understands self storage but has the experience and knowledge to produce quality information to share with prospective purchasers. Your agent should have the skills to analyse recent trading performance, identify any value upside, and accurately position your asset in the market in terms of pricing. Agents with valuation experience are highly regarded as their advice is trusted by investors.

Assess Market Knowledge

Your selected agent should have deep self storage market knowledge. They should provide insights on recent transactions, emerging trends, demand fluctuations, and potential growth areas. Ask for examples of sales they’ve completed and the outcomes they achieved for clients in similar scenarios.

Evaluate their Credentials, Skills and Reputation 

Industry credentials can demonstrate a higher level of professionalism and expertise. Memberships in reputable organisations can also reflect an agent’s commitment to ethical practices. Ask your potential agent what member bodies they support and whether they participate in regular continuing professional development (CPD).

Your chosen agent should be trusted, respected, and well connected in the self storage industry. This will be reflected by their industry reputation. Check their reviews and ask for client references. Feedback from past clients can offer valuable insights into the agent’s reliability, negotiation skills, and overall performance.

By thoroughly vetting potential agents, you can find a trusted partner who will work tirelessly to achieve your agreed strategy.

Having the Correct Strategy

Timing

We have been fortunate that the self storage market across Australia and New Zealand has been stable when other commercial markets have declined. Self storage is a defensive asset class that is known to be somewhat counter cynical. However, market conditions can fluctuate based on a range of macro and micro economic factors. Customer demand can also be seasonal. The sooner you build a relationship with your agent, the more time you will have to plan a considered strategy and navigate your local market.

Pricing

Accurately pricing your self storage facility is a critical step in the sales process. There is one opportunity to get pricing correct. Many failed sale campaigns are a result of inaccurate pricing.

If your agent is experienced, particularly if they have a valuation background, they should provide you with an accurate and honest opinion on the sale price that is achievable for your facility. You can ask for a higher listing price, however, this strategy comes with risks. Purchasers can drop out early in the campaign due to an inflated asking price and it is very difficult to get them interested once that has occurred.

Your agent will undertake a detailed analysis of current and recent historic trading performance. The clearer this information is provided, the more accurate their assessment will be. This stands true for buyers also. Having well-maintained records, easy to comprehend financials and your accountant briefed and available will help streamline the process.

Your agent should be across all relevant comparable sales. Ask them to discuss their comparability to your property. Ideally, they would have been involved in the recent sales. Knowledge is power when it comes to understanding the market, and understanding what price is achievable for your facility.

Preparation

Ideally, allow some time in the leadup to your divestment to get your property and your business ready for sale. Consider:

• Physical and Cosmetic Upgrades: Address any deferred maintenance issues such as repairs, painting, or landscaping. Are your access and security systems functional? Are there minor upgrades that can be undertaken to enhance the attractiveness of your facility?
• Documents and Records: Prospective purchasers need to thoroughly understand what they are buying. This includes financial and trading records, building plans, Council approvals, servicing handbooks, employment records etc. – effectively every part of your facility should be documented and ready to share with potential purchasers.
• Performance Optimisation: Are there areas of your facility that can be enhanced? A good agent will offer an optimisation review ahead of the campaign to identify whether there are any areas for improvement before going to market. This may be underutilised areas that are not being captured in your available Net Storage Area; or it could be an underperforming financial metric such as fee rate or ‘other income’. Where time permits, a small adjustment can make a big difference to the end result.

A well-maintained and efficiently run facility will command a higher price and attract more buyers.

Marketing

A targeted marketing strategy can be the difference between a good result and a great result. One of the most important considerations is your agent’s access to the right buyers.

The marketing campaign will be very different for a $20 million facility and a $2 million asset. One may be sold off-market, using an exclusive invite-only approach, whilst the other may be listed online.

It’s important to understand the marketing strategy that your agent proposes early in the process. It will not only save time and money, but it will also ensure that your facility is sold for the best price possible.

Ask your agent to show you examples of their marketing material (also known as Information Memorandum or IM) for previous campaigns and ensure you are comfortable with the quality, process and strategy being proposed.

Completion

Once you have selected the buyer and accepted the offer, it is standard practice for the buyer to conduct their due diligence (DD) over the period of time set out in their offer. This period allows the buyer to complete a more thorough review of the financial and operational records, and it may include a number of consultants inspecting various elements of the property, such as the structure, services and environmental conditions. Transparency is the key to a successful transaction. Address any issues that arise during due diligence promptly to keep the deal on track.

Over the DD period, the contract of sale will typically be drawn up. It may be a single contract or two separate contracts – one for the real estate and one for the business. Ensure you have an experienced property lawyer on standby to handle the contract negotiations on your behalf.

Once DD is satisfied and contracts are signed, the sale will typically go ‘unconditional’ unless there are other conditions that have yet to be met, such as a finance condition.

In the lead up to settlement, the buyer may request additional information, or they may ask to re-inspect the property. Your willingness to corporate will assist with a smooth transaction.

Conclusion

Selling a self storage facility requires careful planning, preparation, and execution. By selecting the right agent and having the correct strategy, you can achieve a successful sale that is a rewarding culmination of your investment in the self storage industry.