Managing the Lifecycle of a Storage Facility
FOUR STEPS TOWARD SUCCESS IN VALUE-ADD FACILITIES
by Jackie Gibson and Scott Lewis
A n interesting part of investing in self-storage is managing an asset through the various stages of its lifecycle. Great success may be achieved in purchasing value-add facilities—properties where the operations are significantly lacking. This can be a daunting task for a new buyer but are a lot of fun after you do it a couple times and reap significant rewards throughout the project lifecycle. The lifecycle of a storage facility consists of four phases: acquisition,
turnaround, stabilization, and dis- position. Each phase has key tasks, that if executed correctly, will set you up for success during the next phase. Patience is key because as much as we’d all like to skip steps, doing so will come at a cost. During the acquisition process, conduct feasibility on the facility and local market. If the market is prom- ising based on your specific criteria, then the process may be moved for- ward by engaging in contract negoti- ations to purchase the facility. Once
under contract, engage in thorough due diligence by examining the site conditions, operations, and financials as well as build the business plan for the facility. Decisions to be made during this process are site improve- ments, expansion potential and what to build, revenue targets, hold time, and capital stack, the level of funding for the project, how and when. This is the shortest of all phases and gen- erally takes a few months. Once you’ve acquired the proper- ty, the next phase is the turnaround.
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