Fairhope, AL ยท Self-storage
Fairhope Self-Storage
Sold off market, at the number the seller named.
The deal at a glance
- State
- Alabama
- Process
- Sold off market. The property was never listed.
- Seller profile
- A principal partnership, formerly commercial real estate brokers, who started buying in 2020 and 2021 and did four self-storage deals. This was their second.
The asset. Self-storage, bought from a long-term mom and pop owner and held almost five years, functional at acquisition with little deferred capex.
The transaction
What actually happened.
Oakside sold a self-storage facility in Fairhope, Alabama off market for a principal partnership five years into a ten-year hold. The asset performed. The expense side did not, so the seller named the number he needed and Oakside found the buyer without taking the property to market.
- 01
The challenge
The partnership bought the facility from a long-term mom-and-pop owner and underwrote it as a mark-to-market play on a ten-year hold, with debt at 4 percent. Almost nothing needed spending on it: the parking lot was sealed and striped and the rest was already functional. They hit the rents they had underwritten. The expense side did not hold, and the economics the deal was bought on were no longer the economics it was running on.
- 02
What Oakside did
The seller and Dezmon Fortenberry started talking at the beginning of the year. The seller did not know whether the asset needed to go to market, so he named the number he needed instead. Oakside took that number to its own buyers rather than to a marketing campaign.
- 03
The outcome
The facility sold off market at the number the seller named, almost five years into a ten-year hold, and the capital went back to the investors for its next use. It was never listed.
In their words
Having someone who has a national knowledge base, knows all the national players, knows the macro of self-storage or whatever asset class you're playing in. But also have somebody that knows the local growth story of that market.
Grant Reaves Sold the facility, on choosing an advisor The seller
They hit the rents they underwrote. The expense side moved.
Grant Reaves, who bought this facility in 2021 and sold it almost five years into a ten-year hold.
In their words
This is where we need to be to sell it. And you were able to deliver that off market.
Grant Reaves Self-storage owner and investor, Fairhope, Alabama Grant Reaves was a commercial real estate broker for a long time before he moved to the principal side with his business partner, Jeremy. They started in 2020 and 2021, through the COVID years, when everyone was chasing housing. Self-storage was the closest thing they could find that was not what everybody else was chasing, and they did four self-storage deals.
Fairhope was the second. The first was a grocery store box converted to climate-controlled storage about a mile away, which they still own, so the two could share expenses. They bought this one from a long-term mom and pop owner and held it almost five years. It was a mark-to-market play: the asset was already functional, the parking lot wanted sealing and striping, and the debt was at 4 percent.
It was underwritten as a ten-year hold and the investors signed up for ten years. They came out at five. The asset was performing and the rents were the rents they had underwritten. The expense side was not, and the partnership decided the capital had a better use. Grant and Dezmon started talking at the beginning of the year, Grant named the number he needed, and the facility sold off market without ever going to market.
In their words
Everyone was chasing housing, and really the closest thing we could find to not chase the same thing that everybody else is chasing was self-storage.
Grant Reaves When we bought that property, insurance was about 25, 30 grand a year. In 23, I think it was, it got up to $120,000 a year.
Grant Reaves It was doing fine. It just was one of those where it wasn't distributing quite as good as we had anticipated.
Grant Reaves I've known you for years. And so value y'all's national presence, but then also your local Gulf Coast knowledge as well. It was super helpful.
Grant Reaves I didn't have to get through the whole sales process and all that craziness. And I was able to select the right buyer, I think, for this property and get it closed out.
Grant Reaves If you're going to sell something, sell it, get a broker, sell it and go after it. Not just nonchalantly do it on the side.
Grant Reaves Advisor on the deal
Dezmon Fortenberry
Senior Vice President, Oakside Companies
Dezmon ran this transaction and conducted the interview above. He leads Oakside's self-storage advisory platform across the lower Southeast, which is the local half of the thing Grant says a seller should insist on.
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