A+ Storage

Location: Roseburg, OR

Company Website:

For Sale Website:

Description:

The attached spreadsheet model is for the storage units, A+ Storage, located in Roseburg, OR, which were auctioned off at the end of October. The starting price was $170,000 and it sold for $1,270,000.  This model includes a pro forma income statement and balance sheet for the storage units, based on industry assumptions in the area, and an analysis of the costs of capital and internal rate of return forecasted for the units.  The model allows variables to be changed for all major assumptions included in the computations.

In this model with the current assumptions, the storage units would have a weighted average cost of capital equal to 6.53%, but has an internal rate of return equal to 17.57%.  Realizing that the cost of capital may be adjusted by changing the debt and equity proportions, we have attempted to do so, but no reasonable proportions work to allow the cost and return to be close to equal.  Even with 100% debt, the weighted average cost of capital was 7.23%.

For this reason, we believe the auction price for the storage units was a very reasonable amount.  The net present value of the storage units is $1,597,593, which would suggest that overall the purchaser will earn $327,593 on the units.  We would not suggest purchasing these units for over $1,590,000.