Management / Equity Agreement - STORAGE UNIT Partnership?

3 Replies

I have an accepted agreement for a storage unit facility under my company. A regional businessman is interested in joining this venture. I approached him regarding a possible management agreement (they have storage units in the area already). They mentioned a possible interest in equity as well. His company is well respected and I have worked with him on his prior business as a customer.

I would expect if he managed there would be a reasonable fee but don't have experience in storage units / management fees.
What is a typical fee arrangement for running storage units off-site (following technology updates to facilitate this model as best as possible)?
Would this fee be expected to be the same independent of partner status or not?

I would expect a plan 50/50 split if both are bringing equal capital. Does anyone else see a different split expected?

Options / Risks / Benedfits / Alternatives to consider?

Thanks!

There is room to grow on this project and having a partner as a guide seems like a good option to me. I am more familiar with SFH and small multiplex space in my journey thus far. For him, it seems like having a partnership would be beneficial to allow scaling quicker for a job he already has the infrastructure to do. Also, although 30 miles apart, could there be concern about competition if he is not an equity player? Just more AM thoughts. Appreciate any feedback.

@Brian Black - To answer your questions:

There are companies that strictly manage self storage facilities.  The fees vary based upon staffing requirements, and what is involved in taking care of the facility.

Self storage fees are typically on site staff (if required), call center (if no on site staff), AR/AP management etc, and marketing fees.  These can all vary from market to market and facility to facility.

When we partner on a facility, these fees are treated like another expense, they are passed onto the company.

30 miles away is not competition between the sites.  Typically competition is 3-5 miles or 20 minutes of driving.

With regard to splits on a partnership, each party should assess their goals and level of risk to determine their comfort level for their roles and level of participation.