The Sale of Center Street Storage
Located at 2829 148th Ave Cir in Omaha, Nebraska, the sale of Center Street Storage reflects the challenges and complexities inherent in business real estate transactions. The property, boasting 59,440 net rentable square feet (NRSF) and 468 units, had been on the market intermittently for over five years, with previous brokers unable to secure a satisfactory deal. Despite numerous setbacks, dedicated agent Matthews™ agent Mason Gates, who served as the primary listing agent, along with Ben Tracy and Simon Assaf, successfully closed the sale at an impressive $4,525,000. This achievement not only marked a milestone for the seller but also set a year-high price per net rentable square foot at $76.13/NRSF. Moreover, this sale marks the largest on-market self-storage transaction in the state for 2024, both in terms of gross net rentable square footage and overall sale price. This transaction highlights the critical role of persistence, ingenuity, and relationship management in closing deals that others would deem just short of impossible.
Seller: A Long-Awaited Exit
The seller, MDSE LLC, had long sought to divest the property but faced years of unmotivating market feedback. Numerous brokers attempted to market the facility without success, and the seller had grown increasingly disillusioned. However, the Matthews™ impressive track record specific to the Nebraska self-storage market reinvigorated the seller’s motivations. Gates’ consistent communication and proof of prior successes were instrumental in securing the initial 6-month exclusive listing agreement. The seller’s primary motivation was to maximize returns, and cash out on a unique mortgage structure that offered a discounted prepayment penalty contingent on the interest rate environment. Procuring the highest offer the seller had ever received was not just a financial win but a testament to attention to detail and overall quality of service provided by the Matthews™.
Buyer: A Strategic Acquisition
The buyer, Sundance Bay, a nationally recognized private equity group with an impressive track record of acquisitions spanning a wide array of commercial investment properties, recognized the potential of Center Street Storage as a financially and geographically strategic addition to their growing self-storage portfolio. Sundance Bay’s approach to this acquisition was both innovative and resourceful. Their ability to fund the purchase without traditional financing—leveraging five independent 1031-exchanges, including two reverse exchanges— demonstrates their adaptability in capital markets. While initially, the buyer was unable to meet the seller’s price expectations, they eventually returned to the table with a revised offer. Their newly proposed terms met the seller’s desired returns and allowed Sundance Bay to secure a property with favorable in-place and conservatively projected Year 1 returns.
Navigating Challenges
This transaction was marked by a series of formidable obstacles, each threatening to derail the deal:
- Unexpected Capital Expenditure Requirements – During the inspection period the Buyer identified higher-than-anticipated capital expenditure (CapEx) needs, leading to prolonged negotiations. A mere $50,000 gap (≈1%) between the buyer and seller seemed insurmountable. Gates and the buyer’s contracted representative, Braden Checketts of Checketts Development, agreed to reduce their respective commissions by $25,000 each, demonstrating an unwavering commitment to ensuring the deal’s success, and willingness to work together.
- Weather-Related Damage – A severe windstorm swept through Omaha during the escrow, causing material damage to the property. The seller acted decisively, hiring contractors to repair the damage swiftly. A third-party property condition assessment verified the quality of repairs, enabling the buyer to remove all contingencies, and proceed with confidence.
- Delays in 1031-Exchange Funding – A critical portion of the buyer’s funding, sourced from a prospective 1031-exchange down-leg, was hindered due to numerous permitting delays. With the end of the year fast approaching, Gates & Tracy coordinated closely with Lish to keep the subject transaction on track. Hard-money deposits and frequent communication ultimately ensured the transaction closed on-time, and before the year-end deadline.
- Extended Escrow Period – Altogether, the escrow process spanned 192 days, far longer than typical for similar transactions. Each delay added complexity and stress, but Gates’ persistence and problem solving skills ensured progress continued despite the setbacks.
Record-Breaking Results
The sale of Center Street Storage stands as a landmark achievement for several reasons:
- Highest Sale Price Per NRSF in Nebraska (2024): At $76.13/NRSF, the transaction set a new benchmark, significantly exceeding the state’s on-market average of $54.83/NRSF and off-market average of $31.54/NRSF.
- Unparalleled Brokerage Success: After years of unsuccessful attempts by other brokers, Matthews™ not only secured the highest offer ever received but also navigated the transaction to completion in a particularly challenging borrowing environment.
- Team Collaboration: Mason Gates brought in fellow Matthews™ broker Gray Griffin to assist the seller with a assist the seller with an up-leg acquisition in closer proximity to his existing portfolio up-leg in Texas, showcasing the firm’s depth and commitment to client success.
Conclusion
The sale of Center Street Storage underscores the value of tenacity, creativity, and client centered service in commercial real estate. Mason Gates, Ben Tracy, and Simon Assaf carefully and strategically overcame formidable obstacles—from weather-related damages to funding delays—while maintaining their fiduciary duty to the seller. This transaction not only achieved a record-breaking result but also exemplifies the gold standard of service that Matthews Real Estate Investment Services™ is known for. It is a testament to the firm’s ability to succeed where others have failed, solidifying its reputation as a leader in the self storage market, and commercial real estate industry as a whole.
Testimonials
“The Omaha closing was one of the most challenging I’ve encountered in my 9 years of
storage transactions. A combination of assuming an existing purchase contract, 1031 delays,
CapEx work, and multiple extensions made it an exceptionally complex deal to navigate.
However, you and your team did a good job of communicating the concerns and intricacies to
both the buyer and seller. Ultimately, you managed to keep the deal on track and get it across
the finish line, which speaks volumes given all the obstacles faced.” – Matthew Lish, Buyer
“Mason is a tenacious and hungry broker. He did a great job actively marketing the listing and
working the deal from start to finish. He is also a great team player with an ability to help both
buyer and seller close the deal.” – Braden Checketts, Buyer
“It’s a miracle that you were able to sell it. This is a very difficult property, older, class B, tough
rate environment, but buyer received more than fair value. You guys did a really good job
selling a difficult property. And I thought that considering the difficulties with the buyer you
handled that exceptionally well.” – MDSE LLC, Seller
