Location: Murrieta, CA
For Sale Website:
The attached spreadsheet model is for the California Storage Units located in Murrieta, CA, which is currently listed for sale at $7,000,000. This model includes a pro forma income statement and balance sheet for the storage units based on market 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 inputs of the computations, and includes citations for assumed values in the models.
In the model with the input values chosen, the storage units would only have a weighted average cost of capital equal to 7.20%, while the units show an internal rate of return equal to 8.80%. Although the cost of capital may be adjusted by changing the debt and equity proportions, we did not attempt to do so since the internal rate of return is greater than the cost of capital.
Based on our both our financial analysis and the market research we have performed, we have determined that the listed price for these units is overstated. For this reason, we have performed our analysis assuming a cost of $4,500,000. Lowering the sale price to this amount causes the internal rate of return to exceed that of the cost of capital and also more closely reflect the land and building costs of this particular area. We show the purchase as being financed through 68% debt and 32% equity.