Self-Storage Facility LOI Template & Negotiation Guide

Buyer and Seller Identification

Identifies the legal entities entering into the letter of intent, including the acquiring entity (often an LLC formed or to be formed for the acquisition) and the selling party or parties. For self-storage facilities, sellers are frequently individual owner-operators or family-held LLCs, and buyers may be acquiring through a newly formed SPE (special purpose entity). This section should also note whether the buyer has the right to assign the LOI to a related entity prior to closing.

💡 Sellers should confirm the buyer's entity is capitalized or has committed financing before proceeding. Buyers should include assignment rights to accommodate SBA 7(a) loan requirements or equity partner structures that may not be finalized at LOI stage. If an individual buyer intends to use an LLC not yet formed, note that explicitly rather than leaving it ambiguous.

Property and Assets Included in Sale

Defines exactly what is being purchased, which in a self-storage transaction typically includes the real property, all improvements and structures, the operating business and goodwill, existing tenant leases and rent roll, management software licenses or subscriptions, gate access systems and security equipment, office furniture and supplies, and any transferable vendor contracts. Vehicles, personal items not used in operations, and certain prepaid expenses may be excluded.

💡 Buyers must ensure the management software (e.g., SiteLink, storEDGE, or similar) is transferable or can be re-licensed quickly post-close. Sellers should clarify whether domain names, Google Business listings, and social media accounts are included — these have meaningful SEO and marketing value. For facilities with expansion land, confirm whether that acreage is included in the purchase or retained by the seller.

Purchase Price and Valuation Basis

States the proposed total purchase price and explains the methodology used to arrive at it, typically a multiple of trailing twelve-month NOI or a per-square-foot valuation benchmarked against comparable self-storage transactions. For self-storage facilities, valuation multiples in the lower middle market typically range from 4.5x to 7x NOI depending on location, occupancy, facility condition, and growth potential.

💡 Sellers of older facilities often value their asset based on replacement cost or personal income history rather than NOI multiples — be prepared to walk through the NOI methodology clearly. Buyers in competitive markets should acknowledge the seller's perspective while anchoring the offer to verifiable cash flow. If the facility has recently increased rates or filled vacancies, discuss whether trailing NOI or stabilized pro forma NOI is the appropriate basis, as this is a frequent point of negotiation.

Deal Structure and Financing

Describes how the purchase price will be funded, including the equity contribution, any SBA 7(a) or conventional financing, and seller financing or earnout components. Self-storage facilities are among the most SBA-eligible business types due to their real estate component and cash flow stability, making SBA 7(a) and SBA 504 structures common. Seller financing of 10–20% can bridge valuation gaps and signal seller confidence in the asset.

💡 SBA lenders will typically require that seller financing be on full standby for the first 24 months of the loan, meaning no payments to the seller during that period. Sellers unfamiliar with SBA structures may resist this — educate early. For all-cash buyers or private equity acquirers, eliminate the financing contingency entirely to strengthen the offer and reduce closing risk. If an earnout is proposed tied to occupancy milestones, keep it simple and measurable using existing management software data.

Earnest Money Deposit

Specifies the amount of earnest money the buyer will deposit upon execution of the LOI or formal Purchase Agreement, the escrow holder, and the conditions under which the deposit is refundable or non-refundable. For self-storage transactions in the $2M–$5M range, earnest money of $25,000–$75,000 is typical, with a hard (non-refundable) deposit often triggered after the due diligence period expires.

💡 Sellers should push for a meaningful earnest money amount — $50,000 or more on a $3M+ deal — to filter uncommitted buyers. Buyers should tie the hard deposit trigger to completion of due diligence rather than LOI execution so they retain full flexibility during the inspection period. For SBA-financed deals, negotiate a financing contingency that allows the earnest money to remain refundable through the SBA commitment letter stage.

Due Diligence Period and Access Rights

Establishes the length of the due diligence period and specifies what information and physical access the buyer is entitled to during that time. For self-storage acquisitions, due diligence should cover financial records, rent rolls, unit-level occupancy data, deferred maintenance assessment, environmental review, zoning confirmation, technology system review, and lien sale compliance records. A 45–60 day due diligence period is standard; complex or larger facilities may warrant 75 days.

💡 Insist on management software data exports — not just printed spreadsheets — to verify occupancy trends, rate histories, and payment patterns independently. Buyers should commission their own Phase I Environmental Assessment regardless of whether the seller has a prior one; lender requirements and property age make this non-negotiable for most SBA transactions. Sellers should limit buyer access to tenant areas during operating hours and require buyer's contractors to carry proof of insurance before conducting any physical inspections.

Representations and Warranties

Outlines the key representations the seller is expected to make regarding the accuracy of financial statements, occupancy data, physical condition of the facility, environmental status, zoning compliance, and absence of undisclosed liabilities. While reps and warranties are typically formalized in the Purchase Agreement, the LOI should signal which areas the buyer considers material and intends to rely upon.

💡 Sellers should disclose any known deferred maintenance, historical flooding, roof leaks, or prior environmental incidents proactively — undisclosed issues discovered post-close can trigger indemnification claims. Buyers should add a specific rep around lien sale compliance, as failure to follow state-specific lien sale statutes is a common operational risk in owner-operated facilities. Negotiate a rep and warranty survival period of 12–24 months with a basket (deductible) appropriate to deal size.

Exclusivity and No-Shop Period

Grants the buyer an exclusive negotiating period during which the seller agrees not to solicit, entertain, or accept competing offers. For self-storage acquisitions, a 60–90 day exclusivity period is standard to allow time for due diligence, SBA lender processing, and PSA negotiation. This is one of the most critical provisions in the LOI for a buyer.

💡 Sellers should resist open-ended exclusivity and insist on a defined expiration date with milestone checkpoints — for example, buyer must deliver proof of financing commitment within 30 days and execute the PSA within 45 days to maintain exclusivity. Buyers should negotiate for a 75–90 day period when SBA financing is involved, as SBA conditional approval alone typically requires 45–60 days. If a seller refuses exclusivity, that is a significant red flag about their seriousness or competing offers already in play.

Closing Timeline and Conditions

Establishes the target closing date and lists the primary conditions that must be satisfied before closing can occur. For self-storage acquisitions, closing is typically 60–120 days from LOI execution depending on financing type, environmental review requirements, and title work complexity. SBA-financed deals tend to run longer due to lender processing timelines.

💡 Include a material adverse change (MAC) clause that specifically references occupancy rate drops greater than 5 percentage points or loss of more than 10% of revenue-paying tenants between LOI and closing. For SBA deals, communicate with your lender before LOI execution to understand their timeline so you can set a realistic closing date — sellers lose confidence when buyers repeatedly request extensions. Build in a 15-day extension right for the buyer in the event of SBA processing delays beyond buyer's control.

Transition and Non-Compete

Addresses the seller's role during and after closing, including any transition assistance period and restrictions on the seller competing with the acquired facility. For self-storage, transition assistance typically involves 30–90 days of seller availability to introduce the buyer to vendors, transfer management software access, and assist with tenant communication. Non-compete agreements typically restrict the seller from opening or operating a competing facility within a defined geographic radius for 3–5 years.

💡 Geographic radius and duration of non-compete must be reasonable and enforceable under applicable state law — overly broad restrictions may be voided entirely by courts in some jurisdictions. Sellers should push to limit the non-compete to primary facility types they currently operate and carve out any existing investments. Buyers acquiring in rural or secondary markets should negotiate for a larger geographic radius (15–20 miles) given the limited trade area. Transition assistance should be capped in scope to prevent indefinite obligations on the seller post-close.