CHERRY HILL, NJ — Holliday Fenoglio Fowler used a condominium structure to arrange the sale of two co-located assets, one retail and one self-storage, on adjoining sites in the Philadelphia suburb of Cherry Hill, NJ.

HFF successfully closed the $6.275 million sale of Treasure Island Retail and the $7.25 million sale of Treasure Island Storage, on behalf of the seller, Cayre Equities, who sold the properties in two separate transactions. 

Cayre Equities hadpurchased the property several years ago, when it was mainly occupied by Levin Furniture, says Richard Schontz, HFF managing director, who led the transactions with managing director Chris Munley.

“The seller owns both retail and self-storage,” Schontz tells GlobeSt.com exclusively. “When they looked at this building that looked at it that they would put a couple of retail tenants in it and then convert the warehouse into a three-story self-storage property. When Chris and I looked at the deal, we felt the property itself as a whole was less valuable to the market as one deal, so we encouraged them to set it up so that we could sell it in two different condo buildings. Then we could market to a more specific market. We were able to offer the property to the market as one asset or individual assets and uses, which allowed us to access the appropriate buyer pool for each use.  Ultimately, were able to create more activity, yielding 15 offers and a significant premium in the sale price by selling each condominium to separate buyers.”

“We did have a couple of bids on the entire asset, but splitting it up far exceeded the pricing if it was sold as one deal,” says Schontz.

An affiliate of Paragon Realty Group purchased Treasure Island Retail, and Extra Space Storage purchased Treasure Island Storage.

“Self-storage in general has been a very hot product,” says Schontz. “There's been a lot of equity chasing self-storage that hasn't chased self-storage in the past, which created a pretty aggressive market where the spire was willing to take a look at it through a different lens. It wasn't really a cash flow deal, it was more of the value add opportunity for them. From a cap rate perspectives, it didn't matter, they are looking for total return on a long-term basis. We are seeing a lot of that, where cap rate doesn't necessarily matter if they feel that they can get in there, do something, and stabilize the asset.”

“On the retail side, it was definitely an opportunistic buy, simply because of the price point versus the square footage they would be accumulating,” Munley says. “We also needed someone to understand the dynamics of working together with the storage operator, and I think the difficulty that could have arisen in the process if they didn't have this expertise could have been an issue. We had to marry these two parties together because they are, in effect, going to be partners on the asset, even though we went through a process of selling them individual deals. They are sharing a parking lot, so it was important to get qualified, credible people, and to really understand that they are going to work together to improve the property long-term. The synergies had to align, and that was really important to us. Frankly, if these guys didn't get along, regardless of how good the deal was, we couldn't have gotten them to the closing table.”

Treasure Island Retail and Treasure Island Storage share an adjoining 9.38-acre site located at 101 Church Road in Cherry Hill, about five miles from Philadelphia.  The property is across the street from Cherry Hill Mall.  The 107,390-square-foot Treasure Island Retail is 100 percent leased to two tenants, Ashley Furniture HomeStore and Ollie's Bargain Outlet.  Treasure Island Storage's three-story facility spans 98,214 net rentable square feet and houses 762 climate-controlled units in addition to 13 surface parking spaces.  The facility features a ground-floor loading area, commercial loading docks and retail supplies on site.

Munley led the HFF team representing the seller in the Treasure Island Retail transaction, and Schontz and director Barbara Guffey led the team representing the seller for the Treasure Island Storage transaction.

CORRECTION, 10/13/2015: Because of an editing error, several words were misspelled in an earlier version of this article, and have been corrected. Richard Schontz's name was misspelled Shontz in one reference, a quote misrendered the phrase "self-storage" as "some storage.", and the phrase "an opportunistic buy" was rendered as "an opportunistic by."