Investment Overview

Executive Enclosed Storage is a 54,600 rentable-square-foot facility resting on approximately 3.01 acres (one parcel) in the affluent town of Round Rock, Texas. Consisting of 78 fully enclosed 14x50 boat/RV spaces constructed to institutional-grade standards, the facility opened in December 2021 and is approximately 98 percent physically occupied as of April 2023. In fact, as of April 2023 the facility’s economic occupancy rate is 100 percent (despite being remotely-managed by first-time “mom and pop” owner/operators living approximately 20 minutes away in Georgetown). The facility features many of the attributes commonly found in “Class A” boat/RV storage facilities, including concrete and asphalt driveways, 24/7 video surveillance and recording, wrought iron perimeter fencing, personalized key-pad gated entry, a 1,500 gallon dumping station with sound and light alarm notification, complimentary air and potable water stations, 15 amp power outlets and interior lighting in each unit, waterproof 15k ML LED perimeter lighting, and a closed loop fire hydrant system tied to an onsite tank. While impressive by any standard of measure, the facility’s physical attributes only serve to augment the primary feature that makes Executive Enclosed Storage a uniquely attractive acquisition opportunity – its location. For the past ten years the greater Austin MSA has been experiencing unprecedented growth from both an investment and population perspective because its pro-business political climate and low cost-of-living (compared to most other primary markets throughout the country) continues to attract billions in corporate investment from companies like Oracle, Dell, Tesla, Amazon and Apple. Consequently, many experts believe Austin’s growth trajectory remains in its infancy. To be sure, in 2021 the commercial property association AFIRE ranked Austin as the second-most favored US destination for planned investment during the next five years. And a report issued by the Kenan Institute of Private Enterprise in October 2022 not only ranked Austin as the second-fastest growing city in the United States in terms of multi-year GDP growth, it was also cited as the number-one fastest growing city among ‘millennials’. The data and trends impacting the boat/RV storage market at a national level are also extremely appealing. During the past two years boat/RV sales swelled to unprecedented heights as a result of pandemic-driven shifts in consumer behavior. More specifically, a report issued in 2022 by CNBC noted that boat/RV sales reached a 13 year high in 2020, only to be eclipsed by almost 34 percent one year later. Another industry publication recently reported that in 2021, consumers visiting self-storage websites sought out boat/RV parking at a 250 percent higher rate than they did in 2020. As a result, supply/demand imbalances across the country have intensified (as evidenced by the fact that the average boat/RV physical occupancy rate within 20-miles of Executive Enclosed Storage currently equals approximately 98 percent) – even though 2022 boat/RV storage facility deliveries (nationwide) rose its highest annual level in two decades. While it is difficult to overstate the strength and legitimacy of the national boat/RV storage market, when the field of vision is confined to the north Austin market in particular, the future looks even brighter. Towns like Hutto, Pflugerville, and Cedar Park have all thrived during the past decade, but when it comes to population/investment growth, Round Rock is currently the north Austin equivalent of ‘ground zero’. To be sure, the city’s Planning and Development Services Department predicts the population will grow by 75,000 during the next 20 years – representing an increase of more than 50 percent compared to 2020 numbers. At a more granular level, market conditions within Executive Enclosed Storage’s 20-mile trade area paint an even prettier picture. To be sure, the infill location is surrounded by the Texas State Highway 45 Toll Road to the south (1.5 miles), the Texas State Highway 130 Toll Road to the east (2.25 miles), and Interstate 35 to the west (4.2 miles). Single-family residential housing also surrounds the facility in every direction, and the property lies adjacent to the affluent master-planned community of Forest Creek. The median sale price of a home located in Forest Creek exceeded $700,000 in Quarter Three 2022 – a 15 percent increase compared to the same time last year – and its median household income exceeds $100,000 annually. Several nearby infrastructure projects that will positively impact the facility are also underway. Most importantly, Red Bud Lane is scheduled to be expanded in 2023 to a five-lane multidirectional thoroughfare beginning at Gattis School Road and terminating at US Route 79. Condemnation proceedings have been completed at the Executive Enclosed Storage site, and the buildings already conform to the new setback requirements. When the economic and population growth trends mentioned above are viewed in concert with the upcoming improvements to the surrounding transportation infrastructure, it only serves to validate the revenue projections contained herein. And those projections are bolstered even further when noting the fact only three competitors within a five-mile radius, six competitors within a 10-mile radius, and 10 competitors within a 20-mile radius contain similarly-sized enclosed boat/RV storage units. Despite this dearth of competition, despite the fact that the average physical occupancy rate within that same 20-mile radius also exceeds 99 percent, and despite the fact that most of those competitors are objectively inferior to Executive Enclosed Storage from both a physical construction and location perspective, the subject property’s effective rates remain substantially below market. In fact, one of the facility’s competitors (Storage Star (98% physical occupancy as of April 2023)) features 50-foot units whose street rates are approximately 55 percent higher than the subject property’s. Additionally, the current owner charges the same rate ($490) for every unit, even though 15 percent of those units feature two garage-style roll up doors that allow for multidirectional pull-thru access. When considering both the macro-economic factors that are currently impacting the overall boat/RV storage industry, as well as those factors pertaining specifically to the subject property, the legitimacy of the financial projections contained herein become readily apparent. To be sure, a growing Texas market, a thriving Austin economy, a high-occupancy trade area, an infill location, an affluent tenant profile, a “sticky” product type, an institutional-quality facility, and the categorical absence of a revenue management program are all attributes that render the opportunity to acquire Executive Enclosed Storage uniquely attractive. At a purchase price of $6,175,000 a new owner will be position to generate unleveraged yields in excess of 6 percent by the end of year one, pro-forma returns approaching 8 percent throughout the hold period, and a substantial profit margin upon exit.