Investment Overview

405 Storage is an 11,920 rentable-square foot self-storage facility resting on one parcel encompassing approximately 0.75 acres in Shawnee, Oklahoma. The facility contains 118 non-climate drive up units (18 of which are Boxwell portable units) ranging in size from 50 to 200 rentable-square feet. The storage buildings are metal, with garage-style roll-up doors, and standing seam metal roofs. The facility features chain-link fencing, a personalized key-pad gate system, perimeter fencing, camera surveillance, automated remote leasing technology, and wide driveways. The facility also benefits from the fact that it is in the heart of Shawnee. As a result, the facility, built in 1995 and expanded in 2023, has maintained above 90 percent occupancy for the past 15 years. Shawnee, located in the Oklahoma City Metro area, is home to a variety of natural gas and wind energy companies. In fact, it ranks as one of the nation’s top 10 markets for natural gas and wind energy production. With that said, Oklahoma City has been purposely diversifying its economic base by focusing on job creation in the medical and information technology sectors, and over the next five years the metro’s population of 1.4 million is expected to grow by 4.8 percent, more than two times the national average. The facility currently maintains a 91 percent physical occupancy rate and 90 percent economic occupancy rate. With that said, a new owner can realistically expect to add value throughout the hold period by raising the current street rates to the submarket average. To be sure, street rates at 405 Storage reside approximately ten percent below the competition on average. Assuming the facility’s existing 10 percent economic vacancy rate is maintained, at a purchase price of $950,000, a new investor need only raise rental rates by 7 percent to achieve the end-of-year-one (broker-adjusted) 7.37 percent unleveraged yield quoted herein. Given the fact that the current owner does not live in Oklahoma, and has never engaged a third-party management company, it is reasonable to expect that a new operator (who will, by default, almost certainly be adopting a more “hands on” approach at both an operational and strategic level), can also expect to capture unleveraged pro forma yields in excess of eight percent after raising street rates to the submarket average by the remaining 3 percent delta, and reducing the economic vacancy factor to 5 percent.