Investment Overview

Airport Road Storage is a 15,242 rentable-square foot self-storage facility resting on six parcels encompassing approximately 5.2 acres in Tow, Texas. The facility contains 13 non-climate drive up units ranging in size from 80 to 180 rentable-square feet, 36 fully enclosed boat parking units, two warehouse buildings 1,250 and 1,800 square-feet respectively, and one vacant 5,794 square-foot convenience store with four gas pumps. The storage buildings are metal, with garage-style roll-up doors (fully enclosed boat parking units are swing door) and standing seam metal roofs. The facility, built in 1970 and expanded in 2000, has maintained above 80 percent occupancy for the past 10 years. The facility currently maintains an 84 percent physical occupancy and 33 percent economic occupancy. The current economic occupancy is due to several factors. The owner occupies 3,050 square-feet or 20 percent of the facility’s total rentable-square feet. Additionally, the facility is remotely operated without a website, management software, or the ability to pay electronically. That being said, one can realistically expect to add value by implementing a business plan utilizing storage management software, website, and electronic payments. Current rental rates are over 20 percent under the current market average. At a purchase price of $650,000, a new investor having implemented a professional management strategy to increase economic occupancy, would only need to raise rental rates of new and existing tenants by 10 percent to achieve the (broker adjusted) 7.68 percent end-of-year-one unleveraged yield quoted herein and 22.41 percent end-of-year-one cash-on-cash return. Furthermore, additional value could also be created by raising the facility’s street rates up to the submarket average. Upon doing so, assuming 85 percent economic occupancy rate is maintained), unleveraged pro forma unleveraged yields in excess of 10 percent also appear realistically achievable within the hold period.