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Self-Storage Facility

Midlothian Self Storage

200 E Ridgeway Dr, Midlothian, TX 76065

Listing Price: $10,000,000

Cap Rate
3.07%
Number of Units
714
Occupancy
84.0%
Gross SF
94,385
Rentable SF
94,385
Price/Rentable SF
$105.95
Year Built
1993

Investment Overview

Midlothian Self Storage is a 94,385 net rentable square foot facility resting on two non-contiguous parcels encompassing approximately 6.04 acres located in Midlothian (Dallas-Fort Worth), Texas. The facility was built in 1993 to institutional-grade standards and is comprised of 588 drive-up units, 10 covered parking spaces, 27 portable units, and 89 uncovered parking spaces. The facility features a professional leasing office, perimeter fencing and lighting, 24-hour video surveillance, personalized gated key-pad entry, a licensed UPS/FedEx shipping center, and a separate office area (inside which the current owner runs their family business) adjacent to the leasing office that could be retrofitted into a manager’s residence. The facility benefits from its strategic location along the frontage road of US Highway 67, upon which approximately 36,000 vehicles travel per day. Additionally, only four competing facilities operate within a three-mile radius and the City of Midlothian recently denied approval of the development of a new Class-A facility approximately two miles from the facility. As a result, Midlothian Self Storage has enjoyed a 100 percent physical occupancy rate and an approximate 85 percent economic occupancy rate for years. While the facility’s superior location, high-quality construction, and best-in-class amenities have undoubtedly contributed to its impressive historical operating performance, the future remains equally as bright for a variety of reasons. Not the least of which is the maturation of the Midlothian submarket as a whole. To be sure, Dallas-based Hanover Property Company recently announced their purchase of a 966-acre tract less than three miles away from Midlothian Self Storage – upon which they intend to develop a $950-million master-planned community named BridgeWater. The development will include 2,000 single-family homes, 160 townhomes, 26 acres of commercial property, and 42 acres of industrial real estate. The first phase of BridgeWater is underway and will include 470 residential lots. In fact, Hanover executive Ben Luedtke recently commented “We’re releasing more lots in this first phase than we originally anticipated based on the high market demand”. The existence of the BridgeWater project, along with a number of other commercial and residential developments currently underway throughout Midlothian, give credence to the income projections contained within the offering memorandum. To be sure, since it’s inception the facility has been operated by long-time residents of the local community who have been historically reticent to raise rents in spite of market conditions that clearly warrant it (street rates at Midlothian Self Storage are approximately 50 percent below market averages in spite of the fact that every competitor within a three-mile radius is at least 99 percent physically occupied). In addition, a vast portion of the subject property’s current tenants occupy spaces at rates substantially below the facility’s current street rates. More specifically, 45 percent of the facility’s drive-up tenants lease at a rate that is on average approximately 27 percent below the street rate, 100 percent of the portable units are leased at an average of 33 percent below the street rate, 80 percent of the covered parking is leased at an average of 28 percent below the street rate, and 80 percent of the open parking is leased at an average of 45 percent below the street rate. Due to these factors, a new operator will be in position to substantially increase cash flow throughout the hold period. To that end, at a purchase price of $10,000,000 a new operator can reasonably expect to achieve a pro-forma cap rate of 7.20 percent and cash-on-cash yields approaching 10 percent after raising existing tenants up to the current street rates, and then escalating the gross potential rent to market norms.

Investment Highlights

  • Pro-Forma Cap Rate – 7.20%
  • Approximately 10% Pro-Forma Cash-on-Cash Return
  • 100% Physical Occupancy (July 2021)

Exclusively Listed By

Self-Storage Facility

Midlothian Self Storage

Listing Price: $10,000,000

Cap Rate
3.07%
Number of Units
714
Occupancy
84.0%
Gross SF
94,385
Rentable SF
94,385
Price/Rentable SF
$105.95
Year Built
1993

Investment Highlights

  • Pro-Forma Cap Rate – 7.20%
  • Approximately 10% Pro-Forma Cash-on-Cash Return
  • 100% Physical Occupancy (July 2021)

Investment Overview

Midlothian Self Storage is a 94,385 net rentable square foot facility resting on two non-contiguous parcels encompassing approximately 6.04 acres located in Midlothian (Dallas-Fort Worth), Texas. The facility was built in 1993 to institutional-grade standards and is comprised of 588 drive-up units, 10 covered parking spaces, 27 portable units, and 89 uncovered parking spaces. The facility features a professional leasing office, perimeter fencing and lighting, 24-hour video surveillance, personalized gated key-pad entry, a licensed UPS/FedEx shipping center, and a separate office area (inside which the current owner runs their family business) adjacent to the leasing office that could be retrofitted into a manager’s residence. The facility benefits from its strategic location along the frontage road of US Highway 67, upon which approximately 36,000 vehicles travel per day. Additionally, only four competing facilities operate within a three-mile radius and the City of Midlothian recently denied approval of the development of a new Class-A facility approximately two miles from the facility. As a result, Midlothian Self Storage has enjoyed a 100 percent physical occupancy rate and an approximate 85 percent economic occupancy rate for years. While the facility’s superior location, high-quality construction, and best-in-class amenities have undoubtedly contributed to its impressive historical operating performance, the future remains equally as bright for a variety of reasons. Not the least of which is the maturation of the Midlothian submarket as a whole. To be sure, Dallas-based Hanover Property Company recently announced their purchase of a 966-acre tract less than three miles away from Midlothian Self Storage – upon which they intend to develop a $950-million master-planned community named BridgeWater. The development will include 2,000 single-family homes, 160 townhomes, 26 acres of commercial property, and 42 acres of industrial real estate. The first phase of BridgeWater is underway and will include 470 residential lots. In fact, Hanover executive Ben Luedtke recently commented “We’re releasing more lots in this first phase than we originally anticipated based on the high market demand”. The existence of the BridgeWater project, along with a number of other commercial and residential developments currently underway throughout Midlothian, give credence to the income projections contained within the offering memorandum. To be sure, since it’s inception the facility has been operated by long-time residents of the local community who have been historically reticent to raise rents in spite of market conditions that clearly warrant it (street rates at Midlothian Self Storage are approximately 50 percent below market averages in spite of the fact that every competitor within a three-mile radius is at least 99 percent physically occupied). In addition, a vast portion of the subject property’s current tenants occupy spaces at rates substantially below the facility’s current street rates. More specifically, 45 percent of the facility’s drive-up tenants lease at a rate that is on average approximately 27 percent below the street rate, 100 percent of the portable units are leased at an average of 33 percent below the street rate, 80 percent of the covered parking is leased at an average of 28 percent below the street rate, and 80 percent of the open parking is leased at an average of 45 percent below the street rate. Due to these factors, a new operator will be in position to substantially increase cash flow throughout the hold period. To that end, at a purchase price of $10,000,000 a new operator can reasonably expect to achieve a pro-forma cap rate of 7.20 percent and cash-on-cash yields approaching 10 percent after raising existing tenants up to the current street rates, and then escalating the gross potential rent to market norms.

Exclusively Listed By

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