Investment Overview

Marcus & Millichap is pleased to exclusively offer for sale the Premium Storage Portfolio. The offering consists of two properties located in Dallas-Fort Worth and Houston Texas. In total, the facilities contain 64,421 rentable-square-feet of storage space divided among 345 units. Acquisition of the portfolio could provide a new owner with an opportunity to capture economies-of-scale in a thriving Texas economy. Texas continues to attract investors searching for reliable yield and capital appreciation within an otherwise highly volatile global market. To that end, a new operator will likely be drawn to the portfolio’s many physical attributes – attributes like garage-style roll up doors, 24-hour video surveillance cameras, personalized key-pad gated entry, and perimeter fencing and lighting – the cumulative presence of which are typically found in “Class A”, institutional-grade storage facilities. Each of the two facilities are operated remotely from Dallas, Texas. Because of this, most tenant transactions are handled through a kiosk, over the telephone, or through the properties’ websites. The owner’s decision to operate the facilities remotely is representative of a growing national trend that has become significantly more commonplace within the past twelve months. Implementing a remotely managed operational strategy has clearly proven beneficial because, as of July 30, 2023, the average physical and economic occupancy rate between the two Premium Storage facilities has risen to 93 percent and 81 percent, respectively. Additionally, since being acquired, property revenues continue to grow incrementally year-over-year. Offered for $4,820,000, a new investor will be purchasing the stabilized portfolio for a 6.31 percent end year one (broker-adjusted) cap rate. However, when the facilities’ past performance is contextualized against the backdrop of attractive demographic profiles, stable competitive landscapes, and growing population bases, the opportunity to create future value via revenue gains becomes readily apparent not only at the portfolio level, but also when each property is evaluated individually. It should also be noted that approximately 47 percent of the portfolio’s total rentable square footage is dedicated to covered boat/RV parking. This disproportionately large ratio is particularly attractive given the recent, unprecedented lifestyle changes Americans made in response to the Covid-19 pandemic. For example, boat/RV sales have increased substantially compared to pre-pandemic levels, development of recreational real estate dedicated exclusively to boat/RV owners has never been higher, and as of March 2023, the average physical occupancy rate of a boat/RV storage facility in Texas exceeds 90 percent. To that end, conversion of the uncovered parking spaces (approximately 46 spaces) into covered parking is a value-creation opportunity likely warranting serious contemplation, but no assumptions to that effect have been made in the pro-forma operating statement. Additionally, rental rates at the two facilities are on average 22 percent lower than the market rates. Significant value could be realized if a new operator were to increase rental rates ten percent while remaining below the market average. Be that as it may, the combination of a highly resilient income stream and upside potential renders acquisition of the Premium Storage Portfolio a uniquely desirable proposition.