Analysis of Investments

Self-Storage Portfolio 2

Inland

Inland Self Storage Portfolio 2 is an investment into 8 self storage properties. These properties are all located in Knoxville, Tennessee. The operator of these facilities is Metro Storage LLC, which is a privately held real estate company that specializes in self storage facilities.

Investment Highlights

  • Yr. 1 Cash-on-Cash 5.00%
  • Initial Occupancy 92.20%
  • Est. Time Horizon 10 years YEARS
  • Current Cash Flow
  • Yr. 1 Cap Rate to Investor 5.46%
  • Investor Purchase Price $40,802,931
  • Total Offering Size $21,827,931

Loan Information

The total loan is $18,975,000 and is from First Merchants Bank. The total loan term is 10 years with the first 5 years being interest only. When amortization begins it is based on a 30 year schedule. The interest rate is fixed at 4.00%.

  • Yr. 1 DSCR 2.74
  • Loan-to-Offering 46.50%
  • Hold Period DSCR 2.57

Tenant Information & Lease Terms

The portfolio has a total of 8 properties in Tennessee. Each of the properties is operated by a single private company.
Metro Storage is a privately held company that has over 54,000 units at 98 properties in 12 states. Leases are signed on a month to month basis and residential tenants make up about 70% of the tenant mix.

Key Positives

  • The sponsor has underwritten the year 1 performance of the portfolio very conservatively. EGR growth is 1.26%, while OpEx grows 7.73% compared to the trailing 12. This leads to a decrease in NOI of 3.37% allowing the property the potential to outperform its projections.

  • The portfolio is moderately leveraged and the sponsor is utilizing an LTV of 46.5%.

Key Risks to Consider

  • The population in the area around these properties is expected to underperform the average growth rate of the nation. This growth rate in the 5-mile radius is projected to be 0.54%.

  • The cap rate to investors is low (5.46%).

Investment Sponsor Information

Inland

The Inland Real Estate Group of Companies, Inc. ("Inland"), is an industry leader and one of the nation's largest commercial real estate and finance organizations. As a business incubator, we specialize in creating, developing and supporting Inland member companies that provide commercial real estate-related services and alternative investment funds, including limited partnerships, institutional funds and non-listed and listed REITs.

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