Analysis of Investments

Self-Storage Portfolio 3

Inland

Inland Self Storage Portfolio 3 is an investment into 4 self storage properties. These properties are all located in Houston, Texas. 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 93.60%
  • Est. Time Horizon 7 years YEARS
  • Current Cash Flow
  • Yr. 1 Cap Rate to Investor 4.60%
  • Investor Purchase Price $35,176,613
  • Total Offering Size $20,001,613

Loan Information

The total loan is $15,175,000 and is from Santander Bank. The term is for a total of 7 years with the first 3 years being interest only. When amortization beings it will be based on a 30 year schedule. The interest rate is 2.5% + one month LIBOR. The rate has been capped at 3.5% for a portion of the loan. The other portion of the loan has been hedged by a SWAP which creates an effective fixed rate of 4.49%.

  • Yr. 1 DSCR 2.26
  • Loan-to-Offering 43.14%
  • Hold Period DSCR 2.33

Tenant Information & Lease Terms

The portfolio has a total of 4 properties in Texas. 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

  • There is a potential for a value-add opportunity at the property due to its age and the fact that a larger operator may enter as a partner.

  • The average occupancy at the properties is high (93.6%).

  • There is strong growth of population in the 5-mile radius. The total population in this radius ranges from 297,000 to 530,00 and has a growth rate of over 1.30%.

Key Risks to Consider

  • The loan term is only for a period of 7 years which may not allow enough time to exit for a profit.

  • The cap rate to investors is low (4.6%).

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.

  PAST Investments