Property Details
Stabilized Occupancy  Stabilized Income  Below Market Rents 
Asset Profile
Value Add

Stabilized 3 Property Self-Storage Opportunity

Danville, VA

Self-Storage Property
5050 Storage Partners Charlotte, NC
5050 Storage Partners
  • IRR 19.59%
  • Equity Multiple 2.25x
  • Hold Period 5Y
  • Minimum Investment $25K
  • Year 1 Cash on Cash 7.3%
  • Stabilized Cash on Cash 9.5% Y2
  • First Distribution Oct 2022
  • Distribution Frequency Quarterly
  • Co-Investment 5% ($166K)
  • Preferred Return 8%
  • Investor Profit Share 70%
  • Asset Profile Value Add
  • Loan-to-Value 66.93%
  • Current Occupancy 94%

About this Property

"Virginia Self-Storage Portfolio"

- D. Brent Wright Jr., 5050 Storage Partners

 

Address(es) 1517 S Boston Rd
253 Parker Rd
4771 Riverside Dr.
Square Footage 99,290 sq. ft.
# of Units 676 Units
43 Parking Spots
Year Built 1995
Year Renovated 2021
Current Occupancy 94%
Market Occupancy 98%
Current Average Rents $91.97
Average Market Rents $112
Purchase Price $8,525,000
Price/Sq. Ft. $85.86/Sq. Ft.
Stabilized Loan to Value 62.2%

Top Questions

All answers are provided by the sponsor, 5050 Storage Partners, or its representatives.

 

Why are you buying this property?

D. Brent Wright Jr., 5050 Storage Partners: "Airpark and Econo Storage is located in Danville, VA. In a 100-mile radius 5050 Storage Partners currently owns and manages over 1,700 units. This 3 property portfolio is an excellent bolt-on to the existing portfolio. This opportunity also offers the ability to increase both street rates and existing customer rates by implementing effective revenue management. The city of Danville is going through a revitalization as a new casino is under construction, and many manufacturers moving to the area because of the skilled labor force."

 

What are the most important aspects of this investment opportunity for the investors?

D. Brent Wright Jr., 5050 Storage Partners:

  • "The acquisition of the property is not overleveraged. 65% LTV is a comfortable leverage point for this kind of asset. The break-even ratio is 61.1% in year 2. During the 2007-2009 downturn self-storage on a national level held occupancy levels around 80% on a national scale."
  • "There is a great opportunity in the first 12 months to increase rental rates on existing customers, add insurance income, and other ancillary income drivers like merchandise, enforce late fees, etc. The asking rates are on average 30% below the best operators in the market. It is important to note that when percentage increases are discussed that there needs to be consideration given to the dollar amount. Since the average rate is $91.97 a 30% increase is effectively only $27.59. This number is achieved over an 18-month period."
  • " This will be the 6th asset that 5050 Storage Partners owns and manages in a 100-mile radius. 5050 Storage Partners has an intimate knowledge of the market, customer base, and excellent data because of the other locations."

 

What is your investment strategy/business plan?

D. Brent Wright Jr., 5050 Storage Partners: "The investment strategy and business plan will focus on a few key areas:"

  • "Existing customer rates: 5050 Storage Partners utilizes best-in-class software for revenue management. Since implementation revenues of both top line and bottom line have grown by 25%. Existing customer rates are a key part of the business plan as it is one of the fastest ways to increase the property's performance."
  • "Top line rate growth: Street rates are monitored on a daily basis and in some instances, the rates will change on daily basis depending upon supply and demand. Having a first-in-class revenue management system allows for quick decision-making across the growing storage portfolio."
  • "Capital Improvements: The Econo Storage locations need capital improvements to increase the curb appeal. New access controls will allow for ease of access. New fencing will provide additional security for the customers. New 16 camera security cameras will increase security measures. New doors and paint will give the assets great curb appeal which will allow for increased asking rates from new customers."
.

 

How has COVID-19 impacted your business plan?

D. Brent Wright Jr., 5050 Storage Partners: "COVID-19 had a minimal impact on the business plan. There were a few municipalities around the country where self-storage was impacted. Mainly larger cities like LA, New York, etc. Overall COVID-19 had a positive impact on the business. Self-storage is defined by four fundamental drivers (Death, Divorce, Disposition, and Downsizing) but during COVID a 5th "D" emerged. Decluttering became the main focus during COVID as Americans decided to organize their lives but also needed to repurpose rooms in their homes or apartments because of remote work. Demand during COVID was very strong for the asset class. There was a short period of time when states were under a state of emergency. If a state of emergency is issued operators can not follow the typical lien process or push existing customer rates. This only disrupted operators for a few months and the impact was minimal."

 

What are the risks and how are you mitigating those risks?

D. Brent Wright Jr., 5050 Storage Partners:

  • "Rising Interest Rates: the current debt terms are fixed at a 4.5% interest rate."
  • "New Construction: New construction can always pose challenges. History shows existing customers tend not to move out because there is a better located or newer product in the trade area. The main issue typically arises out of seeing some softness in the move-in rates. Having revenue management software will take new construction into account to make sure the move-in to move-out relationship stays in line."
  • "Exit Valuation Risk: The exit cap is 6.25% or 125 basis points higher than the going-in cap rate. This provides a good margin of safety. If cap rates were to increase to an exit of 7% the opportunity would provide a 16.19% Net IRR to the investor."
  • "Slower Demand: The demand for self-storage has been very high over the past 24 months. Occupancies remain at all-time highs across most assets. There is a risk of a slower economy, recession, lack of movement via home sales, etc. History has proven that self-storage performs well in both good times and bad. By not overleveraging the purchase provides a greater margin of safety if tough economic times do indeed arise."
  • "Inflation: Self-storage leases are month-to-month leases. This provides the ability to raise rental rates every 30 days if desired. This is not a standard operating procedure. The standard practice is to increase the rental rates 6 months from the rental and then every 11 months after. This turn is faster than office, industrial, and multi-family providing the ability to be a better hedge against inflation."

 

NOTE: All answers provided by the sponsor, 5050 Storage Partners, or its representatives.

About this Property

"Virginia Self-Storage Portfolio"

- D. Brent Wright Jr., 5050 Storage Partners

 

Address(es) 1517 S Boston Rd
253 Parker Rd
4771 Riverside Dr.
Square Footage 99,290 sq. ft.
# of Units 676 Units
43 Parking Spots
Year Built 1995
Year Renovated 2021
Current Occupancy 94%
Market Occupancy 98%
Current Average Rents $91.97
Average Market Rents $112
Purchase Price $8,525,000
Price/Sq. Ft. $85.86/Sq. Ft.
Stabilized Loan to Value 62.2%

Top Questions

All answers are provided by the sponsor, 5050 Storage Partners, or its representatives.

 

Why are you buying this property?

D. Brent Wright Jr., 5050 Storage Partners: "Airpark and Econo Storage is located in Danville, VA. In a 100-mile radius 5050 Storage Partners currently owns and manages over 1,700 units. This 3 property portfolio is an excellent bolt-on to the existing portfolio. This opportunity also offers the ability to increase both street rates and existing customer rates by implementing effective revenue management. The city of Danville is going through a revitalization as a new casino is under construction, and many manufacturers moving to the area because of the skilled labor force."

 

What are the most important aspects of this investment opportunity for the investors?

D. Brent Wright Jr., 5050 Storage Partners:

  • "The acquisition of the property is not overleveraged. 65% LTV is a comfortable leverage point for this kind of asset. The break-even ratio is 61.1% in year 2. During the 2007-2009 downturn self-storage on a national level held occupancy levels around 80% on a national scale."
  • "There is a great opportunity in the first 12 months to increase rental rates on existing customers, add insurance income, and other ancillary income drivers like merchandise, enforce late fees, etc. The asking rates are on average 30% below the best operators in the market. It is important to note that when percentage increases are discussed that there needs to be consideration given to the dollar amount. Since the average rate is $91.97 a 30% increase is effectively only $27.59. This number is achieved over an 18-month period."
  • " This will be the 6th asset that 5050 Storage Partners owns and manages in a 100-mile radius. 5050 Storage Partners has an intimate knowledge of the market, customer base, and excellent data because of the other locations."

 

What is your investment strategy/business plan?

D. Brent Wright Jr., 5050 Storage Partners: "The investment strategy and business plan will focus on a few key areas:"

  • "Existing customer rates: 5050 Storage Partners utilizes best-in-class software for revenue management. Since implementation revenues of both top line and bottom line have grown by 25%. Existing customer rates are a key part of the business plan as it is one of the fastest ways to increase the property's performance."
  • "Top line rate growth: Street rates are monitored on a daily basis and in some instances, the rates will change on daily basis depending upon supply and demand. Having a first-in-class revenue management system allows for quick decision-making across the growing storage portfolio."
  • "Capital Improvements: The Econo Storage locations need capital improvements to increase the curb appeal. New access controls will allow for ease of access. New fencing will provide additional security for the customers. New 16 camera security cameras will increase security measures. New doors and paint will give the assets great curb appeal which will allow for increased asking rates from new customers."
.

 

How has COVID-19 impacted your business plan?

D. Brent Wright Jr., 5050 Storage Partners: "COVID-19 had a minimal impact on the business plan. There were a few municipalities around the country where self-storage was impacted. Mainly larger cities like LA, New York, etc. Overall COVID-19 had a positive impact on the business. Self-storage is defined by four fundamental drivers (Death, Divorce, Disposition, and Downsizing) but during COVID a 5th "D" emerged. Decluttering became the main focus during COVID as Americans decided to organize their lives but also needed to repurpose rooms in their homes or apartments because of remote work. Demand during COVID was very strong for the asset class. There was a short period of time when states were under a state of emergency. If a state of emergency is issued operators can not follow the typical lien process or push existing customer rates. This only disrupted operators for a few months and the impact was minimal."

 

What are the risks and how are you mitigating those risks?

D. Brent Wright Jr., 5050 Storage Partners:

  • "Rising Interest Rates: the current debt terms are fixed at a 4.5% interest rate."
  • "New Construction: New construction can always pose challenges. History shows existing customers tend not to move out because there is a better located or newer product in the trade area. The main issue typically arises out of seeing some softness in the move-in rates. Having revenue management software will take new construction into account to make sure the move-in to move-out relationship stays in line."
  • "Exit Valuation Risk: The exit cap is 6.25% or 125 basis points higher than the going-in cap rate. This provides a good margin of safety. If cap rates were to increase to an exit of 7% the opportunity would provide a 16.19% Net IRR to the investor."
  • "Slower Demand: The demand for self-storage has been very high over the past 24 months. Occupancies remain at all-time highs across most assets. There is a risk of a slower economy, recession, lack of movement via home sales, etc. History has proven that self-storage performs well in both good times and bad. By not overleveraging the purchase provides a greater margin of safety if tough economic times do indeed arise."
  • "Inflation: Self-storage leases are month-to-month leases. This provides the ability to raise rental rates every 30 days if desired. This is not a standard operating procedure. The standard practice is to increase the rental rates 6 months from the rental and then every 11 months after. This turn is faster than office, industrial, and multi-family providing the ability to be a better hedge against inflation."

 

NOTE: All answers provided by the sponsor, 5050 Storage Partners, or its representatives.

Offered By

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Assets Under
Management

Currently
$29.6MM less than 10 assets
Exited
$69.5MM less than 10 assets
Portfolio LTV
49.9%  
Historical
Realized Returns

Total IRR
30.6%  
Equity Multiple
2.59x  
Annual Cash
N/R  
Years Of
Experience

As Principals
10+ years  
In Business
5 years  
Size
6 Staff  
* All information is reported by 5050 Storage Partners as of 6/2/2022.
Assets Under
Management

Currently
$29.6MM less than 10 assets
Exited
$69.5MM less than 10 assets
Portfolio LTV
49.9%  
Historical
Returns

Total IRR
30.6%  
Equity Multiple
2.59x  
Annual Cash
N/R  
Years Of
Experience

As Principals
10+ years  
In Business
5 years  
Size
6 Staff  
* All information is reported by 5050 Storage Partners as of 6/2/2022.

Financials

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Offering Financial

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Location Details

Danville, VA

D. Brent Wright Jr., 5050 Storage Partners: "The transaction will consist of 3 properties located in Danville, VA. The Airpark location is the largest of the 3 properties and has a mixture of climate-controlled and non-climate-controlled units. The other 2 locations are in well-located parts of Danville. The Parker Road location is adjacent to major retailers like Home Depot, TJ Max, and Best Buy. The Riverside Dr location is on the main road with excellent visibility and traffic counts. All the properties are located within a few miles of each other. Parker Road and Riverside are well-located assets but desperately need capital improvements. Adding security cameras, fencing, select door replacement, and painting both of the locations will enhance the curb appeal. Once completed these facilities will then be able to command stronger rental rates."

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Offering Agreement Documents

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