Deal type
Self-storage, on street rates
A storage facility earns differently from an apartment building. Customers who have been there a while pay more than a new one is quoted, because their rate goes up every year and moving out is a day’s work. Customers come and go every month. And a new facility fills over two or three years. That is what this models.
A row is a unit size
A 5×5, a 10×10, a 10×10 climate-controlled, a 10×30. How many, how big, the street rate a new customer is quoted, and what the customers there now pay on average.
- In place above street is the normal case. The table shows each size’s gap to street, and what its in-place rent has become by the sale.
- The rows, the totals and the rent line are the model’s. 550 units, 58,500 SF, the facility’s rent at street, and how far in-place sits from it.
- Each size can fill and turn at its own rate. Climate-controlled units usually run fuller and turn slower than drive-up; a size left empty uses the facility’s figures.
Who leaves, what those who stay pay
Each month some customers move out and are replaced at the street rate, with whatever was given to bring them in. Those who stay get the yearly increase. Where the two balance is where in-place rents settle against street, and the card says where that is.
- The settling point is shown, not hidden. 4.5% move-outs a month and 9% increases settle about 11% above street. An assumption that implies customers paying double street is visible on the card before it reaches the IRR.
- Move-outs say how long people stay. 4.5% a month is an average stay of about twenty-two months, which is the figure an operator knows.
- Increases land on each customer’s anniversary, the first one a set number of months after move-in, so a facility’s rent steps the way a real program does rather than creeping up every month.
- A cap above street stops a customer’s increases at the premium an operator will push to, and the card says the rents settle there.
- Increases with nobody leaving and no cap are flagged, because rents would climb away from street for the whole hold.
Swept on what a storage deal turns on
Occupancy, how hard existing customers’ rates are pushed, and how many move out are levers of their own, in place of the apartment levers a storage facility does not have. The second grid opens on occupancy against rate increases.
- Street rate moves in-place rents with it. Customers leave and are replaced at street, so a shock to street alone would understate any hold longer than an average stay.
- A lease-up is a straight line from the occupancy it opens at to the stabilized figure, and the DSCR and debt-yield tests start from the month it reaches the stabilized threshold on the Assumptions tab.
Honest
What it does not do
A page that only lists strengths is a page you have to check somewhere else.
- Customers are kept in groups, not one by one. Move-outs come evenly from every group, where in practice the newest customers leave soonest and the longest-staying hardly at all.
- The rent roll’s move-in dates are not read. The customers there at closing are taken as having their anniversaries spread evenly over the coming year.