Self-Storage Portfolio 3
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.
- Year 1 Cash Flow 5.00%
- Initial Occupancy 93.60%
- Est. Time Horizon 7 years
- Yr 1. Cap Rate to Investors 4.60%
- Investor Purchase Price $35,176,613
- Total Offering Size $20,001,613
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-Value 43.14%
- Hold Period DSCR 2.33
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%.
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%).
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.