1. sports
2. golf

Development
Business Plan
Utah Real Estate Challenge
March 27, 2012
Porter's Crossing & Pony Express Parkway
Eagle Mountain, UT
[EAGLE MOUNTAIN STORAGE]
The first self-storage facility in Eagle Mountain, Utah, serving over 23,000 people.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
TABLE OF CONTENTS
Executive Summary.........................................................................................................3
Site Location....................................................................................................................4
Site Description...............................................................................................................5
Feasibility Study.............................................................................................................14
Marketing Plan...............................................................................................................21
Deal Economics.............................................................................................................22
Sustainability..................................................................................................................33
Conclusion.....................................................................................................................33
Appendix........................................................................................................................35
Sources..........................................................................................................................41
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Executive Summary
Eagle Mountain City has no self storage. Eagle Mountain Storage proposes Eagle
Mountain City's first self-storage unit development to service the 23,000+ residents who
live in that city. Our analysis shows that significant unmet demand makes this a viable,
financially-rewarding opportunity. Eagle Mountain Storage needs equity investment for
this to move forward and we respectfully request your consideration in 1 ) reviewing this
proposal and 2) providing financial backing at terms acceptable to you.
Salient Site Facts
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Currently for sale with verbally agreed land price
Highly visible
Near high density of hundreds of condos
Located along major arterial
In to-be-developed grocery-anchored "Town Center"
Flat terrain
Seller to stub utilities
Supported by city planners & economic development director
Salient Feasibility Facts
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Demand: 23,000 residents
Supply: no self-storage facilities
Analysis: easily supports 70k+ square feet of storage
High population growth (7%+ per year)
$62k+ median income in trade area
Deal Economics Facts
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21.43% IRR; 17.48% cash-on-cash return
61,000 SF 450-unit facility; 54,845 NRSF
$3,264,402 project cost
“3-1-1” construction loan at 4.5%
25-year amortization 6% permanent loan
Debt Yield Ratio of 12.34%
$3,705,193 value (8% CAP); 9.81% return on cost
Three year lease up period
$2,596,635 in debt
$538,758 in equity required from investor
Developer to contribute $132,009
3
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Site Location
4
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Site Description
The development comprises 2.55 acres located within a proposed development owned
by Amsource north of the intersection of Porter's Crossing and Pony Express Parkway
in Eagle Mountain City. We will first highlight the importance of this intersection, then
will outline the overall Amsource project, and then narrow the focus to how our proposal
integrates seamlessly within the Amsource development.
Amsource's Proposed
Development
Our Site
Porter's Crossing
Pony Express Pkwy
Pony Express Parkway. UDOT just completed construction a few months ago
connecting Pony Express Parkway directly into Redwood Road, creating one of Eagle
Mountain's featured primary arterials into and out of the city. Whereas this highway only
feeds into Redwood Road, UDOT has plans to make Pony Express Parkway a major
highway extending east through Lehi, similar to the new Pioneer Crossing, directly to I15 (at the Vineyard Connector).
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Our site on Pony
Express Pkwy
Pony Express Pkwy will
directly connect to I-15
Pony Express Pkwy now
connected to Redwood Rd.
This guarantees Pony Express Parkway the prominent placement as the "Main Street"
of Eagle Mountain City. UDOT has no traffic numbers yet for Pony Express since its
recent connection to Redwood, though is currently studying this with a report due this
May. The city estimates half of its traffic now comes along this road.
Amsource Development. Known as "Porter's Crossing Town Center," Amsource's
145-acre development will include retail (30 acres), office (34 acres), residential (50
acres), and open space (30 acres). Importantly, the retail will feature the city's first
grocery-anchored development, indeed justifying the development's underlying goal and
name: "Town Center."
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Site Photos and Land Use Plan
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Amsource has already begun laying the infrastructure for its development. This
includes cutting in the road, all utilities and storm water services on the main road.
Amsource has agreed to stub utilities to our site (included in the land price).
Although zoned Agricultural, the Amsource site has received an approved master
development plan with the rezone pending a signed and approved master development
agreement for the project.
Eagle Mountain Storage Site. Although the area can support new retail and
residential development, we feel little or no demand exists for 34 acres of office
development in the primarily residential community of Eagle Mountain. As such, we
propose substituting a small portion (<10%) of the office space with a market-driven
solution: storage units.
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
We met with Amsource to determine the mutually best location for the storage unit
facility and came to the following conclusion:
Wash area:
difficult to
develop
Site
Visibility
Visibility
This location benefits us greatly. Given the city's requirements to locate the storage
facility behind the retail instead of immediately along the highway, this location boasts
the most prominent placement possible in the development. It also places the storage
units on the development's highly visible eastern edge next to an area that will likely not
experience development due to slope issues.
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Further, until the retail pads along the front are built, this facility will enjoy unhindered
visibility directly from the city's busiest highway, which direct visibility may exist for years
to come especially given the two adjoining pads are likely to be built last given their
location furthest from the anchor and shadow anchor.
Visibility
Visibility
Visibility
This location likewise benefits Amsource because of its awkwardness for the traditional
uses of retail (away from the anchors) and office (no demand). Hence, the location
mutually benefits buyer and seller.
This site features easily developable
flat terrain. Given the agreed upon
land price of $4 per square foot (psf)
Amsource has agreed to provide the
infrastructure (roads, stubbed
utilities) to make this site ready to
develop.
Most importantly, we have
discussed our proposal with the
city's planner, senior planner, and
economic development director,
and each supports this proposal.
The city simply asks that the storage
units be placed behind the retail with
aesthetic attention given to landscaping and elevations, for which we planned additional
monies in the pro forma.
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Entitlement. We would need to entitle the site which includes an application, plans,
preliminary and final plats, and a site plan. The Development and Review Committee
reviews the application and plans to help ensure compliance with city requirements.
The planning commission and city council would review the plats on a consent agenda
(simple approval), while the city council would review the site plan as a discussion item
to ensure it meets requirements (particularly aesthetic), hear feedback from neighbors,
and make a final decision. The city would then grant the Commercial Storage zoning
that's specific to storage units. The planner indicated the entire entitlement process is
simple enough that we could expect to move dirt less than 90 days from initial
application.
Importantly, the planners support this proposal and feel it would successfully gain final
approval. The city needs it, the market demands it, it will meet the city's desires for site
placement and aesthetics, it fits really well into the surrounding area (undeveloped land
zoned agriculture, hence no real complaints from neighbors), and it fits seamlessly into
Amsource's existing site proposal that already has master approval.
Site plan. The site design includes a 61,000 square foot building with 2,000 square
feet set aside for an office and residence for an on-site manager. The 59,000 square
feet of storage space includes approximately 4,155 square feet of hallways and 54,845
net rentable square footage (NRSF).
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
The building will feature investment-grade construction including cinder block (similar to
our competitors) with an attractive façade to satisfy city requirements. Other features
include automated access, security cameras, and appropriately sized driving corridors.
Larger units have wider driveway access and turnaround space. We elected to forego
providing climate-controlled units per a cost-benefit analysis.
With a building-to-land ratio of 54.92%, the building itself has room to change to
accommodate any requirements that the city has as the development progresses. In
our conversations with our three mentors and Menlove construction (the leading storage
unit builder in Utah) we have been assured that our site can handle the 54.92%
building-to-land ratio with several configurations.
The building opens up to a contiguous .43 acre parcel to its north, providing three
development options. 1) Amsource can use this use this to meet open space
requirements. 2) We can option this for future expansion. 3) We can purchase this site
immediately and use it for RV/boat storage until the market merits a building expansion.
The Ranches HOA has strict guidelines preventing homeowners from storing recreation
vehicles and trailers in visible locations on their properties, so regulatory pressures
create strong demand for RV/boat storage. A snip from the Ranches HOA General
Rules:
Once we pay Menlove Construction to officially engineer/architect the site we’ll know
more precisely how we would like to proceed with the adjoining .43 acre parcel.
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
13
[EAGLE MOUNTAIN STORAGE]
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Feasibility
Demographics. Eagle Mountain City provides favorable demographics for a storage
unit facility: dense residential neighborhoods, a fast growing population, and solid
incomes. Eagle Mountain is the 4th fastest growing city in the state. Its population has
grown 920% to 23,000+ since its incorporation in 1996 with only 250 residents, and has
a projected growth to 88,500 residents by 2040. As a comparison, the 2010 Census
shows Eagle Mountain with only 370 fewer residents than Herriman. 90% of adults
have post-secondary education, 60% have college degrees, and most work in white
collar jobs. Newer homes, a master-planned city, excellent housing financing (0% down
Rural Housing loans), and attractive home prices continue to spur this growth. Further,
drives times to major destinations are much closer than many realize:
Drive Times
(minutes)
Downtown Salt Lake City
35
SL International Airport
35
Downtown Provo
25
Population
2010 Census
21,415
2012 (estimated)
23,000+
2015 Projected
25,655
2040 Projected
88,500
Households
2010
5,546
Average Size
4.2
Income
2010 Ave HHI
$57,000
2010 Med. HHI
$63,000
Employment Type*
White Collar
64.20%
Blue Collar
18.81%
Services
16.99%
*3-mile radius, STDB Online
The Ranches,
population 15,500+
City Center,
population 7500+
Undeveloped land,
owned by SITLA
Eagle Mountain City has two primary centers of development, known commonly as The
Ranches and City Center. These two centers are separated by SITLA-owned land.
Eagle Mountain Storage's location allows it to capture tenants from both locations.
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Supply/Demand. Cushman & Wakefield's self-storage industry group's econometric
model forecasts storage unit demand for the Salt Lake City Metro region at 7.74 square
feet per person. With a current supply of 9.99 square feet per person, the SLC Metro
region appears over-supplied with self-storage space. However, the 2012 Self Storage
Almanac confirms what real estate experts know already: "The performance of an
individual facility is more dependent on local market conditions than ... regional trends."
As such, we need to perform a trade area analysis of the local Eagle Mountain market.
Trade Area Analysis. "Survey research and zip code studies confirm that demand for
a typical self-storage facility comes from about a three-mile radius from the subject."
(2012 Self-Storage Almanac , p. 40). Natural barriers likewise justify this distinction. In
studying the closest facilities to Eagle Mountain we identified two competitors: Towne
Storage and Extra Space Storage, both 4+ driving miles from the subject. The 3-mile
trade areas for these competitors only reach to the eastern edge of Eagle Mountain
City, while Eagle Mountain Storage sits competitively advantaged within Eagle Mountain
City.
These two competing facilities are
located near the prominent crossing
of SR-73 and Redwood Rd., the
main traffic corridors for both Eagle
Mountain (23,000+ population) and
Saratoga Springs (17,781
population per 2010 Census). It
appears that the competitive
strategy for these locations is to
absorb the storage needs of Eagle
Mountain (which has no facilities)
and Saratoga Springs (which only
has these two facilities), as well as
the population in west Lehi.
Towne Storage has existed for
several years and has reached
stabilized occupancy. Extra Space
opened January 2012 and has a
30-36 month projected lease up
phase. Both facilities are
comparable in size and unit
number.
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Competitors
Towne Storage
Extra Space Storage
Total
Units
465
431
896
Leasable Sq Ft
64,750
64,770
129,520
Occupancy*
85%
50%**
*85% is considered stabilized for self storage. **Based on projections of when our facility opens.
Supply/Demand Reconciliation. Using industry standard guidelines, we observe the
existing supply from competition does not meet demand, especially in Eagle Mountain.
Further strengthening the analysis, we omitted the population of west Lehi falling within
the competitors' trade areas that would otherwise boost the demand figure.
Summary of Supply/Demand
Eagle Mountain Saratoga Springs
Population
23,000
18,000
Storage Demand (7.74 factor)
178,020
139,320
Storage Supply (3-mile radius)
0
129,520
Excess Demand (Sq Ft)
178,020
9,800
Even utilizing a demand factor 65% (5 square
feet per person) of the Alamanac-researched
7.74 for the Salt Lake Metro region, the
analysis still strongly supports the proposed
facility of 54,845 NRSF (a 5.0 factor indicates
70,230 square feet of unmet demand exists).
Total
41,000
317,340
134,770
182,570
Demand Factor Sensitivity
Demand Factor Excess Demand (Sq Ft)
7.74
182,570
7
152,230
6
111,230
5
70,230
Conclusion: the market is undersupplied.
Additionally, Eagle Mountain Storage's
location enjoys a significant competitive
advantage in capturing its primary market,
including the 7k+ City Center population.
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Notice: the 3-mile rings from the
competitors barely reach into our
facility's target market.
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Drive time from City Center to Eagle
Mountain Storage = 10 minutes; to
nearest competitor = 18 minutes.
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The first self-storage development in Eagle Mountain. | 23,000 served.
City Center
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
This map shows the secondary market
within Saratoga Springs where we may
capture some of the demand.
Importantly, we sized our facility such
that Eagle Mountain should
independently provide sufficient
absorption, so any tenants procured from
Saratoga would come as a bonus.
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Note: the recently connected Pony
Express Parkway now provides
Recently connected
easy access for Saratoga Springs Pony Express Pkwy
residents to the site.
Note: Saratoga has enough
population to independently
support both Towne Storage and
Extra Space, so the competitors
do not need Eagle Mountain
residents to remain stabilized.
Demographic Comparison.
Analysis shows striking
similarities between the
demographics of the 3-mile
radii surrounding Eagle
Mountain Storage and Towne
Storage. (Of note, though
some overlap exists between
the 2 radii, the shared area
consists primarily of
undeveloped land.)
Year 2010 Demographic
Summary*
Population
Households
Families
Average Household Size
Owner Occupied HUs
Renter Occupied HUs
Vacant HUs
Median Income
Median Age
Population Growth Rate
Employed Population
White Collar
Blue Collar
Services
Eagle Mountain
Towne Storage
Storage
$
18,922
4,604
4,130
4.11
79%
10%
10%
62,653 $
30.2
20,694
5,432
4,920
3.81
77%
19%
4%
65,107
30
7.10%
6.74%
Whereas Towne Storage has
a higher percentage of
64.20%
62.74%
renters nearby, Eagle
18.81%
20.57%
Mountain Storage has a much
16.99%
16.69%
greater density when
comparing 1-mile radii. Our site has double the population (7453 vs. 3760) and housing
units (2239 vs. 994), which density will increase even further when Amsource develops
its planned 242 residential units (condos representing the majority of those).
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
We interviewed 3 self-storage facility owners and developers. Each commented that
the percentage of renters isn't a measured factor: density is. Apartment renters may
provide greater turnover as self-storage tenants, but condo owners often make for longterm tenants.
Each individual we interviewed stressed the same thing: what matters is density.
Critically, therefore, there are hundreds of condo units (averaging 1258 square feet with
no garages and minimal in-residence storage) within 1 mile of our site:
The Eagle Mountain Storage site mirrors Towne Storage's site in key ways:
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Location: each on "Main St"
Density: each has large condo (note: NOT apartment) complexes nearby
Demographics: each compares similarly with income and population
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Towne Storage's Saratoga Springs site has experienced significant success. When our
site's demographic and area matrices line up so well with Towne's site, we feel
justified in our site selection, pricing strategy, and opportunities for success.
Other proposed self-storage facilities. We also researched with the city regarding
any current or previous self-storage facility proposals. The city planner indicated a site
near SR-73 had received a self-storage approval back in 2001, but the developer never
moved forward. That developer has engaged the city in discussion from time-to-time
over the past few years, including as recently as a month ago. We advise, therefore,
that equity investors reading this analysis act quickly to make our facility the first in the
ground. The following map shows our location's superiority next to dense residential
housing versus the potential competing facility located in an area of 1-acre and 5-acre
lots zoned Rural Residential:
1-acre lots
Previously
Proposed
Facility
Approved for
high density res.
Approved for
1st groceryanchored dev.
5-acre lots
Our Site
City's highest density
*Eagle Mountain City - Future Land Use and Transportation Corridors
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
The other potential location has critical deficiencies: 1) sparse "Rural Residential" (only
280 households in a 1-mile radius vs. 2239), 2) large homes with lots of storage (4180
square feet average, most with 3-car garages), 3) expensive off-site infrastructure
improvements (estimated $1,000,000 to make it developable), 4) poor traffic counts
(2620 AADT), and 5) location too far to capture any of Saratoga's market.
Barriers to entry. The primary barrier to entry in self-storage development is securing
a location that out-positions the competition to the extent that a competitor doesn't
proceed to develop because it could only build in an inferior location. Factors
influencing a prime self-storage location include residential density, visibility, and city
requirements.
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Density. The map on the previous page displays that our site captures the
closest possible location to the highest density in the entire city.
Visibility. Our site has great access and visibility along one of the busiest
arterials in the city and is located in the best position along that arterial because
of the grocery anchor.
City requirements. The General Plan doesn't provide for any storage within or
near this location as it's all planned Mixed Residential (reference the map on the
preceding page). However, the city planners support storage in our location
because it integrates well into Amsource's plan for the grocer, retail, and
business park. Importantly, no competitor can simply develop storage units "as
of right." They will need city council approval. In general, cities don't want too
many storage facilities because they provide minimal jobs (1-2/facility) and
minimal tax revenue. Our location within Amsource's development has been the
key for gaining the support of the city planning department.
First to market. Ours will be first to market and should deter wise developers
from adding competition, especially given self-storage's long lease-up periods.
Although it's possible that eventually another developer could build storage units in
Eagle Mountain, we like our location's competitive advantages being nearest to the
highest density, within the only grocery-anchored development, along one of the busiest
arterials.
Population growth. Population growth 1) reduces risk created by competitors entering
the marketplace and 2) accelerates lease-up. Population growth solely within the 3-mile
trade areas of our facility and Towne's facility estimates to grow by 17,000 residents
from years 2010 to 2015. Though the 3-mile rings have some overlap, this growth
statistic emphasizes that by the time our facility opens in Summer 2013, the market
could very well support starting construction on an additional 60k square foot facility.
Such is the demand to live in these cities. Such is the minimized risk for developing in a
high growth area.
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Marketing Plan
Interviewing industry insiders, we learned that self-storage tenants usually locate
facilities primarily through the sources in the chart below:
Given our location's prominent
placement along Pony Express
Parkway, we feel we'll do well
capturing the drive by traffic.
We have also allotted $40,000 of
soft costs toward marketing
including strategies such a
website, search engine
optimization, and various print
advertising.
We will also purchase a truck to 1) help tenants move in free and 2) provide marketing
signage. We have also budgeted a separate line item soft cost for building a noticeable
monument sign along the road frontage.
The annual budget also allots costs for generous marketing expenses.
Most critically, though, we will carefully select and train our on-site manager. Utah's
highest producing self-storage real estate agent commented to us that management is
the key to successfully leasing a storage facility. He provided a personal example of
greatly increasing an existing facility's occupancy solely through focusing on
management. Just like a real estate agent can consistently achieve higher sold prices
than a competing agent, we will hire capable managers that outperform the competition.
In the fragmented mom-and-pop industry in Utah County with dozens of one-facility
owners we will ensure a management-driven focus helps us compete above the rest.
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Deal Economics
Financing. With the Market Analysis exploiting a strong unmet demand for a storage
unit project in Eagle Mountain, we feel the reward of a 21.43% IRR, a 17.48% cash-oncash return, and a non-recourse permanent loan easily justifies the limited risk.
Summary of Deal Economics
Total Budget
Debt
Equity
Deferred Developer Fee
Stabilized NOI
Stabilized Value
Profit (cumulative BTCF + Sale Y10)
IRR
Return on Cost (Stabilized Y4)
Return on Cost (Sale)
Cash on Cash (Stabilized Y4)
Cash on Cash (Sale)
Market Cap Rate
Terminal Cap Rate
Cash Multiple
$
$
$
$
$
$
$
3,264,402
2,593,635
538,758
132,009
296,415
3,705,193
2,794,913
21.43%
9.81%
11.71%
17.48%
25.09%
8.00%
8.50%
4.17
The total project cost is $3,264,402 financed on a 70% debt, 30% equity piece. We feel
that a construction loan interest rate at 4.5% is very reasonable as quotes we have
received from Wells Fargo on March 15, 2012 put interest rates at a variable 3.24%.
We feel that the conservative rate of 4.5% is acceptable as rates will fluctuate. The loan
will be a “3-1-1” meaning an initial 3 year term with 2 1-year extension options with
0.25% extension fees. This will allow us options for a strategic execution of the
permanent loan or a chance to market the property for sale if so decided.
Project Costs
Land Costs
Total Hard Costs
Total Soft Costs
$ 444,312
$ 2,195,878
$ 624,213
Total Project Costs
$ 3,264,402
Project Value
Stabilized NOI
$ 296,415
CAP
8.00%
StabilizedValue
$ 3,705,193
The maximum loan-to-value (LTV) from Wells Fargo is 70%, maximum Debt Coverage
Ratio (DCR) is 1.30, maximum loan-to-cost (LTC) is 80%, and minimum debt yield is
11%. Wells would finance the project under the LTV at 70% as it is the strictest of the
four. The LTC reaches 79.45%, the debt yield exceeds 11% (12.34%), while the DCR
would allow for a much larger loan.
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Maximum Take-Out Loan Analysis
Direct Income Capitalization Approach
Stabilized NOI
Going-In CAP Rate
$
296,415
8.00%
Value (NOI/Cap Rate)
$
3,705,193
Debt Yield Ratio
> 11% (Stabilized NOI/Loan)
12.34%
Loan Terms
Interest Rate
Amortization (years)
Using Loan-to-Value Ratio
Maximum LTV
Maximum Loan Based on LTV
Using Debt Coverage Ratio
Monthly NOI
Maximum DCR
Maximum Monthly Payment (NOI/DCR/12)
Maximum Loan Based on DCR
6.00% *
25
$
$
70%
2,593,635
$
$
24,701
1.30
19,001
2,949,084
$
80%
2,611,522
$
$
$
2,593,635
(16,908)
(202,892)
Using Loan-to-Cost Ratio
Maximum LTC
Maximum Loan Based on LTC
Maximum Loan (Lesser of LTV, LTC or DCR)
Maximum Principal
Monthly Payment
Annual Debt Service
*3/15/2012 quoted rate of 5%. We use 6% to be conservative as the
Perm loan is four years away
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The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
We assume a 36-month lease-up period to achieve stabilization and have financed a
lease-up reserve and interest reserve in year one to cover the interest payments without
having to come out of pocket. We will be able to cover our interest payments on the
construction loan after one year of lease-up becoming cash-flow positive during year
two before the loan is converted to a perm. After consulting with Wells Fargo and
several experts in the industry, we feel that the lease-up period is very reasonable.
Similar projects have more aggressive 30-month lease-up periods but often do not
reach stability until month 36. We have avoided this shortfall and expect to be stable by
the end of year three.
Lease-Up Estimation Chart
Year 1
Year 2
Year 3
Year 4
MONTH
NRSF
Occupancy
1
54,845
2.00%
2
54,845
5.50%
3
54,845
9.00%
4
54,845
13.00%
5
54,845
16.00%
6
54,845
22.00%
7
54,845
24.00%
8
54,845
27.00%
9
54,845
28.00%
10
54,845
29.00%
11
54,845
31.00%
12
54,845
33.50%
20.00%
MONTH
NRSF
Occupancy
13
54,845
39.00%
14
54,845
43.00%
15
54,845
46.00%
16
54,845
48.00%
17
54,845
52.00%
18
54,845
55.00%
19
54,845
58.00%
20
54,845
61.00%
21
54,845
63.00%
22
54,845
64.00%
23
54,845
65.00%
24
54,845
66.00%
55.00%
MONTH
NRSF
Occupancy
25
54,845
69.50%
26
54,845
72.50%
27
54,845
74.50%
28
54,845
76.50%
29
54,845
78.50%
30
54,845
81.50%
31
54,845
83.50%
32
54,845
84.50%
33
54,845
85.00%
34
54,845
84.50%
35
54,845
84.50%
MONTH
NRSF
Occupancy
37
54,845
84.00%
38
54,845
83.00%
39
54,845
82.00%
40
54,845
82.00%
41
54,845
83.50%
42
54,845
85.50%
43
54,845
86.50%
44
54,845
87.00%
45
54,845
87.50%
46
54,845
87.00%
36
54,845
85.00%
Stabilized
47
48
54,845
54,845
86.50% 85.50%
80.00%
85.00%
The permanent loan will carry a 6.0% interest rate on a 25-year amortization. Wells
Fargo has assured us that with an investor in good standing, this loan can be done on a
storage facility with no recourse. Having a Non-Recourse loan further minimizes the
risk of investing in this project. Today's rate is 5.0% per Wells Fargo, though we
selected 6.0% for our pro forma because the perm loan is a few years down the road
and rates will most likely rise.
In year three after construction we have built in the refinance cost in the cash flow
analysis (0.5% finance charge plus $17,500 in fees, per Wells Fargo).
Conversion to Perm-Loan Snapshot
Loan Balance
0.5% Conversion Cost
Fees and Closing
Total Cost to Convert
$2,624,102.92
$13,120.51
$17,500.00
$30,620.51
Loan Snapshot
Construction
4.50%
Permanent
6.00%
As discussed earlier, the site will be 2.55 acres. After meeting with the property owner
and discussing land prices we have determined that $4.00 psf for our site is very
competitive and we have received verbal approval from the landowner to purchase the
land at this price with all necessary utilities stubbed into the site.
24
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Assumptions. The construction costs for the project are projected to be at $31.00 psf
for the building and $4.00 psf for the site work with a 5% contingency bringing the total
hard costs to just under $37.00 psf. The site work estimate is based off of flat terrain
and stubbed utilities. The building costs have been built citing several sources.
The first source used to come to this figure is Menlove Construction, the state's leader
in building storage unit complexes. A discussion with owner Mike Menlove has
informed us that current construction costs, including site work, building engineering,
and the building itself for cinder block construction is at $33.00 psf. Steel construction is
currently priced out at $31.00 psf respectively for the same.
We have also received consultations from several industry leaders that both appraise
and develop storage units confirming these amounts. Marshall & Swift’s cost guide also
confirms this number. We have set the building costs at $31.00 psf and the site work at
$4.00 psf totaling $35.00 psf to cover for the attractive façade that the city will require
and to cover for any unforeseen issues that may come up. When this project moves
forward, we will receive a formal bid from Menlove Construction. We want to have an
attractive, marketable building to provide a positive feel to the community and the
shopping center it resides next to.
Hard Costs
SF
Building
Site Work
Contingency
Total Hard Costs
Levels
61,000
50,078
5%
1
$ Per GSF Total
$31.00 $1,891,000
$4.00
$200,312
$0.94
$104,566
$35.94 $2,195,878
Industry standards for constructing storage unit complexes between 50,000 sf and
70,000 sf generally have soft costs averages at around $7.00 psf. This has been
confirmed by our sources. The soft costs for our project total $7.19 psf. This does not
include the interest reserve and the lease up reserve which would bring it up to
$10.31psf. The soft costs do however include the developer fee which we will
immediately roll into equity in the project. We want to show investors that we are
dedicated to our projects success and by rolling our developer fee it gives us skin in the
game and a 19.68% ownership in the project.
Within the soft costs, we have a generous marketing and signage budget for a pylon
sign along Pony Express parkway, marketing materials, and an advertising truck as
discussed earlier. We feel that by not overlooking these items we can get our project off
the ground running quickly.
25
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Costs and Assumptions
Eagle Mountain Storage
Land
Acres
Building
$ Per SF Footprint
2.55
$4.00
61,000
$ Per GSF
Less
Footprint Total
50,078
$444,312
$7.28
Hard Costs
SF
Building
Site Work
Contingency
Total Hard Costs
Levels
61,000
50,078
5%
$ Per GSF Total
1
$31.00 $1,891,000
$4.00
$200,312
$0.94
$104,566
$35.94 $2,195,878
Soft Costs
Architect & Engineering
Construction Inspection and Testing
Soils & Environmental Testing
Permits, Review, Connections
Legal & Accounting
Taxes & Insurance
Contingency (Project)
Finance Charges
Title & Closing
Signage
Marketing
Interest Reserve, Months 1-12
Lease-Up Reserve, Months 13-36
Developer Fee
Total Soft Costs
Total Soft Costs (Inc. Lease-Up & Int. Res.)
Total Hard and Soft Costs
Total Cost
2.5%
0.5%
2.00%
0.75%
2.0%
1.0%
5.0%
$ Per GSF Total
$0.90
$54,897
$0.16
$9,881
$10,000
$0.16
$10,000
$0.72
$43,918
$12,000
$0.11
$6,500
$0.32
$19,801
$0.87
$52,804
$0.43
$26,402
$15,000
$0.25
$15,000
$25,000
$0.41
$25,000
$40,000
$0.66
$40,000
$41,000
$0.67
$41,000
$147,000
$2.41
$147,000
$2.16
$132,009
$7.15
$436,213
$10.23
$624,213
$46.17 $2,820,090
$53.46 $3,264,402
Financing
NPER
Monthly PMT
Construction Interest
12
4.5%
$3,404
$40,850
*Note: Construction interest rate is 30-day LIBOR + 3.00% as of 3/15/2012. We used 4.5%
to be conservative
26
RATE
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Our going in CAP rate is 8.00%. Along with the most important factor of comparable
sales, we confirmed this number by interviewing employees at Extra Space Storage and
consulting with several industry leaders that deal with the appraisal and brokering of
storage units (Data obtained from Marcus & Millichap).
Comparable CAP Rates Past 6 Months
Name
Watchman Self Storage
Armor Storage of Logan
Community Self Storage
Average
Location
Orem, UT
Logan, UT
SLC, UT
Total Units Rentable S.F. Year Built Sale Price
1,116
187,579
1982 $ 8,450,000
1,079
177,780
2004 $ 7,200,000
371
47,995
1992 $ 4,525,000
Name
Watchman Self Storage
Armor Storage of Logan
Community Self Storage
Stone Edge Storage
River Valley Storage
Average
Location
Total Units Rentable S.F. Year Built Sale Price
Orem, UT
1,116
187,579
1982 $ 8,450,000
Logan, UT
1,079
177,780
2004 $ 7,200,000
SLC, UT
371
47,995
1992 $ 4,525,000
Roy, UT
267
35,800
2005 $ 1,150,000
Morgan, UT
126
32,640
2008 $ 1,000,000
Sale Date
12/15/2011
11/29/2011
10/15/2011
CAP
8.25%
7.29%
7.30%
7.61%
Sale Date
12/15/2011
11/29/2011
10/1/2011
11/23/2010
3/22/2010
CAP
8.25%
7.29%
7.30%
10.40%
6.30%
7.91%
Comparable CAP Rates Past 24 Months
Unit Mix/Rent Schedule. The total number of units and the unit mix are two of the
most important hurdles when it comes to calculating the NOI and assuring the success
of a storage unit project. The correct combination of units can make a project succeed
or cause it to fail. The number of units we chose and the unit mix we put together was
not done lightly. Our complex has a total of 450 units, has 54,845 NRSF, and has
beginning rents averaging at $8.64 psf annually.
In coming up with our unit mix we took three main factors into consideration. The first
factor was the competition. We canvassed the competitors, obtained property maps,
and made charts reflecting the number and size of their units.
Towne Storage Unit Mix
Unit Size
5X5
5X10
10X10
10X15
10X20
10X25
10X30
12X25
12X30
Total
27
Square Number
Total
% of Total % of total
Feet of Units Square Feet NRSF
Units
25
50
100
150
200
250
300
300
360
34
61
127
88
89
11
40
5
10
465
850
3,050
12,700
13,200
17,800
2,750
12,000
1,500
3,600
67,450
1.26%
4.52%
18.83%
19.57%
26.39%
4.08%
17.79%
2.22%
5.34%
100.00%
7.31%
13.12%
27.31%
18.92%
19.14%
2.37%
8.60%
1.08%
2.15%
100.00%
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Extra Space Storage Unit Mix
Unit Size
Square Number
Total
% of Total % of total
Feet of Units Square Feet NRSF
Units
5X5
5X10
7X10
10X10
10X15
10X20
10X25
10x30
12x35
ODD
Total
25
50
70
100
150
200
250
300
420
500
35
106
6
99
89
79
4
31
17
4
470
875
5,300
420
9,900
13,350
15,800
1,000
9,300
7,140
2,000
65,085
1.34%
8.14%
0.65%
15.21%
20.51%
24.28%
1.54%
14.29%
10.97%
3.07%
100.00%
7.45%
22.55%
1.28%
21.06%
18.94%
16.81%
0.85%
6.60%
3.62%
0.85%
100.00%
Second, we consulted with three professionals within the industry, two of which
currently develop, own, and operate storage facilities of their own and a third that works
within the industry. We discussed what type of units they had, what unit size they had
too many of and what unit size they needed more of. We then investigated how
demographics and residential densities influenced their unit mix success. This insight
helped greatly in the development of our unit mix. We learned, for instance, that 5 X 10
and especially 10 X 10 unit sizes were usually underdeveloped especially in high
condominium markets. We will utilize this insight from other owners to our advantage.
Rent Schedule & Unit Mix
Unit Size
05X05
05X10
10x10
10x15
10x20
10X30
12X35
Total
# of Units
41
120
120
70
57
31
11
450
NRSF Per
Unit
25
50
100
150
200
300
420
Monthly
Rent Per
Unit
$
29
$
53
$
78
$
105
$
128
$
175
$
227
Annual Rents
$
$
$
$
$
$
$
$
14,268.00
76,320.00
112,320.00
88,200.00
87,552.00
65,100.00
29,964.00
473,724.00
Cost Per ft
% of Total
% of Total
Per month Total SF
NRSF
Units
(Weighted)
1.87%
1.16
1,025
9.11%
10.94%
1.06
6,000
26.67%
21.88%
0.78
12,000
26.67%
19.14%
0.70
10,500
15.56%
20.79%
0.64
11,400
12.67%
16.96%
0.58
9,300
6.89%
8.42%
0.54
4,620
2.44%
100.00%
0.72
54,845
100.00%
Lastly, we then needed to look at the types of homes that our storage units would
service. Our 1-mile radius shows that there are a large amount of condominium
complexes. These types of residents heavily use the 5 X 10’s and 10 X 10’s for
storage. The rest of our trade area, due to the types of homes and income levels will
primarily use 10 X 15 and 10 X 20’s in addition to the 5 X 10 and 10 X 10’s.
By using the three factors discussed, we decided upon 450 units with an average
square footage per unit of around 120 sq ft and split out our percentages of each unit
28
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
type indicated in the chart on the previous page. A bonus to our unit mix plan is that the
5 X 10 units and the 10 X 10 units demand higher rents per square foot which actually
increases our average rent per square foot than if we had more of the larger units. We
feel very confident in the unit mix and believe it will maximize lease up and overall
operation efficiency of the project.
Storage unit lease rates are driven by your direct competition due to it being such a
fragmented market of mom-and-pop shops. Storage unit rental rates within the Utah
market rely heavily on what your direct competitors' rental rates are. We have selected
monthly rents similarly to the way that we selected the unit mix. We used the rates of
our two closest competitors, discussed these items with our industry partners, and
looked at our site's competitive advantage with its location. (Lease rates provided by
Marcus & Millichap)
Direct Competition Rental Rates (Within 3 Miles)
Name
Towne Storage
Extra Space Storage
Average
Eagle Mountain Storage
Location
Total Units Occupancy Avg. Rent/SF Mo Avg. Rent/SF Annual
Saratoga Springs, UT
465
N/A
$0.71
$8.52
Saratoga Springs, UT
470
N/A
$0.73
$8.76
468
$0.72
$8.64
Eagle Mountain, UT
450
$0.72
$8.64
Non-Direct Comparable Rental Rates (3 Miles and Greater)
Name
Towne Storage
Extra Space Storage
First Lehi Storage
Fort Knox Storage of Lehi
A A A Lehi
Point of the Mountain Storage
Blue Ribbon Storage
Average
Eagle Mountain Storage
Location
Total Units Occupancy Avg. Rent/SF Mo Avg. Rent/SF Annual
Saratoga Springs, UT
465
N/A
$0.71
$8.52
Saratoga Springs,UT
470
N/A
$0.73
$8.76
Lehi, UT
N /A
N/A
$0.82
$9.84
Lehi, UT
570
82%
$0.75
$9.00
Lehi, UT
64
90%
$0.58
$6.96
Bluffdale, UT
500
75%
$0.69
$8.28
Pleasant Grove, UT
475
91%
$0.65
$7.80
424
85%
$0.70
$8.45
450
$0.72
$8.64
Our rents for the 5 X 5 units and the 10 X 10 units are slightly lower than that of our two
competitors to help with the lease up towards stabilization. As soon as stabilization is
reached, rents can be changed and increased as demand warrants. We currently have
rents estimated at 3% annual increases. We feel very confident that our complex can
exceed a $12.00 per foot average annual rent as the facility matures.
Proforma/Cash Flows. The proforma takes the stabilized potential income, adds in
late fee charges, sales of locks and boxes, and auction and vending fees, less an
industry standard 15% collection, vacancy, and first month's free rent factor to give us
our total income. The 15% comes from intelligence from several mentors, the Almanac,
and individuals within the industry. Through discussions with several owners of storage
unit sites, we feel that these numbers are reflective of the current market.
29
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Proforma
Incomes
Gross Rental Income
Late Fees
Merchandise Sales (Locks, Boxes)
Other Income (Auctions/Vending)
Less Vacancy and Collection Loss
Total Income
$473,724
$7,000
$6,000
$9,750
15% -$71,059
$425,415
Expenses
On-Site Management
Off-Site Management
Advertising
Utilities
Office Expenses
Credit Card Fees
Telephones
Computer and Internet fees
Repairs and Maintenance
Misc Expenses
Property Tax
Insurance
Total Expenses
Total % of Total Income
$32,000
$15,000
$10,000
$9,000
$2,000
$7,000
$2,000
$3,000
$8,500
$5,000
0.50 pf $30,500
$5,000
$129,000
30.32%
Net Operating income (NOI)
NOI per NRSF
$296,415
$5.40
We will have an onsite live-in manager as well as fill-in Saturday managers. This is
ideal for any storage unit complex and is the best way to provide a safe atmosphere to
the tenant’s possessions and to provide for the quickest, most efficient lease-up.
According to the Almanac, our industry partners, and comparable construction costs,
total expenses for a site of our size will be around 30%. We currently have expenses
budgeted at 30.32%. Our stabilized NOI for the perm loan is $296,415. Capping this at
8% gives it a value of $3,705,193. The 6% perm loan at a 25-year amortization will
yield an annual debt service of $202,892.
By using the 70% LTV, the required capital to fund the project is $670,767. As stated
earlier, we are willing to roll our developer fee of $132,009 directly into the project which
would bring the capital required from an investor down to $538,758 to get this project off
of the ground.
30
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Cash Required or Returned at Take-Out Loan
Total Project Costs
$
3,264,402
Req. Equity for Construction Loan
(-) $
670,767
Construction Loan Debt
$
2,593,635
Remaining Loan Balance
$
2,593,635
Take-Out Loan Max
$
2,593,635
Equity Requirements
Developer Capital
Deferred Developer Fee
$
132,009
Total Developer Capital
Req. Equity for Construction Loan
$ (132,009) 19.7%
$ 670,767 80.3%
Total Equity Required
$
538,758
100%
Ownership Interest
Investor
80.320%
Developer
19.680%
Total
100.0%
Deal economics conclusion. The self-storage facility agent and owners we
interviewed mentioned that investors typically seek a leveraged IRR in the 10-13%
range on existing facilities and 14-20% on new development. We feel this project's solid
returns (21.43% IRR, 17.48% cash-on-cash, 9.81% return on cost vs. 8% cap rate)
merit investor consideration and justify the low risks of the proven "cash cow" asset type
of storage units.
31
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
Project Costs
Total Project Cost
Total Project Cost before Op. Res.
Land Cost
[EAGLE MOUNTAIN STORAGE]
Depreciation Assumptions
Building Basis
Life (in years)
Acceleration Factor
Straight Line (calculated)
$ 2,820,090
27.5
1.0
$
102,549
yr 0
Net Operating Income
Project Costs or Total Acquisition $
Principal (Debt)
$
Equity
$
Financing Assumptions
Equity
Mortgage Principal
Interest Rate
Amortization
Annual Debt Service
$ 3,264,402
$ 3,264,402
$
444,312
Other Assumptions
Inflation Adjustment
Term of Loan
Sell at End of Year
yr 1
yr 2
yr 3
$
$
$
$
$
8.64
473,724
22,750
80%
99,295
129,000
NOI
$
(29,705) $
Financing
Beginning Loan Balance
Interest
Principal
Perm Loan Finance Charges (Financed)
Ending Loan Balance
Short Fall
Lease-Up Reserve
Before Tax Cash Flow (BTCF) $
(670,767)
$ 2,593,635 $ 2,593,635 $
$
116,714 $
116,714 $
$
$
$
$
$ 2,593,635 $ 2,593,635 $
$ (146,419)
$
146,419
$0 $
31,669 $
$
$
$
$
$
yr 1
Tax Calculation
NOI
Interest
Depreciation
Taxable Income (or loss)
Taxes
After-Tax Cash Flow
Before-Tax Operating Cash Flow $
Taxes
After-Tax Operating Cash Flow $
32
Lease Up Assumptions
Y1 Occupancy
20%
Y2 Occupancy
55%
Y3 Occupancy
80% (Stabilized @ end of Y3)
Y4 Occupancy
85%
3%
25
10
yr 4
yr 5
yr 6
yr 7
yr 8
yr 9
yr 10
yr 11
(3,264,402)
(2,593,635)
(670,767)
Average Annual Lease Rate
Potential Gross Rental Income
Miscellaneous Income
Average Vacancy Rate
Effective Gross Income (less vacancy)
Total Expenses
Depreciation Calculation
Beginning Balance
Less: Annual Depreciation
Ending Balance
Cumulative Depreciation Taken
Cumulative Straight Line
Recapture
Remaining Book Value
Return on Investment
IRR
21.43%
Profit
$ 2,794,913
Cash Multiple
4.17x
Return on Cost
9.81% Stabilized NOI / Cost (Year 4)
Year 10
Cash on Cash
17.48% Stabilized NOI / Equity (Year 4) Year 10
$
670,767
$ 2,593,635
6.00%
25
$ (202,892)
8.90
487,936
23,433
45%
281,253
132,870
$
$
$
$
$
148,383 $
yr 2
9.16
502,574
24,135
20%
421,367
136,856
$
$
$
$
$
9.44
517,651
24,860
15%
461,134
140,962
$
$
$
$
$
9.72
533,181
25,605
15%
474,968
145,191
$
$
$
10.01
549,176
26,373
15%
489,217
149,546
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
11.27
618,102
29,684
15%
550,618
168,316
$
$
382,302 $
$
$
2,624,103 $ 2,578,658 $ 2,530,485 $ 2,479,423 $ 2,425,296 $ 2,367,922 $ 2,307,105 $ 2,242,638 $
157,446 $
154,719 $
151,829 $
148,765 $
145,517 $
142,074 $
138,425 $
134,555 $
45,445 $
48,172 $
51,063 $
54,126 $
57,374 $
60,817 $
64,467 $
68,337
30,621
2,578,658 $ 2,530,485 $ 2,479,423 $ 2,425,296 $ 2,367,922 $ 2,307,105 $ 2,242,638 $ 2,174,301
11.61
636,645
30,574
15%
567,137
173,365
81,620 $
117,281 $
Reversion value based on yr11 NOI less sales costs:
$ 2,319,325 Reversion Value
126,886 $
136,779 $
146,969 $
157,465 $
168,276 $ 2,498,736
yr 4
yr 5
yr 8
371,167 $
$
$
$
329,777 $
yr 7
360,357 $
10.94
600,099
28,819
15%
534,581
163,413
320,172 $
yr 6
349,861 $
10.62
582,621
27,980
15%
519,010
158,654
284,511 $
yr 3
339,671 $
10.31
565,651
27,165
15%
503,894
154,033
yr 9
yr 10
$ 2,820,090 $ 2,717,541 $ 2,614,993 $ 2,512,444 $ 2,409,895 $ 2,307,346 $ 2,204,798 $ 2,102,249 $ 1,999,700 $ 1,897,152
$
102,549 $
102,549 $
102,549 $
102,549 $
102,549 $
102,549 $
102,549 $
102,549 $
102,549 $
102,549
$ 2,717,541 $ 2,614,993 $ 2,512,444 $ 2,409,895 $ 2,307,346 $ 2,204,798 $ 2,102,249 $ 1,999,700 $ 1,897,152 $ 1,794,603
$
102,549 $
205,097 $
307,646 $
410,195 $
512,744 $
615,292 $
717,841 $
820,390 $
922,939 $ 1,025,487
$
102,549 $
205,097 $
307,646 $
410,195 $
512,744 $
615,292 $
717,841 $
820,390 $
922,939 $ 1,025,487
$ 3,161,853 $ 3,059,305 $ 2,956,756 $ 2,854,207 $ 2,751,658 $ 2,649,110 $ 2,546,561 $ 2,444,012 $ 2,341,464 $ 2,238,915
$
$
$
(29,705) $
(116,714) $
(102,549) $
148,383 $
(116,714) $
(102,549) $
284,511 $
(157,446) $
(102,549) $
320,172 $
(154,719) $
(102,549) $
329,777 $
(151,829) $
(102,549) $
339,671 $
(148,765) $
(102,549) $
349,861 $
(145,517) $
(102,549) $
360,357 $
(142,074) $
(102,549) $
371,167 $
(138,425) $
(102,549) $
382,302
(134,555)
(102,549)
$
28% $
(248,967) $
(69,711) $
(70,880) $
(19,846) $
24,516 $
6,865 $
62,904 $
17,613 $
75,400 $
21,112 $
88,357 $
24,740 $
101,795 $
28,503 $
115,733 $
32,405 $
130,194 $
36,454 $
145,199
40,656
(670,767) $
$
(670,767) $
$
69,711 $
69,711 $
31,669 $
19,846 $
51,515 $
81,620 $
(6,865) $
74,755 $
117,281 $
(17,613) $
99,668 $
126,886 $
(21,112) $
105,774 $
136,779 $
(24,740) $
112,039 $
146,969 $
(28,503) $
118,467 $
157,465 $
(32,405) $
125,060 $
168,276 $ 2,498,736
(36,454) $
(40,656)
131,821 $ 2,458,080
The first self-storage development in Eagle Mountain. | 23,000 served.
393,771
4,632,605
4,493,627
(2,174,301)
2,319,325
11.71%
25.09%
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Sustainability
Consolidating a city's storage needs in a centralized facility allows developers to
produce denser housing communities. This density provides a better tax base for the
city (economic stability) while increasing walkability, reducing sprawl, decreasing
Vehicle Miles Traveled and allowing for greater population growth.
Further, we tucked the storage unit facility behind Amsource's retail, allowing the retail
frontage to provide a more pleasing aesthetic texture to the city while positioning it for
prime walkability.
Conclusion
Our site, feasibility, and economic studies conclude that this project is:
1.
2.
3.
4.
Physically possible: flat, developable terrain with utility access and correct size.
Legally permissible: supported by the seller and city planning department.
Financially feasible: surpasses lender and investor requirements.
Maximally productive: achieves highest and best use of site based on
immediate market demand.
When the top self-storage real estate agent in the state of Utah reviewed this proposal,
he commented to us that he has six or seven investors that would look at this
transaction.
So if this is so good, why hasn't someone else already done it?





Recession
Tightened lending requirements
Lack of population
Lack of grocery anchor
No available sites along previous primary arterial (Ranches Pkwy)
However, the ripening has now occurred to make this an immediately viable opportunity
for the willing and ready investor!






Regional job growth
Loosed lending requirements
Rapid population growth
Announcement of a grocery anchor
Creation of a primary arterial (Pony Express to Redwood) that realistically
opened up this site
Willing seller (office/retail developer) who isn't interested to develop self-storage
33
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Someone recently proposed developing a colony on the Moon:
If that's what you want, then unfortunately Eagle Mountain Storage isn't for you. It's just
the opposite: simple, straightforward, feasible, makes sense on its face, and provides
social and economic benefit to both developer and the community. Thank you for your
vote of confidence in this opportunity and we look forward to partnering with you in this
venture.
34
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Appendix
Site Renderings
35
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
36
[EAGLE MOUNTAIN STORAGE]
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Chart below provided by Integra Realty Resources
37
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Photos of competitors
38
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Site pic looking due north
Site pic looking due west across Amsource site
39
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Site pic looking due south
Amsource site looking west along Pony Express Parkway
40
The first self-storage development in Eagle Mountain. | 23,000 served.
Development Business Plan
[EAGLE MOUNTAIN STORAGE]
Sources
1. 2010 Census (demographic data)
2. Wasatch Front Regional Council Transportation Analysis Zones (demographic data)
3. Amsource Development, Inc. (site info & plans)
4. UDOT (traffic plans)
5. Eagle Mountain City (master plan, traffic info)
6. Woodbury Corporation (renderings)
7. Menlove Construction (cost estimates)
8. Integra Realty Resources (storage facility sales comps, land comps, expense comps, pro forma review)
9. Extra Space Storage (market and operations information)
10. Marcus & Millichap (sales comps, land comps, lease rates, pro forma review)
11. Ranches Home Owners Association
12. STDB Online, CCIM.com (demographic data)
13. Wells Fargo (finance rates, terms, and costs)
14. ArcGIS
15. Google Maps; Google Earth (drive times, aerials)
16. 2012 Self Storage Almanac (demand analysis; industry guidelines)
17. VaDa Studio (logos)
18. Marshall & Swift (build costs)
41
The first self-storage development in Eagle Mountain. | 23,000 served.