Las Vegas Self Storage OZ Deal, With YourSpace America

In this webinar, Russ Colvin highlights a modern self storage project in the thriving Las Vegas market.

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Webinar Highlights

  • Projected returns and timeline.
  • Summary of due diligence activities that have been completed or are in progress.
  • Discussion of the competitive landscape, including other self-storage development projects occurring now.
  • Demographics of the Las Vegas market.
  • Review of the site plan of the proposed project.
  • YourSpace America’s “playbook” for contractor selection, insurance policies, and other key details.
  • Discussion of the historical performance of the self storage market.
  • History and vision of YourSpace America.
  • Live Q&A with OZ Pitch Day attendees.

Industry Spotlight: YourSpace America

YourSpace America, Inc was formed as an investment vehicle to provide superior risk adjusted returns in the growing self-storage industry. This commercial real estate asset class is characterized by strong cash flows, low break-even margins and best in REIT universe returns for the last 28 years. 

Learn More About YourSpace America

Webinar Transcript

Jimmy: Russ Colvin is with YourSpace America Self-Storage. He is going to be presenting his self-storage deal in Las Vegas, Nevada. There he is. Russ, how are you doing this morning? Good to see you.

Russ: Very good.

Jimmy: Excellent. And you wanted…

Russ: Thank you for having me today.

Jimmy: Good. And you wanted me to play that video to start us off, I believe. Should I play that now?

Russ: Yeah. Why don’t we start with the AI, and then we’ll go right into the property side.

Jimmy: And enjoy this brief two-and-a-half-minute video, and then we’ll get into the live presentation. Thank you so much.

Narrator: Welcome to a vision of the future, the YourSpace America Self-Storage Development Project, a beacon of innovation, strategically positioned at 120 West Owens Avenue, Las Vegas, Nevada. Imagine a sprawling 2.39-acre site in a bustling residential and commercial area, adjacent to the I-15 freeway, with an audience of nearly 191,000 passing cars daily, a location that offers unparalleled accessibility and visibility. Let’s delve into the demographics. A population of over 175,000 within a three-mile radius, and a whopping half a million within five miles, with a projected increase of almost 8% between 2024 and 2026. A thriving community, a potential market, a sea of opportunities. Now, imagine a state-of-the-art, Class-A self-storage facility, stretching over 158,000 gross square feet, offering 1189 units, a facility that is not just a space, but a solution, setting a new standard for storage with its cutting-edge amenities.

This opportunity is exceptional, and the reason is simple. The average age of facilities within the three-mile radius exceeds 30 years. The market is yearning for modern, climate-controlled space, and that’s where we step in. We offer premium storage options, filling the gap, meeting the demand. The self-storage market within a three-mile radius is undersupplied, presenting a significant potential for growth. And with the multifamily market in Las Vegas exhibiting robust growth, characterized by high occupancy rates and increasing rental rates, the viability of our self-storage development project is reinforced. Our four-story structure will soon rise, a symbol of progress, meeting the demands of the growing Las Vegas community. As construction progresses, we maintain stringent protocols and procedures to ensure efficiency and safety, because we believe in delivering quality. In conclusion, the YourSpace America Self-Storage Development Project is not just a development, it’s a revolution. It meets a critical need in the market, and sets itself apart as a beacon of innovation and quality, amidst a landscape ripe for expansion. YourSpace America, redefining self-storage excellence in Las Vegas.

Jimmy: All right. Well, that was a tremendous little opening number for us.

Russ: Thank you.

Jimmy: So, Russ, now I’m going to share the deck, and I’ll have you run through that…

Russ: Okay.

Jimmy: …with us. Here it comes. One moment.

Russ: Very good. Good morning, everyone, and thank you for taking the time to join us today. After that AI presentation, I’d like to go right into discussing the project, and then take some time to discuss the self-storage industry, and our company, as well. This first slide is a rendering of the project, which is slightly different in terms of the signage from what’s in the AI, as we are now going to be managed by Public Storage, so we view that as a positive.

Disclosure. It’s important to read the disclosure, everyone. The Owens property. I’ll get more into the details in the following slides, but essentially, as was noted in the AI presentation, we plan to develop nearly 160,000 square-foot self-storage facility, in an ideal location along Interstate 15, in an area with a growing population, an undersupplied self-storage market. People often ask me, you know, what is it that you look for in a project and deciding to move forward with the development? And this project certainly checks all of those boxes, as we will discuss in the following slides. Next slide. Next slide.

This slide is an additional rendering of the property. There you go. This slide is an additional rendering of the property, and as you look at it, it really doesn’t even look like a classic self-storage property. It looks more like an office or a retail property, and that is by design. So, anyway. That’s what we intended, and that’s how it’s gonna look when it’s done. Next slide.

As we mentioned, 120 West Owens Avenue in Las Vegas, it’ll be a 158,783-square foot building, with approximately 116,255 net rentable square feet, which is approximately 75% of the total square footage will be self-storage. The rest will be hallways, office, etc., loading, unloading areas. Total project cost, approximately $23.158 million. Our model is using $1.70 per square foot rents, to start, and $2.29 at stabilization. Stabilized NOI is $2,393,699. We own this site. It was acquired in October of ’23. We had actually acquired it a year prior, and had begun working on all the construction, but we essentially deeded it to the Opp Zone entity in October of ’23. We expect to have our full building permits by the end of the month. It’s been a relatively long process, but we’re nearly completed, at which point the construction would also begin. We anticipate that construction will take about 12 months. We have another project under construction in Las Vegas right now, and that’s the approximate time, 12 months. And we expect that from that point, it’ll take about 36 months to get it stabilized, although we are being told that due to the lack of competition in the market, it is possible for it to be stabilized much sooner. But we are using the most conservative analysis here, okay. And in terms of the capital stack, we’re assuming the construction loan of about $15.053 million, and equity of approximately $8.1 million. Next slide.

This project will be approximately 1189 units. So, the units are nearly 100 square feet, on average, size. I mentioned the building permit. YourSpace America’s the sponsor. We have a long history. The principals in YourSpace have a history of successful self-storage development. This will be a generation five facility, which is considered the most up-to-date, most modern facility of institutional quality. When this project is eventually sold, we expect there will be a lot of people lined up that’ll wanna purchase it. It’ll be fully climate-controlled facility. It will offer state-of-the-art security. About two-thirds of the people that make a decision to store are women, and they want a safe, clean, well-lit, secure facility. And the general public, of course, wants that as well, but we offer all of that with this property. In terms of the economics, we designed it to be investor-friendly, with a 10% preferred return, an 80/20 split to a 15% IRR, and 70/30 thereafter. We’re estimating, our latest estimate is that the project-level returns on a 10-year Opp Zone hold will be about 24.77% annually to investors, with a multiple of about 4.21. So, an investor who invests $100,000 would get their money back, plus make $321,000 on a 10-year hold. And if it’s an Opp Zone hold, of course, it wouldn’t be taxable, and the depreciation wouldn’t be subject to recapture. We are also planning that, around month 24 or shortly thereafter, to refinance the property, and return equity to investors, so they can pay taxes if they need to and do other things. Next slide.

This, again, is an overview of what I was just discussing, the total project cost, the equity, the debt, internal rate of return, the investor multiple, and then the projected return of capital around month 24. Next slide.

This is an overview, again, of the same information, but it’s a little bit more detail in terms of land financing costs, hard costs, soft costs, which, I won’t take your time with that right now, but we can certainly review that in detail with anybody that wants to review it. Next slide.

In terms of due diligence, these items here are all due diligence, and construction-related items. Our environmental, phase one report was clean, no evidence of geotechnical issues. New supply. There are two projects planned in a three-mile radius, but there is such short supply, though, in the two-mile and the one-mile, and the three-mile, that that’s really not gonna make any difference. We plan to use ARCO/Murray as the contractor. They’re the number three design-build firm in the United States, and probably the top firm in the United States in self-storage, and we have a very successful history with them. Terms of zoning entitlements, the project is fully approved and fully supported by the City of Las Vegas. And as I mentioned, all the building plans are completed. We have our approval now with Las Vegas Valley Water District. We have our grading permit, our dust permit. We have all of our improvement bonds in place. We’re just waiting to finalize everything for the building permit. Next slide.

This is another overview of the local area. Shows you, essentially, the property, and the underlying, overlying properties nearby. As was alluded to on the AI presentation, about 190,000 vehicles per day here, and a strong population, both in the one, three, and five-mile radius. Next slide.

This is an overview of the pipeline. As I mentioned at the beginning, one of the most important aspects of deciding to move forward with a self-storage project is looking at the overall population, and looking at the competition. And in this particular case, there’s no competition in a one-mile radius at the present time. There will be the two new properties, approximately in a three-mile radius, but even after our project is built, this market will be pretty severely undersupplied. So, as I mentioned, I think it’s likely that it could well be stabilized ahead of schedule. But there are only two projects in the development pipeline at the moment. Next slide.

This is an overview layout of the two competitive projects. You see our project in the red, and the two competitive projects in the green. Certainly, we have the best location, along Interstate 15. And I’ve seen some pictures of what they plan to develop there, and, you know, our project will be much nicer as well. Next slide.

Another photo, in terms of the mapping. Next slide. This is the, kind of a close-up of the traffic, and the vehicle count per day. You can see our project here, with the red dot, and you see Interstate 15, with 175,000 vehicles per day, and then Owens Avenue, with nearly 15,000 vehicles per day. And I’ll get more into that in a few slides, but it just gives you a graphic of the proximity of the property. This site is about 30 feet above the interstate, which is a positive. Next slide.

This is a site plan of the property. And I think it shows you the layout, essentially. So, you drive into the property on Owens Avenue. Then you have parking and loading in the front. You have loading on the side, on the right side there, and then in the rear, you have more parking and loading, so it should be very easy for customers to access the property, and have a relatively short walking distance. That’s one of the things we look at, that’s important. Next slide.

Construction operations protocol. These are some important things, and we’ll take just a minute to discuss this. Having developed a lot of these, they’ve become more important as time goes on. I mentioned the general contractor, Arco/Murray, third-largest in the United States. Really a great firm. We have a very close working relationship with them. Insurance coverage, having liability insurance on the property. In case there’s ever an accident, we wanna make sure we’re very well-insured, and we’ve done this on every property, and I’m a strong believer in it. Site security. Even right now, on this site, where there’s no buildings or anything, we have a camera system set up so we can observe the site to make sure there’s nothing going on on the site that shouldn’t be going on.

But once, when construction begins, and there’s people working on the site every day, we’ll have cameras watching the project 24 hours a day, along with security. In case there’s any issues, we call the police, whatever. But the project site security is important. Online project monitoring. This is important as well. And I think it means a lot to investors as well. So, essentially, when the construction begins, there will be a camera on-site that’s watching the property. So, you could literally, if you felt like it, you could sit in your office or your living room or wherever, and watch what’s going on at the project. You know what’s going on. There’s historical photographs. They take photos every day, so you can watch the progress of the construction, and see what’s happening.

Project management conference calls. We have a weekly conference call with our contractor while the project is under construction, and we also require a weekly written report from them as well. Site safety. You know, obviously, safety protocols. Anyone visiting the site, we have those, and we strictly adhere to those. And, the schedule, we have the schedule for when everything is going to be completed on the project, and if there’s any changes to that we’re notified immediately, but we watch that carefully. Next slide.

Construction management. Again, I mentioned, ARCO/Murray’s the contractor. And in terms of management, we use, or I have used in the past, Public Storage, CubeSmart, and Extra Space, and Life Storage, before they were acquired by Extra Space. These are, the public storage REITs are really, in my mind, the best self-storage managers in the world, literally. And I think Public Storage does a particularly good job. So do the others, but I think Public Storage may have a slight edge over the others, and I think it’s a great brand as well. So, to the general public who sees the property, it’ll look like it’s a Public Storage. It’ll be on their system if anybody goes to rent space, which is a great thing. But essentially, we have the best contractor, the best manager. It’s hard to screw it up when you have a great project, a great contractor, a great manager, then us overseeing the project from the time it’s acquired to the time it’s sold. Next slide.

Disposition analysis. We believe that this property will eventually sell at a 4% cap rate. I’ve sold properties at lower than a 4% cap rate. This being a generation five facility in a top market, we think it will generate that type of cap, which means it would sell for almost $60 million at the end of our 10-year hold. Next slide.

These next two slides are our underwriting. And at the end here, the bottom, we see NOI of $2,393,699, which is what we’re basing our disposition price on on the 4% cap. We’re pretty confident about that. I think we’ve used a very reasonable number for our rents, given the supply situation, and we’re confident we can achieve that. Next slide. Next slide.

The self-storage industry. I’d like to take a few minutes and discuss the self-storage industry, try to move it along here, but I’d like to cover this, because I think it’s important when people look at self-storage as a potential investment. Why should I invest in self-storage? Why is it different than an apartment building or an office building or an industrial building or whatever? And we’re gonna cover that here in just a moment. Next slide. Next slide.

REIT sector fundamentals. The National Association of Real Estate Investment Trusts monitors the performance of the various types of REITs in the United States, and keeps a long-term track record of all of those properties. And when you look at self-storage’s performance relative to these other product types, it really is quite impressive. Next slide.

So, for the past 30 years, so, it’s not, you know, something that just came around in the last 5 or 10 years and started doing well, for the past 30 years, self-storage was the top-performing property type NAREIT Index, with average returns of 17.3% from 1994 to 2023. It outperformed literally every other product type. Next slide.

This is kind of a graphic you can see of self-storage relative to the other product types. When you look at industrial, you look at residential and multifamily, they did well, but clearly, self-storage outperformed everything. Next slide.

This is a history of the market cap of Public Storage, which is the largest self-storage owner in the world. Market cap of about $50 billion. But it shows how there’s, you know, basically, from 2021 to 2024 how their stock value has grown. Next slide.

This is a history of Extra Space stock growth. Same thing. You know, a very powerful growth story. This… Next slide.

This is the history of CubeSmart’s growth, you can see, from 2004 to 2024. Very impressive. Next slide.

NSA, National Storage Affiliates, who basically went public in 2015. You can see what’s happened to their stock, has grown. Off from the highs a bit, but still a market cap of about $5 billion. It started out about $150 million. Next slide.

This next slide is really quite interesting. This is the performance of the various property types during the pandemic. So, basically, from the commencement of the pandemic until June 30th, 2022, how did these various property types perform during this very difficult time? Well, self-storage was up 55%. Self-storage REITs, about 55%. Industrial was up 28.7%, but really, nothing, and if you look at this graph, and there’s certainly some on here that were negative, but if you look at this graph, nothing else was comparable to self-storage. They often talk about self-storage as a property type that people consider a safe harbor, recession-resistant, one that performs well in all cycles, and I think all of those things are true, but anyway. Again, pretty graphic display of how self-storage performed during a very tough time. Next slide.

This is also an interesting fact, when looking at the self-storage industry. This is the top 10 shareholders in Public Storage, and if you look at all these investors, some have multi-billion-dollar positions. And if you look at the names of these investors, these are some of the largest investors in the world. And certainly household names. I mean, all of us know the name, are familiar with these names. But nonetheless, they hold large positions in Public Storage. They own approximately half of Public Storage’s stock, okay. Which, obviously, they must view it as a safe investment as well. Next slide.

These are the largest shareholders in Extra Space, which is the second-largest self-storage REIT. But once again, you have major household name, some of the top investors in the world, with multi-billion-dollar positions in Extra Space. It once again speaks to the safety of this as an investment. Next slide.

CMBS data, commercial mortgage-backed securities. I’ll try to move this along, because I know we don’t have a lot of time. This… Next slide. This shows the historical delinquency rate for various property types, which was before, during, and after the Great Recession. A lot of people talk about during the Great Recession, self-storage had a very low delinquency rate. But the really interesting thing is if you go to the bottom, and you look at the average historical CMBS delinquency for the various property types, self-storage is exponentially lower than all the others. And I think this once again speaks to the safety of self-storage as an investment in commercial real estate. Next slide.

Now I’d like to take a few moments and talk about the company, YourSpace America. We created YourSpace because I felt that I wanted to hold projects longer, maximize returns to investors, and although, you know, my track record has been very strong in terms of overall returns, exceeding 30% on average, it could have been even better if some properties had been held longer, and I have partners that wanted to sell things, and I think, in some cases, a little too soon. We could do a whole ‘nother presentation on that subject. But that’s our plan, is to maximize the returns for investors on each and every project. And that will happen by just sticking to the fundamentals of getting good projects in good areas, with strong demographics. Next slide.

The YSA team, our management team. We have a great team, an exceptional team, really, with a lot of experience across the business world, from self-storage to finance. We have a great acquisition and underwriting team. Our acquisition team has been working, we’ve been working together for over a decade. Our head of underwriting is somebody that we’re working with for many years, is extremely competent. And, relationship, deal flow, you know, by having all of these relationships in the industry, it allows us to find some great deals, but it’s important to really, to have a great reputation out there, which we do, and be well-thought-of, and so when there’s opportunities, people call you. This next slide. Next slide. Next slide.

This is kind of an overview of our team, our board of directors, and our board of advisors, and our key executives. As I say, an excellent team. Next slide.

This, next slide, this is the conclusion of the presentation. You’ll notice on this slide, there’s my contact information. Anybody that has any questions or would like to discuss anything here in greater detail, you’re welcome to call me directly, or email me. And we promise we will be very responsive, because that’s another thing I demand in the organization. So, if you need anything, just call me. And with that, I’ll give it back to our host here.


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