Storage Unit Investor Terms

[Walter Pape]

Hello, 

What are the common terms operators are giving investors when it comes to investing into purchasing existing storage facilities with the goal to upgrade, refinance and sell in 5-10 years?

% of equity?

Hurdle rates?

Thanks,

Walter 

[Jacob Morris]

So I can answer this from the investors side and what I have seen and been offered over the last 4 years. If you want to be competitive against everyone else.... Most syndications we see a 70/30 split. 70% of the equity goes to all the investors "LP" raising the money, 30% to the "GP" managing the deal. Individual equity is based on the amount you bring. Typically there is a 6-10% preferred return (We get the first 6-10%) of the cash flow AFTER all expenses are paid of course. Some operators do a waterfall return after that pref has been made everything on top of that is split however you set it up. I have seen some where they waterfall 50/50 after the pref. I have seen some waterfall 70/30 until the investors hit xx then 100% goes to the GP. That's up to you to get creative. Then, If its a JV deal all the above potentially goes out the window and you can structure however you want and get people to agree to it.