Circling back to give an update on our most recent acquisition to end 2022! With my partners leading the charge and me tagging along, we closed on the Gastonia Sun Drop bottling warehouse in Gastonia, NC along with a great group of investors. Purchase price plus the cost of the renovation is $5.1 million. Loan is at 6.5% interest, 70% LTV, so $3.56 million financed, and our capital raise on this one was $1.55 million, raised in about 4 weeks. The facility is 70,181 sf, which will be converted into 50,000 sf of net rentable climate controlled storage. The average blended rate per square foot for climate controlled storage in the market is $23.32. With our average price set at $20 per square foot, that gives us gross potential income of $1,020,000 in year one of full occupancy. We schedule 1 year of Reno, and another year to fill it up, and offer a preferred return until the cashflows coming in eclipse that preferred return. Based upon a desktop feasibility study (Bob Copper, SelfStorage101) this is an underserved market with high demand for storage, and there are 57k residents in a 3 mile radius.

This property is in a Qualified Opportunity Zone, so any capital invested as a Capital Gain, does have the option to come out tax free after a 10 year hold! Obviously we don't expect investors to leave capital in for 10 years, so there is a preferred return in years one and two, then cash flow equal to each investors percentage of equity, then a return of the initial capital investment in year 5 by way of refinance, additional cashflow in years 6-10, and then a big pay off in year 10, potentially tax free if the initial capital invested by the investor was a capital gain. On a $250k investment, it comes out to a 4.4x multiplier, with a total payout of $1.1 million, and on a $50k investment, it's 4.24x, total payout of $212k. the value-add that comes from conversion projects is really mind-blowing. For the commercial valuation for Refi at year 5, or sale at year 10, it's as follows.

7 Cap, $12,071,802 (5 yr), $15,076,705 (10 year)

6 Cap, $14 mill (5 yr), $17.5 mill (10 yr)

and if we get lucky and are still around a 5 Cap in 5 years...

5 Cap, $16.9 mill (5 yr), $21 mill (10 yr)

Great way to end 2022, hoping for 8+ projects in 2023, and very excited to be a small part of this team!