Self Storage Real Estate Ramping Model: Up to 15 Years

This is an equity only (joint venture capable) financial model for building / acquiring self storage property for some time and then re-selling it in the hopes of growing into bigger deals over time.

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Video Tutorial:

This model is based on the logic specific to self storage properties. The idea behind this model is to show how much equity one can start off with, enter into a joint venture to acquire and operate a self storage facility as a sponsor (GP) or investor (LP), and then exit and use the proceeds to enter into bigger and bigger deals.

There is logic to account for up to 6 separate deals that can span across a period of 15 years. The assumption configuration was designed for ease of use with smart formulas for making it easy to plan out the amount of months each deal is held for when the next deal starts, and the initial construction costs / acquisition period for each deal. All of this data flows to the same timeline, but also automatically populates separate cash flow waterfalls on a per deal basis where the user can adjust IRR hurdle rates, contribution percentages, and cash distribution splits at each hurdle.

The real magic here is being able to show all 6 deals independently and within the same timeline in aggregate. The aggregation is a good way to see ongoing equity requirements of the sponsor or investor (meaning this financial model can be used for either view and show minimum equity required to accomplish up to 6 entries and exits).

The general assumptions for each deal involve defining the initial land purchase, development/construction, and/or the acquisition of an existing self storage property based on the entry cap rate and existing NOI. Also, the user will define assumptions for total units, revenue per unit, occupancy, growth of occupancy, and the stabilized long-term occupancy rate. Expenses are fairly straightforward as well and involve a yearly cost per square foot and sales and marketing costs as a percentage of gross revenue.

Each deal has independent inputs for all the above assumptions. If you want to model multiple self storage properties being operated in parallel rather than one after the other, that will work by simply entering a negative input for the number of months when each subsequent deal happens relative to when the previous one ends. The cash flow tab will show a negative bank balance, which defines the total equity needed, at minimum, to survive each deal.

The dashboard allows for easy analysis of the entire investment plan by showing lifetime IRR as well as the following metrics on a per deal basis for the GP and LP:
– Initial equity contribution percentage and amount
– Total Cash returned
– ROI
– Discount rate (for NPV calculations and DCF Analysis of each deal)
– NPV (monthly basis)
– IRR (monthly basis)

There were multiple DCF Analysis summaries done on a monthly and annual basis and for both the sponsor and investor for each deal and in aggregate overall deals.

Plenty of visualizations were added to summarize the final results and rolling cash position.

There is an instructions tab to help users get started easier. All inputs are placeholders so be sure to enter your own inputs into all light yellow cells.

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