An investment in Self-Storage Portfolio II DST may offer the following benefits:
• Opportunity to Invest in Self-Storage Assets
According to the Self-Storage Association, a not-for-profit trade association representing the self-storage industry, the self-storage industry has been the fastest growing segment of the commercial real estate industry over the last 40 years. The U.S. self-storage industry generated approximately $31.6 billion in annual revenues in 2015.
• Property Locations in an MSA Boasting Superior Economic Growth with Strong Property Occupancy and Operating History
The Knoxville MSA’s unemployment rate has remained low and it is expected to continue to improve from the recent recession much faster than other metro areas. As of September 30, 2016, the average physical occupancy rate for the Properties, based on rentable square footage, was approximately 92.2%.The Offering consists of eight separate assets strategically positioned within the Knoxville MSA. This dominant geographic positioning creates management efficiencies while allowing for favorable pricing power and control of the Knoxville MSA which should drive Metro Storage’s ability to maximize rent, minimize discounts, and establish significant influence over rental rates.
• Experienced Property Management
Each of the Properties will be managed by Metro Storage, an established operator of self-storage properties. Metro Storage has positioned itself as one of the nation’s premier self-storage operators. As of 2016, Metro Storage was the third largest private self-storage company in the country and the ninth largest among private and public self-storage companies. Metro Self Storage operates 100 locations in 12 states serving 75,000 customers annually.
• Long-term, Fixed Rate, Amortizing Loan
The Properties will be financed with a loan that is expected to have a term of 10 years, with principal amortizing in years six through 10 on a 30-year schedule. The loan is expected to bear interest at a variable rate, which will be fixed at an estimated rate of 4.0% per annum pursuant to a swap agreement.The loan may be prepaid, in full or in part at any time, without penalty, subject to the breakage costs associated with terminating the swap agreement. See “Financing Terms.”
• Master Lease Structure
The Trust will lease each of the Properties to an affiliate of IPCC (the Master Tenant),pursuant to a master lease agreement (the Master Lease). The Master Tenant will sublease or rent the storage units and the rentable parking spaces, if any, at each of the Properties to space tenants pursuant to rental agreements. The Master Lease structure will allow the Master Tenant to operate the Properties on behalf of the Trust and to enable actions to be taken with respect to the Properties that the Trust would be unable to take due to tax law-related restrictions, including,but not limited to, a restriction against re-leasing the Properties. See “Summary of the Leases – Master Lease.”