Private Equity Real Estate Offering For Self-Storage Portfolio With 18.1% Target IRR

The real estate investment platform RealtyMogul has a new offering open for investment. The LA/TX Self-storage offering is a large portfolio of storage facilities, all of which are in Texas and Louisiana. The Texas side of the portfolio includes 819 class-A units and just under 78,000 square feet of storage spaces in Houston, Texas. The Louisiana portion, based in Metairie, has over 97,000 square feet of space and 1050 units.

The offering will give investors access to rapidly growing and dynamic markets in their respective locations. In the case of the Texas storage units, Houston is not only the 4th largest city in the country, it’s undergoing a prolonged period of growth. The Metairie, Louisiana portion has storage units in a location convenient to both the 10 freeway and the Mississippi River, both of which are vital commercial corridors for the region.

Investment Highlights

The project is being co-sponsored by Hickory Capital Group and the Prescott Group. They believe they have discovered a diamond in the rough with this offering. In spite of the fact that the storage units in both portfolios were built in 2018 and 2019, and offer modern features like high tech security, there is significant upside in rents for both properties.

In Houston, current rents for comparable storage units are 13% higher than what existing tenants are paying. Meanwhile, comparable storage units in Metairie are netting 26% over the current rents. Additionally, there are no plans for any new storage units to be built in either area.

Considering the upside in rents, the strength of both markets and the strong demand for storage space, it’s not hard to understand why Hickory Capital Group is so bullish about the portfolio’s prospects. If the the sponsors able to increase revenue as planned, they should easily be able to achieve the targeted 5.15% market cap rate when the properties are sold.

• Minimum investment: $35,000
• Projected hold period: 3.6 years
• Projected Internal rate of return (IRR): 18.1%
• Projected cash on cash return: 7%
• Protected equity multiple: 1.71x

The property was purchased for $37,500,000 with a loan from Trustmark Bank. Hickory Capital Group expects to begin making owner distributions in September, 2022.

View more real estate investment offerings from RealtyMogul.

About the Project Sponsors

The Prescott Group is a Dallas based real estate investment firm that was founded in 1996. The company has owned or operated nearly $650 million worth of commercial real estate, much of it through their own fund: the Prescott Strategies Fund II.

Project Co-sponsor Hickory Capital Group,LLC, is an investment and management firm that concentrates on purchasing and developing self storage facilities, most of which are in the southeast or lower midwest. Hickory Capital Group was founded in 2014 and currently has $130 million in assets under management.

Details on this offering and other private equity real estate investments can be found on Benzinga Alternative Investments.