The term GenV or “Generation V” was coined by the NexPoint Storage team as an industry description of newly built, multi-story, climate-controlled, Class-A self-storage facilities located in dense and growing markets throughout the United States. The V depicts both the number 5 and the letter V, referencing the 5th generation of self-storage facilities containing the design and technological advances in self-storage over the industry’s 50-year history, such as self-contained climate-controlled buildings with modern security and other amenities and the word “vertical” characterizing the multi-story facilities built on small tracts of land in dense urban core markets that NexPoint Storage targets for investment.
GenV: The New and Improved Storage Facility
Developing Facilities in Select Submarkets
We built our portfolio through a strategy of providing debt and equity capital to self-storage entrepreneurs in an investment structure that facilitates NexPoint Storage’s ultimate ownership via partner buyouts or right-of-first-refusal exercises. Our investment strategy focuses on GenV facilities in submarkets exhibiting the following characteristics:
High
Population
Areas
100,000
People
Above-Average
Household
Incomes
75,000
Average Income
Strong
Population
Growth
>1
Population Growth
High Percentage
of Multifamily
Housing/Renters
>40
Population Growth
Low Self-Storage
Supply Per
Capita
7
SQFT Per Capita
An Entrepreneurial and Creative Approach
We will continue to partner with knowledgeable industry professionals by providing first mortgage or preferred equity development financing, joint venture capital and/or certificate of occupancy takeout acquisitions.
We will grow through acquisitions of existing properties (lease-up and stabilized) from third-parties and select in-house development projects.
Investing through Financing and Acquisitions
NexPoint Storage expects to be an active participant in what it believes will be a robust acquisition cycle over the coming three years, focusing on GenV facilities that fit within our current best-in-class portfolio.
Based on data provided by Yardi Matrix, we estimate that during the five-year period beginning January 1, 2015, between $25 and $30 billion of new GenV supply entered the top 50 Metropolitan Statistical Areas (MSAs). We believe as much as 75% of the new supply (between $19 and $23 billion) was developed by “merchant builders” targeting an exit through property sale rather than cash flow through a long-term hold.
A substantial majority of these new deliveries have not reached the market yet, creating numerous acquisition opportunities for NexPoint Storage and NexPoint.
15-20
Billion
Potential “GenV” acquisition volume
coming to market by 2023
DSTs: Self-Storage Investment Vehicles
Self-storage properties can be packaged into tax-advantaged investment vehicles such as DSTs or Delaware Stuatory Trusts. DSTs are commonly used in a 1031 exchange which gives an investor the ability to defer capital-gains taxes on real estate sales by reinvesting the proceeds in “like-kind” properties.
