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:
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.
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.