self storage investments€¦ · 9,941,000 sq/ft of occupied space, up 6.1% average rent per sq/ft...

SELF STORAGE INVESTMENTS

WWW.LDAG.NET | +44 (0) 871 218 0888 | [email protected] | +41 417 201 555

INTRODUCTION

We would like to introduce the !rst a"ordable self storage commercial property investment to be released into the UK.

An opportunity to invest in a self storage unit, a completely hands o" investment with full on-site management, maintenance, cleaning, letting etc.

You will receive guaranteed returns from a 6 year lease already in place upon completion, making this a high yielding, hassle-free investment which has been speci!cally designed to meet the needs of today’s astute investor. #e lease produces an excellent average return of 14% per annum for the 6 year period (guaranteed 8% NET yield for years 1 and 2).

A storage unit is an individual, highly secure enclosed area set within a purpose built self storage centre. #is is the easiest way to allow both individuals and businesses to manage belongings, equipment, furniture, stock and any other storable items in a secure and safe storage facility with 24 hour access 7 days a week.

All units are built and operational, negating the risks associated with purchasing o" plan. With a limited number of units available, we are recommending investors act fast if they wish to secure a storage unit.

“!e UK’s Self Storage Companies have seen the Highest Growth and Highest Yielding Returns within the commercial property sector over the last decade”

14% average annual yield

6 years secured immediate income

Income paid quarterly in advance

Fully managed and maintained

VAT exempt investment

SIPP and SASS compliant investment

De!ned exit strategy

Developments built and operational

Units priced from £3,750 to £30,000

INVESTMENT SNAPSHOT

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THE UK SELF STORAGE MARKET

Self Storage was !rst established in the UK in the 1980’s and continues to grow steadily. "ere are now more than 350 companies operating more than 750 self storage facilities in the United Kingdom, cumulating to around 26m rental square feet. "e UK generates revenues of about £360m, has over 235,000 customers using the service and provides employment for 2,700 people.

When compared to more mature markets, the levels of market penetration in the UK are low at just under 0.5 Sq/Ft per person. "e US has more than 7.4 Sq/Ft per person and Australia has 1.1 Sq/Ft per person. Despite such high levels of market penetration, the market in the US continues to grow at 10-15% a year (based on net lettable space). On this evidence it is clear that the UK market has further to grow.

"e biggest players are large, multi-centre companies such as Safestore, Big Yellow, Access, Lok’n Store, Shurgard, Space Maker, Storage King and HSIL Property.

MARKET ANALYSISA quick review of the large PLC’s annual reports shows a growing industry with a con!dent outlook for the future:

BIG YELLOWYear to March 2011Occupancy growth of 215,000 Sq/FtStore revenue up 8% to £59.6 million

SAFESTORE2010 Year-end reportRevenue grew by 5.7% to £89.2 million9,941,000 Sq/Ft of occupied space, up 6.1%Average rent per Sq/Ft up 1.2% to £25.55

LOK’N’STOREInterim results January 2011Revenue grew 4.5% to £5.42 millionOccupancy up 2% Prices up 3.5%

“Full SIPP approval from most major Pension Trustees”

London

South

Northern England / Scotland

Midlands / Wales

28%

35%

23%

14%

Source: Intelligent Partnership Due Diligence Report 1st March 2011

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MANAGEMENT BUSINESS MODEL AND DIFFERENTIATORS

!e sites are located on vibrant o"ce and commercial business parks, within easy access to motorway links and within short diving distance of major conurbations. All of the sites gave maximum vision to large tra"c #ow from either motorways or large main roads. All centres are located in highly populated areas.

Tenants pay one month’s rent as a deposit and one month’s rent upfront. If any tenants default on their rent, the Management Company is legally entitled to open the Storage Unit, sell the contents and use the proceeds to cover any outstanding rent.

Centurion Business Park, Blackburn

Empire Business Park, Burnley

Shuttleworth Mead Business Park, Padiham

Blackpool Airport

Liverpool Airport

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BUSINESS MODEL!e Self Storage Management business model has been built to guarantee they stand out from the crowd; their values, ethics and commitment have helped develop the business model to be the highest standard available within the industry.

Dedicated to continue to provide the very best infrastructure and support they are fast becoming an exemplary business that is the envy of their competitors.

!e Management Company have sites in the following locations:

Manchester Airport

Millennium City Park, Preston

Kings Court, Rochdale

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And have sites under construction in the following locations:

!e Management Company have sites under option in Birmingham, Leeds and three sites in Greater London. !e Management Company are focused on the North West, where levels of market penetration are lower and higher levels of growth are projected.

Each facility is purpose built and will o%er Storage units ranging in size from 25 Sq/Ft to 200 Sq/Ft.

Management Company o%er their storage space at least 30% cheaper than competitorsAll of the sites have o"ce facilities, breakout areas, packaging facilities and van hire, goods pick up service, forkli& truck facility and reception areas.

Every site has 24 hour digital CCTV and a state of the art alarm system installed.

Coded electric gates, perimeter security fencing, smoke detectors and 're alarms are 'tted as standard.

Tenants have the use of a PO Box Address along with private meeting rooms, o"ce space, free Wi-Fi, and in and out bound mail service

Management Company have partnered with Sagar insurance to provide cover for tenants’ contents.

DIFFERENTIATORS

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$

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“6 year rental in place at contract giving fantastic returns averaging 14% per annum”

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!e Management Company pay investors a "xed NET rental return of 8% for the "rst two years

A#er two years, and every subsequent two years, the Management Company will o$er investors a further two years at a "xed rate

!e new rate o$ered will be higher than the previous rate

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Summary terms of agreement:

Investor can accept the two year extension at the new "xed rate, or choose to exit the lease and opt for a variable rate of return instead.

If investors choose to exit the lease, the Management Company will continue to market and let their Storage.

Unit on rotation with the other Storage Units and service the tenants. Investors are just opting for a variable rate of return based on rental yield, rather than a "xed rate of return o$ered by the Management Company.

!e Management Company has the option to break the lease every two years.

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Points to note

Investment levels

THE INVESTMENT OPPORTUNITY

Investor purchases a long leasehold (minimum of 250 years) on a Storage Unit, and then enters into a 6 year agreement to sub-let their Storage Unit to the Management Company. !e Management Company will then sublet the units, under licence, to end users.

Investment levels start at £3,750 for 25 Sq/Ft.

Size (Sq/Ft) Sale Price

255075

100125150175200

£3,750£7,500

£11,250£15,000£18,750£22,500£26,250£30,000

PRICE LIST

“A guaranteed buy-back giving you peace of mind that you exit strategy is secure”

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RETURN ON INVESTMENT

“Completed developments negating the risk associated with purchasing o! plan”

Year 1

Year 2

Year 3

Year 4

Year 5 onwards

8% - £900

8% - £900

10% - £1,155

10% - £1,155

12% - £1,410

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EXAMPLE ASSUMES £11,250 INITIAL INVESTMENTIncomeAll "gures are NET of costs.

Years 1 & 2

Years 3 & 4

Years 5 & 6

£17 per sq/#

£21 per sq/#

£25 per sq/#

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Years 1 & 2

Years 3 & 4

Years 5 & 6

£11,250

£13,860

£16,500

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Capital GrowthCommercial Property is valued based on a multiplier of the rental income from the property. $e rent per square foot paid to investors by the Management Company is scheduled to grow every two years for the "rst six as follows:

Un-tenanted ChargesIf the Storage Unit is not tenanted, the owner is responsible for a small ground rental based on the size of the unit. $is charge is only payable once the unit is let and will be deducted from the "rst rental payment to the investor.

Tenanted ChargesWhen the Storage Unit is tenanted, the owner is responsible for a 15% management fee and a yearly service charge of £1.95 per Sq/Ft. $ese will be deducted from the monthly payments.

Please note that if an investor "nds and services their own tenants for their Storage Unit or utilise it themselves then the 15% management fee will not be applicable.

Total ReturnCombining the capital growth and income, this gives a forecast NET return of £12,180 over 6 years, or over 108%.

$erefore based on the Capital Value being 8.8 times rental yield the value of the Storage Unit in future years is predicted to be as follows:

Year 1 and 2 are guaranteed, years 3 onwards are forecast returns and could vary.

Investors pay all of their costs out of the rental income that they receive so there is no additional cash injection a#er purchase required.

COSTS

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REVENUES

PRICE LIST ! YEARS 1&2 ! BASED UPON AN 8% RETURN

Property Type Rental Income(£17 per Sq/Ft)

Ground Rental(per annum)

Management Fee(15% per annum)

Service Charge(£1.95 per Sq/Ft)

Net Rental Return(8% for Years

1&2)

Storage Units have the bene"t of an established 6 year lease via a Management Company with "xed and upward facing rental reviews and bi-annual break clauses. Figures shown are for illustration purposes. All agreements are subject to contract.

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

25

50

75

100

125

150

175

200

General Sizes

£425

£850

£1,275

£1,700

£2,125

£2,550

£2,975

£3,400

Gross Income

£12.50

£25.00

£37.50

£50.00

£62.50

£75.00

£87.50

£100.00

Cost once let

£63.75

£127.50

£191.25

£255.00

£318.75

£382.50

£446.25

£510.00

Cost once let

£48.75

£97.50

£146.25

£195.00

£243.75

£292.50

£341.25

£390.00

Cost once let

£3,750

£7,500

£11,250

£15,000

£18,750

£22,500

£26,250

£30,000

Excluding VAT

£300.00

£600.00

£900.00

£1,200.00

£1,500.00

£1,800.00

£2,100.00

£2,400.00

Net Income

Size Sq/Ft(per Storage

Unit)

Sale Price(per Storage

Unit)

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REVENUES


Property Type Rental Income(£21 per Sq/Ft)





3&4)

25

50

75

100

125

150

175

200

General Sizes

£525

£1,050

£1,575

£2,100

£2,625

£3,150

£3,675

£4,200

Gross Income

£12.50

£25.00

£37.50

£50.00

£62.50

£75.00

£87.50

£100.00

Cost once let

£78.75

£157.50

£236.25

£315.00

£393.75

£472.50

£551.25

£630.00

Cost once let

£48.75

£97.50

£146.25

£195.00

£243.75

£292.50

£341.25

£390.00

Cost once let

£3,750

£7,500

£11,250

£15,000

£18,750

£22,500

£26,250

£30,000

Excluding VAT

£385.00

£770.00

£1,155.00

£1,540.00

£1,925.00

£2,310.00

£2,695.00

£3,080.00

Net Income

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Size Sq/Ft(per Storage

Unit)


Unit)


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REVENUES


Property TypeSize Sq/Ft

(per Storage Unit)


Unit)

Rental Income(£25 per Sq/Ft)





5&6)

25

50

75

100

125

150

175

200

General Sizes

£625

£1,250

£1,875

£2,500

£3,125

£3,750

£4,375

£5,000

Gross Income

£12.50

£25.00

£37.50

£50.00

£62.50

£75.00

£87.50

£100.00

Cost once let

£93.75

£187.50

£281.25

£375.00

£468.75

£562.50

£656.25

£750.00

Cost once let

£48.75

£97.50

£146.25

£195.00

£243.75

£292.50

£341.25

£390.00

Cost once let

£3,750

£7,500

£11,250

£15,000

£18,750

£22,500

£26,250

£30,000

Excluding VAT

£470.00

£940.00

£1,410.00

£1,880.00

£2,350.00

£2,820.00

£3,290.00

£3,760.00

Net Income

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit

Storage Unit


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OWNERSHIP

Each Storage Unit comes on an individual title. You are purchasing an individual Storage Unit within one of the Management Company Centres as leasehold for 250 years. You will receive a full Title Deed registered at the UK Land Registry giving you peace of mind that your investment is safe and secure.

OWNERSHIP STRUCTURE

“An excellent addition to any well-balanced portfolio as it provides diversi!cation”

Developer

Investor

Management Company

Owns the freehold to the site

Purchases the storage unit on a long leasehold (250 years) from Store First Limited

Sub-leases the storage unit from the investor on an initial 6 year lease, and rents it out to end users

Investors will receive their guaranteed 8% NET annual return for years 1 and 2 quarterly in advance.

Year 3 onwards, investors will receive their rental payments monthly, NET of charges, paid directly into their bank account or SIPP by direct debit, making this a truly ‘hands o! ’, low maintenance investment.

INVESTOR PAYMENTS

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PURCHASING PROCEDURE

LEGALAs with any property purchase we recommend that you utilise the services of an independent Solicitor to conduct the legalities on behalf of your purchase. You are, of course, free to use any Solicitor or !rm of your choosing but several of our clients have undertaken the services of "e Hetherington Partnership and as a result they are able to provide very competitively priced packages to our clients.

If you wish to use "e Hetherington Partnership then you would need to instruct them at the time of reservation. "eir contact details are to the right »

PURCHASE PROCESS

“250 year leasehold ownership giving individual title deeds registered at the UK land registry”

Reservation (Day 1):Completion of reservation formDepositLegal Fees

Contracts (Day 7):Deposit

Immediate Completion

10% of the purchase price£400 + VAT and Disbursements

90% of the purchase price

!e Hetherington Partnership32 Market StreetHoylakeWirralMerseysideCH47 2AF

Contact: Margaret HetheringtonTelephone: +44 (0) 1516 323411Email: [email protected]

"eir cost for the purchase is approximately £400 plus VAT and disbursements.

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THE DEVELOPER AND EXIT STRATEGY

“A completely hands o! investment with full on-site management, maintenance, cleaning, letting etc”

THE DEVELOPERSince the developer established in 1998, the developer of the Storage Unit investments have grown to become one of the UK’s top alternative investment specialists completing transactions and investments worth in excess of £1 billion.

!e developer has completed and retains either freehold or full ownership of 28 residential developments totalling over 3,500 units, a hotel development overseas and currently has completed 12 Business Centres across the north-west of the UK with 50 more planned in the next 12 years. !ese business centres include managed o"ce buildings through to full Business Parks incorporating restaurants, large warehouses, retails premises such as Halfords and Focus, storage centres and other associated commercial dwellings.

You can re-sell your Storage Unit at any time, with

assistance to you. !ere are four possible markets:

EXIT STRATEGY

Resale to another investor. A Storage Unit with a proven rental track record will be an attractive investment for other investors looking to purchase income.

Resale to owner occupiers. Many tenants who let the Storage Units on long term deals will welcome the opportunity to purchase rather than rent their Storage Unit as this will reduce their overheads, secure an appreciating asset for their business and bring tax bene$ts.

Resale to a large PLC. Safestore and Big Yellow Storage are two examples of large PLC self storage companies with an appetite for expansion who may purchase Storage Units in bulk as part of their growth strategy.

Management Company. In year 5, Investors have the option to enter the guaranteed buy-back scheme. In this scheme, the Management Company will guarantee to buy the Storage Unit back o# the investor for the original price paid within the next 5 years.

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both the developer and master agent offering

self storage investments€¦ · 9,941,000 sq/ft of occupied space, up 6.1% average rent per sq/ft...

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