ISS Conference (Inside Self Storage)

Contributing Author: Nick Miner, CCIM

Recently, I attended the ISS conference in Vegas. This was my first time at this event to learn a little about the self-storage product type. The overall layout of the conference and education sessions were well thought out. It allowed me to pick a track of education and achieve a better understanding of the product type and how it operates.

The first educational session I attended focused on the financing of the product. Where it is today and where it has been. Some of my key takeaways from this session were:

-SS operations are always focused on revenue management
-SS historically has the lowest default rate on CMBS loans of any product type
-In January 2018, the default rate of CMBS loans was .04%
-Underwriting SS is based upon historic NOI (usually the trailing 12 months)
-They are seeing a plateau of occupancy (upper 80s low 90s)
-Since 2016, they have seen almost $10B of new construction
-2016-$2.5B
-2017-$4B
-2018-$4B is expected
-SS is micro market specific (usually uses 3.5 mile demographic analysis)
-Average SS uses 7 SF per individual for gap analysis
-They are starting to see interest-only (I/O) loans for the term of the loan (CMBS)
-Rates are hovering around 180 bps over the 10 Year
-Banks are getting more creative in in their financing terms for property acquisitions
-Life Companies are starting to focus on SS as a property to fund loans on Continue reading ISS Conference (Inside Self Storage)

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