Development Business Plan Utah Real Estate Challenge March 27, 2012 Porter's Crossing & Pony Express Parkway Eagle Mountain, UT [EAGLE MOUNTAIN STORAGE] The first self-storage facility in Eagle Mountain, Utah, serving over 23,000 people. Development Business Plan [EAGLE MOUNTAIN STORAGE] TABLE OF CONTENTS Executive Summary.........................................................................................................3 Site Location....................................................................................................................4 Site Description...............................................................................................................5 Feasibility Study.............................................................................................................14 Marketing Plan...............................................................................................................21 Deal Economics.............................................................................................................22 Sustainability..................................................................................................................33 Conclusion.....................................................................................................................33 Appendix........................................................................................................................35 Sources..........................................................................................................................41 2 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Executive Summary Eagle Mountain City has no self storage. Eagle Mountain Storage proposes Eagle Mountain City's first self-storage unit development to service the 23,000+ residents who live in that city. Our analysis shows that significant unmet demand makes this a viable, financially-rewarding opportunity. Eagle Mountain Storage needs equity investment for this to move forward and we respectfully request your consideration in 1 ) reviewing this proposal and 2) providing financial backing at terms acceptable to you. Salient Site Facts Currently for sale with verbally agreed land price Highly visible Near high density of hundreds of condos Located along major arterial In to-be-developed grocery-anchored "Town Center" Flat terrain Seller to stub utilities Supported by city planners & economic development director Salient Feasibility Facts Demand: 23,000 residents Supply: no self-storage facilities Analysis: easily supports 70k+ square feet of storage High population growth (7%+ per year) $62k+ median income in trade area Deal Economics Facts 21.43% IRR; 17.48% cash-on-cash return 61,000 SF 450-unit facility; 54,845 NRSF $3,264,402 project cost “3-1-1” construction loan at 4.5% 25-year amortization 6% permanent loan Debt Yield Ratio of 12.34% $3,705,193 value (8% CAP); 9.81% return on cost Three year lease up period $2,596,635 in debt $538,758 in equity required from investor Developer to contribute $132,009 3 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Site Location 4 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Site Description The development comprises 2.55 acres located within a proposed development owned by Amsource north of the intersection of Porter's Crossing and Pony Express Parkway in Eagle Mountain City. We will first highlight the importance of this intersection, then will outline the overall Amsource project, and then narrow the focus to how our proposal integrates seamlessly within the Amsource development. Amsource's Proposed Development Our Site Porter's Crossing Pony Express Pkwy Pony Express Parkway. UDOT just completed construction a few months ago connecting Pony Express Parkway directly into Redwood Road, creating one of Eagle Mountain's featured primary arterials into and out of the city. Whereas this highway only feeds into Redwood Road, UDOT has plans to make Pony Express Parkway a major highway extending east through Lehi, similar to the new Pioneer Crossing, directly to I15 (at the Vineyard Connector). 5 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Our site on Pony Express Pkwy Pony Express Pkwy will directly connect to I-15 Pony Express Pkwy now connected to Redwood Rd. This guarantees Pony Express Parkway the prominent placement as the "Main Street" of Eagle Mountain City. UDOT has no traffic numbers yet for Pony Express since its recent connection to Redwood, though is currently studying this with a report due this May. The city estimates half of its traffic now comes along this road. Amsource Development. Known as "Porter's Crossing Town Center," Amsource's 145-acre development will include retail (30 acres), office (34 acres), residential (50 acres), and open space (30 acres). Importantly, the retail will feature the city's first grocery-anchored development, indeed justifying the development's underlying goal and name: "Town Center." 6 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Site Photos and Land Use Plan 7 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Amsource has already begun laying the infrastructure for its development. This includes cutting in the road, all utilities and storm water services on the main road. Amsource has agreed to stub utilities to our site (included in the land price). Although zoned Agricultural, the Amsource site has received an approved master development plan with the rezone pending a signed and approved master development agreement for the project. Eagle Mountain Storage Site. Although the area can support new retail and residential development, we feel little or no demand exists for 34 acres of office development in the primarily residential community of Eagle Mountain. As such, we propose substituting a small portion (<10%) of the office space with a market-driven solution: storage units. 8 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] We met with Amsource to determine the mutually best location for the storage unit facility and came to the following conclusion: Wash area: difficult to develop Site Visibility Visibility This location benefits us greatly. Given the city's requirements to locate the storage facility behind the retail instead of immediately along the highway, this location boasts the most prominent placement possible in the development. It also places the storage units on the development's highly visible eastern edge next to an area that will likely not experience development due to slope issues. 9 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Further, until the retail pads along the front are built, this facility will enjoy unhindered visibility directly from the city's busiest highway, which direct visibility may exist for years to come especially given the two adjoining pads are likely to be built last given their location furthest from the anchor and shadow anchor. Visibility Visibility Visibility This location likewise benefits Amsource because of its awkwardness for the traditional uses of retail (away from the anchors) and office (no demand). Hence, the location mutually benefits buyer and seller. This site features easily developable flat terrain. Given the agreed upon land price of $4 per square foot (psf) Amsource has agreed to provide the infrastructure (roads, stubbed utilities) to make this site ready to develop. Most importantly, we have discussed our proposal with the city's planner, senior planner, and economic development director, and each supports this proposal. The city simply asks that the storage units be placed behind the retail with aesthetic attention given to landscaping and elevations, for which we planned additional monies in the pro forma. 10 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Entitlement. We would need to entitle the site which includes an application, plans, preliminary and final plats, and a site plan. The Development and Review Committee reviews the application and plans to help ensure compliance with city requirements. The planning commission and city council would review the plats on a consent agenda (simple approval), while the city council would review the site plan as a discussion item to ensure it meets requirements (particularly aesthetic), hear feedback from neighbors, and make a final decision. The city would then grant the Commercial Storage zoning that's specific to storage units. The planner indicated the entire entitlement process is simple enough that we could expect to move dirt less than 90 days from initial application. Importantly, the planners support this proposal and feel it would successfully gain final approval. The city needs it, the market demands it, it will meet the city's desires for site placement and aesthetics, it fits really well into the surrounding area (undeveloped land zoned agriculture, hence no real complaints from neighbors), and it fits seamlessly into Amsource's existing site proposal that already has master approval. Site plan. The site design includes a 61,000 square foot building with 2,000 square feet set aside for an office and residence for an on-site manager. The 59,000 square feet of storage space includes approximately 4,155 square feet of hallways and 54,845 net rentable square footage (NRSF). 11 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] The building will feature investment-grade construction including cinder block (similar to our competitors) with an attractive façade to satisfy city requirements. Other features include automated access, security cameras, and appropriately sized driving corridors. Larger units have wider driveway access and turnaround space. We elected to forego providing climate-controlled units per a cost-benefit analysis. With a building-to-land ratio of 54.92%, the building itself has room to change to accommodate any requirements that the city has as the development progresses. In our conversations with our three mentors and Menlove construction (the leading storage unit builder in Utah) we have been assured that our site can handle the 54.92% building-to-land ratio with several configurations. The building opens up to a contiguous .43 acre parcel to its north, providing three development options. 1) Amsource can use this use this to meet open space requirements. 2) We can option this for future expansion. 3) We can purchase this site immediately and use it for RV/boat storage until the market merits a building expansion. The Ranches HOA has strict guidelines preventing homeowners from storing recreation vehicles and trailers in visible locations on their properties, so regulatory pressures create strong demand for RV/boat storage. A snip from the Ranches HOA General Rules: Once we pay Menlove Construction to officially engineer/architect the site we’ll know more precisely how we would like to proceed with the adjoining .43 acre parcel. 12 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan 13 [EAGLE MOUNTAIN STORAGE] The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Feasibility Demographics. Eagle Mountain City provides favorable demographics for a storage unit facility: dense residential neighborhoods, a fast growing population, and solid incomes. Eagle Mountain is the 4th fastest growing city in the state. Its population has grown 920% to 23,000+ since its incorporation in 1996 with only 250 residents, and has a projected growth to 88,500 residents by 2040. As a comparison, the 2010 Census shows Eagle Mountain with only 370 fewer residents than Herriman. 90% of adults have post-secondary education, 60% have college degrees, and most work in white collar jobs. Newer homes, a master-planned city, excellent housing financing (0% down Rural Housing loans), and attractive home prices continue to spur this growth. Further, drives times to major destinations are much closer than many realize: Drive Times (minutes) Downtown Salt Lake City 35 SL International Airport 35 Downtown Provo 25 Population 2010 Census 21,415 2012 (estimated) 23,000+ 2015 Projected 25,655 2040 Projected 88,500 Households 2010 5,546 Average Size 4.2 Income 2010 Ave HHI $57,000 2010 Med. HHI $63,000 Employment Type* White Collar 64.20% Blue Collar 18.81% Services 16.99% *3-mile radius, STDB Online The Ranches, population 15,500+ City Center, population 7500+ Undeveloped land, owned by SITLA Eagle Mountain City has two primary centers of development, known commonly as The Ranches and City Center. These two centers are separated by SITLA-owned land. Eagle Mountain Storage's location allows it to capture tenants from both locations. 14 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Supply/Demand. Cushman & Wakefield's self-storage industry group's econometric model forecasts storage unit demand for the Salt Lake City Metro region at 7.74 square feet per person. With a current supply of 9.99 square feet per person, the SLC Metro region appears over-supplied with self-storage space. However, the 2012 Self Storage Almanac confirms what real estate experts know already: "The performance of an individual facility is more dependent on local market conditions than ... regional trends." As such, we need to perform a trade area analysis of the local Eagle Mountain market. Trade Area Analysis. "Survey research and zip code studies confirm that demand for a typical self-storage facility comes from about a three-mile radius from the subject." (2012 Self-Storage Almanac , p. 40). Natural barriers likewise justify this distinction. In studying the closest facilities to Eagle Mountain we identified two competitors: Towne Storage and Extra Space Storage, both 4+ driving miles from the subject. The 3-mile trade areas for these competitors only reach to the eastern edge of Eagle Mountain City, while Eagle Mountain Storage sits competitively advantaged within Eagle Mountain City. These two competing facilities are located near the prominent crossing of SR-73 and Redwood Rd., the main traffic corridors for both Eagle Mountain (23,000+ population) and Saratoga Springs (17,781 population per 2010 Census). It appears that the competitive strategy for these locations is to absorb the storage needs of Eagle Mountain (which has no facilities) and Saratoga Springs (which only has these two facilities), as well as the population in west Lehi. Towne Storage has existed for several years and has reached stabilized occupancy. Extra Space opened January 2012 and has a 30-36 month projected lease up phase. Both facilities are comparable in size and unit number. 15 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Competitors Towne Storage Extra Space Storage Total Units 465 431 896 Leasable Sq Ft 64,750 64,770 129,520 Occupancy* 85% 50%** *85% is considered stabilized for self storage. **Based on projections of when our facility opens. Supply/Demand Reconciliation. Using industry standard guidelines, we observe the existing supply from competition does not meet demand, especially in Eagle Mountain. Further strengthening the analysis, we omitted the population of west Lehi falling within the competitors' trade areas that would otherwise boost the demand figure. Summary of Supply/Demand Eagle Mountain Saratoga Springs Population 23,000 18,000 Storage Demand (7.74 factor) 178,020 139,320 Storage Supply (3-mile radius) 0 129,520 Excess Demand (Sq Ft) 178,020 9,800 Even utilizing a demand factor 65% (5 square feet per person) of the Alamanac-researched 7.74 for the Salt Lake Metro region, the analysis still strongly supports the proposed facility of 54,845 NRSF (a 5.0 factor indicates 70,230 square feet of unmet demand exists). Total 41,000 317,340 134,770 182,570 Demand Factor Sensitivity Demand Factor Excess Demand (Sq Ft) 7.74 182,570 7 152,230 6 111,230 5 70,230 Conclusion: the market is undersupplied. Additionally, Eagle Mountain Storage's location enjoys a significant competitive advantage in capturing its primary market, including the 7k+ City Center population. Notice: the 3-mile rings from the competitors barely reach into our facility's target market. Drive time from City Center to Eagle Mountain Storage = 10 minutes; to nearest competitor = 18 minutes. 16 The first self-storage development in Eagle Mountain. | 23,000 served. City Center Development Business Plan [EAGLE MOUNTAIN STORAGE] This map shows the secondary market within Saratoga Springs where we may capture some of the demand. Importantly, we sized our facility such that Eagle Mountain should independently provide sufficient absorption, so any tenants procured from Saratoga would come as a bonus. Note: the recently connected Pony Express Parkway now provides Recently connected easy access for Saratoga Springs Pony Express Pkwy residents to the site. Note: Saratoga has enough population to independently support both Towne Storage and Extra Space, so the competitors do not need Eagle Mountain residents to remain stabilized. Demographic Comparison. Analysis shows striking similarities between the demographics of the 3-mile radii surrounding Eagle Mountain Storage and Towne Storage. (Of note, though some overlap exists between the 2 radii, the shared area consists primarily of undeveloped land.) Year 2010 Demographic Summary* Population Households Families Average Household Size Owner Occupied HUs Renter Occupied HUs Vacant HUs Median Income Median Age Population Growth Rate Employed Population White Collar Blue Collar Services Eagle Mountain Towne Storage Storage $ 18,922 4,604 4,130 4.11 79% 10% 10% 62,653 $ 30.2 20,694 5,432 4,920 3.81 77% 19% 4% 65,107 30 7.10% 6.74% Whereas Towne Storage has a higher percentage of 64.20% 62.74% renters nearby, Eagle 18.81% 20.57% Mountain Storage has a much 16.99% 16.69% greater density when comparing 1-mile radii. Our site has double the population (7453 vs. 3760) and housing units (2239 vs. 994), which density will increase even further when Amsource develops its planned 242 residential units (condos representing the majority of those). 17 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] We interviewed 3 self-storage facility owners and developers. Each commented that the percentage of renters isn't a measured factor: density is. Apartment renters may provide greater turnover as self-storage tenants, but condo owners often make for longterm tenants. Each individual we interviewed stressed the same thing: what matters is density. Critically, therefore, there are hundreds of condo units (averaging 1258 square feet with no garages and minimal in-residence storage) within 1 mile of our site: The Eagle Mountain Storage site mirrors Towne Storage's site in key ways: Location: each on "Main St" Density: each has large condo (note: NOT apartment) complexes nearby Demographics: each compares similarly with income and population 18 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Towne Storage's Saratoga Springs site has experienced significant success. When our site's demographic and area matrices line up so well with Towne's site, we feel justified in our site selection, pricing strategy, and opportunities for success. Other proposed self-storage facilities. We also researched with the city regarding any current or previous self-storage facility proposals. The city planner indicated a site near SR-73 had received a self-storage approval back in 2001, but the developer never moved forward. That developer has engaged the city in discussion from time-to-time over the past few years, including as recently as a month ago. We advise, therefore, that equity investors reading this analysis act quickly to make our facility the first in the ground. The following map shows our location's superiority next to dense residential housing versus the potential competing facility located in an area of 1-acre and 5-acre lots zoned Rural Residential: 1-acre lots Previously Proposed Facility Approved for high density res. Approved for 1st groceryanchored dev. 5-acre lots Our Site City's highest density *Eagle Mountain City - Future Land Use and Transportation Corridors 19 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] The other potential location has critical deficiencies: 1) sparse "Rural Residential" (only 280 households in a 1-mile radius vs. 2239), 2) large homes with lots of storage (4180 square feet average, most with 3-car garages), 3) expensive off-site infrastructure improvements (estimated $1,000,000 to make it developable), 4) poor traffic counts (2620 AADT), and 5) location too far to capture any of Saratoga's market. Barriers to entry. The primary barrier to entry in self-storage development is securing a location that out-positions the competition to the extent that a competitor doesn't proceed to develop because it could only build in an inferior location. Factors influencing a prime self-storage location include residential density, visibility, and city requirements. Density. The map on the previous page displays that our site captures the closest possible location to the highest density in the entire city. Visibility. Our site has great access and visibility along one of the busiest arterials in the city and is located in the best position along that arterial because of the grocery anchor. City requirements. The General Plan doesn't provide for any storage within or near this location as it's all planned Mixed Residential (reference the map on the preceding page). However, the city planners support storage in our location because it integrates well into Amsource's plan for the grocer, retail, and business park. Importantly, no competitor can simply develop storage units "as of right." They will need city council approval. In general, cities don't want too many storage facilities because they provide minimal jobs (1-2/facility) and minimal tax revenue. Our location within Amsource's development has been the key for gaining the support of the city planning department. First to market. Ours will be first to market and should deter wise developers from adding competition, especially given self-storage's long lease-up periods. Although it's possible that eventually another developer could build storage units in Eagle Mountain, we like our location's competitive advantages being nearest to the highest density, within the only grocery-anchored development, along one of the busiest arterials. Population growth. Population growth 1) reduces risk created by competitors entering the marketplace and 2) accelerates lease-up. Population growth solely within the 3-mile trade areas of our facility and Towne's facility estimates to grow by 17,000 residents from years 2010 to 2015. Though the 3-mile rings have some overlap, this growth statistic emphasizes that by the time our facility opens in Summer 2013, the market could very well support starting construction on an additional 60k square foot facility. Such is the demand to live in these cities. Such is the minimized risk for developing in a high growth area. 20 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Marketing Plan Interviewing industry insiders, we learned that self-storage tenants usually locate facilities primarily through the sources in the chart below: Given our location's prominent placement along Pony Express Parkway, we feel we'll do well capturing the drive by traffic. We have also allotted $40,000 of soft costs toward marketing including strategies such a website, search engine optimization, and various print advertising. We will also purchase a truck to 1) help tenants move in free and 2) provide marketing signage. We have also budgeted a separate line item soft cost for building a noticeable monument sign along the road frontage. The annual budget also allots costs for generous marketing expenses. Most critically, though, we will carefully select and train our on-site manager. Utah's highest producing self-storage real estate agent commented to us that management is the key to successfully leasing a storage facility. He provided a personal example of greatly increasing an existing facility's occupancy solely through focusing on management. Just like a real estate agent can consistently achieve higher sold prices than a competing agent, we will hire capable managers that outperform the competition. In the fragmented mom-and-pop industry in Utah County with dozens of one-facility owners we will ensure a management-driven focus helps us compete above the rest. 21 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Deal Economics Financing. With the Market Analysis exploiting a strong unmet demand for a storage unit project in Eagle Mountain, we feel the reward of a 21.43% IRR, a 17.48% cash-oncash return, and a non-recourse permanent loan easily justifies the limited risk. Summary of Deal Economics Total Budget Debt Equity Deferred Developer Fee Stabilized NOI Stabilized Value Profit (cumulative BTCF + Sale Y10) IRR Return on Cost (Stabilized Y4) Return on Cost (Sale) Cash on Cash (Stabilized Y4) Cash on Cash (Sale) Market Cap Rate Terminal Cap Rate Cash Multiple $ $ $ $ $ $ $ 3,264,402 2,593,635 538,758 132,009 296,415 3,705,193 2,794,913 21.43% 9.81% 11.71% 17.48% 25.09% 8.00% 8.50% 4.17 The total project cost is $3,264,402 financed on a 70% debt, 30% equity piece. We feel that a construction loan interest rate at 4.5% is very reasonable as quotes we have received from Wells Fargo on March 15, 2012 put interest rates at a variable 3.24%. We feel that the conservative rate of 4.5% is acceptable as rates will fluctuate. The loan will be a “3-1-1” meaning an initial 3 year term with 2 1-year extension options with 0.25% extension fees. This will allow us options for a strategic execution of the permanent loan or a chance to market the property for sale if so decided. Project Costs Land Costs Total Hard Costs Total Soft Costs $ 444,312 $ 2,195,878 $ 624,213 Total Project Costs $ 3,264,402 Project Value Stabilized NOI $ 296,415 CAP 8.00% StabilizedValue $ 3,705,193 The maximum loan-to-value (LTV) from Wells Fargo is 70%, maximum Debt Coverage Ratio (DCR) is 1.30, maximum loan-to-cost (LTC) is 80%, and minimum debt yield is 11%. Wells would finance the project under the LTV at 70% as it is the strictest of the four. The LTC reaches 79.45%, the debt yield exceeds 11% (12.34%), while the DCR would allow for a much larger loan. 22 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Maximum Take-Out Loan Analysis Direct Income Capitalization Approach Stabilized NOI Going-In CAP Rate $ 296,415 8.00% Value (NOI/Cap Rate) $ 3,705,193 Debt Yield Ratio > 11% (Stabilized NOI/Loan) 12.34% Loan Terms Interest Rate Amortization (years) Using Loan-to-Value Ratio Maximum LTV Maximum Loan Based on LTV Using Debt Coverage Ratio Monthly NOI Maximum DCR Maximum Monthly Payment (NOI/DCR/12) Maximum Loan Based on DCR 6.00% * 25 $ $ 70% 2,593,635 $ $ 24,701 1.30 19,001 2,949,084 $ 80% 2,611,522 $ $ $ 2,593,635 (16,908) (202,892) Using Loan-to-Cost Ratio Maximum LTC Maximum Loan Based on LTC Maximum Loan (Lesser of LTV, LTC or DCR) Maximum Principal Monthly Payment Annual Debt Service *3/15/2012 quoted rate of 5%. We use 6% to be conservative as the Perm loan is four years away 23 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] We assume a 36-month lease-up period to achieve stabilization and have financed a lease-up reserve and interest reserve in year one to cover the interest payments without having to come out of pocket. We will be able to cover our interest payments on the construction loan after one year of lease-up becoming cash-flow positive during year two before the loan is converted to a perm. After consulting with Wells Fargo and several experts in the industry, we feel that the lease-up period is very reasonable. Similar projects have more aggressive 30-month lease-up periods but often do not reach stability until month 36. We have avoided this shortfall and expect to be stable by the end of year three. Lease-Up Estimation Chart Year 1 Year 2 Year 3 Year 4 MONTH NRSF Occupancy 1 54,845 2.00% 2 54,845 5.50% 3 54,845 9.00% 4 54,845 13.00% 5 54,845 16.00% 6 54,845 22.00% 7 54,845 24.00% 8 54,845 27.00% 9 54,845 28.00% 10 54,845 29.00% 11 54,845 31.00% 12 54,845 33.50% 20.00% MONTH NRSF Occupancy 13 54,845 39.00% 14 54,845 43.00% 15 54,845 46.00% 16 54,845 48.00% 17 54,845 52.00% 18 54,845 55.00% 19 54,845 58.00% 20 54,845 61.00% 21 54,845 63.00% 22 54,845 64.00% 23 54,845 65.00% 24 54,845 66.00% 55.00% MONTH NRSF Occupancy 25 54,845 69.50% 26 54,845 72.50% 27 54,845 74.50% 28 54,845 76.50% 29 54,845 78.50% 30 54,845 81.50% 31 54,845 83.50% 32 54,845 84.50% 33 54,845 85.00% 34 54,845 84.50% 35 54,845 84.50% MONTH NRSF Occupancy 37 54,845 84.00% 38 54,845 83.00% 39 54,845 82.00% 40 54,845 82.00% 41 54,845 83.50% 42 54,845 85.50% 43 54,845 86.50% 44 54,845 87.00% 45 54,845 87.50% 46 54,845 87.00% 36 54,845 85.00% Stabilized 47 48 54,845 54,845 86.50% 85.50% 80.00% 85.00% The permanent loan will carry a 6.0% interest rate on a 25-year amortization. Wells Fargo has assured us that with an investor in good standing, this loan can be done on a storage facility with no recourse. Having a Non-Recourse loan further minimizes the risk of investing in this project. Today's rate is 5.0% per Wells Fargo, though we selected 6.0% for our pro forma because the perm loan is a few years down the road and rates will most likely rise. In year three after construction we have built in the refinance cost in the cash flow analysis (0.5% finance charge plus $17,500 in fees, per Wells Fargo). Conversion to Perm-Loan Snapshot Loan Balance 0.5% Conversion Cost Fees and Closing Total Cost to Convert $2,624,102.92 $13,120.51 $17,500.00 $30,620.51 Loan Snapshot Construction 4.50% Permanent 6.00% As discussed earlier, the site will be 2.55 acres. After meeting with the property owner and discussing land prices we have determined that $4.00 psf for our site is very competitive and we have received verbal approval from the landowner to purchase the land at this price with all necessary utilities stubbed into the site. 24 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Assumptions. The construction costs for the project are projected to be at $31.00 psf for the building and $4.00 psf for the site work with a 5% contingency bringing the total hard costs to just under $37.00 psf. The site work estimate is based off of flat terrain and stubbed utilities. The building costs have been built citing several sources. The first source used to come to this figure is Menlove Construction, the state's leader in building storage unit complexes. A discussion with owner Mike Menlove has informed us that current construction costs, including site work, building engineering, and the building itself for cinder block construction is at $33.00 psf. Steel construction is currently priced out at $31.00 psf respectively for the same. We have also received consultations from several industry leaders that both appraise and develop storage units confirming these amounts. Marshall & Swift’s cost guide also confirms this number. We have set the building costs at $31.00 psf and the site work at $4.00 psf totaling $35.00 psf to cover for the attractive façade that the city will require and to cover for any unforeseen issues that may come up. When this project moves forward, we will receive a formal bid from Menlove Construction. We want to have an attractive, marketable building to provide a positive feel to the community and the shopping center it resides next to. Hard Costs SF Building Site Work Contingency Total Hard Costs Levels 61,000 50,078 5% 1 $ Per GSF Total $31.00 $1,891,000 $4.00 $200,312 $0.94 $104,566 $35.94 $2,195,878 Industry standards for constructing storage unit complexes between 50,000 sf and 70,000 sf generally have soft costs averages at around $7.00 psf. This has been confirmed by our sources. The soft costs for our project total $7.19 psf. This does not include the interest reserve and the lease up reserve which would bring it up to $10.31psf. The soft costs do however include the developer fee which we will immediately roll into equity in the project. We want to show investors that we are dedicated to our projects success and by rolling our developer fee it gives us skin in the game and a 19.68% ownership in the project. Within the soft costs, we have a generous marketing and signage budget for a pylon sign along Pony Express parkway, marketing materials, and an advertising truck as discussed earlier. We feel that by not overlooking these items we can get our project off the ground running quickly. 25 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Costs and Assumptions Eagle Mountain Storage Land Acres Building $ Per SF Footprint 2.55 $4.00 61,000 $ Per GSF Less Footprint Total 50,078 $444,312 $7.28 Hard Costs SF Building Site Work Contingency Total Hard Costs Levels 61,000 50,078 5% $ Per GSF Total 1 $31.00 $1,891,000 $4.00 $200,312 $0.94 $104,566 $35.94 $2,195,878 Soft Costs Architect & Engineering Construction Inspection and Testing Soils & Environmental Testing Permits, Review, Connections Legal & Accounting Taxes & Insurance Contingency (Project) Finance Charges Title & Closing Signage Marketing Interest Reserve, Months 1-12 Lease-Up Reserve, Months 13-36 Developer Fee Total Soft Costs Total Soft Costs (Inc. Lease-Up & Int. Res.) Total Hard and Soft Costs Total Cost 2.5% 0.5% 2.00% 0.75% 2.0% 1.0% 5.0% $ Per GSF Total $0.90 $54,897 $0.16 $9,881 $10,000 $0.16 $10,000 $0.72 $43,918 $12,000 $0.11 $6,500 $0.32 $19,801 $0.87 $52,804 $0.43 $26,402 $15,000 $0.25 $15,000 $25,000 $0.41 $25,000 $40,000 $0.66 $40,000 $41,000 $0.67 $41,000 $147,000 $2.41 $147,000 $2.16 $132,009 $7.15 $436,213 $10.23 $624,213 $46.17 $2,820,090 $53.46 $3,264,402 Financing NPER Monthly PMT Construction Interest 12 4.5% $3,404 $40,850 *Note: Construction interest rate is 30-day LIBOR + 3.00% as of 3/15/2012. We used 4.5% to be conservative 26 RATE The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Our going in CAP rate is 8.00%. Along with the most important factor of comparable sales, we confirmed this number by interviewing employees at Extra Space Storage and consulting with several industry leaders that deal with the appraisal and brokering of storage units (Data obtained from Marcus & Millichap). Comparable CAP Rates Past 6 Months Name Watchman Self Storage Armor Storage of Logan Community Self Storage Average Location Orem, UT Logan, UT SLC, UT Total Units Rentable S.F. Year Built Sale Price 1,116 187,579 1982 $ 8,450,000 1,079 177,780 2004 $ 7,200,000 371 47,995 1992 $ 4,525,000 Name Watchman Self Storage Armor Storage of Logan Community Self Storage Stone Edge Storage River Valley Storage Average Location Total Units Rentable S.F. Year Built Sale Price Orem, UT 1,116 187,579 1982 $ 8,450,000 Logan, UT 1,079 177,780 2004 $ 7,200,000 SLC, UT 371 47,995 1992 $ 4,525,000 Roy, UT 267 35,800 2005 $ 1,150,000 Morgan, UT 126 32,640 2008 $ 1,000,000 Sale Date 12/15/2011 11/29/2011 10/15/2011 CAP 8.25% 7.29% 7.30% 7.61% Sale Date 12/15/2011 11/29/2011 10/1/2011 11/23/2010 3/22/2010 CAP 8.25% 7.29% 7.30% 10.40% 6.30% 7.91% Comparable CAP Rates Past 24 Months Unit Mix/Rent Schedule. The total number of units and the unit mix are two of the most important hurdles when it comes to calculating the NOI and assuring the success of a storage unit project. The correct combination of units can make a project succeed or cause it to fail. The number of units we chose and the unit mix we put together was not done lightly. Our complex has a total of 450 units, has 54,845 NRSF, and has beginning rents averaging at $8.64 psf annually. In coming up with our unit mix we took three main factors into consideration. The first factor was the competition. We canvassed the competitors, obtained property maps, and made charts reflecting the number and size of their units. Towne Storage Unit Mix Unit Size 5X5 5X10 10X10 10X15 10X20 10X25 10X30 12X25 12X30 Total 27 Square Number Total % of Total % of total Feet of Units Square Feet NRSF Units 25 50 100 150 200 250 300 300 360 34 61 127 88 89 11 40 5 10 465 850 3,050 12,700 13,200 17,800 2,750 12,000 1,500 3,600 67,450 1.26% 4.52% 18.83% 19.57% 26.39% 4.08% 17.79% 2.22% 5.34% 100.00% 7.31% 13.12% 27.31% 18.92% 19.14% 2.37% 8.60% 1.08% 2.15% 100.00% The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Extra Space Storage Unit Mix Unit Size Square Number Total % of Total % of total Feet of Units Square Feet NRSF Units 5X5 5X10 7X10 10X10 10X15 10X20 10X25 10x30 12x35 ODD Total 25 50 70 100 150 200 250 300 420 500 35 106 6 99 89 79 4 31 17 4 470 875 5,300 420 9,900 13,350 15,800 1,000 9,300 7,140 2,000 65,085 1.34% 8.14% 0.65% 15.21% 20.51% 24.28% 1.54% 14.29% 10.97% 3.07% 100.00% 7.45% 22.55% 1.28% 21.06% 18.94% 16.81% 0.85% 6.60% 3.62% 0.85% 100.00% Second, we consulted with three professionals within the industry, two of which currently develop, own, and operate storage facilities of their own and a third that works within the industry. We discussed what type of units they had, what unit size they had too many of and what unit size they needed more of. We then investigated how demographics and residential densities influenced their unit mix success. This insight helped greatly in the development of our unit mix. We learned, for instance, that 5 X 10 and especially 10 X 10 unit sizes were usually underdeveloped especially in high condominium markets. We will utilize this insight from other owners to our advantage. Rent Schedule & Unit Mix Unit Size 05X05 05X10 10x10 10x15 10x20 10X30 12X35 Total # of Units 41 120 120 70 57 31 11 450 NRSF Per Unit 25 50 100 150 200 300 420 Monthly Rent Per Unit $ 29 $ 53 $ 78 $ 105 $ 128 $ 175 $ 227 Annual Rents $ $ $ $ $ $ $ $ 14,268.00 76,320.00 112,320.00 88,200.00 87,552.00 65,100.00 29,964.00 473,724.00 Cost Per ft % of Total % of Total Per month Total SF NRSF Units (Weighted) 1.87% 1.16 1,025 9.11% 10.94% 1.06 6,000 26.67% 21.88% 0.78 12,000 26.67% 19.14% 0.70 10,500 15.56% 20.79% 0.64 11,400 12.67% 16.96% 0.58 9,300 6.89% 8.42% 0.54 4,620 2.44% 100.00% 0.72 54,845 100.00% Lastly, we then needed to look at the types of homes that our storage units would service. Our 1-mile radius shows that there are a large amount of condominium complexes. These types of residents heavily use the 5 X 10’s and 10 X 10’s for storage. The rest of our trade area, due to the types of homes and income levels will primarily use 10 X 15 and 10 X 20’s in addition to the 5 X 10 and 10 X 10’s. By using the three factors discussed, we decided upon 450 units with an average square footage per unit of around 120 sq ft and split out our percentages of each unit 28 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] type indicated in the chart on the previous page. A bonus to our unit mix plan is that the 5 X 10 units and the 10 X 10 units demand higher rents per square foot which actually increases our average rent per square foot than if we had more of the larger units. We feel very confident in the unit mix and believe it will maximize lease up and overall operation efficiency of the project. Storage unit lease rates are driven by your direct competition due to it being such a fragmented market of mom-and-pop shops. Storage unit rental rates within the Utah market rely heavily on what your direct competitors' rental rates are. We have selected monthly rents similarly to the way that we selected the unit mix. We used the rates of our two closest competitors, discussed these items with our industry partners, and looked at our site's competitive advantage with its location. (Lease rates provided by Marcus & Millichap) Direct Competition Rental Rates (Within 3 Miles) Name Towne Storage Extra Space Storage Average Eagle Mountain Storage Location Total Units Occupancy Avg. Rent/SF Mo Avg. Rent/SF Annual Saratoga Springs, UT 465 N/A $0.71 $8.52 Saratoga Springs, UT 470 N/A $0.73 $8.76 468 $0.72 $8.64 Eagle Mountain, UT 450 $0.72 $8.64 Non-Direct Comparable Rental Rates (3 Miles and Greater) Name Towne Storage Extra Space Storage First Lehi Storage Fort Knox Storage of Lehi A A A Lehi Point of the Mountain Storage Blue Ribbon Storage Average Eagle Mountain Storage Location Total Units Occupancy Avg. Rent/SF Mo Avg. Rent/SF Annual Saratoga Springs, UT 465 N/A $0.71 $8.52 Saratoga Springs,UT 470 N/A $0.73 $8.76 Lehi, UT N /A N/A $0.82 $9.84 Lehi, UT 570 82% $0.75 $9.00 Lehi, UT 64 90% $0.58 $6.96 Bluffdale, UT 500 75% $0.69 $8.28 Pleasant Grove, UT 475 91% $0.65 $7.80 424 85% $0.70 $8.45 450 $0.72 $8.64 Our rents for the 5 X 5 units and the 10 X 10 units are slightly lower than that of our two competitors to help with the lease up towards stabilization. As soon as stabilization is reached, rents can be changed and increased as demand warrants. We currently have rents estimated at 3% annual increases. We feel very confident that our complex can exceed a $12.00 per foot average annual rent as the facility matures. Proforma/Cash Flows. The proforma takes the stabilized potential income, adds in late fee charges, sales of locks and boxes, and auction and vending fees, less an industry standard 15% collection, vacancy, and first month's free rent factor to give us our total income. The 15% comes from intelligence from several mentors, the Almanac, and individuals within the industry. Through discussions with several owners of storage unit sites, we feel that these numbers are reflective of the current market. 29 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Proforma Incomes Gross Rental Income Late Fees Merchandise Sales (Locks, Boxes) Other Income (Auctions/Vending) Less Vacancy and Collection Loss Total Income $473,724 $7,000 $6,000 $9,750 15% -$71,059 $425,415 Expenses On-Site Management Off-Site Management Advertising Utilities Office Expenses Credit Card Fees Telephones Computer and Internet fees Repairs and Maintenance Misc Expenses Property Tax Insurance Total Expenses Total % of Total Income $32,000 $15,000 $10,000 $9,000 $2,000 $7,000 $2,000 $3,000 $8,500 $5,000 0.50 pf $30,500 $5,000 $129,000 30.32% Net Operating income (NOI) NOI per NRSF $296,415 $5.40 We will have an onsite live-in manager as well as fill-in Saturday managers. This is ideal for any storage unit complex and is the best way to provide a safe atmosphere to the tenant’s possessions and to provide for the quickest, most efficient lease-up. According to the Almanac, our industry partners, and comparable construction costs, total expenses for a site of our size will be around 30%. We currently have expenses budgeted at 30.32%. Our stabilized NOI for the perm loan is $296,415. Capping this at 8% gives it a value of $3,705,193. The 6% perm loan at a 25-year amortization will yield an annual debt service of $202,892. By using the 70% LTV, the required capital to fund the project is $670,767. As stated earlier, we are willing to roll our developer fee of $132,009 directly into the project which would bring the capital required from an investor down to $538,758 to get this project off of the ground. 30 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Cash Required or Returned at Take-Out Loan Total Project Costs $ 3,264,402 Req. Equity for Construction Loan (-) $ 670,767 Construction Loan Debt $ 2,593,635 Remaining Loan Balance $ 2,593,635 Take-Out Loan Max $ 2,593,635 Equity Requirements Developer Capital Deferred Developer Fee $ 132,009 Total Developer Capital Req. Equity for Construction Loan $ (132,009) 19.7% $ 670,767 80.3% Total Equity Required $ 538,758 100% Ownership Interest Investor 80.320% Developer 19.680% Total 100.0% Deal economics conclusion. The self-storage facility agent and owners we interviewed mentioned that investors typically seek a leveraged IRR in the 10-13% range on existing facilities and 14-20% on new development. We feel this project's solid returns (21.43% IRR, 17.48% cash-on-cash, 9.81% return on cost vs. 8% cap rate) merit investor consideration and justify the low risks of the proven "cash cow" asset type of storage units. 31 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan Project Costs Total Project Cost Total Project Cost before Op. Res. Land Cost [EAGLE MOUNTAIN STORAGE] Depreciation Assumptions Building Basis Life (in years) Acceleration Factor Straight Line (calculated) $ 2,820,090 27.5 1.0 $ 102,549 yr 0 Net Operating Income Project Costs or Total Acquisition $ Principal (Debt) $ Equity $ Financing Assumptions Equity Mortgage Principal Interest Rate Amortization Annual Debt Service $ 3,264,402 $ 3,264,402 $ 444,312 Other Assumptions Inflation Adjustment Term of Loan Sell at End of Year yr 1 yr 2 yr 3 $ $ $ $ $ 8.64 473,724 22,750 80% 99,295 129,000 NOI $ (29,705) $ Financing Beginning Loan Balance Interest Principal Perm Loan Finance Charges (Financed) Ending Loan Balance Short Fall Lease-Up Reserve Before Tax Cash Flow (BTCF) $ (670,767) $ 2,593,635 $ 2,593,635 $ $ 116,714 $ 116,714 $ $ $ $ $ $ 2,593,635 $ 2,593,635 $ $ (146,419) $ 146,419 $0 $ 31,669 $ $ $ $ $ $ yr 1 Tax Calculation NOI Interest Depreciation Taxable Income (or loss) Taxes After-Tax Cash Flow Before-Tax Operating Cash Flow $ Taxes After-Tax Operating Cash Flow $ 32 Lease Up Assumptions Y1 Occupancy 20% Y2 Occupancy 55% Y3 Occupancy 80% (Stabilized @ end of Y3) Y4 Occupancy 85% 3% 25 10 yr 4 yr 5 yr 6 yr 7 yr 8 yr 9 yr 10 yr 11 (3,264,402) (2,593,635) (670,767) Average Annual Lease Rate Potential Gross Rental Income Miscellaneous Income Average Vacancy Rate Effective Gross Income (less vacancy) Total Expenses Depreciation Calculation Beginning Balance Less: Annual Depreciation Ending Balance Cumulative Depreciation Taken Cumulative Straight Line Recapture Remaining Book Value Return on Investment IRR 21.43% Profit $ 2,794,913 Cash Multiple 4.17x Return on Cost 9.81% Stabilized NOI / Cost (Year 4) Year 10 Cash on Cash 17.48% Stabilized NOI / Equity (Year 4) Year 10 $ 670,767 $ 2,593,635 6.00% 25 $ (202,892) 8.90 487,936 23,433 45% 281,253 132,870 $ $ $ $ $ 148,383 $ yr 2 9.16 502,574 24,135 20% 421,367 136,856 $ $ $ $ $ 9.44 517,651 24,860 15% 461,134 140,962 $ $ $ $ $ 9.72 533,181 25,605 15% 474,968 145,191 $ $ $ 10.01 549,176 26,373 15% 489,217 149,546 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 11.27 618,102 29,684 15% 550,618 168,316 $ $ 382,302 $ $ $ 2,624,103 $ 2,578,658 $ 2,530,485 $ 2,479,423 $ 2,425,296 $ 2,367,922 $ 2,307,105 $ 2,242,638 $ 157,446 $ 154,719 $ 151,829 $ 148,765 $ 145,517 $ 142,074 $ 138,425 $ 134,555 $ 45,445 $ 48,172 $ 51,063 $ 54,126 $ 57,374 $ 60,817 $ 64,467 $ 68,337 30,621 2,578,658 $ 2,530,485 $ 2,479,423 $ 2,425,296 $ 2,367,922 $ 2,307,105 $ 2,242,638 $ 2,174,301 11.61 636,645 30,574 15% 567,137 173,365 81,620 $ 117,281 $ Reversion value based on yr11 NOI less sales costs: $ 2,319,325 Reversion Value 126,886 $ 136,779 $ 146,969 $ 157,465 $ 168,276 $ 2,498,736 yr 4 yr 5 yr 8 371,167 $ $ $ $ 329,777 $ yr 7 360,357 $ 10.94 600,099 28,819 15% 534,581 163,413 320,172 $ yr 6 349,861 $ 10.62 582,621 27,980 15% 519,010 158,654 284,511 $ yr 3 339,671 $ 10.31 565,651 27,165 15% 503,894 154,033 yr 9 yr 10 $ 2,820,090 $ 2,717,541 $ 2,614,993 $ 2,512,444 $ 2,409,895 $ 2,307,346 $ 2,204,798 $ 2,102,249 $ 1,999,700 $ 1,897,152 $ 102,549 $ 102,549 $ 102,549 $ 102,549 $ 102,549 $ 102,549 $ 102,549 $ 102,549 $ 102,549 $ 102,549 $ 2,717,541 $ 2,614,993 $ 2,512,444 $ 2,409,895 $ 2,307,346 $ 2,204,798 $ 2,102,249 $ 1,999,700 $ 1,897,152 $ 1,794,603 $ 102,549 $ 205,097 $ 307,646 $ 410,195 $ 512,744 $ 615,292 $ 717,841 $ 820,390 $ 922,939 $ 1,025,487 $ 102,549 $ 205,097 $ 307,646 $ 410,195 $ 512,744 $ 615,292 $ 717,841 $ 820,390 $ 922,939 $ 1,025,487 $ 3,161,853 $ 3,059,305 $ 2,956,756 $ 2,854,207 $ 2,751,658 $ 2,649,110 $ 2,546,561 $ 2,444,012 $ 2,341,464 $ 2,238,915 $ $ $ (29,705) $ (116,714) $ (102,549) $ 148,383 $ (116,714) $ (102,549) $ 284,511 $ (157,446) $ (102,549) $ 320,172 $ (154,719) $ (102,549) $ 329,777 $ (151,829) $ (102,549) $ 339,671 $ (148,765) $ (102,549) $ 349,861 $ (145,517) $ (102,549) $ 360,357 $ (142,074) $ (102,549) $ 371,167 $ (138,425) $ (102,549) $ 382,302 (134,555) (102,549) $ 28% $ (248,967) $ (69,711) $ (70,880) $ (19,846) $ 24,516 $ 6,865 $ 62,904 $ 17,613 $ 75,400 $ 21,112 $ 88,357 $ 24,740 $ 101,795 $ 28,503 $ 115,733 $ 32,405 $ 130,194 $ 36,454 $ 145,199 40,656 (670,767) $ $ (670,767) $ $ 69,711 $ 69,711 $ 31,669 $ 19,846 $ 51,515 $ 81,620 $ (6,865) $ 74,755 $ 117,281 $ (17,613) $ 99,668 $ 126,886 $ (21,112) $ 105,774 $ 136,779 $ (24,740) $ 112,039 $ 146,969 $ (28,503) $ 118,467 $ 157,465 $ (32,405) $ 125,060 $ 168,276 $ 2,498,736 (36,454) $ (40,656) 131,821 $ 2,458,080 The first self-storage development in Eagle Mountain. | 23,000 served. 393,771 4,632,605 4,493,627 (2,174,301) 2,319,325 11.71% 25.09% Development Business Plan [EAGLE MOUNTAIN STORAGE] Sustainability Consolidating a city's storage needs in a centralized facility allows developers to produce denser housing communities. This density provides a better tax base for the city (economic stability) while increasing walkability, reducing sprawl, decreasing Vehicle Miles Traveled and allowing for greater population growth. Further, we tucked the storage unit facility behind Amsource's retail, allowing the retail frontage to provide a more pleasing aesthetic texture to the city while positioning it for prime walkability. Conclusion Our site, feasibility, and economic studies conclude that this project is: 1. 2. 3. 4. Physically possible: flat, developable terrain with utility access and correct size. Legally permissible: supported by the seller and city planning department. Financially feasible: surpasses lender and investor requirements. Maximally productive: achieves highest and best use of site based on immediate market demand. When the top self-storage real estate agent in the state of Utah reviewed this proposal, he commented to us that he has six or seven investors that would look at this transaction. So if this is so good, why hasn't someone else already done it? Recession Tightened lending requirements Lack of population Lack of grocery anchor No available sites along previous primary arterial (Ranches Pkwy) However, the ripening has now occurred to make this an immediately viable opportunity for the willing and ready investor! Regional job growth Loosed lending requirements Rapid population growth Announcement of a grocery anchor Creation of a primary arterial (Pony Express to Redwood) that realistically opened up this site Willing seller (office/retail developer) who isn't interested to develop self-storage 33 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Someone recently proposed developing a colony on the Moon: If that's what you want, then unfortunately Eagle Mountain Storage isn't for you. It's just the opposite: simple, straightforward, feasible, makes sense on its face, and provides social and economic benefit to both developer and the community. Thank you for your vote of confidence in this opportunity and we look forward to partnering with you in this venture. 34 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Appendix Site Renderings 35 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan 36 [EAGLE MOUNTAIN STORAGE] The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Chart below provided by Integra Realty Resources 37 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Photos of competitors 38 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Site pic looking due north Site pic looking due west across Amsource site 39 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Site pic looking due south Amsource site looking west along Pony Express Parkway 40 The first self-storage development in Eagle Mountain. | 23,000 served. Development Business Plan [EAGLE MOUNTAIN STORAGE] Sources 1. 2010 Census (demographic data) 2. Wasatch Front Regional Council Transportation Analysis Zones (demographic data) 3. Amsource Development, Inc. (site info & plans) 4. UDOT (traffic plans) 5. Eagle Mountain City (master plan, traffic info) 6. Woodbury Corporation (renderings) 7. Menlove Construction (cost estimates) 8. Integra Realty Resources (storage facility sales comps, land comps, expense comps, pro forma review) 9. Extra Space Storage (market and operations information) 10. Marcus & Millichap (sales comps, land comps, lease rates, pro forma review) 11. Ranches Home Owners Association 12. STDB Online, CCIM.com (demographic data) 13. Wells Fargo (finance rates, terms, and costs) 14. ArcGIS 15. Google Maps; Google Earth (drive times, aerials) 16. 2012 Self Storage Almanac (demand analysis; industry guidelines) 17. VaDa Studio (logos) 18. Marshall & Swift (build costs) 41 The first self-storage development in Eagle Mountain. | 23,000 served.
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