Growth & Income Investing in Self Storage Development and Acquisition
A Vertically Integrated, Full Service Self Storage Development & Acquisition Firm...Welcome to Leitbox,
"We Do Storage Differently"
A Vertically Integrated, Full Service Self Storage Development & Acquisition Firm...Welcome to Leitbox,
"We Do Storage Differently"
We utilize a proprietary algorithm (Leitbox Sitefinder) to identify supply and demand imbalances for self storage investment throughout the United States. Once the void is identified we execute what we believe is the correct strategy for the market identified in order to maximize barriers to entry, position with proximity to targeted demographics, match the architectural symmetry with neighborhood uses, and lastly, to position with convenience and efficiency for a busy customer. We call this "Market Up" execution. By aligning our investment strategy to local storage needs and fundamentals, we "Market Up". "Market Up" can either be 1) a programmatic development wherein we repeat the development of our self storage prototype, 2) a mixed-use development with other uses outside storage integrated into the physical plant, (3) a value-add income-producing acquisition, or lastly, (4) conversion of a retail use. Our founder has been doing retail for 25 years and anchor tenant adaptive re-use for storage is often a fruitful backfill. Not all markets are alike, so, by using a multi-faceted approach to self storage development, we strive to ensure the most important investment criteria remains top of the decision tree : Location, location, location.
Fifth generation self-storage is defined by three (3) primary factors: design, location, and use. The Design is typically a vertical, 3+ story building with architectural articulation resembling an urban mixed-use project. Architects call it neo-industrial; our team calls it “urban millennial.” Location is probably the most weighted factor within the fifth-generation definition. The site selection process is almost 100% identical to retail anchor-tenant’s site selection criteria (think Wholefoods, Trader Joe's or Target). Use is probably the most exciting criteria. Storage is not always "simply storage" - we typically prefer to introduce what we call high-urban-street-front retail. We do not change the scope of the business plan, as this retail component with our projects is usually about 4% of the total SF. We believe this produces a great looking storefront, generates more jobs, and increases retail sales tax revenue. If we deem the area more appropriate for shared office space, we can execute on this use too. Every project does not warrant mixed use, but if we feel we need to integrate mixed use to secure entitlement approvals for a superior location, Fifth Generation Storage is a niche ability for Leitbox that we intend to launch across the Nation.
Unlike retail, wherein the physical plant is designed for maximum profit potential, specific to self storage, there is a deficit of repeating design prototypes. Wherein the interiors of almost all Wal-Marts, Dicks Sporting Goods, or Targets are the same, historically self storage has been uniquely designed for every parcel. Whereas retail attempts to duplicate every build with a repeating prototype, in self storage, for the most part, there is very little duplication of design, no repetition of process, and, therefore, no risk mitigation by implementing a recurring development process. We discovered this in 2015 and have never looked back. We believe our success in retail came through repetition of market analysis, repeating architectural design, and recurring sequences of the build. Our goal was to build the same widget in any location, in an effort to mitigate risk, shorten construction time frames, and improve the certainty of on-time and on-budget delivery. We call that Programmatic Development wherein development becomes like a manufacturing process. It's tantamount to bringing a Model T assembly line approach to self storage development.
In the past, self-storage has been simply that, storage. Certain amenities, such as conference rooms or office cubicles were often offered. But we are talking about introducing an entirely new use into the physical plant – that’s fifth generation to Leitbox. And this evolution is both better for the community and often required to get the best locations.
MIXED USE ENHANCES SUCCESS RATES IN SECURING ZONING APPROVAL
Think about it. From a political standpoint, why would a mayor or city council approve storage in their premier urban or retail-centric corridors. The facility does not create substantial jobs (usually 2), the facility does not generate significant sales tax revenue (box and locks), and the facility does not produce material impact fees (2 bathrooms!). So, why allow the zoning? Fifth generation storage integrates other uses to overcome this reluctance.
We typically prefer to introduce what we call high-urban-street-front retail. We do not change the scope of the business plan, as this retail component is usually about 4,000 SF in a 90,000 SF building (4% of the total SF). But what it does is produce a great looking storefront, more jobs, and sales tax revenue. If we deem the area more appropriate for shared office space, we execute on this use too.
REDUCTION OF RISK OPPORTUNITY
The secret “profit-kicker” to mixed-use integration is the break-even occupancy benefit. Mixed use will often decrease the risk of the overall investment. We have found, if we lease all 4,000 SF of retail, open and operating on day one, then our break-even occupancy declines on average from 50% occupancy to 35%. The retail lease income is approximately the same amount as 15% of the storage income, and the retail pays 100% of its contractual rent day one; there is no absorption period. So, we realize a lower break-even and, therefore, a greater profit opportunity.
USES WE INTEGRATE
We often get asked what retail uses do you introduce into the storage building? That is determined by the submarket and the other retailers represented in the market. We utilize the same leasing standards we have plemented for the last 25 years with lease guarantees, tenant co-investment in the space buildout, and overall creditworthiness. If the tenant can pass the underwriting test, we welcome users typically spanning various types such as Fedex/UPS stores, coffee & juice shops, professional services and, lastly, health and wellness. We also see a combination of retail showroom with a large storage unit to inventory supplies. Think artisan jewelers or custom home furnishings. The storage facility only needs about 6 parking spaces, so the retailers never have to fight for parking. It’s the perfect combination of a passive use (storage) with an active, customer-heavy use (retail).
Many of the better markets, such as areas of Charlotte, Nashville, and Miami have passed new ordinances requiring mixed use integration into self storage to meet newly-adopted master plan overlays. Mixed Use in a self storage format is growing.
Harnessing Big Data
Leitbox Sitefinder: A Proprietary Algorithm to Find the Best Sites
All images of self storage properties displayed on this website are owned by Leitbox Storage Partners, LLC. Past performance is not indicative of future results.
STREET FRONT APPEAL
Programmatic Development Underway
METRICS MATTER: LEITBOX SITEFINDER LEADS US TO MARKET VOIDS AND SUPPLY & DEMAND IMBALANCES
The Seven Points of Differentiation
Self Storage is different in how it performs during market cycles. Performance has been attractive during the good times and down times according to industry research (NAREIT, FITCH CMBS 2020).
When a tenant vacates, we simply broom sweep. Unlike other asset classes, Self Storage does not require material landlord costs to backfill tenant spaces.
The building rarely requires more than 8 subcontractors to fully develop the building. The simpler the build, the lower the risk for an on time and on budget delivery.
We have developed retail and mixed use for 20+ years. Adding a retail component to the bottom floor to overcome Zoning Challenges was a natural. Mixed use integration has turned plenty of NIMBYs to "Welcome To's"
Self Storage is often sold at Certificate of Occupancy (before any leasing occurs), at approximately 50% occupancy, and at stabilization. These varying exit options are unique to Self Storage.
We are market-up, not asset down. We find a market we believe has a demand anomaly and we execute on four investment options: programmatic development, mixed use development, acquisition of an existing asset, and conversions. And we often add to our holdings in a market to garner greater market share.
Our philosophy is driven by the risk we incur relative to the time frame required to realize the reward. We think Storage offers lower risk than many asset classes because it is not materially capital intensive, it is a simpler building to erect, it has proven itself to weather the storms of economic cycles with the Great Recession and Covid (disruption and dislocation are positives for operating performance), and it has various exit options. The reward can be realized in a shorter term duration than many other commercial real estate assets. Speed Wins in our minds.
Bill Leitner, Leitbox Storage Partners, LLC
We invest throughout the United States with team office locations in seven states.
Recent investment activity spans seven states with a mixture of value add acquisitions, programmatic developments, conversions, and mixed use deployments.
Investor Relations, Capital Markets
William (Bill) Leitner
Sales & Distribution:
Peak Capital Solutions
Securities offered through Orchard Securities LLC, member FINRA/SIPC. The information contained herein is for informational purposes only and is not an offer or solicitation to purchase any securities.
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The information provided on this website is for informational and discussion purposes only and is not and may not be relied on in any manner as, legal, business, financial, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in Leitbox Portfolio Partners Self Storage Fund II (LB Fund II or the “Fund”). A private placement of units of limited liability company interests (“Units”) in the Fund will only be made pursuant to a confidential private placement memorandum (as may be amended or supplemented from time to time, the “PPM”), the Fund’s subscription documents, and the Fund’s limited liability company agreement (collectively, the “Offering Documents”), which will be furnished to qualified investors on a confidential basis at their request and should be reviewed in connection with any consideration of an investment in the Fund.
An investment in the fund is illiquid, speculative, and involves a high degree of risk—including the loss of principal invested. No assurance can be given that the Fund’s investment objectives will be achieved. This website does not contain all of the information and risk factors that would be important to an investor in making an investment decision. Some of the more significant risks include the following: financing may exceed the anticipated loan-to-value ratio of 60% to 75% for all of the properties acquired. No existing commitment for any loans has been obtained and, therefore, the amount and terms of any future loans are uncertain and will be negotiated by the Manager. No assurance can be given that future cash flow will be sufficient to make the debt service payments on loans encumbering acquired properties and to cover all operating expenses of the properties; if property revenues are insufficient to pay debt service and operating costs, and additional working capital is unavailable, lenders may foreclose on one or more properties and investors could lose their investment. Leitbox is a newly formed business entity with no history of operations and limited assets, is subject to the risks involved with any speculative new venture and no assurance can be given that it will be profitable. There can be no assurance that cash distributions will in fact be made or, if made, whether those distributions will be made when or in the amount anticipated. An interest in the Fund is not freely transferable and an investor must bear the economic risk of his, her or its investment for an indefinite period of time. There will be no market for interests in the Fund and an investor cannot expect to be able to liquidate his, her or its investment in the case of an emergency. Any transfer of an interest in the Fund requires the prior written consent of the Manager. The Fund may raise significantly less than the target equity raise which would limit the number of properties it may acquire, thereby potentially affecting investors’ return on investment. Real estate risks include fluctuations in occupancy rates, rent schedules, operating expenses, interest rates, real estate tax rates; changes in governmental rules, regulations, and fiscal policies; the effects of inflation and enactment of unfavorable real estate, rent control, environmental, zoning or hazardous material laws; uninsured losses; risks related to the renovation and rehabilitation of properties, including construction risks; the general economic climate and changes in the overall real estate market and local real estate conditions; and the financial condition of tenants, buyers and sellers of properties, and the supply of or demand for competing properties.