Self-storage facilities and development sites.

Self-storage is underwritten on trailing performance, not on the rate card. We look at physical and economic occupancy separately, because a facility can be 92% full and still collect far less than its posted rates once move-in specials, delinquencies and long-tenured tenants paying old rates are counted. Revenue per occupied square foot, the trend in street rates over the past year, and how management has handled existing-customer rate increases tell more about value than the occupancy figure alone.

The second question is supply. Storage trade areas are small, typically three to five miles, and new deliveries in that radius show up in street rates quickly. We check permitted and under-construction competitors, the mix of climate-controlled and drive-up space against what the submarket wants, and whether the facility is institutional-grade or best suited to a regional operator. For development sites and conversions, the analysis is a feasibility study: demand per capita in the trade area, achievable rates, construction or conversion cost and the lease-up period a lender will underwrite.