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Prescott Portfolio – Prescott, Arizona

730 6th Street, prescott, AZ

Description

Read more about this closed sale here.

General Information

The investment opportunity is an income producing, two property, self storage portfolio which is 95% leased to a mix of household and commercial storage tenants.  Leveraged cash on cash returns, based on an $4,300,000 purchase price, are projected to increase from 15% to 19% following the first year of operations and substantially thereafter delivering a 41% total internal rate of return on a five year investment horizon.

The improvements consist of two separate properties:

The first property, 6th Street Mini Storage, is comprised of seven self storage buildings totaling 31,096 rentable square feet, with one office and one residence totaling approximately 750 square feet. The facility consists of 128 drive up self storage and 185 units accessible via stairs or ramps. Construction is steel on concrete foundations. Interior partitions are steel and plywood. All buildings have metal roofs with steel doors. Drive aisles are Asphalt.

The second property, Chino Valley Mini Storage, is comprised of 6 self storage buildings totaling 43,800 rentable square feet, with one office and one residence totaling approximately 1000 square feet. The facility consists of 288 units of drive up self storage. Construction is steel on concrete foundations. All interior partitions are steel. All buildings have metal roofs with steel doors. Drive aisles are gravel.

Market Information

The Prescott Area, located in the mountains of Yavapai county, is one of the oldest regions in the state. Its history dates back to Arizona’s days as a territory, when Prescott served as the capital. As the years have passed, and the capital moved to Phoenix, the city of Prescott has continued steadily growing. People have long been drawn to the beautiful climate and rustic western charm, that the old city of Prescott has never seemed to loose. As a result, a number of cities have sprouted up around its outskirts. Most notable of these burgeoning cities are Prescott Valley, Chino Valley, and Dewey-Humboldt. Today these closely connected cities are referred to as as the Quad-City Area. It is the third largest metropolitan area in Arizona and it provides a number of economic drivers that ensure the area will continue to grow.

Tourism is one of the driving forces of this Tertiary Arizona economy. In 2014 the Arizona office of tourism released a report that found that tourism spending totaled $678 million and created over 8,000 jobs. The majority of this was Due to the appeal of the Prescott Area, which is a nationally recognized tourist location. The region has been deemed one of a dozen distinctive destinations by the national trust for historic preservation. It’s been identified as the Number one true western town of the year. Not to mention that its Yavapai Courthouse Plaza is recognized as one of the first ten great public places, enjoying the company of iconic places such as Central Park and Santa Monica Beach.

Prescott’s position as an ideal vacation spot has been a major driving force for the self storage market as well. There are approximately 10 self storage options within a 3-mile radius from 6th street mini storage. Yet still, this facility is at a 100% occupancy. This is because the storage facilities in the area are not only serving the 100,000+ people who live in the Prescott Area, but also the thousands of people who travel up from phoenix. The beautifully cultured city, many amenities, great climate, and close proximity to Phoenix attract many regular visitors who often choose to keep their vacation items, such as RV’s, boats, and camping equipment, in Prescott to make their trip easier. This is one of the reason we see so much self storage in the city and one of the reasons it is doing so well.

Another driving force of the Prescott Area economy is education. Firstly, there is the Yavapai College. In 2001 the college had roughly 3000 students enrolled. Today there are over 11,000 students. That is nearly an 18% annual growth rate in enrollment. Secondly, Prescott is home to Embry-Riddle Aeronautical University, the worlds largest university specializing in aviation and aerospace. The university currently has over 2,200 students enrolled and is continuing to grow. These two educational institutions have been tremendously beneficial to the growth of the region. They create a huge draw to the area and then make a significant addition to the supply of jobs to support the growth they create.

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