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The Big Question of Feasibility

The Big Question of Feasibility. Benjamin Burkhart BKB Properties 2008 Southeastern Self Storage Convention. Three Areas of Feasibility. Site Selection Market Dynamics Financial Performance Opportunities/Risks. Measuring Risks. Supply & Demand Lease-Up/Absorption Development Budget

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The Big Question of Feasibility

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  1. The Big Question of Feasibility Benjamin Burkhart BKB Properties 2008 Southeastern Self Storage Convention

  2. Three Areas of Feasibility • Site Selection • Market Dynamics • Financial Performance • Opportunities/Risks

  3. Measuring Risks • Supply & Demand • Lease-Up/Absorption • Development Budget • Financial Performance • Site Quality • Local Horizon • Objectivity!!!

  4. Critical Piece of the Puzzle • Investor Package • Loan Request • Design Team • Management Team • Promotion Initiatives • Exit Strategy

  5. Site Selection Rifle Approach • Get A BIG road map • Get a Zoning map • Identify traffic patterns • Plot Competitors • Find Holes • Go There!!!

  6. Site Research • Zoning • Environmental • Long-Term Growth Plans • Setbacks • Utilities

  7. Site Planning • Drive Aisles • Access • Visibility • Signage • Code Issues • Turning Radius • Site Features • Traffic

  8. Demographic Analysis • Primary Market • Population • Households • % of Renters • Household Income • Other population statistics

  9. Competitor Analysis • Competitor Strength • MANAGER!!!!!!!!!!! • Age & Appearance • Location • Management Style • Features & Benefits • Rates • Size & Occupancy

  10. Competitor Analysis

  11. Competition

  12. Competitor Data

  13. Construction Goals Let’s Be Realistic • Market Demands • Type of Construction • Hurdles • Approvals • Process & Red Tape • Phasing

  14. Financial Feasibility • Capital Requirements • Development Costs • Cash Flow Deficit • Interest Expense • Operating Expenses • Pro-forma Lease-Up • Sensitivity Analysis • Exit Strategy

  15. Development Budget • Design Costs • Soft Costs • Hard Construction • Start-Up • Construction Interest • Cash Flow Deficit • Contingency

  16. Condensed Budget

  17. Unit Mix Analysis

  18. Operating Expenses

  19. Cash Flow Analysis • Cost of Operations • Real Estate Taxes • Interest/Debt Repay • Seasonal Fluctuations • Lease Up • Monthly Rentals • Rate Structure • Discounts

  20. Cash Flow Analysis

  21. Sensitivity Analysis • What If Rents Decline? • What about Discounts? • Interest Expense • Local Economy • Slower Lease-Up • Cost of Operations

  22. Sensitivity Analysis

  23. Interpreting Data • How it all fits together • Red Flags • Site, Market, Financials • Identifying and Mitigating Risks • SWOT-Internal/External

  24. Execution • Team Building • Design • GC/Project Management • Bidding • Scheduling • Financing • Managing • Promoting • Marketing

  25. Exit Strategy • Best & Worst Case Scenarios • Refinancing--- Timing & Structure • When to Sell/If to Sell • External Influences • Things Forever Change

  26. Biggest Mistake/Biggest Opportunity • Who’s driving your ship? • You get what you pay for. • Train your managers.

  27. BKB Properties Benjamin K. Burkhart Ben@storagestudy.com 804-598-8742

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