The message you’re trying to drive home is that the asset will achieve its objectives over time. If did a five-year projection of revenue, expenses and NOI, you’ll want five columns here. This section of your self-storage pro forma should summarize each year in a separate column, going out as many years as you covered in the section above. (Obviously, at that stage, each month will look almost identical.)Ī quick word on projecting expenses: Though you may not ultimately hire a third-party management company or even onsite staff for your self-storage facility, you should still enter an amount for these items in your pro forma, as your lender or investor will want to plan for that cost in the event they must take over the property. In fact, you can then simply take an annual projection and divide it by 12 to fill in each line item. At the point of stabilization, it isn’t as important to ensure each monthly projection is accurate. Until the self-storage asset is stabilized, you must show when the property-tax bill will be paid, any variation in seasonal expenses like utilities and maintenance, and how fast lease-up will occur. This should reduce the number of questions your lender or investor will ask, especially if an item is outside what they believe to be an acceptable range. However, if you anticipate that stabilization won’t occur until year three, do a five-year projection.įor each line item, include a brief explanation of how you arrived at the number, whether it came from historical financial information, a vendor quote or your own experience managing other self-storage facilities. So, if you’re obtaining a three-year balloon on a 25-year amortization, I’d suggest showing three years of revenue and expenses. You also want to show at least two years of performance at stabilization. In general, the number of years you include in this section should be equal to at least the number of years of the balloon term of the self-storage loan. For debt service, include the assumptions for the type of debt you expect to secure, then you can adjust accordingly based on feedback from lenders and investors. Generally, your pro forma should predict facility income, expenses, net operating income (NOI) and debt service. This helps them gauge the degree and length of investment risk.

Lenders like to see a monthly summary of financial performance, especially until the site reaches stabilization. The most important and substantial portion of your self-storage pro forma will focus on annual revenue and expense projections, broken out by month. Next, report monthly revenue and gross annual revenue, and show what percentage of income and total square footage each unit type represents. This section should summarize the information from the rent roll, showing only one line item for each self-storage unit size. At a minimum, this portion of your pro forma should include the number of units, unit dimensions and size, current rent, and projected rates. This also helps appraisers determine pricing if you’re seeking the purchase at an “as-stabilized” value. If you’re looking to acquire an existing self-storage facility, a recommended first step in the due-diligence process is to examine the property’s current leases and project how much value you can create just by raising rental rates. To produce as accurate and useful a forecast as possible, focus on the following seven areas. In addition to convincing lenders and investors that your proposal is sound, this document will serve as a guideline for conducting due diligence and aligning all partners on the project.

If you want to determine the viability of a self-storage acquisition or development project and secure funding for it, it’s imperative to create a realistic pro forma that projects revenue and costs and provides other key information.

Pro forma noi real estate