Investor Presentaiton
NexPoint Storage Partners
Top 10
Exposures
1.
2.
NexPoint Storage
Partners
NexPoint Homes
NexPoint Real
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Estate Finance
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EDS Legacy
Partners
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IQHQ
QuaterNorth
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Energy
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NexPoint
Hospitality Trust
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CCS Medical
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Freddie Mac 21K-
F103
10. Easton Village
Ventures
INVESTMENT BACKGROUND
In November 2020, NexPoint participated in the take-private transaction
of Jernigan Capital (formerly NYSE: JCAP) in a $900 million transaction.
The company rebranded as NexPoint Storage Partners, Inc. ("NSP"). NSP
has successfully acquired most of the self-storage facilities that JCAP
financed and continues to seek investments in newly built, multi-story,
climate-controlled, Class-A self-storage facilities located in dense and
growing markets, which management refers to as GenV facilities. All
assets are managed by Extra Space Storage, who also invested $300
million in preferred equity during the JCAP buyout.
In December 2022, NexPoint Storage Partners acquired all 29 SAFStor
properties. Following the SAFStor acquisition, the NSP platform consists
of 69 owned GenV facilities plus interests in 3 additional GenV facilities.
The aggregate gross asset value is approximately $1.6 billion. In
addition, NSP has the right to acquire an additional 20 GenV facilities
with a gross asset value of approximately $700 million.
INVESTMENT UPDATE
The self-storage industry experienced strong rent growth in 2021 and
2022 but faced a deceleration in both rent and net operating income
growth during 2023, reaching a notable plateau in the third quarter. The
slowdown in growth from the Covid years was largely expected by the
industry. This slowdown was attributed to the resurgence of in-office
work and a sluggish housing market characterized by elevated mortgage
rates. Consequently, occupancy rates reverted from the high 90% range
observed in 2021 and 2022 to the low 90% range. This reversal, coupled
with expanding cap rates contributed to a decline in self-storage real
estate valuations.
Despite these challenges, the CEO of Extra Space Storage conveyed
optimism during the company's third-quarter call, emphasizing the long-
term prospects of self-storage as an asset class. Occupancy rates
remained robust, hovering at healthy levels, and although new
customer rates didn't match the strength seen in 2022, they surpassed
pre-pandemic levels.
INVESTMENT HIGHLIGHTS
Initial Investment
% of HFRO
Investment
Investment Type
Industry
2018
15.54%
$162.6M
Private Equity
Real Estate - Storage
Extra SpaceStorage
NOVEMBER 2023
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