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Investor Presentaiton

NexPoint Storage Partners Top 10 Exposures 1. 2. NexPoint Storage Partners NexPoint Homes NexPoint Real 3. Estate Finance 4. EDS Legacy Partners 5. IQHQ QuaterNorth 6. Energy 7. NexPoint Hospitality Trust 8. CCS Medical 9. 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 7
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