MVP REIT Inc., a publicly registered, non-traded real estate investment trust, has formed a limited liability company with Vestin Realty Mortgage II Inc. (VRMII) for the purpose of acquiring Red Mountain Storage, a self-storage facility in Boulder City, Nev. The property, adjacent to Nevada Highway, was acquired for $5.2 million.
Originally built on about 1 acre in 1996, the asset was expanded in 2000 and 2006 and today encompasses 5 acres. The 23-building facility consists of two separate sites, comprising approximately 112,000 rentable square feet in 288 storage units and 11 outdoor RV spaces. The facility is currently 97 percent occupied, company officials said.
"We believe self-storage facilities are a particularly attractive asset class because they can provide income teamed with relatively low operating costs, and can provide a hedge against inflation since they rely on short-term leases," said Mike Shustek, chairman and CEO of MVP REIT. "This facility has exhibited a history of strong growth, enjoys an excellent location, and operates at essentially full capacity."
The deal was brokered by Cameron Glinton, an associate in the Las Vegas office of Marcus & Millichap Real Estate Investment Services. “Boulder City is a high-barrier market with controlled-growth restrictions on new commercial and residential construction, which help storage facilities maintain high occupancy,” Glinton said. “Red Mountain Storage has the additional advantage of being primarily a boat-storage facility with proximity to the Lake Mead National Recreation Area.”
MVP REIT and VRMII will hold a 51 percent and 49 percent interest, respectively, in the limited liability company, which will be jointly managed by MVP Realty Advisors LLC and Vestin Mortgage LLC. Together, the companies financed $2.7 million of the purchase with American Family Insurance Co. through a seven-year term loan amortized over 25 years at a 4.35 percent APR.
MVP REIT is currently conducting a public offering of up to 55,555,556 shares of its common stock at $9 per share, and up to an additional 5,555,556 shares of its common stock for issuance under its distribution reinvestment plan at $8.73 per share.
The company intends to use the proceeds from the offering to invest in a diversified portfolio of income-producing commercial real estate properties and loans secured by income-producing commercial real estate as well as to pay expenses and fees associated with the offering. The company said last December it would primarily focus its activities on assets located in the western and southwestern United States.
Marcus & Millichap has more than 1,000 investment professionals in offices nationwide and closed more than 6,100 transactions last year. The company’s National Self Storage Group has brokered more than $2 billion in storage-property closings in the last five years.