Acquisition and Expansion Financing for a 640-Unit Self-Storage Facility on Florida's Space Coast

THE PROPERTY

A 2021-Built Self-Storage Facility Acquired with 232 Existing Units and Expanded to 640 Units Across Four Buildings in Palm Shores, Florida

The property at 5586 N US Highway 1 in Palm Shores, Florida is a newly constructed self-storage facility built in 2021, situated on a prominent site along one of Brevard County's primary north-south corridors. At the time of acquisition in April 2022, the facility was operating as a single-phase property with 232 storage units, 92 of which were climate-controlled, offering temperature-regulated storage to serve the needs of residential and small business customers in the surrounding community. The property was acquired at 74.6 percent physical occupancy, reflecting a lease-up trajectory that had been building since the facility's opening the prior year, with February 2022 alone seeing 16 net move-ins.

The sponsor's business plan combined two distinct objectives: completing the lease-up of the existing 232 units to stabilization, and executing a Phase II construction program to add three additional buildings totaling 408 new units and approximately 46,800 square feet of additional rentable space. Upon completion of Phase II, the facility would total 640 units and approximately 99,300 rentable square feet, transforming it from a single-phase property into one of the larger self-storage facilities serving the Space Coast market.

THE RRA SOLUTION

$10,770,000 Non-Recourse Bridge Loan Covering Acquisition, a $3,501,000 Construction Holdback for Phase II, and an Earnout Tied to Stabilized Performance

RRA provided a $10,770,000 non-recourse, interest-only first-position bridge loan closing April 5, 2022, structured to fund all components of the sponsor's two-part business plan. The initial disbursement of $7,044,000 covered the acquisition of the existing facility at a purchase price of $10,631,250, estimated closing costs, and a $75,000 interest reserve to supplement cash flow during the early phase of lease-up. The remaining $3,501,000 was held as a construction cost holdback, available to fund the Phase II build-out as construction milestones were met. An additional $225,000 earnout was structured to be released to the sponsor upon Phase II construction completion and achievement of an 8 percent debt yield on the total loan commitment.

The loan was repaid in full in April 2023, approximately 13 months after origination, well ahead of the 24-month initial term.

THE EXPANSION

Three New Buildings, 408 Additional Units, and 46,800 SF of New Rentable Space: Phase II More Than Doubled the Facility's Original Capacity

The Phase II construction program was the defining element of the business plan, transforming the property from a single-building, 232-unit facility into a four-building self-storage campus with a total of 640 units. The expansion required the design, permitting, and construction of three new storage buildings on the existing site, adding 46,800 square feet of additional rentable space at a construction cost of $3,501,000, or approximately $8,581 per new unit. The expansion budget was funded entirely through the RRA holdback facility, with no additional equity contribution required from the sponsor for the construction phase.

Phase II construction was projected to be completed by the third quarter of 2022, with the expanded facility reaching full stabilization by the fourth quarter of 2024. The $225,000 earnout provision built into the loan structure provided an additional incentive aligned with performance: the funds would be released to the sponsor only after construction was complete and the total facility had demonstrated an 8 percent debt yield on the full $10,770,000 commitment. This structure ensured that RRA's remaining capital was deployed into a performing asset rather than advanced in advance of demonstrated demand.

THE LOCATION

US Highway 1 Frontage in Palm Shores, Brevard County — on Florida's Space Coast, Between Cocoa and Melbourne with Strong Household Income and Consistent Population Growth

The property is located on North US Highway 1 in Palm Shores, a small community in Brevard County situated between the cities of Cocoa to the north and Melbourne to the south. Palm Shores sits along the western bank of the Indian River Lagoon, at the center of Florida's Space Coast, a region anchored by NASA's Kennedy Space Center and Cape Canaveral Space Force Station and supported by a growing concentration of aerospace, defense, and technology employers. The property's address on US Highway 1 provides high-visibility frontage along the primary commercial arterial connecting the communities of coastal Brevard County, with convenient access for residents throughout the surrounding trade area.

The immediate trade area reflects the demographic profile of a relatively established, income-stable coastal community. The median household income within three miles of the property is approximately $80,989, above the national median. Annual population growth within the three-mile trade area is estimated at 1.1 percent over the following five years, consistent with Florida's broader pattern of sustained in-migration driven by climate, tax environment, and employment opportunity. The Space Coast in particular has benefited from the growth of the commercial space industry and the expansion of defense and aerospace employers in Brevard County, supporting continued household formation and housing demand in the communities surrounding the property.

THE MARKET

Brevard County Self-Storage: A Space Coast Market with Above-Average Household Income, Consistent Population Growth, and Demand Supported by a Large Owner-Occupant and Seasonal Resident Population

Palm Shores and the surrounding Brevard County communities represent a self-storage market with characteristics that distinguish it from Florida's more densely populated coastal metros. The three-mile population at the time of underwriting was approximately 32,455, reflecting a trade area typical of the Space Coast's lower-density residential footprint relative to markets like Orlando or Tampa. However, lower density does not translate to lower per-capita demand: owner-occupied households and seasonal residents generate self-storage demand patterns that differ meaningfully from urban renter-dominated markets. Homeowners in the process of downsizing, seasonal residents storing recreational and household goods, and small businesses supporting the aerospace and marine industries in the region all represent consistent demand segments.

The lease-up trajectory of the existing facility at the time of acquisition was the clearest evidence of market demand. The property opened in 2021 and had reached 74.6 percent occupancy within approximately a year of operations, with positive net absorption continuing through early 2022. The combination of above-average household income, consistent population inflow, and a lease-up trajectory that was already generating momentum provided a foundation for the Phase II expansion thesis: that a market absorbing the Phase I units at that rate had the depth to support a materially larger facility.

THE SPONSOR

A Chicago-Area Real Estate Investment Firm with $100 Million in Assets Under Management, Over 125 Investment Partners, and 95 Years of Combined Executive Experience

The sponsor is a real estate investment firm headquartered in the Chicago area, founded in 2010 with a vertically integrated platform spanning real estate brokerage, insurance, investment management, and debt. The firm manages approximately $100 million in assets under management across its investment portfolio and has worked with over 125 investment partners since its founding, with no realized losses reported across its history of investments. The executive team's combined experience of approximately 95 years spans a range of real estate disciplines, providing the operational depth to underwrite, execute, and manage a business plan that combined an active lease-up program with a concurrent construction effort.

The vertical integration of the firm's platform, which includes brokerage, insurance, and debt capabilities in addition to direct investment management, was relevant to the underwriting of a project requiring simultaneous coordination of construction management, lease-up operations, and loan management. The sponsor's track record of working across multiple real estate disciplines without realized losses supported confidence in their ability to execute a business plan that required performance on two fronts: stabilizing the existing Phase I units while delivering a Phase II construction program on schedule and within budget.

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