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250911 LaGrange Meeting notes

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need to update the $1 move in banner on website to First Month Free

@Ashley Aaltonen

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Thu, Sep 11

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Performance Highlights

Occupancy:

71.7% units (355/495) and 65.5% sq. ft. as of Sept 10.

Economic occupancy ~47.5% (actual rent ~$39k vs. $82k potential).

Net +125 units YTD (278 move-ins vs. 153 move-outs).

Leads & Conversions:

408 leads YTD, 67% conversion rate.

Main sources: “Other” (164), Drive-by (99), Storagely (78), Referrals (27).

Revenue:

~$31.7k MTD Sept; ~$40k in both July & Aug.

$298k YTD revenue (vs. $94k same period 2024).

Revenue mix: 82% rent, 10% insurance, 6% fees, 1% merchandise.

Insurance penetration: ~81% tenants.

Unit Size Performance:

Strong demand: 5x5, 5x10, 10x7/8 (90%+ occupied).

Challenges: 10x20 (~44% occupied), 10x13 (~42%).

Street rates for large units high (10x20 at $198 vs. in-place avg. $157).

Rate Increases (Last 3 Months):

~20–25% of tenants received increases (mostly 10x20s, 10x10s, 10x15s).

Typical bumps $5–15; some larger ($30–50+) for under-market tenants.

Minimal move-out impact; most tenants accepted.

October Scheduled Increases 48 tenants for $1054

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Wins

Steady lease-up momentum: every month net positive rentals.

Revenue nearly quadrupled vs. last year.

High lead conversion efficiency.

Strong ancillary income (insurance + fees).

Rate increase program gaining traction without hurting retention.

Challenges & Focus Areas

Large economic occupancy gap (47% vs. 72% physical).

Underperforming large units dragging down sq. ft. occupancy.

Street rate strategy may need recalibration on 10x20s/10x13s.

Seasonal slowdown in fall/winter – need creative marketing.

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Outlook

Q3 revenue projected $120k+ (best yet).

Year-end goals: ~80% physical occupancy, 55–60% economic occupancy.

2025 revenue projection: $400k+, ~3x 2024 total.

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LaGrange Climate Storage – Performance Update (September 2025)

Lead Flow and Conversion Rates

The facility has generated 10 new leads MTD (month-to-date) with a conversion rate of 60% (i.e. 6 move-ins from those leads). Year-to-date, marketing efforts have driven 408 total leads with an overall conversion of 67.4% into rentals. This high conversion rate indicates strong demand capture and effective sales closing. The top lead sources include a substantial “Other” category (~164 leads), Drive-By traffic (99 leads), and an online listing service (Storagely) contributing 78 leads. Referrals (27 leads) and call center inquiries (28 leads) play smaller but notable roles, while aggregator Sparefoot provided 12 leads. The dominance of drive-by and “other” local sources suggests our on-site signage and local marketing are particularly effective, though it may be worth investigating what “Other” encompasses to further exploit those channels. Overall, lead flow is robust and has not been a limiting factor in occupancy growth so far.

Move-Ins, Move-Outs, and Net Rentals

Rental activity remains positive. Over the past three months (June–Aug 2025) the facility recorded 32, 43, and 21 move-ins respectively, against 26, 25, and 17 move-outs, yielding net gains of +6 (Jun), +18 (Jul), and **+4 (Aug)】. This shows a peak leasing surge in July followed by a slower August – typical seasonality after the summer rush. Year-to-date, 278 move-ins and 153 move-outs have resulted in a net +125 unit increase in occupancy. This net gain is substantial, indicating successful lease-up momentum throughout the year. Notably, July’s high move-in count (50) far outpaced move-outs (11), driving the biggest monthly occupancy jump. Even in months with more balanced activity (e.g. June and August), move-ins exceeded move-outs, reflecting sustained growth. With no months of net losses so far in 2025, the facility has steadily filled units. The positive net rentals each month underscore effective marketing and retention efforts (move-outs have remained relatively low and stable, ranging 11–26 per month). Current projections indicate this trend should continue into the fall, albeit at a moderated pace consistent with seasonal demand patterns.

Occupancy Status (Units, Square Footage, Economic)

Occupancy has improved markedly this year. The facility is currently 71.7% occupied by unit count (355 of 495 units) and 65.5% occupied by square footage. The discrepancy between unit and square footage occupancy suggests that smaller units are closer to full capacity than larger units. Importantly, economic occupancy (revenue as a percentage of gross potential) is about 47.5% as of early September. In dollar terms, of approximately $81.9k in monthly gross potential rent (if all units rented at standard rates), about $38.9k is actually being realized. This indicates a significant gap due to concession discounts and below-market in-place rents. The economic occupancy, while still low relative to physical occupancy, has improved over the course of the year – it was roughly in the low-40s% range at the start of 2025 and reached ~50% by the end of August as more units were rented and some rate increases took effect. The gap of ~20+ percentage points between physical and economic occupancy remains a key area of opportunity, representing $40k+ in unrealized monthly rent that can be captured through rate adjustments and occupancy gains. Overall, the facility has made strong gains in filling units, but closing the economic occupancy gap (i.e. improving the effective rental rate per occupied unit) will be a primary focus going forward.

Revenue Performance (MTD, Trailing 3 Months, YTD)

Revenue continues to trend upward in tandem with occupancy. Month-to-date (through Sep 10) total revenue collected is $31,684, on track to meet or exceed the prior full month of August (which was ~$40,255). In the last three full months, total operating revenues were approximately $35.1k in June, $40.3k in July, and $40.3k in August – a new high watermark set in July and essentially maintained in August. This reflects both the jump in occupancy and incremental rent increases on existing tenants during the summer. Year-to-date, the facility has collected about $298.45k in total revenue, dramatically up from roughly $94k in the same period last year (note: 2024 was the initial lease-up phase). The current revenue mix demonstrates heavy reliance on rental income: ~82% Rent ($245.4k), supplemented by ~6% in various fees ($17.8k), ~10% from insurance sales ($30.8k), and ~1–2% from merchandise ($4.47k). Rent growth has naturally been the largest contributor to the revenue jump, but it’s worth highlighting that tenant insurance penetration is very strong (~80% of tenants enrolled), yielding over $30k YTD in insurance revenue – a notable ancillary income stream. Fee income (mostly late fees, admin fees, etc.) at ~$18k YTD is also significant. Gross potential revenue vs. actual: At full occupancy (495 units at standard rates), the monthly gross potential is about $81.9k, whereas actual rent collected is roughly $38–40k, as noted above, so there is substantial headroom as the facility continues to lease up and push rents. Overall, the facility’s annual revenue run-rate now exceeds $400k, and it is on track to roughly triple last year’s total revenue – a clear sign of a successful lease-up year.

Gross Potential vs. Actual Rent (Economic Occupancy Trends)

The difference between gross potential rent and actual collected rent remains wide, though trends are encouraging. As of this report, gross potential rent is ~$81,923 per month for the entire facility, versus actual occupied rent of ~$38,905 – meaning current tenants’ rents represent only 47.5% of the theoretical maximum. This 47.5% economic occupancy is an improvement from earlier in the year (it was ~43% in January when physical occupancy was around 50%). In fact, by the end of August the economic occupancy had reached 50.7%, before dipping slightly in early September due to new move-ins on promotional rates. The upward trend in this metric over time indicates that revenue is growing faster than mere unit occupancy – an outcome of pushing rents higher on existing customers and moving in new customers at higher rates than earlier in the lease-up. Still, the current gap between 71% physical occupancy and 47% economic occupancy means there is roughly $43k of unrealized rent potential each month. This gap arises from two factors: vacant units (about 28% of units still vacant) and below-standard rents on occupied units (many tenants locked in at discounts). Notably, management has granted about $21.6k in rent discounts year-to-date as move-in incentives or other concessions – necessary to drive occupancy early on, but now a diminishing factor as those discounts expire or convert. Going forward, as occupancy continues to climb into the 80–90% range, we expect economic occupancy to also improve significantly (management’s goal is to surpass 60% economic occupancy by year-end). Closing this gap will come from raising in-place rents closer to standard rates and filling remaining vacancies – a balancing act between revenue optimization and maintaining high occupancy.

Unit Size Performance and Rate Competitiveness

Not all unit types are performing equally – smaller units are near full occupancy, while several larger unit sizes are underperforming. Most **small climate-controlled units (5x5, 5x7, 5x10, 10x7, 10x8, etc.) are over 90% occupied. In particular, popular sizes like 5x5 and 5x10 are effectively full (95%+ occupancy). Medium units (10x10, 10x15) are doing fairly well too – e.g. 10x10 units are about 81% occupied and 10x15 units about 72–74% occupied. By contrast, the large climate-controlled units are lagging badly: the facility’s 10x20 units (200 sq ft, 114 total) are only ~44% occupied (half empty) and the 10x13 units (130 sq ft, 38 total) are about 42% occupied. These two categories represent the biggest occupancy opportunity – together they account for a large share of the vacant square footage. The low occupancy suggests either demand for these large sizes is weaker in this market, or current pricing is not competitive. A pricing analysis reveals a potential factor: the posted street rates for these units are relatively high – $198 for a 10x20 and $175 for a 10x13 – while the average in-place rents for existing tenants in those units are far lower (about $157 for 10x20s and $110 for 10x13s on average). In other words, new customers may be balking at the high street rates, yet our existing customers in those units are paying rates deeply discounted from market (some legacy tenants in 10x13s are paying under $90). This indicates a pricing imbalance: to improve occupancy on these sizes, we might need to introduce targeted promotions or rate reductions to attract new move-ins, then gradually increase rates over time. It’s possible that competitors are offering large units at lower prices, or simply that demand (household or business) for units over 150 sq ft is limited in the LaGrange area. We will conduct a market comp survey to verify if our 10x20 rate needs adjustment. In summary, smaller units are a clear strength (high occupancy and possibly room for rate increases), whereas the largest units are a challenge. Our strategy is twofold: (1) Aggressively market the vacant large units (e.g. special discounts, advertising to businesses or contractors who need bigger spaces) to raise their occupancy, and (2) Continue optimizing rates on the small units, which are in high demand (we can likely push those rents up as they are nearly full). Balancing occupancy versus rate for each size category will help maximize overall revenue.

Customer Rate Increases – Trailing 3 Months

In the last three months, management has executed a systematic program of rent increases on existing customers, aiming to boost revenue and move tenants closer to market rates. Approximately 78 tenants (about 20–25% of occupied units) received rate increase notices between June and August. These increases targeted tenants who had been rented for sufficient length and were paying well below current street rates (often those on introductory or historic rates). Unit sizes most frequently increased included the 10x20 and 10x10 categories (which had many long-term tenants at low rates), as well as a number of 10x15s and smaller units that were near capacity. The magnitude of increases varied: many were modest bumps of $5–15 (for tenants already closer to market), while a few were significant jumps of $30–$50+ for tenants who were far below the standard rate. For example, a long-term 10x15 tenant paying $79 had their rent raised to $104 in July (still $83 below the $187 street rate for that size), and some 10x20 tenants paying around $110–$125 were raised up closer to $150–$180 range. Even after these increases, most of those tenants are still below street rate – indicating there is room for further upward adjustments over time. Tenant response and churn: Importantly, we have not seen a wave of move-outs directly attributable to these rate increases. Over June–August, move-out totals remained in a normal band (17–26 per month), and in fact occupancy continued to climb, implying that the vast majority of customers accepted their rate increases. A few tenants did vacate rather than pay higher rates, but those units were generally re-leased quickly given overall demand. We are monitoring any impact on bad debt or payment behavior, but so far collections remain strong (no unusual uptick in delinquency post-increase). Additionally, some future increases are already scheduled – for instance, many tenants who moved in during the spring on promotional rates will receive their first increase after 6 months of tenancy this fall. One example is a 10x15 tenant scheduled to go from $155 to $179 in October (a ~15% bump, still slightly below street rate). By year-end, we expect to have most long-term tenants closer to the current standard rates, albeit with careful, incremental adjustments to avoid rate shock. Summary of rate management: This proactive approach to customer rate management is gradually lifting the facility’s average rent per occupied unit, contributing to revenue growth without sacrificing occupancy. We will continue to implement periodic rent reviews – typically targeting 5–7% increases for well-performing sizes and perhaps larger adjustments (10%+) for units far below market – as the market allows. So far, the strategy is working: it has added income and begun to narrow the gap between in-place and street rates, all while our tenant retention remains high.

Summary – Key Strengths and Recent Wins

Occupancy Growth: The facility achieved 71–72% physical occupancy (units) within ~18 months of opening, with a net gain of +125 units YTD in 2025. This rapid lease-up is a clear success, demonstrating strong demand and effective marketing/operations on-site.

Robust Demand & Conversion: Lead generation is high (408 YTD leads) and conversion rates (~67% YTD) are excellent. The mix of drive-by traffic and local referrals indicates our location and word-of-mouth are driving business, reducing reliance on paid third-party sources. We’re effectively turning inquiries into move-ins, as evidenced by the 278 move-ins so far this year.

Revenue Acceleration: Monthly revenues hit a record ~$40k level in July/August, and YTD revenue ($298k) is already triple last year’s for the same period. We are on pace to far exceed the initial pro-forma. Ancillary income streams are also contributing strongly – for example, insurance penetration is ~81% of tenants, yielding over $30k YTD in additional revenue. This enhances our NOI and reflects upselling efforts at move-in.

Active Rate Management: We’ve successfully implemented rental rate increases on existing tenants without spiking move-outs. This indicates pricing power and resident satisfaction (or at least acceptance of the value proposition). Each rate increase boosts revenue and raises economic occupancy. The process of normalizing discounted rents is well underway, positioning the facility for even stronger financial performance as we stabilize.

Operational Excellence: The on-site management team has kept delinquencies low (accounts over 30 days past due remain minimal), and unit turnarounds are quick. Additionally, customer experience seems positive – anecdotally, our average Google review rating is high (the August report showed ~4.8/5 average Google rating, reflecting strong customer satisfaction). High insurance enrollment and merchandise sales also point to good management practices.

Key Challenges and Opportunities

Economic Occupancy Gap: At ~47–50%, economic occupancy is well below the ~72% physical occupancy. Closing this gap is the main financial opportunity. It will be achieved by continuing to raise in-place rents and by filling the remaining 28% vacancy – particularly our large units. Every incremental increase in effective rent per square foot will directly improve the bottom line.

Underperformance of Large Units: The 10x20 and 10x13 climate units are a weak spot, with ~55–60% of those unit counts still vacant. These sizes have a disproportionate impact on square footage occupancy and revenue potential. We likely need to adjust pricing or offer aggressive promotions to boost occupancy here. For example, a temporary “large unit special” could entice new customers. Once occupied, we can attempt to raise rates later, but filling them will generate immediate cash flow (even at lower rates) and improve our economies of scale.

Pricing Strategy: Striking the right balance on rates is an ongoing challenge. Our data shows some tenants are paying far below street rate (due to initial incentives or legacy rates). We have to continue nudging these up without provoking move-outs. Conversely, our street rates on certain sizes (e.g. 10x20 at $198) might be above what the local market will bear given the vacancy level. Regular market surveys and possibly dynamic pricing could help optimize this. The opportunity is to maximize revenue per available square foot (RevPAF) by intelligently managing price points – raising where we can (high-demand units) and lowering where we must (over-supplied units).

Seasonal Slowdown: As we move into the late fall and winter, demand typically tapers. We must be prepared for seasonal leasing challenges – meaning Q4 move-ins may slow down. This is a challenge for hitting occupancy targets, but it’s also an opportunity to focus on internal growth (rate increases, operational efficiencies) during the slower season. We’ll also ramp up marketing in key channels (especially online and locally) to capture whatever demand is in the market during winter.

Competition & New Supply: We should stay vigilant about competitors’ actions. Any new facilities or expansions in the LaGrange area could impact our leasing velocity or require us to adjust rates. Right now, we appear to be in a strong position (since we’ve leased up quickly), but continued monitoring of market rents and competitor occupancy is important. The opportunity here is to differentiate – through superior customer service, clean and secure premises, and perhaps unique selling points like climate control (which we have) or superior access features – to justify our premium rates and maintain high occupancy even if competition increases.

Projections for Quarter-End and Remainder of Year

Given the current trajectory, we have a positive outlook for the end of Q3 2025 and beyond. By September 30, we anticipate reaching roughly 360 occupied units, which would be about 73% occupancy by unit count (up from 71.7% now). This assumes net rentals of ~5–7 more in the second half of September (a conservative projection given 6 net already MTD). Achieving this would put us on solid footing entering Q4. Revenue-wise, Q3 is projected around $120k–$125k in total revenue (versus $101k in Q2), making it our strongest quarter yet. For the full year 2025, we forecast $400k+ in total revenue (we have ~$298k through early September and expect ~$100k+ in Q4). This would be a remarkable jump from ~$130k in 2024 (partial year) and would exceed initial budget estimates.

Looking further ahead, if current trends hold, we could finish 2025 at 80–85% physical occupancy. However, the more critical metric to watch will be economic occupancy. With planned rate increases and reduced discounting, we are targeting economic occupancy to rise into the mid-50% range by end of Q4 (from ~47% now). Each percentage point gain in economic occupancy at our rent roll equates to roughly $800–$900 in monthly revenue, so even modest improvements are meaningful.

In summary, LaGrange Climate Storage is demonstrating strong leasing momentum and revenue growth. The focus for the remainder of the year will be on optimizing revenue: filling remaining vacancies (especially large units) and converting occupancy gains into financial performance via rate management. Management is confident that by year-end, the facility will be near stabilization, setting the stage for an excellent start to 2026 with healthy occupancy and much improved economic yield per unit.

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Slide Deck – LaGrange Climate Storage Performance Update

Lead Flow & Conversion Rates (YTD)

Lead sources breakdown for 2025 YTD (number of leads by source). “Other” and drive-by traffic account for the largest share of new leads. The facility has benefited from strong lead volume and efficient conversion. 408 leads have been generated year-to-date, primarily from local sources (drive-by and “Other” referrals) and online listings. The bar chart illustrates that “Other” leads (which include local marketing and unspecified sources) make up about 40% of total leads, followed by drive-by inquiries (~24%). Storagely, our online marketing partner, contributed roughly 19% of leads. Smaller segments like call center referrals, tenant referrals, and Sparefoot round out the remainder. With a YTD conversion rate of 67%, the majority of these leads translate into move-ins. This indicates that our marketing efforts are targeting qualified prospects and that on-site staff are effective in closing rentals. Maintaining this lead flow (especially the high-volume local channels) and conversion efficiency will be key as we push toward higher occupancy. Overall, demand generation is a bright spot, providing a solid foundation for occupancy growth.

Rental Activity Trends (Move-Ins vs. Move-Outs)

Monthly move-ins and move-outs for 2025. The facility has sustained positive net rentals each month, with move-ins (yellow line) consistently exceeding move-outs (orange line). Rental activity has been robust, yielding consistent net occupancy gains. The chart shows move-ins and move-outs by month: notably, move-ins (gold line) outpaced move-outs (orange line) every month. We saw a surge in March (50 move-ins) that significantly boosted occupancy, followed by a seasonal peak again in July (43 move-ins). Move-outs have remained relatively steady in the mid-teens to low-20s most months, with a slight uptick in early summer but still well below move-in counts. This dynamic produced net positive rentals each month (e.g. +39 in March, +18 in July) and a total net gain of 125 units through August. The graph’s upward spikes (move-ins) versus the flatter move-out trend illustrate our success in attracting new tenants while keeping departures under control. In summary, every month of 2025 has seen occupancy growth, a clear indicator of strong market demand capture and effective retention. As we enter the fall, we anticipate a moderation in move-ins (already evident with 21 in August and ~10 in early September), but move-outs are also low (only 17 in August), so we expect to continue net gains. The positive gap between the lines on the chart is the story: more customers coming in than leaving, driving our occupancy upward quarter after quarter.

Occupancy & Economic Occupancy Progress

Physical occupancy (units) vs. economic occupancy (revenue-based) by month for 2025. Physical occupancy (yellow) has risen steadily to ~71%, while economic occupancy (orange) lags at ~47–51%, reflecting below-market rents and concessions. This slide highlights the gap between physical and economic occupancy. The yellow line shows physical occupancy %, climbing from ~50% in January to 71% in August as we filled units. The orange line is economic occupancy % (actual rent collected as a percentage of full potential rent). Economic occupancy started around 43% and has improved to about 50% by August, but remains well below the physical occupancy level. The divergence between the lines underscores that many occupied units are not yet yielding full revenue potential – due to discounted introductory rates, legacy low rents, or concessions. Notably, in April there’s a dip in economic occupancy (orange line drops to ~42%) even as physical occupancy rose, likely due to new move-ins at promotional $0 or half-month rates that temporarily diluted revenue. By August, economic occupancy rebounded to ~51%, thanks to rent increases and expiring discounts. The current gap (~20 percentage points) means we are collecting roughly half of the theoretical max rent – a major improvement area. The good news: as we burn off concessions and implement rate increases, the orange line is trending upward. Our goal is to narrow this gap substantially over the next few quarters, converting occupancy gains into higher effective rent. In practice, this means pushing that economic occupancy toward 60%+ while continuing to drive the physical occupancy into the 80s – a key focus for revenue management. The trend lines are moving in the right direction, but there is plenty of upside left to capture.

Unit Size Occupancy – September 2025

Occupancy by unit size (selected major sizes). Smaller units (blue bars) are near full, while large units like 10x13 and 10x20 (orange bars) lag around 45% occupancy. This chart illustrates occupancy performance by unit size, highlighting where our vacancies are concentrated. As shown, our small climate-controlled units (e.g. 5x5, 5x7 not shown, 10x5) are essentially full – 10x5 units are 96% occupied, and similarly 5x7 and 5x8 (grouped in 10x7/10x8 dimensions) are over 90% occupied. 10x10s (100 sq ft) are also doing well at 81% occupancy. In contrast, look at the orange bars: 10x13 units (130 sq ft) and 10x20 units (200 sq ft) are only ~45% occupied, indicating more than half of those units are vacant. The 10x15 mid-size units are around 74% – better, but still below the facility average. This disparity suggests that demand is strongest for smaller sizes, and we have an oversupply (or under-demand) in the largest units. It’s a key insight for pricing and marketing: we likely can raise rents or at least hold firm on smaller units given their high occupancy, whereas larger units may need price incentives or targeted advertising to improve fill-up. The underperformance of 10x20s (our most voluminous units) is a significant drag on overall square footage occupancy (which is ~65%). Addressing this – perhaps via rate adjustments (our 10x20 street rate is $198, which might be too high relative to market) or promotions like “1st month free on 10x20s” – could unlock a lot of occupancy and revenue upside. In summary, the facility is very healthy in small unit occupancy and can capitalize on that by maximizing rent, while large unit occupancy is a challenge that presents an opportunity if we course-correct on strategy for those sizes.

Revenue Composition YTD (Rent vs. Ancillary)

Year-to-date revenue breakdown by category: Rent (82%), Insurance (10%), Fees (6%), Merchandise (1%). Rental income dominates, with healthy contributions from insurance and fee revenue. The pie chart shows the composition of $298k YTD revenue, underlining that this storage facility’s income is driven primarily by rental fees. Rental income (orange slice) makes up about 82% of total revenue – approximately $245k for the year so far. This is expected, as unit rents are the core business. However, the ancillary revenue streams are notable: Insurance sales (gray-orange slice) account for roughly 10% of revenue ($30.8k YTD), which is quite substantial. This reflects our success in enrolling 80%+ of customers in tenant insurance programs (providing both value to customers and commission income to the facility). Various fees (red slice) – including admin fees, late fees, and others – comprise about 6% of revenue ($17.8k). These fees bolster our income and often offset operational costs (e.g., late fees offset collection efforts). Merchandise sales (pink slice) like boxes and locks are a much smaller piece at ~1–2% ($4.4k), indicating some additional revenue but also potential room for growth. The key takeaway is that while we rely on rent for the bulk of earnings, we are effectively capturing ancillary revenue where possible. The high insurance percentage is a strength, showing we’re monetizing our customer base beyond just rent. Going forward, maintaining these ancillary streams (and perhaps improving merchandise sales with more marketing at the office) will further boost total income. But the primary lever remains rental revenue – so occupancy and rate increases will most heavily influence this pie chart’s future shape (ideally growing the whole pie!).

Current Strengths & Achievements (Summary)

Strong Lease-Up Momentum: Achieved ~72% occupancy within 1.5 years of opening, with positive net absorption every month. Leasing velocity has been excellent, reflecting solid market demand and effective operations.

Revenue Growth: Monthly revenues hit $40k in recent months, and YTD income ($298k) has nearly quadrupled last year’s same-period total. We are quickly approaching stabilization from a revenue standpoint, thanks to both higher occupancy and improving rental rates.

High Ancillary Uptake: ~81% of tenants carry our storage insurance, contributing a significant secondary income stream. Fee collection (late, admin, etc.) is robust as well. These indicate diligent management and policy enforcement that add to NOI.

Marketing & Lead Conversion: Our marketing mix is yielding plentiful leads (408 YTD) and an impressive 67% conversion. Drive-by visibility and local marketing are particularly effective, giving us an edge in occupancy without overspending on aggregator leads.

Proactive Rate Management: We have initiated rent increases on existing tenants to boost effective rents, with minimal pushback. This strategy has started to raise economic occupancy (now ~47.5%, up from 40–45% earlier) and will pay dividends in the long term through higher revenue per unit. Maintaining high customer satisfaction during this process is a testament to our customer service focus.

Key Challenges & Next Steps (Summary)

Economic Occupancy Gap: With actual revenue at ~47% of potential, there’s significant revenue left on the table. Bridging this gap is our primary financial goal – to be addressed by continued rent increases where justified and driving occupancy on vacant units (especially large ones).

Large Unit Vacancies: Over half of our 10x20 and 10x13 units are empty, weighing down total occupancy. We plan to recalibrate pricing and promotions for these sizes to boost fill rate. Every large unit rented will noticeably lift square-foot occupancy and revenue.

Rate Optimization: Fine-tuning rates is an ongoing challenge. We must be cautious not to overprice (and stall occupancy) nor underprice (and sacrifice revenue). Regular market surveys and possibly revenue management software will guide our pricing strategy by unit type and season. We’ll continue our balanced approach: raise rates on in-demand units and consider incentives on slow-moving units.

Seasonal Demand & Competition: As the busy season winds down, we’ll face slower demand in Q4. This requires creative marketing (holiday promotions, partnering with local businesses for referrals, etc.) to keep leasing moving. Also, we remain watchful of competitors – any aggressive pricing or new supply could impact us. Being proactive – highlighting our climate-controlled advantage and superior service – will help retain a competitive edge.

Maintaining Service Quality: As occupancy grows, maintaining high service (cleanliness, security, customer service) is critical. It ensures strong reviews and referrals, supporting our marketing. Additionally, keeping delinquency low and controlling expenses as the facility gets busier will protect our profitability. We will continue to train staff and refine operations to meet these challenges.

Outlook – Q3 End and Q4 2025

By the end of Q3 2025, we expect to be approximately 73–75% occupied (unit count), hitting a new high. This will position us well ahead of our original lease-up schedule. Revenue for Q3 is projected to top $120k, our best quarter to date, and Q4 should be similar or slightly higher if we sustain occupancy gains. Looking to Q4, our focus shifts to quality of earnings: pushing economic occupancy upward. We anticipate implementing another round of targeted rate increases in Q4 (particularly for those who moved in on summer promotions) – which should further boost revenue without significant occupancy loss. By December, it’s realistic to aim for ~80% physical occupancy and ~55–60% economic occupancy, inching closer to stabilized performance. Financially, that would translate into a run-rate of roughly $45k+ monthly revenue going into 2026.

In summary, LaGrange Climate Storage is on a very positive trajectory. The remainder of the year will be about capitalizing on our occupancy gains – through smart pricing, continued expense discipline, and unwavering customer service – to ensure that higher occupancy fully translates into higher profitability. We’re building a solid tenant base and gradually moving them to market rates. Barring any unforeseen market shifts, we expect to close out 2025 ahead of targets, with a strong foundation for an even better 2026.

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