The formula, the three inputs it needs from the rent roll, and why a store with lower occupancy can earn more per foot.
REVPAF is collected rental revenue for the period divided by the store's net rentable square feet. On an illustrative 48,000 sq ft store at 88.0 per cent occupancy, an average in-place rent of £32.20 and 5 per cent lost to discounts and bad debt, it is £26.92 per sq ft a year, £2.24 a month. The shortcut most people use, occupancy times the street rate, gives £25.96 and misses what the rent roll actually collects.
Worked in full in Self-Storage Real Estate by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
A single store in a regional town is offered for sale. The pack quotes occupancy and the current web rate, as nearly every pack does. To compare it with the buyer's own stores, the analyst needs revenue per available foot, which requires three things from the rent roll: occupied area, the rent each customer actually pays, and what leaks between the rent charged and the cash received. All figures are illustrative, in pounds per square foot per year.
| Input | Value |
|---|---|
| Net rentable area (NRSF) | 48,000 sq ft |
| Gross building area | 62,000 sq ft |
| Physical occupancy, by area | 88.0% |
| Average in-place rent | £32.20 |
| Street rate (web price) | £29.50 |
| Move-in discounts and concessions | 3.0% of scheduled rent |
| Bad debt and write-offs | 2.0% of scheduled rent |
| Ancillary income (protection, retail, fees) | £96,000 |
Occupied area. 88.0 per cent of 48,000 sq ft is 42,240 sq ft let.
Scheduled rent. At the in-place average of £32.20, the rent roll bills £1,360,128 a year.
Leakage. Discounts take £40,804 and write-offs £27,203. Collected rental revenue is £1,292,122, an achieved rate of £30.59 per occupied foot.
REVPAF = collected rental revenue / NRSF = 1,292,122 / 48,000 = £26.92 a year
Equivalently: occupancy × in-place rent × (1 − leakage) = 0.880 × 32.20 × 0.95 = 26.92
Excel: =NRSF*Occ*InPlace*(1-Disc-BadDebt)/NRSF, or simply =CollectedRent/NRSF
Monthly, as many operators report it, that is £2.24 a foot. Mixing a monthly figure from one pack with an annual figure from another makes the first store look a twelfth as productive as it is, so confirm the period before comparing.
Occupancy times street rate gives 0.88 × £29.50 = £25.96, which understates REVPAF by £0.96, 3.6 per cent of the true figure. The reason is the defining feature of the asset class: existing customers have received rate increases since they moved in, so the average in-place rent sits 9.2 per cent above the price on the website. On revenue potential at street rate of £1,416,000, the store's economic occupancy is 91.3 per cent, higher than its physical occupancy, which is only possible because the rent roll is above market. Whether that premium is durable is the question how many move-outs a rate increase can afford answers.
The direction of the error is not fixed. In a store that leans on half-price move-in offers, leakage can exceed the in-place premium and the shortcut overstates REVPAF instead.
REVPAF exists because occupancy alone rewards the wrong behaviour. Two stores of the same size, with the same 5 per cent leakage:
| Store | Occupancy | In-place rent | REVPAF | Rental revenue |
|---|---|---|---|---|
| A, priced to fill | 93% | £27.60 | £24.38 | £1,170,461 |
| B, priced for rate | 84% | £31.40 | £25.06 | £1,202,746 |
Store B is nine points emptier and earns £32,285 more a year, before counting the lower wear, cleaning and payment costs of fewer customers. A league table ranked by occupancy puts A first; one ranked by REVPAF puts B first, and only the second describes the money.
| Occupancy | £28.00 | £30.00 | £32.20 | £34.00 |
|---|---|---|---|---|
| 80% | 21.28 | 22.80 | 24.47 | 25.84 |
| 84% | 22.34 | 23.94 | 25.70 | 27.13 |
| 88% | 23.41 | 25.08 | 26.92 | 28.42 |
| 92% | 24.47 | 26.22 | 28.14 | 29.72 |
| 96% | 25.54 | 27.36 | 29.37 | 31.01 |
At the base case one point of occupancy is worth £0.31 a foot, £14,683 a year, while one pound of in-place rent is worth £0.84 a foot, £40,128. A point of occupancy is therefore worth only £0.37 of rate. That ratio is the trade every revenue manager is making, usually without writing it down.
Three definitional errors account for most bad comparisons. Dividing by gross building area: £1,292,122 over 62,000 sq ft gives £20.84, more than a fifth lower. Including ancillary income: tenant protection and retail lift the figure to £28.92 on total revenue of £1,388,122, which is a legitimate number but not the one a competitor reports. And using scheduled rather than collected rent, which ignores the 5 per cent that never arrives. State the basis, net rentable area, rental revenue only, collected and annual, and the number becomes comparable.
The book builds the rent roll from cohorts of customers rather than leases, and the free workbook for this case computes street, in-place and achieved rents for a full store from that engine. For the cost side of the same discounting decision, see what a half-price move-in offer actually costs.
Occupancy measures how much space is let; REVPAF measures how much rent each available foot earns, so it captures price as well as volume. In this example store A at 93 per cent occupancy and £27.60 earns £24.38 a foot, while store B at 84 per cent and £31.40 earns £25.06. The less full store earns £32,285 more a year on 48,000 sq ft.
The standard measure uses rental revenue only, so that stores and operators can be compared on rent. Tenant protection, retail and fees are reported separately. Including the £96,000 of ancillary income in the example lifts the figure from £26.92 to £28.92 a foot, which is why any comparison should state which basis it uses.
On net rentable square feet, the area that can be let to customers. Dividing by gross building area, which includes corridors, lifts and the office, understates it: here £1,292,122 over 62,000 sq ft gives £20.84 instead of £26.92, a figure no operator would recognise.
This article is one calculation from Self-Storage Real Estate. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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