Reading a fund deck for a storage portfolio and there's a revenue line called tenant protection plan income at just under 8 percent of total revenue. There's a footnote saying it's not insurance. If it isn't insurance, what is it, and is 8 percent a lot? It's a big enough number that if it's fragile the whole NOI moves.
A tenant protection plan is a contractual promise from the facility owner to reimburse a tenant up to some limit if their stored goods are damaged, usually a few thousand dollars of coverage for something like ten or fifteen dollars a month. The footnote is there because calling it insurance can trigger insurance licensing rules, and whether a given program counts as insurance depends on the state, so operators are careful with the wording and it's genuinely a question for a licensed professional in each state they operate in.
The reason it's a big line is that it costs the operator very little. There's no property to maintain and no leasing cost. A high percentage of tenants enroll, often because it's presented as part of move-in, so most of the fee drops to NOI. Eight percent of revenue is within the range you see at professionally run facilities, and it's one of the first things a new owner adds when they take over a mom-and-pop facility that never offered it.
What you're right to poke at is whether that income is already in the trailing numbers or whether the sponsor is projecting it. Those are very different. If the seller never offered a protection plan and the deck shows 8 percent as if it exists today, that's a projection dressed as history, and it depends on getting enrollment rates the sponsor hasn't demonstrated at those properties. Ask for the enrollment percentage by facility and the claims history. A program with a lot of paid claims and no reinsurance behind it is a cost center waiting to show up.