Welcome to our Insights Page!
Below is a running list of articles written by our team explaining our thinking on the management, investing, and the commercial real estate market as a whole. Please join our mailing list to receive these articles in your inbox, as well as select investment opportunities for accredited investors.
what We've Learned in 25 Years of CRE Investing
Updated: July 20, 2023
We understand that you have numerous options for investing your money. What sets us apart is our unique investment strategies and partnership mindset. We focus on major metros, leveraging our extensive experience to navigate the regulatory and permitting hurdles that deter many competitors.
Developing anything in core markets is a huge pain. Yet, we’ve built over 250mm in major cities since our firm’s inception. Here are the reasons why we focus on core markets for storage development:
- Restricted supply: Cities hate storage buildings and frequently pass regulations restricting their development. They have a reputation for being ugly, attracting seedy elements, and they pay little sales tax. This creates a barrier to entry for operators who know how to get buildings built despite the red tape, restricting competition and promoting rate growth.
- Lower cap rates: Storage cap rates tends to track with multifamily and industrial. Lower cap rates translate to higher sales prices for completed assets. The Core gateway markets we focus on, like LA, NYC, and SF, typically command lower cap rates for these product types than secondary or tertiary markets do.
- Complexity as a competitive advantage: Knowing how to navigate the complexity inherent to permits and construction in core markets is a moat! Not everyone knows this, and this world is small. With experience, one can build the skills and relationships to win in these markets.
- Since we develop typically projects $40 million and larger, targeting IRRs in the low to mid-teens for LPs, and high-teens / mid-20s for co-GPs, our focus on core MSAs allows us to add value through land use approvals & density bonuses.
Our Favored Strategies
- Build to Core: We favor core markets (LA, NYC, SF, etc.) due to their supply constraints and regulatory barriers to entry. We believe these markets are less prone to overbuilding and have more stable demand compared to boom/bust suburban and rural markets. We prefer to build rather than buy, as developments achieve higher yields, and we have the experience to navigate the added risks. We focus on projects where we can achieve a 30% or larger gross margins and aim to sell or refinance our projects upon completion or stabilization.
- Value Add Conversion: We see an increasing number of buildings defaulting on their loans and being given back to their lenders. These properties can generate more income if converted to a higher value use. We believe many of these properties are located in strong self-storage markets and are actively studying the feasibility of converting them to self-storage.
- Sub-institutional Existing Assets: We supplement our build to core program with acquisitions of existing cash-flowing assets located in secondary markets within a reasonable driving distance of our large-scale core developments. We add value by building additional square footage, streamlining operations, and raising rent. Acquiring secondary locations allows us to rapidly grow our brand while driving property management efficiencies across the portfolio.
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Investing In Self-Storage?
Updated: December 6, 2022
A 10-minute read to reintroduce ourselves, the self-storage industry, and its investment opportunities.
Who we are and what we do:
Top 3 Reasons to invest in commercial real estate?
Why We Invest in Self-Storage (and think you should too!)
Do Not Invest In Self-Storage If…
Self-storage is not for everyone. Commercial real estate investments differ from residential property investments in many ways (subscribe to our newsletter for more on this).
An overview of our investment strategy
Now that you have a better idea of why we choose to invest in an industry with a relatively longer investment period, here’s a brief overview of how we go about choosing where to invest:
- Build to Core: New developments typically produce higher yields, so we strive to build well-located projects in core markets (San Francisco, Los Angeles, New York City…) so that we can survive whatever economic conditions there might be when we deliver.
- Value-Add Conversion: We actively study the feasibility of converting big box retail stores and class B office buildings to self-storage.
- Sub-institutional Existing Assets: We supplement our build-to-core program by acquiring secondary locations that allow us to rapidly grow our brand while driving property management efficiencies across the portfolio.
You will see these strategies resurface and elaborated upon in posts to come.
Ready to Invest?
Whether you are an accredited investor or just getting started on your investment journey, we welcome you to subscribe to our newsletter for updates and opportunities to co-invest with us. Our investment opportunities are not frequent – so we don’t spam – but by the time they are presented to you, they will have already been through our extremely rigorous selection process. All investors are welcome to join our Investors’ Circle for a listing of past, current, and future offerings.
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