The Move It self-storage brand is tapping into a $25 million pool of cash from its first-ever equity fund to add 10 to 15 facilities to its portfolio.
Tim Springer, president of Dallas-based Move It, said the company will leverage the $25 million in investment capital to spend about $100 million primarily on ground-up and certificate-of-occupancy projects. The fund launched in January.
Move It already has purchased six facilities with the equity capital, bringing its portfolio to 90 locations in six states. By year’s end, Springer envisions the company will own and operate 110 to 115 facilities, with some of this year’s new acquisitions being financed via the equity fund.
A flexible capital source
Since its founding in 2013, Move It has raised growth funding individually from institutional investors rather than pooling money from various investors into a single fund, Springer said. For the equity fund, an accredited investor had to chip in at least $250,000.
“Our thinking here was we wanted to have a flexible capital source,” Springer said. “We’ve worked with a number of great private equity groups and potential joint venture partners.”
Springer said the equity fund is a closed-end fund. But if this fund is successful, he hopes to go to market with more equity funds in the future.
‘We have a growth plan’
“I don’t want to be just another guy raising a self-storage fund, because there’s certainly a lot of them,” Springer said. “I would emphasize that we have a growth plan — we’re trying to grow in a way that’s responsible for the industry, that benefits our company, that benefits our markets and meets demand where it exists. We are doing our due diligence and have a lot of experience in doing that.”
While cash from this equity fund will mostly target ground-up and certificate-of-occupancy projects, Move It will continue to rely on other corporate pots of money to purchase stabilized and value-add facilities, Springer said. Stabilized and value-add facilities complement Move It’s role as one of 10 regional partners of self-storage REIT National Storage Affiliates Trust.
Springer said the facilities being scooped up through the equity fund eventually may wind up under the National Storage Affiliates umbrella.
Entering ‘SEC country’
No matter the source of money, Move It’s acquisition strategy focuses geographically on what Springer refers to as “SEC country.” The SEC athletic conference encompasses 14 colleges and universities in 11 states: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Missouri, South Carolina, Tennessee and Texas.
“The two biggest mistakes that people make in self-storage are they build a property that shouldn’t be built from a supply standpoint, or they build the wrong project for the market,” Springer said. “We’re trying to combat both of those mistakes by building in markets that we know and where we have studied the supply so we think they can absorb additional supply, either because they’re undersupplied or because of demand trends.”
“We solve the second mistake by trying to be involved early in the process, or control the process ourselves, so that we’re matching the product to what is actually demanded by the market,” he added.