SROA Capital LLC has scooped up an additional 26 self-storage facilities, bringing the Florida-based investment firm’s portfolio to more than 200 storage properties spread out mostly in secondary and tertiary markets east of the Mississippi River.
SROA Capital operates self-storage facilities under the Storage Rentals of America brand name.
Acquiring StayLock Storage
SROA Capital announced last week that it has purchased StayLock Storage for an undisclosed sum from two private investment firms based in St. Louis—Cequel III and Thompson Street Capital Partners.
In the same announcement, SROA Capital disclosed plans to build 500,000 square feet of additional storage space at some of the StayLock sites it just acquired in eight states, including in Battle Creek, MI, Bettendorf, IA and Fort Wayne, IN.
“We’re long-term investors,” says Benjamin S. Macfarland, founder and CEO of SROA Capital, based in West Palm Beach, FL, and founded in 2013. “We like secondary and tertiary markets.”
With the purchase of the StayLock facilities, which SROA plans to operate under its Storage Rentals of America brand, Macfarland’s said his firm now owns “nearly $2 billion in assets” in 19 states.
‘Several hundred more’
And it expects to add to those assets with plans next year to start a ninth fund, SROA Capital Fund IX, which Macfarland said will hopefully entail raising $500 million from pensions, endowments and other large investors.
SROA Capital’s long-term goal: To buy or build “several hundred more” facilities over coming years.
As for the StayLock acquisition, Macfarland said some of the new properties overlap with a few of SROA’s existing territories, but they mostly complement and fill out SROA’s current footprint. “It wasn’t much of a stretch for us operationally,” he said of the geographic locations of the StayLock properties.
Macfarland said he’s particularly excited about picking up a facility in Iowa, along the Mississippi, where he said large publicly traded real estate investment trusts are not as active.
Indeed, he said his firm, which employs about 330 people, generally prefers to buy, develop and own facilities in secondary and tertiary markets, as long as properties are profitable and his firm can distribute quarterly returns to investors. “We haven’t missed a quarterly (payout) since we started,” Macfarland says.
‘Not a walk in the park’
SROA’s expansion comes as the self-storage industry is flooded with new investors determined to take advantage of the sector’s strong performance during the recent economic downturn.
But Macfarland said he’s not too concerned about new investment players entering the self-storage industry, saying many of them may be good at snapping up properties but not necessarily as good at actually operating facilities.
“It’s a tough market to aggregate in,” he said. “It’s not a walk-in-the-park industry, operationally.”
He said his firm invests heavily in proprietary technologies to make sure facilities are run efficiently and smoothly.
According to its website, SROA Capital was founded by Macfarland, who has been involved in commercial real estate since 2006, in partnership with Sidney Kohl, co-founder of Kohl’s Department Stores, and James Jenkins, co-founder of Alliant, an owner and operator of affordable housing.