The Storage Acquisition Group has established a presence in Canada and named Lloyd McDonald director of Canadian acquisitions. He is based in Calgary, Alberta.
McDonald will focus on purchasing storage facilities and portfolios directly, meaning owners don’t have to list their assets.
McDonald’s background includes real estate and building a private financial services firm that placed more than $1 billion into multifamily, commercial and industrial asset classes in North America.
Storage Acquisition Group is a brokerage firm based in Hampton Roads, VA. The firm is an affiliate of Mid-Atlantic Commercial Real Estate.
Here, McDonald talks about why the company has entered Canada, the hot market and more.
Q: Why is the company expanding operations to Canada now?
A: We’re building out a portfolio for a gentleman who is the largest private owner of self-storage assets in the world. Currently, he doesn’t have Canadian holdings; they’re all in the US. We’d like to repeat his success in the US and consolidate some of the mom-and-pop facilities in Canada. Additionally, we’d like to work with companies that have done some consolidation in Canada to help them with an exit strategy.
Q: Is the self-storage market as hot in Canada as it is in the United States?
A: It is. As a Canadian, we’re always looking to the United States to see what the next trend is. Self-storage has been a popular asset class in the U.S. for several years, but only in the last 12-24 months has self-storage hit the news as a popular asset class in Canada.
With COVID-19, people recognize that a self-storage asset is easier to operate. If you have a business that two people can operate with technology, it’s easier to operate that business. It’s been a tough year for smaller businesses, and self-storage is far easier to manage than other asset classes.
Q: Are there differences between how the Canadian self-storage market works and the U.S. self-storage market works?
A: I think there’s trends we see in the Canadian self-storage space. One is growing urbanization; we see downsizing. In some cases, baby boomers are moving to smaller homes, and that’s driving a need for storage.
Another trend we’re seeing here are lifestyle changes. We’ve had a real boom in people purchasing RVs, road bikes or mountain bikes. It’s kind of a staycation mindset, instead of loading up the family and doing all-inclusive trips to another country. So people need a place to put all that recreational equipment.
Another trend is small business owners that have started a home-based business. Maybe they’ve outgrown their basement or garage and taken on a self-storage space in order to manage a small business.
Q: How often do surprises pop up in a late stage of the buying process?
A: Often we speak to the owners of businesses before they’ve discussed it with their lawyers, accountants and families.
There are a few things that can slow down the purchase of a facility. One is that if someone doesn’t understand how to maximize the value of their facility, such as cleaning up their accounts payable. Sometimes a business owner hasn’t had that conversation with the family yet.
Sometimes people haven’t considered the taxes they will have to pay if they sell the business.
We help them see some of the best practices in the industry. If they decide to sell to us, that’s great. But if it’s not their time yet, at least we’ve given them information to help them with their business. And trust has been built up.