Investors pour billions into private self-storage funds

Al Harris
January 26, 2023

Looking for a recession-resistant place to put your money during these turbulent times?

Better get in line.

Recently two real estate funds announced that they had exceeded their fundraising goals, each closing with ten-figure sums with which to buy storage properties across the United States.

Largest fund in self-storage history

Saratoga Springs, NY-based Prime Group Holdings announced that it has raised the industry’s largest private fund for investing in self-storage assets. The private equity firm and self-storage operator closed its Prime Storage Fund III LP at a hard cap of $2.5 billion in December of 2022—exceeding its original target of $1.5 billion.

Investors from more than 30 countries contributed funds to the storage vehicle. The investor base includes sovereign wealth funds, public pension plans, endowments, banks, insurers, family offices and foundations.

So far Fund III has utilized 18% of its total equity to buy self-storage properties across the United States. The company seeks assets in undersupplied markets where they can streamline operations through their management platform.

“We are pleased to have closed our third flagship fund, the largest in history in the self storage sector. This achievement is a testament to the strength of our platform, our differentiated, data-driven investment approach and experienced team,” said Robert Moser, Prime Group’s founder, principal and CEO in a statement.

Prime Group is one of the largest storage operators in the country, having owned and operated more than 22 million rentable square feet since its inception.

GLP Capital Partners raise $1.5 billion

The self-storage sector’s reputation as a safe haven amid economic uncertainty makes funds such as Prime’s an attractive investment. Other funds in the self-storage sector are also surpassing their fundraising goals as investors seek stable alternatives.

In November, global alternative asset manager GLP Capital Partners announced it had closed a $1.5 billion self-storage real estate fund. The fund, GCP SecureSpace Property Partners, seeks to acquire storage facilities in dense but undersupplied markets across the United States. At the time of the announcement, the oversubscribed fund had assets totalling seven million square feet under ownership or in the pipeline.

The acquired facilities will operate under the SecureSpace brand. SecureSpace also operates several facilities developed by InSite Property Group. Both InSite and SecureSpace are controlled by GLP Capital Partners. InSite remains a completely separate business from the new fund.

“The current macroeconomic environment is particularly conducive for well-capitalized platforms with sophisticated operating and technology capabilities like ours,” said Keith Wetzel, co-founder and senior managing director of SecureSpace.

Nathan McElmurry, head of self-storage acquisitions at SecureSpace, said one headwind they face deploying funds is that there are fewer transactions taking place in the sector as owners wait to see how things are going to shake out.

“That said, we have a lot of dry powder to continue pursuing our strategy of targeting low-supply markets with high demand and are optimistic that opportunities will avail themselves over the next few quarters,” McElmurry said.

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