Spartan Investment Group has rolled out an investing concept that has something for most everybody – three new funds at the same time in the categories of income, growth and debt.
“We want the investors to know exactly what they’re getting into,” said Ryan Gibson, chief investment officer and a co-founder along with CEO Scott Lewis.
“We don’t want to mix unestablished deals with stabilized funds. The three different funds provide investors clarity of vision about what they’re investing into,” Gibson said.
Three funds for self-storage
Together the funds aim to raise a total of $180 million. The minimum investment is $50,000 for any of the funds. Spartan has quickly attracted hundreds of names to its wait list.
Here is a breakdown of how the new funds differ:
- The Spartan Storage Income Fund aims to raise $75 million in an equity fund, with accredited investors investing in self-storage facilities throughout the United States. It opened in early March.
- The Spartan Storage Growth Fund seeks $45 million to invest in facilities in key U.S. markets. The fund will buy ground-up development and lease-up investment entities. This one also opened in early March.
- The Spartan Storage Debt Fund seeks $60 million. Those interested can invest in notes for the company’s self-storage projects nationwide. It opens at the end of March.
Last year, Spartan rolled out Spartan Storage Fund 1 in spring 2022, with a goal of turning $150 million into self-storage property worth $400 million. It, too, had a minimum investment of $50,000.
The company currently owns 65 facilities in 11 states, with a total of about 4 million square feet and just over 30,000 units.
We chatted with Gibson about Spartan, which has offices in Golden, CO and Seattle, WA.
Storage Beat: Why launch three new funds at the same time?
Gibson: “The reasoning is because rather than have a fund and throw anything we find in it, we want to offer the specific options to investors to get them to the destination they want to get to. In the income fund, we’re only going to be purchasing self-story facilities that have cash flow and upside potential. It’s for those that want predictable cash flow … For those approaching retirement and are counting on that income, we’re only buying facilities that are income-producing.”
How is the market these days?
“The market is very hot. We’ve been building self-storage since we started in 2016. But the opportunities to buy an existing property now are more challenging because the cost of entry is higher and the pricing of those properties hasn’t come down that much.”
What do you mean by “accredited investors”?
They earn $200,000 a year if filing alone; $300,000, and they made it for the last two years and expect to make that income again this year. Or, they have a million dollars of net worth, excluding their primary residence.
“We bucket them into three categories: High income-earning professionals, such as the service industry – attorneys, doctors, tech, health care.”
“The next category is, for example, someone who’s a business owner, or runs a marketing and PR firm, or owns their own law price, runs a distribution company. We have a lot of real estate pros in this category.”
“Third is someone in a C-suite, in a high-paid leadership position within a company.”
How did you determine your upper limits for each fund?
That’s based on our acquisition target for the year. We want to buy $240 million in the income fund this year. In order to fund that with enough debt and equity, we have to raise $75 million in equity and the remainder would come from debt.
“On the growth fund, we want to do $100 million in total project costs and would need $45 million in equity and the remainder in debt to achieve that. And for the debt fund, we need $60 million to supplement any shortfalls.”