A startup founded by veterans of the self-storage industry has started to build its portfolio with the acquisition of two facilities, and it plans to spend up to $500 million to buy dozens of facilities over the next several years.
Pete Williams and Doug McCarron launched Premier Storage Investors LLC in January. Williams is a former director of acquisitions for Storage USA and has been a private investor in storage for several years. In 2012, Williams jumped from the self-storage team at real estate brokerage firm Grubb & Ellis to the self-storage team at a competitor, JLL. McCarron was a managing director at real estate brokerage firms JLL and HFF, where his specialty was self-storage. Williams is based in Memphis, TN, and McCarron in Westlake Village, CA.
The two joined forces with the backing of an institutional investment partner, which Williams declined to name. He described the partner as a “very large” and “very significant” endowment fund. Premier Storage Investors has an exclusive relationship with the fund.
Williams said the institutional partner has earmarked capital for acquisition of self-storage facilities in the 40 largest U.S. metro areas. Premier also is looking at building facilities from the ground up. “We are cranking up our development program as we speak,” Williams said.
Closed deals
Premier recently closed on its first two acquisitions; purchase prices weren’t disclosed.
The first deal was for a facility at 640 Broadway Ave. in Holbrook, NY. Premier is managing the facility, Broadway Self Storage. Williams said the firm is leaning toward hiring third-party managers for its acquisitions.
“It’s kind of funny our primary strategy is to hire third-party management and the first one we bought we end up managing ourselves,” Williams said.
Premier also picked up AAA Self Storage at 10707 N. I-35 in Austin, TX (pictured at top). Premier tapped Extra Space to manage the 56,000-square-foot facility. Williams said Premier isn’t tied to Extra Space or any other third-party manager.
“As you know, there are a lot of choices out there. Three of the REITs have an active third-party management program,” Williams said. “We will just pick the best third-party manager for each property we buy.”
Pending acquisitions
Premier plans to aggressively grow its portfolio from 2014 through 2016. Williams said Premier hopes to spend about $400 million to $500 million on acquisitions during that time.
“With our partner, we buy as many as we like, as long as we like the deals,” Williams said. “If we see only $200 million worth of deals we like, that’s all we’ll do.”
In the near term, Williams said, the company has six more facilities under contract or with signed letters of intent. All told, those facilities will cost $30 million.
