Gary Delaney has barely settled into his new job as chief executive of Wheat Capital Management and he’s already thinking of taking off.
Not taking off in terms of leaving the job. Taking off in terms of boosting Wheat Capital to new heights with a newly established fund focusing on self-storage development.
Delaney, the veteran self-storage industry executive who last month took the helm at the Fort Lauderdale, Florida private equity firm, says Wheat Capital plans to soon file with the Securities and Exchange Commission for a non-REIT fund specializing in self-storage. Though he declined to say how much the fund might raise, Delaney said the fund would be available to investors via broker dealers and could be filed within 30 to 45 days.
For Delaney, whose firm was founded in 2015 and already holds a handful of properties in Florida, the time is still ripe for new self-storage development – and a fund to back up acquisitions and new developments.
Still room to build
Though some industry experts think there may be overbuilding underway within the self-storage today, Delaney says he’s convinced there’s still high demand and plenty of room for growth within the sector.
“I believe so far the banks and lenders are doing a pretty fair job of constricting growth,” he said of current construction in self-storage. “It’s fairly difficult to get construction financing and the terms are getting more restrictive, not less, so far.”
In addition, Wheat Capital’s strategy is to largely focus on high-demand, underserved areas, specifically “urban infill self-storage facilities” in the United States and Canada. Wheat Capital is especially attracted to “high barrier” markets across North America where it’s difficult to build or convert facilities due to zoning, high costs or other factors, he said.
If all goes well, Wheat Capital could be acquiring or developing about 10 to 12 facilities per year and “we could increase that capacity,” he said.
Assuming its SEC filing goes through, Wheat Capital would become just the latest firm to start a new fund specializing in self-storage. SmartShop Asset Management, based in Ladera Ranch, Calif., got regulatory approvals from the SEC for Strategic Storage IV in March, with the stated goal of raising up to $1 billion for investment purposes. Other funds like City Line Capital and Merit Hill Capital have recently launched to capitalize on investor appetites for storage properties.
Until now, Wheat Capital, founded by well-known entrepreneur and investor Joseph D. Touzier, has relied on funding from high net-worth and institutional investors. With a staff of 12 employees, Wheat Capital currently has three self-storage developments under way in Florida and five more properties under contract in New York, Florida and, most recently, California.
The three Florida projects, located in Pembroke Pines, Margate and Miami, are expected to span nearly 300,000 square feet combined.
While Wheat Capital acts as a investor, developer and owner of facilities, it’s strategy is to have REITs operate its property holdings, primarily via Extra Space or CubeSmart, Delaney said.
The accidental heavyweight
Wheat Capital is just the latest stop for the veteran Delaney, who has worked in self-storage over the years at Banner Storage Group, Safeguard Properties and Shurgard. He also founded and ran his own development consulting company, Meridian Development Co. LLC, before being recruited by Touzier, who Delaney first met at a New York investment gathering, to Wheat Capital. Today, Touzier serves as founder and chairman of Wheat Capital, while Delaney serves as president and chief executive officer.
Delaney, who went to Illinois State College and received an MBA from Pepperdine University, got into self-storage almost by accident. While development homes with his brothers in central Illinois, he was contacted by a head hunter and landed a job at Shurgard in Chicago.
“To this day, I don’t know how that (head hunter) found my name,” said Delaney.
But Delaney had definitely found his professional focus in life: self-storage, a segment of the real estate market that he describes as reliable, resilient and, until recently, under appreciated by investors.
“It came easy to me,” he said of finding and selecting development sites. “I also like building relationships. I want to be the first call [commercial real estate brokers] make when they have a good prospect.”