Equipped with an infusion of more than $80 million in private equity, an Albuquerque, NM-based real estate developer is plotting its entry into the self-storage sector.
Titan Development Ltd. is gearing up to build six self-storage facilities in two New Mexico markets — Albuquerque and Santa Fe — and in the Phoenix, AZ, metro area. Some of the six facilities are expected to open as soon as the fourth quarter of 2018.
Self-storage is one of the investment targets of the company’s Titan Development Real Estate Fund I, which was established in April. The fund’s other targeted sectors are industrial, multifamily, senior living and “opportunistic.” Titan Development’s current portfolio consists of commercial, industrial, mixed-use, multifamily and senior living developments.
Coe Schlicher, chief financial officer at Titan Development, manages the new fund. He is a former finance executive at Albuquerque-based Ernest Health Inc., which owns and operates rehabilitation and long-term care hospitals in 11 states.
So far, the Austin, TX-based fund has collected $82.3 million in private equity for Titan Development Real Estate Fund I, according to a filing with the U.S. Securities and Exchange Commission. The ultimate fundraising goal of the fund is $200 million. Drew Dolan, president of Titan Development, said fundraising will continue for another 10 months.
With $200 million in equity, the fund will be able to tap into more than $600 million in development funds at a 65 percent loan-to-cost ratio, Dolan said.
“Titan Development’s objective is simple: maximize our investors’ returns and create value,” Dolan told The SpareFoot Storage Beat. “In self-storage specifically, all indicators reinforce self-storage as an attractive asset class with good return potential. To that end, we are always evaluating growth into new marketplaces.”
Hot out the gates
At the outset, Titan Development will focus on the six self-storage projects in Arizona and New Mexico, with an eye toward expanding later into Colorado, Florida and Texas, according to Brian Patterson, Titan’s director of self-storage. The company will consider other states if attractive opportunities arise.
“Titan Development regards self-storage as an attractive opportunity for our investors,” Patterson said.
“From a financial perspective, self-storage is an asset class with significantly lower costs and with operating results that demand lower yield,” he added. “From a consumer perspective, many existing facilities are outmoded in terms of services and amenities. As a result, modern facilities and sophisticated operators like Extra Space Storage are disrupting the self-storage industry.”
Extra Space Storage, a self-storage REIT based in Salt Lake City, UT, will be the third-party manager of Titan Development’s self-storage facilities, and the facilities will be branded under the Extra Space name.
Across all sectors, Titan Development has more than 20 projects in its pipeline.
The company, founded in 1999, specializes in acquisition of developed and undeveloped land, land entitlement, design-build leasebacks, joint ventures and private equity management. Aside from Albuquerque, Titan Development maintains offices in Austin; Orlando, FL; and San Antonio.