Alternative investments firm Sylios makes a play for self-storage

Jay Fitzgerald
August 26, 2019

Sylios Corp. has sought riches in oil and natural gas exploration and in the burgeoning cannabis industry. Now it sees riches in self-storage.

A St. Petersburgh-based holding company run by a former hedge-fund operator, Sylios has announced that it’s currently developing the first of a handful of self-storage facilities in the southeastern region of the country. If all goes well, the head of Sylios says the company’s long-term intent is to either sell the properties or spin off the unit into a separate real estate investment trust (REIT).

“It’s a good business with good cash flow,” Wayne Anderson, president and chairman of Sylios, said of the self-storage industry. “We see this as a nearly recession-proof business, or at least as recession-proof as you can get.”

Not that Sylios, an over-the-counter traded company, sees a recession coming. Anderson said Sylios started eying self-storage nine years ago, when it bought property in Macon, Georgia for the specific purpose of building a self-storage facility.

But the oil and natural gas market – a business that Sylios was heavily invested in at the time – took a dive around 2010 and Sylios had to put its self-storage plans on hold. Only now is it getting around to building a facility with 194 self-storage units and 15 boat/RV parking spaces in Georgia, he said.

Hungry for more

Sylios has identified an additional six parcels to possibly buy in Georgia and Florida, though it’s made no bids yet, Anderson said. The goal is to build three to four self-storage facilities by 2021 – all of them to be managed by outside firms – and then look to either sell the properties or spin the unit out as a separate company, Anderson said.

The firm is yet the latest investment company to jump into the booming self-storage business, along with private equity, REITs, construction companies and other investors who are either snapping up existing properties or building new facilities.

New self-storage construction is still booming in most areas of the country, though some observers have expressed concern about a possible recession on the horizon.

Caesar Wright, president of Mako Steel Inc. in California, says he isn’t seeing much of a slowdown in the market. If anything, he said his firm, which provides steel for the framing of new self-storage facilities, is now considering opening a new “Mako East” office somewhere along the East Coast, based on the strong demand he’s seeing nationwide.

Some parts of country may be “oversaturated” with new self-storage properties, he said, such as in parts of Texas and in the Denver, Colorado area. But the self-storage sector is still running strong in other areas, he said.

The bottom line: It’s still not too late for investment firms to jump into the market, as long as they’ve done their research, he said.

Sylios’s Anderson said his holding company has hired a number of industry experts and consultants to help it launch its self-storage venture, and he expressed confidence the southeast is a strong market from which to start.

This is just the latest venture for Anderson, a former operator of a “small hedge fund” in St. Petersburgh before he founded Sylios in 2008.

The original plan for Sylios was to stick exclusively to oil and natural gas exploration. Indeed, Sylios once controlled 125 natural gas and 80 oil wells in West Virginia and Kentucky, before selling most of them off, Anderson said.

From cannabis to self-storage

“That was our main and only goal at the time: oil and natural gas,” Anderson of his firm’s initial focus. Today, Sylios still has royalties and “working interests” in 14 wells, he said.

Five years ago, Sylios, seeking to diversify its holdings, got into the emerging legal cannabis business, via the Greater Cannabis Company, specializing in the development and commercialization of delivery systems for cannabis products, specifically Cannabis-derived cannabinoids (CBD).

But the cannabis business “wasn’t really the right fit” for Sylios, particularly since it was hard (and remains hard) to get bank financing for cannabis-related ventures, Anderson said. So the firm spun out Greater Cannabis Co. in 2017, with Sylios still holding some common shares of the OTC firm, Anderson said.

Now Sylios has taken its self-storage idea off the backburner and put it in motion in Georgia, said Anderson, whose firm hopes to open the facility early next year.

In a press release, Sylios says revenue from the facility is expected to be between $250,000 and $275,000 annually based on 92 percent occupancy. The projected cost to develop the facility, including land acquisition costs, is approximately $520,000.

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