Investment Thesis
The bedrock of our acquisition strategy is based on the principles of value investing:
Buy below replacement cost
Rent to customers at or below market rents
Located in stable or growing markets
We are actively seeking to acquire storage businesses built between 1990-2010 with 250+ customers located in the small towns across Southeast.
In addition, we are looking to purchase vacant grocery stores, car dealerships, or furniture stores on 1.5+ acres to convert into climate-controlled storage in towns with pent-up demand.
It is not complicated, but it takes discipline.
Why we love self-storage
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Each facility has between 250 and 400 customers. No single tenant default risk.
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Leases are all month to month. We can easily keep up with market rates as inflation rises. Few folks want to move out of their 10 x 20 unit in the August heat over a $7 per month increase.
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Storage is a simple asset and we like it that way. There are no leasing commissions to pay, no tenant improvement allowances, and very little capital expenditures. The biggest expenses are the roof and HVAC which can be budgeted for years in advance.
How we add value
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We built our own database of every storage owner in the southeast. We create value by going straight to the source.
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We built our own 1st Stop Storage University to help train all of our property managers. It explains how we do it here - everything from the “5 questions” to ask each customer all the way to our “clean doors and clean floors policy”. In addition, we have an in-house construction management team with a decade of experience managing the conversion and expansion of storage facilities.
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self-storage is an attractive asset class but many institutional players must deploy $25mm+ of capital at one time. We can create substantial value by doing the hard work of assembling multiple properties, which makes it easy for big buyers to put capital to work.
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Our target deal size is between $2mm and $10mm. This is often too large for mom and pop investors and too small for large institutional players. With less competition often comes better returns.
