That's Not A Pot Of Gold At The End Of The Rainbow. It's Self-Storage
Moorfield, the UK-focused real estate fund manager, has joined the investor stampede into self-storage, buying a four-asset, 302K SF self-store business.
Moorfield follows Heitman, H.I.G., Nuveen and a host of others into a sector that promises the kind of stable income, wide pool of customers, and foundation in eternal human weakness, that fund managers dream about. Occupancy in the new portfolio is over 90%.
The deal was made on behalf of its Moorfield Real Estate Fund V and through its joint venture with Stor-Age, the South African self-storage real estate investment trust and owner of UK self-storage business Storage King.
It is the fund's largest buy to date. The next move will be a further £50M-£100M investment in tech-enabled self-storage.
The units in Banbury (Oxfordshire), Wednesbury (West Midlands), Frome (Somerset) and Amesbury (Wiltshire), will be operated by Storage King, which currently provides more than 1M SF of self-store under its third-party management platform.
Depending on its growth and the space constraints caused by a housing crisis, and buoyed by the human frailty that means out of sight is out of mind, thus turning customers with short-term needs into long-term users, self-store is enjoying an investor pile on.
Recent investor plays include February's move by an affiliate of Miami-based global investment firm H.I.G. Capital to acquire an interest in UK self-storage operator Titan Storage Solutions. Titan’s digital approach appealed.
In December 2021 Nuveen Real Estate stepped up the expansion of its self-storage platform whilst Heitman, which has been in the self-storage world since 1996, expanded its Space Station platform as it builds an institutional portfolio of self-storage assets in the UK.
In the UK, self-storage totals 50.5M SF in 1,997 units. However, there are 998 brands, opening the door to the rapid consolidation the private equity players hope to engineer. In 2020/21 the net rental rate was up 3.7% to £23.94 per SF, impressive growth during the pandemic, the Self Storage Association reported late last year.
“This was a rare opportunity to acquire a portfolio of assets in a high barrier-to-entry and fast-growing sector, which has demonstrated its resilience versus almost all other real estate sectors over the past two years and which is ideally placed to benefit from a number of favourable structural trends,” said Chris Perara, Moorfield's senior investment manager.
