Private Equity Faces A Fight As Mega-Investors Lock Onto Self-Storage
Nuveen Real Estate has stepped up the expansion of its self-storage platform as the investor pile-on gathers pace.
Nuveen paid $230M in a take-private acquisition of Sweden’s 24Storage business. It follows rapidly on the acquisition of local Green Storage.
Nuveen said it is “aggressively looking to grow its exposure” to the alternative asset class. Until now private equity has tended to dominate investment in self-storage as it exploits an opportunity to build platforms by consolidating an extremely fragmented sector.
It is also a rare example of an institutional investor undertaking a complex take-private deal, usually the preserve of private equity.
The latest buys are centred around Sweden’s three major cities of Stockholm, Gothenburg and Malmö, and follow the acquisition of Green Storage platform last month.
Whilst a handful of institutional investors have taken a gamble on self-store — the UK’s LGIM agreed a management contract with SureStore Management Services in 2019, and has continued to expand — the private equity sector has largely dominated, attracted by a compound rate of growth estimated to be more than 130% between 2020 and 2025, Forbes reported.
The last year has seen Angelo Gordon and Marcol commit €250M to fund expansion of a new self-storage platform in Germany; Moorfield announce a £100M joint venture with Stor-age Property REIT to fund further development and acquisitions in London and the South East in the UK; whilst Carlyle’s joint venture with Safestore is still expanding in the Netherlands.
During the last decade the total number of self-storage facilities has mushroomed. There are now 5,173 facilities across Europe, providing nearly 118M SF of self-storage space compared to 1,711 facilities a decade ago. Rents across Europe are up 7%, according to JLL.
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 was up 3.7% to £23.94 per SF, impressive growth during the pandemic. However, 18% of operators upped their discount levels, the Self Storage Association reported.
Nuveen Real Estate is one of the largest investment managers in the world with $144B assets under management.
