REITs, Private Equity Investors Pile into Self-Storage Assets
November 29, 2021 | Bendix Anderson | WealthManagement.com
Self-storage properties in the U.S. have performed well throughout the coronavirus pandemic, and that has attracted the attention of investors from around the world, driving prices up even further on the assets.
“Storage facilities have a higher value then they did even a few years ago, due to high levels of occupancies and rental rate performance,” says Isaac Hiatt, product specialist at Yardi Matrix.
Investors continue to open their wallets to buy more self-storage properties at higher prices, relative to the income from the properties.
For example, REITs specializing in self-storage recently paid cap rates in the 5 percent to 7 percent range, according to their earnings reports for the third quarter of 2021. Those numbers are very low for the self-storage business.
“It would be hard for cap rates to go significantly lower than the current environment,” says Ryan Clark, co-founder and director of investment sales for Skyview Advisors, based in Tampa, Fla. However, the rush to invest is not just reflected in the simple cap rate. “Buyers are valuing properties, both stabilized and in lease-up, based on projected pro-forma performance,” he says. “They are applying aggressive cap rates to the future performance.”
