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Self Storage Financing 101: What Is Available?

Written by: Douglas Brooks Posted: 10/3/2018
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Many self storage investment opportunities exist across the country. Whether the market is large or small, Investors are motivated to identify and acquire properties where the addition of a hands-on day to day management team and/or expansion opportunity exists. Finding solid locations where an owner can drive revenue provides an investor great upside opportunity on their new investment asset. Additionally, development of new facilities is another investment option. Whether new ground-up in underserved markets or finding older/vacant retail strips or boxes to redevelop into self storage sites, investors are finding excellent growth opportunities for their portfolios.

Debt for this property type is plentiful. Banks, CMBS and life companies all seek loans on self storage assets. Whether for acquisition, refinance or development, lenders are seeking storage loans for portfolios. Terms on a short-term (3-5 years) or long-term (10-15 years) basis and both recourse and non-recourse loans are available for self storage assets. Additionally, owners can “cash out” equity from their asset if they desire with certain lenders.

For several years, we have tried to use our crystal ball and advise clients that the long-term rates will rise and this increase has happened over the last year. The 10-year treasury rate is settling above 3.0% and short-term rates rise with every Fed rate increase. The time for long-term investors to refinance is now. Rates will not be going lower anytime soon as the US economy improves to a consistent GDP around 4.0%. If an investor has a maturity in the coming year, I would highly consider refinancing that today and avoiding an increase in rates upon maturity.

The Hatcher Group of Marcus & Millichap has the knowledge an investor needs for the successful acquisition of self storage assets. Our sales agents are amongst the best in the business and our financing professionals have great contacts to suit any investor’s financing needs.

About the Author

Doug joined the Columbus, OH office of Marcus & Millichap Capital Corporation (MMCC) in October 2016. As a director with MMCC, Mr. Brooks is responsible for securing commercial debt and equity financing for an array of property types including self storage, net-lease retail, retail, hospitality, multifamily and office. He is well connected with national, regional and local funding sources including, but not limited to, commercial banks, CMBS lenders and life insurance companies. Mr. Brooks has more than 22 years of commercial real estate finance experience and has closed more than 100 transactions. He specializes in self storage, retail, hospitality and multifamily.

Prior to joining MMCC, Mr. Brooks has worked in mortgage banking and spent 20 years as a senior vice president – finance with national development company, Forest City Enterprises. Mr. Brooks is a graduate of Ohio Wesleyan University, where he earned a Bachelor of Arts degree in accounting. He is also member of Self Storage Association and Mortgage Bankers Association.

 

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