Almanac strikes largest-ever deal with $500m self-storage bet

The New York-based firm's first investment out of its ninth fund marks its return to the niche sector after nearly two decades.

Almanac Realty Investors has made a return to the self-storage sector with a commitment to provide up to $500 million of capital to Atlanta-based self-storage owner and manager Storage Post, PERE has learned.

Including debt, the joint venture will have an investment capacity of up to $1 billion, with Storage Post and Almanac seeking to build a diversified, institutional-quality portfolio of self-storage assets throughout the US.

Founded in 1998, Storage Post owns and operates 29 facilities in the East Coast and South. The firm is led by Bruce Roch, who founded Safeguard Self Storage, one of the largest self-storage companies in the US, before selling it to Morgan Stanley’s Prime Property Fund in 2009.

The investment is the New York-based firm’s largest-ever and also represents the first capital outlay from its ninth fund, Almanac Realty Securities IX, which was launched last year. Prior to Storage Post, Almanac’s largest investment had been an up to $400 million commitment to Baltimore-based commercial real estate company Merritt Properties.

“The principals of Storage Post have a 30-year track record of acquiring, developing, and managing self-storage facilities,” said David Haltiner, managing director at Almanac, in a statement. “The business is vertically-integrated with significant operating and technology capabilities and, as such, we believe it to be well positioned to achieve meaningful scale in the storage sector. We are pleased to establish this well-capitalized platform in partnership with Storage Post and to support the next phase of growth.”

Almanac managing director Josh Overbay added: “The self-storage sector has historically performed well throughout market cycles, and current fundamentals are particularly strong across the country. The investment was driven by the opportunity to partner with a high-quality management team focused on a favorable asset class.”

According to a December update from commercial real estate analytics firm Green Street, self-storage recorded the highest property value increase among 10 commercial real estate sectors during the third quarter of 2021, with an average price rise of 18 percent. Malls recorded the second-highest rise at 16 percent, while the overall price increase across all property sectors was 6 percent, the report stated.

Almanac previously made a self-storage investment when it backed Morningstar Properties, a Charlotte, North Carolina-based owner and operator of self-storage facilities, in the late 1990s, exiting in 2003. In making its return to the sector, Overbay said the firm had “spent time with a number of owner-operators over the last several years and found the right partner with Storage Post”.

The Storage Post deal is the latest in a flurry of private real estate investments in self-storage. In December, KKR launched a US self-storage platform after acquiring 16 assets across major growth markets over the previous few months. Also last month, Nuveen agreed to acquire 24Storage, the second largest self-storage operator in Sweden. The firm had made its European self-storage debut in November with the purchase of a majority interest in the Green Storage platform in the country.

Last week, Starwood Capital Group’s non-listed REIT, Starwood Real Estate Income Trust, announced a joint venture with Morningstar Properties to own and operate high-quality stabilized assets in the self-storage sector. The joint venture included the recapitalization of 25 assets owned by Morningstar funds.

Almanac makes growth capital investments into private and public companies that own and operate real estate in North America. Founded in 1981 as Rothschild Realty, it was acquired by New York-based investment firm Neuberger Berman in February 2020. Its prior two funds, ARS VIII and ARS II, were generating net returns of 9 percent and 13 percent, respectively, during the third quarter, according to Almanac. Meanwhile, the ARS fund series was generating a since-inception net return of 12.7 percent as of September 30.