Starwood, Morningstar Properties Form Self-Storage JV
The deal includes the recapitalization of 25 Morningstar assets and a commitment of capital to continue acquiring assets.
Starwood Real Estate Income Trust and self-storage owner and operator Morningstar Properties have formed a joint venture to focus on the self-storage sector.
The joint venture includes the recapitalization of 25 assets owned by Morningstar, as well as a commitment of capital to continue acquiring assets in the sector under the Morningstar brand. The joint venture will seek out both portfolios and one-off assets.
The seed portfolio for the newly formed venture includes 1.8 million square feet of storage space located throughout the Sun Belt region, which is experiencing significant population, employment and income growth.
An Industry on a Tear
Simply put, the self-storage sector has been on a tear.
“Self-storage has had a banner year in 2021, building on its strong performance in 2020,” Nareit senior economist Calvin Schnure told GlobeSt.com in an earlier interview. “Strong housing markets and greater mobility in an era where some employees continue to work-from-anywhere all fuel demand for storage.”
Shifting fundamentals will make the sector even more landlord-friendly, according to a recent report from Moody’s Reis. It expects to see the supply of new stock in self-storage decrease as the industry expands over the next several years and the vacancy rate to follow suit.
It’s an indication that self-storage still has plenty of run room with rents on 10×10 climate-controlled units projected to end 2021 with 8% growth.
As of Nov. 30, 2021, the SREIT portfolio had a total asset value of $18.2 billion across 334 properties.
Morningstar was advised by Eastdil Secured on the recapitalization of the seed portfolio and formation of this venture.