SROA Capital Closes Self Storage Fund With $650M in Commitments

SROA Capital has closed SROA Capital Fund VIII with $650 million in commitments. The fund is the firm’s largest to date, and it closed oversubscribed, significantly surpassing the original target capital raise of $500 million. The fund will focus on self-storage investment.

The fund has already purchased 123 self-storage facilities totaling more than 7.2 million square feet in 26 transactions. It plans to deploy the remaining capital over the next 12 months. SROA already has a portfolio of 310 facilities across 23 states, making them one the largest private owner-operators of self-storage.

A diverse round up of real estate investors, including public and private pensions, insurance companies, foundations, global asset managers, wealth managers, and family offices in North America, Latin America and Europe, invested in the fund. In addition, SROA raised $200 million from limited partners for co-investments alongside Fund VIII.

SROA was one of the largest buyers of self-storage in 2020, alongside major players like BREIT and Nexpoint, the top two buyers, and Public Storage, National Storage Affiliates, CubeSmart, Extra Space Storage. Self-storage sales tallied $7.7 billion in 2020, which was one-third higher than that of 2019, according to Real Capital Analytics, an all-time record. While only two transactions accounted for a quarter of all deals, single-asset sales, which RCA says is a better indicator of the health of the market, also rose 13% year-over-year to $3.5 billion.

Last year, self-storage investment activity kept pace, and this year, experts expect the momentum to continue. The rate growth for 10×10 non-climate controlled units hit 8.5% last year, according to Yardi Matrix, and while similarly dizzying rates are not likely this year, the firm still predicts strong growth in 2022. National street rates for similar units remained at 6.7% growth in December, while rates for climate controlled units fell to 7.4%. And though rent growth has moderated, none of the metros Yardi tracks has seen negative street rate growth for either unit type. Rent growth was 5% or more in 22 of the top 30 markets for non-climate controlled units and in 19 of the top markets for climate-controlled units.