First Neck Self-Storage Group LLC, a joint venture between asset-management and investment-advisory firm CSM Capital Corp. and real estate investment and management company Self-Storage Capital Partners (SSCP), has raised $50 million with the intent to acquire storage properties in primary and secondary markets. The funding round will be used to buy up to $160 million in assets, according to the source.
“Our investors are very well-heeled, wealthy individuals who have worked with us for a long time,” Christopher Moore, founder and president of CSM Capital, told the source. “We’re going to spend this right now, and get back in the market probably when we’re within two-thirds of being done. The next round could be well north of $100 million.”
First Neck is examining opportunities in the top 100 Metropolitan Statistical Areas, though its primary focus will be in secondary markets. “We saw a good opportunity to acquire stabilized facilities in primary and secondary markets, and to acquire relatively sophisticated operators and achieve management upsides through the management expertise of SSCP,” said John Blizzard, an analyst at CSM Capital.
The joint venture believes secondary markets are attractive due to the potential for higher yields. “You get rewarded much better in the secondary market than in the top 10 major markets, but your operational risk is slightly more,” Jake Ramage, CEO of SSCP, told the source. “Maybe the rental growth is not as strong, but your reward is a higher yield.”
While First Neck could decide to sell its assets quickly, it could also pursue status as a real estate investment trust (REIT). “We’ll happily entertain an industry sale to a third party, public or private. And we’ll be happy to look at becoming a REIT ourselves,” Moore said. “There’s no shortage of people looking at the opportunity. At some point, everything’s for sale. But we’re happy to hold it.”
Based in New York City, CSM Capital works with high-net-worth families and individuals. It has $1.1 billion in accounts under management. The firm’s partners have completed more than $150 million worth of direct-equity investments in multi-family properties, according to the source.
Philadelphia-based SSCP is focused exclusively on the self-storage market. Founded in 2013, it operates the Snapbox Self Storage brand name. Its portfolio comprises 26 facilities in nine states. Its executives have more than 35 years of collective experience in acquiring, operating, repositioning and underwriting self-storage properties, according to its website.
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