Institutional investors are snapping up self storage facilities

The European self storage market is currently experiencing a recent surge in transactional activity involving the largest institutional investors in the world.

In the last decade, the industry has tripled, and there are now 6,000 self storage properties across Europe. Reputable investment managers, including Legal & General, Heitman, and Nuveen Real Estate have all participated in recent self storage transactions and consolidation deals around Europe.

Nuveen Real Estate, one of the largest investment managers in the world, expressed its interest in preparing for the next decade of real estate investments and now recognises self storage as a desirable property type throughout multiple real estate cycles. Experts at Nuveen believe that self storage has the potential to help drive performance and income for real estate investors for years to come.

Jasper Gilbey, Head of Housing, Alternatives, and Real Estate Europe at Nuveen said: “Self storage is one of our key conviction plays in Europe given the sector’s proven resilience, strong demographic tailwinds and low provision rates as a basis for growth.”

In April 2023, Nuveen acquired a high-quality self storage portfolio from Easistore. The portfolio, which comprises four assets totalling c. 240,000 sq ft, consists of predominantly modern, bespoke, purpose-built properties which are located across the south-east of England. The vendor was advised by property specialists, Levy Real Estate.

Simon Higgins, Managing Partner at Levy Real Estate said: “Having successfully completed the sale of Easistore and with a number of further sales in hand we are seeing continued and ever increasing investor interest in the UK self storage market.

“As has been the case for some while the number of parties looking to establish themselves exceed the opportunities available and some are now looking to ground up development with a view to introducing 3rd party operators. In Europe many of the larger platforms are simultaneously looking for expansion opportunity and in particular in Germany, Netherlands and Spain where the market is seen to be in its infancy with considerable opportunity for future growth.”

Transactions show no signs of slowing down anytime soon

Ollie Saunders, real estate professional and previous Head of EMEA Alternatives at JLL said: “When I started valuing self storage 25 years ago, there was only a limited amount of transactional activity. Fortunately, as the industry has developed there have been plenty of transactions to help valuers. This is likely to get even better as the sector will soon be transacting over £1 billion per year in Europe. That is a three-fold increase from where it was in 2019!”

Self storage operators revenue continues to surge

Recently, AIM-listed UK self storage company Lok&Store has been buoyed by robust revenue momentum. In an update on trading for the year to 31 July 2023, the company reported a 12.1 per cent rise in same-store self storage revenue, with total self storage revenue up 5.3 per cent.

Lok’n Store CEO Andrew Jacobs said: “Revenue momentum in the year to 31 July 2023 has been robust with same-store self storage revenue up 12.1 per cent against last year, driven by continued strong demand. We are onsite at three further new stores, all of which will open in FY24 and have a secured pipeline of a further eight. These new stores will accelerate our growth in cash flows to fund more dividends to shareholders and more growth of the business.”

Shurgard Self Storage Ltd., the European affiliate of U.S.-based real estate investment trust Public Storage Inc., recently released its financial results for the first half of its 2023 fiscal year. The company showed gains in key areas, particularly in operating revenue and net operating income.

Shurgard has big plans for the future, with seven new developments scheduled to open this year in the Netherlands and U.K., which are expected to add 39,200 square meters of self storage to the company’s portfolio. “Shurgard continues to deliver solid growth, as demonstrated by our first-half results,” said CEO Marc Oursin. “We have achieved these strong results in Q1 and Q2 despite more difficult and uncertain economic conditions, highlighting the strength of our significant geographic diversity and the resilience of our product.”

Self storage voted best shares to buy in 2023

As reported by Yahoo Finance UK, those that stuck with Safestore Self Storage Holdings over the last decade are “currently sitting on a large pile of money” and that “Safestore shares are a smart investment”. Safestore is the UK’s largest self storage group. Following its success in the UK, it’s also continuing to grow its presence in Europe, including a joint venture into Germany. With consumer awareness increasing, management has had little trouble expanding its real estate empire. By strategically positioning facilities near towns and cities, both revenue and earnings have risen drastically over the years. So much so that dividends have increased for 13 years in a row!

Find out more here on why now is the time to invest in self storage: https://kuboid.co.uk/why-invest-in-self-storage/

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