New Self-Storage Fund Based On Sound Fundamentals
Avenue Living Asset Management is leveraging its existing property management platform through Avenue Living Communities to launch a new portfolio: Mini Mall Storage Properties. The fund launched last month with the acquisition of a 400-unit self-storage facility in Calgary.
Established against a backdrop of market disruption, due to the global pandemic of the Coronavirus Disease (COVID-19), the portfolio has already performed well, and has over $18 million worth of assets currently under management or contract. Investors are keen to invest, with over 25 per cent of the founders’ round raised thus far, as well as strong institutional investor interest.
Anthony Giuffre, Founder and CEO of Avenue Living Asset Management, created the fund to consolidate B & C class self-storage properties across Canada, with an initial focus in communities across Western Canada and the Prairies.
“Just as Avenue Living has had incredible success investing in secondary markets in Alberta, Saskatchewan and Manitoba, we’re going to use a similar playbook with our storage fund,” said Giuffre. “We are on track to have 15 to 20 locations by the end of this summer.”
“Consolidation of smaller B & C class assets located throughout the Prairies barely exists, simply because few companies have the infrastructure and the reach to do it,” continued Giuffre, whose first job was working in self-storage – for his father, Joe Giuffre.
Joe Giuffre established the first Mini Mall Self-Storage location in 1977 in Calgary. He subsequently grew the business to multiple locations within Calgary, before divesting to focus on the flagship Mini Mall location.
“My father built, owned, and operated the first self-storage facilities in Western Canada. He was inspired at a construction conference in Texas, and spent the next month researching self-storage, travelling around the state. Then he brought the concept back to Canada,” said Giuffre.
“There was nothing similar in the Prairies in the late 1970’s. My father was a pioneer in this industry in Western Canada.”
The name of Avenue Living’s new fund, Mini Mall Storage Properties, is based on its cornerstone acquisition: Joe Giuffre’s Mini Mall Self-Storage.
“We are building on a legacy of 40 years of industry knowledge and experience, while leveraging our own, in-house Avenue Living platform to take it to the next level.”
In many of the rural centres in which Avenue Living operates, older self-storage properties have traditionally been owned as secondary income businesses. They generate strong cash flow and offer significant opportunity to improve upon an already low expense ratio.
The industry as a whole is extremely fragmented, with less than 15 per cent of the current operating facilities consolidated by the largest organizations in Canada – this is even further fragmented in the Prairies.
“The geographic distribution across Canada creates difficulties for traditional organizations to consolidate these assets effectively,” said Giuffre. “Mini Mall Storage Properties will leverage existing platforms within the Avenue Living Group of Companies, including its Avenue Living Communities team as well as other shared services (Logistics, Accounting, Finance, Legal, Information Technology, Human Resources, for example) to create opportunities and efficiencies other organizations would not be able to achieve.”
Avenue Living has more than $1.6 billion in assets under management across its various platforms, with over 400 residential buildings in 19 markets across the Prairies. It also has 400,000 square feet of commercial real estate, and more than 37,000 acres of agricultural land in Saskatchewan. The Mini Mall Storage Properties initiative will start with Prairie regions, but the potential for growth isn’t limited to these three provinces.
Several factors have tied into a boom in the self-storage industry in recent years throughout North America. The Baby Boomer generation frequently downsizes to smaller homes, often relying on storage as a resource to do so. Additionally, many millennials aren’t purchasing homes, and live in smaller properties, but continue accumulating items that they rely on storage to house.
According to research on self-storage in the United States, (2017 Self-Storage Demand Study, Self-Storage Association) more than 40 per cent of self-storage renters have an income level between $20,000 and $60,000, which is exactly where Avenue Living’s demographic sits – the workforce housing demographic.
As the new Storage Fund explores significant opportunities to consolidate existing storage facilities across the Prairies, providing an attractive exit to current “mom and pop” operators, it will leverage synergies to provide services to Avenue Living’s growing resident base of more than 20,000 people.