A pair of first-time real estate fund managers are betting half a billion dollars on the ever-resilient self-storage sector.
Concord Wilshire, a Los Angeles-based developer, and Summit Investment Management, a Denver-based distressed debt investor, will put $480 million to work over the next four years buying and developing 40 self-storage facilities.
The Miami-based venture, known as Concord Summit Fund-1, launched in April and has already made commitments for properties in Atlanta, Tampa and Boston.
“Over the last decade, the self-storage industry has consistently performed throughout economic cycles and outperformed all other commercial real estate sectors, with average returns of over 20 percent,” said Kevin O’Grady, co-founder of Concord Summit Capital, an advisory firm of which Concord Wilshire and Summit Investment Management are principals.
“We have plenty of aggressive debt and equity capital available for this market,” he added.
The fund will focus on “innovative” self-storage investments that have “the best available and user-friendly technology and applications,” and projected rent rates above $2 per square foot, O’Grady said in an email. It is also targeting Chicago, New Jersey and Philadelphia for future investments.
The fund will also invest in mixed-use properties with residential and retail components. It may provide rescue capital for existing self-storage facilities and make other strategic real estate investments, including build-to-rent properties.
“We will also entertain opportunistic hospitality plays,” O’Grady said.
Concord Wilshire, led by Nate Sirang, has developed and invested in more than $10 billion of real estate since its founding 30 years ago. Summit Investment Management, led by CJ Burger, has invested more than $1.8 billion across a range of capital structures and industries. Neither firm manages any other funds.