VanWest Launching Its Third Self-Storage Fund

The real estate investment company VanWest partner launched the VanWest Storage Fund III, enabling accredited investors to add one of the fastest growing real estate asset classes to their portfolio. The fund will raise $150 million in equity from individual and institutional investors, with a target capitalization of approximately $425 million in assets.

The fund targets value-add opportunities across the US that allow VanWest to create value for investors through renovations, expansions and managerial improvements.

The fund will be launched on June 7, 2022 during a webinar hosted by VanWest Partners. Investors can register for the webinar here.

Self-storage remains a highly segmented asset class, with approximately 74% of facilities owned by small operators. Many of these operators have inefficient management systems, resulting in lower revenue and higher expenses. VanWest is able to acquire these facilities at an attractive price and execute its management and marketing strategies to increase cash flow and create value for investors.

Self Storage Market

While real estate has shown strong performance across virtually all commercial real estate sectors over the past 12 months, self-storage continues to be the dominant sector in terms of price growth. According to the Green Street CPPI Index (which tracks current commercial property prices), self-storage has seen price growth of 64% over the past 12 months and 69% growth since pre-COVID times. The real estate sectors with the second highest growth over the past 12 months are retail with 35% price growth and industrial with 28% price growth.

Demographic trends have been the main reason behind the growth of the self-storage market in recent years as more and more people move to the suburbs and sunbelt states. Now that homeownership is becoming less affordable and more Americans are being forced to rent, the demand for self-storage is expected to continue to grow.

Why self storage?

Low correlation with public markets: Historically, self-storage returns have had little correlation to stock and bond markets. The primary reason for this is that storage units continue to deliver consistent and predictable cash flow through all market cycles.

As many investors brace themselves for a bear market, self-storage is becoming increasingly attractive as a way to generate passive income and long-term growth.

Recession Resistant: Self-storage has proven its worth in a booming economy, but more importantly, the asset class is highly recession-resistant. Demand for self-storage has historically remained strong during recessions as individuals downsize their homes and rent for longer periods.

For example, storage growth remained relatively flat during the Great Recession – compared to declines in the vast majority of other asset classes – and has skyrocketed in the wake of COVID-19.

Inflation: The latest data suggests that inflation may already have peaked, but many experts agree there will be a long slowdown. Self-storage has historically performed well during periods of high inflation and will likely remain one of the most resilient asset classes.

Storage units typically have monthly rental terms, which means operators can quickly adjust rentals to reflect market conditions.

Investment highlights

VanWest Partners has a proven track record in the self storage market. The company has now closed two storage funds and deployed $130 million across 23 properties. So far, both funds have beaten guidance in terms of revenue and net operating income (NOI) from Q1 2022.

Conditions of the VanWest Storage Fund III:

  • Minimum investment: $100,000
  • Target investor IRR: 14% – 16%
  • Target equity multiple: 2x – 2.25x
  • Preferred return: 8%
  • Target holding period: 6 – 8+ years

Access offer details from VanWest partners

About VanWest

VanWest Partners is an industry leader in self-storage and offers accredited retail investors the opportunity to benefit from the growth in this market through its funds under management. The company has an established track record with over $195 million in real estate assets.

VanWest’s wholly owned management company, ClearHome Self Storage, is also one of the top 50 US self-storage facility operators and the top 100 US facility owners

Accredited investors can learn more about VanWest’s strategy and current offerings on the company’s website.

Photo by andrea crisante on Shutterstock

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