Madison Capital Launches Self Storage Fund
The fund is targeting the acquisition and development of properties nationwide, particularly in the Sun Belt.
Madison Capital Group has launched the Go Store It Opportunity Fund L.P., a $250 million self storage investment effort. The fund is intended for the acquisition and development of a diverse portfolio of self storage properties nationwide, particularly in high-growth markets in the Sun Belt.
Go Store It, an affiliate of Madison Capital Group, will oversee the fund’s strategy. The Sun Belt has proven a particularly good market for the company.
“But storage for us is a nationwide strategy,” Ryan Hanks, Madison Capital Group CEO, told Multi-Housing News. “We want to be in markets where we can scale. A big part of the strategy will be to find portfolio deals as well as one-offs.”
The Go Store It Opportunity Fund strategy holds that value-add acquisitions of under managed, locally owned facilities with below-market rents offer potential for both rental growth and operational enhancements. In addition, the fund will pursue pre-stabilized acquisitions, enabling it to acquire properties at a discount with valuations nearing replacement cost and the potential for improved cap rates. The fund will also develop properties in select markets.
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“We have a very active development business,” Hanks said. “But we feel with this fund structure, cash flow and value add will be more appealing to investors at the valuations we’re seeing today. So, we would like to just sprinkle some development in there.”
Hanks added that Madison Capital Group believes the timing is right for the launch of this fund. “Post election, there’s a little more clarity on interest rates,” he said. “Our timing heading into 2025 is great. We foresee capital markets loosening in 2025 and 2025. We don’t see a lot of headwinds, to be honest with you.”
The U.S. self storage market is currently estimated at $44.3 billion, with growth projected at 16 percent through 2029. Growth will be propelled by heightened consumer mobility and increased demand by Americans for flexible storage solutions.
The advertised street rate per square foot in self storage declined 3.5 percent year-over-year as of September, to $16.55, according to a recent Yardi Matrix report. Despite coming down from its largest development boom ever during the COVID-19 era, self storage is still seen as a business-safe, high-growth and diversifying asset class. Further, in many ways, the property type performs well through almost all phases of any economic cycle.
