A new self-storage fund has been launched to consolidate and develop primarily class-A assets in major metropolitan areas across the country.
The ICM Bluebird Canadian Self Storage Fund is a venture between ICM Asset Management and Meckelborg Financial Group Ltd., with Bluebird Self Storage and StoreWest serving as asset managers.
Bluebird is capitalizing on the growing consumer demand for storage space as it continues building and buying assets to expand its portfolio across Canada.
Reade DeCurtins, principal of the Toronto-based company, said they have seven new storage developments breaking ground this year in partnership with StoreWest and more are planned in 2024.
Bluebird’s current portfolio of stores under management includes 30 locations, 2.5 million gross square feet and 20,000 units.
The pipeline of future developments and acquisitions is approximately 20 locations, two million gross square feet and 14,000 units.
The fund's philosophy
“Our mandate is we like storage. We very quickly figured out it was a lot harder to buy than build because everyone wanted to buy but not everyone wanted to build,” StoreWest president Roland Schatz said.
“So I guess it’s just common sense you want to be where people are not. My partners and I have a fairly strong background in real estate and private equity . . .
"We were very bought in, even prior to meeting Bluebird, (to) the concept of building class-A storage because we really saw what the old storage looked like . . . people didn’t want it to look a prison, they didn’t want it in an industrial park.
"They actually wanted it to be part of their community.”
With that vision in mind, StoreWest built its first facility on 17 acres in Chestermere, just outside of Calgary, in 2018.
Phase 1 contained 45,000 square feet of net rentable space with 430 units and 350 RV stalls. Chestermere is being expanded with the addition of 29,000 square feet in Phase 2.
A second facility was built in southeast Calgary with about 80,000 square feet of net rentable space and 879 units on two acres.
In 2019, StoreWest and Bluebird realized they shared a common vision. Bluebird then took over both the Chestermere and Calgary facilities.
The relationship has continued to grow
According to the ICM Bluebird Canadian Self Storage Fund, the opportunity includes proprietary rights to a country-wide pipeline of an existing 3.5 million square feet.
There is also a development pipeline of 1.7 million square feet.
The assets come from three main sources:
Acquisition of an existing portfolio of Bluebird-managed assets in which Bluebird has varying minority ownership interests among fragmented majority ownership structures. These assets are predominantly larger, institutional quality facilities in 'A' locations;
Acquisition of existing third-party assets that either complement the existing portfolio, provide strategic placement for the fund's national presence or offer significant upside due to poor current management, below-market rental rates or expansion opportunities;
An active development arm to provide a pipeline of class-A quality assets in premium locations that can be rolled into the investment once built and stabilized to roughly 50 per cent occupancy.
“We’ve founded a joint partnership called StoreWest Bluebird Partners and essentially its mandate is to do development across Canada for the Bluebird brand," Schatz said.
"So our goal is, instead of just collaborating piecemeal on opportunities it is to collaborate on a more methodical and national scale with Bluebird.
“And what it really combines is Bluebird has the brand, they’ve got the momentum, the reputation in the market. We have the boots on the ground development team and it’s just a very good synergy with them.”
Schatz said he’s heard from people saying it’s very rare to have a national-scale developer in the self-storage industry as most tend to be very local.
New developments coming this year
Seven developments are breaking ground this year in Halifax, Quebec City, Montreal, Mississauga and Calgary.
Schatz said the investment fund’s goal is to aggregate Canada’s first self-storage portfolio comprised of at least 75 per cent class-A assets.
“We’re in this rapid growth mode,” said DeCurtins.
“Our group has been in self-storage since 1983. We’ve built more self-storage than anyone else in the industry and this partnership with StoreWest . . . is going to bolster our ability to scale the development across the country."
The Bluebird portfolio is about half acquisitions and half property that was built or redeveloped, Bluebird's CEO Jason Koonin said, adding that the strategy will likely continue.
DeCurtins said the self-storage industry is growing in part due to the fact that multiresidential unit sizes have shrunk in recent years. The popularity of work-from-home and side hustles also create a need for extra space.
Schatz added self-storage facilities today are closer to residential and mixed-use developments, where in the past they have been located in industrial areas.
“Bluebird and StoreWest, we’re differentiating not just the quality of it but the location,” he said.
"In Mahogany, we have a facility coming out right in the middle of one of the most affluent communities in southeast Calgary.”
Original article source here.
Meghan Cox
Meghan Cox is an expert with years of experience in business development, real estate, and coaching with a B.A. in Communication from Wake Forest University in North Carolina.
