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Looming Commercial Real Estate Crisis offers Huge Opportunities in Self Storage.

Guest post by: Scott Meyers

Article Overview: With the looming commercial real estate crisis due to distressed debt investors, self storage facilities and other properties that can be converted over to climate controlled self storage are going to be a hot investment in the coming years.

Looming Commercial Real Estate Crisis offers Huge Opportunities in Self Storage.

Leon Black, founder of Apollo Management, has forecast that an impending crisis in commercial real estate will provide a "bonanza" for distressed debt investors.

About $2,000 billion of commercial real estate debt falls due in the next few years, Mr. Black said, and he expected banks and insurers to face increasing pressure from politicians and regulators to sell off loans backed by commercial real estate.

"A lot of the sources of capital [for commercial real estate] have failed," said Mr Black at the Super Return private equity conference in Berlin yesterday. "So if you have capital, there are things you will be able to pick off."

"I think a lot of the traditional holders of this real estate are going to be forced to sell as things are marked down," he said. "Commercial real estate will be a bonanza."

Christopher O'Brien, head of private equity at Investcorp, an investment group listed in London and Bahrain with $1.5billion of commercial real estate assets under management, agreed that it would be an attractive area for specialist investors.

"The banks on the real estate side are being extremely co-operative and looking for mezzanine investors to come in as a new source of capital," he said. "But you have to know what you are doing and which part of the capital stack to invest in."

Mr Black said: "We've come off the precipice and moved back into more healthy territory."

So what does all this mean? Well as I read this news, it’s yet another reminder that now is the time to take advantage of a market unlike any other we have seen. We are aggressively raising private capital to begin acquiring self storage facilities from owners that are forced to sell for the above mentioned reasons, and many others. We’re also focusing on abandoned warehouses and other retail/industrial buildings that will be ripe for conversion to temperature controlled storage facilities. The cost of the buildings are down, and construction companies are offering the lowest prices in 10 years in their bids to retrofit these buildings for conversion to Self Storage. It’s the perfect storm.

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Article Tags: real estate, self storage, self storage investing



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