Atlanta-based Stein Investment Group is in the early stages of developing a national self-storage portfolio.
Since buying its first self-storage property in 2010, Stein Investment has established a foothold in the Atlanta market. The firm already operates two properties, with another two under development. Those initial investments have whetted the company’s appetite for self-storage assets.
“We love this business. We think we are good at it, and we would love to have as big of a portfolio as we can—as long as we find deals that make sense to us,” said Jeff Stein, principal at Stein Investment.
Ideally, the company would like to grow to about 35 facilities nationwide within the next seven years. Stein thinks that’s a good portfolio size for an effective owner-operator.
Over the next 12 to 18 months, Stein Investment plans to allocate $25 million to $50 million for acquisitions. That’s on top of the $17 million that the firm already has poured into development activity, according to Stein.
Stein Investment is a third-generation, family-owned investment firm that owns a portfolio of about 1.5 million square feet of retail, office, multifamily and self-storage properties. Combined, the four current self-storage facilities account for a small portion of the overall portfolio—about 225,000 square feet of net rentable space and more than 2,000 units.
Going North and West
For now, the firm’s real estate portfolio primarily is centered in the Southeast and Mid-Atlantic. However, to grow its self-storage holdings, the company expects to go outside its existing markets to places like Denver, Indianapolis, Nashville and Phoenix.
Stein Investment primarily is targeting value-add investments where it can improve management, complete renovations or expansions at existing facilities, or initiate ground-up construction.
“We are interested in creating value, not just buying something with stable, in-place cash flow where we are competing with institutional buyers,” Stein said.
With today’s competitive field, we have to put a better product out there to attract the type of customer that we’re after.
— Jeff Stein, principal at Stein Investment Group
Growing a Portfolio
Part of what sets Stein Investment apart as an owner is its focus on customer service and top-quality assets, said David Dixon, chief operating officer at Universal Storage Group in Atlanta. Universal Storage is Stein Investment’s third-party property manager in Atlanta.
Stein Investment bought its first self-storage facility, Hudson Self-Storage, in the south Atlanta suburb of Stockbridge in 2010. When the Hudson Street property was destroyed by fire two years ago, the firm spent several months on a new design aimed at creating a more modern, upscale feel with amenities such as Wi-Fi, upgraded security and a conference room. Business groups are using the conference room on a monthly and even weekly basis, and that helps attract business users, which are the “holy grail” of self-storage tenants, Dixon said. The facility comprises 57,170 net rentable square feet and 427 units.
“With today’s competitive field, we have to put a better product out there to attract the type of customer that we’re after,” Dixon said. “So, the more features and amenities and the more upscale you make your facilities, the better chance you have for attracting those people.”
Development and Redevelopment
Stein Investment seeks to distinguish itself from direct competitors, including Public Storage and other operators. As such, the company is willing to tackle more challenging redevelopment opportunities.
To develop Decatur Street Self-Storage in Atlanta, Stein Investment is tearing down a former shopping center. The new facility, which set to open by the end of 2013, will feature 87,523 square feet of net rentable space with 854 units, as well as 3,722 square feet of street-level retail space.
In addition, the company razed a former gas station and is doing site work on Johnson Ferry Self-Storage in the East Cobb area of Atlanta. The project will feature 71,000 square feet of rentable square feet and 573 units in a three-story building. Completion of the project is set for the second quarter of 2014.
Now, all of the self-storage properties operate under different names. However, Stein Investment is working on new branding for its self-storage portfolio.
Another advantage for Stein Investment, particularly as it pursues new development projects, is it’s a low-leverage investor, typically buying properties in all-cash deals.
“They are a group of young, aggressive guys,” Dixon said. “They know what they want, and they have partnered up with some good companies to make their vision successful.”
Images courtesy of Stein Investment Group
