(Bloomberg)—Rizk Ventures-backed SpareBox Storage is seeking to amass $1 billion in assets in an effort to consolidate the fragmented self-storage market.
The recently launched company is targeting businesses across the U.S., with an eye toward making 15 or more acquisitions within the next year, according to Tom Rizk, chairman of Rizk Ventures Self Storage LLC, which manages SpareBox.
“Change -- whether it’s Covid or a recession -- tends to create demand for self-storage, which is incredibly resilient throughout different parts of the economic cycle,” Rizk said. Of about 50,000 facilities in the U.S., 30,000 or more are run by mom-and-pop owners, he estimated.
Expecting ongoing migration out of large urban centers like New York and Los Angeles, SpareBox will hone in on smaller cities such as Tucson, Arizona; Augusta, Georgia; Waco, Texas; Albuquerque, New Mexico; Statesville, North Carolina; and Ocala, Florida.
The company has an initial equity commitment of $200 million from an institutional investor and Rizk Ventures, and an acquisition financing facility of as much as $500 million.
SpareBox, led by Chief Executive Officer Steve Treadwell, made its first deal in Amarillo, Texas, buying 10 self-storage properties that accounted for more than a quarter of the city’s availability. The transaction reflects SpareBox’s strategy of acquiring clusters of undervalued self-storage centers in suburbs or small cities, said Treadwell, formerly chief operating officer of National Storage Affiliates Trust.
Self-storage real estate investment trusts have performed better than the broader REIT sector during the pandemic. This year, Public Storage has fallen 2.1%, CubeSmart has declined 1.7% and Extra Space Storage Inc. is up 0.2%, compared with a 13% drop in the Bloomberg U.S. REITs Index.
© 2020 Bloomberg L.P.