How do I invest with SSSE?

At SSSE, we provide both accredited and non-accredited investors access to tax-advantaged self storage investments with an emphasis on downside mitigation and social stewardship. Our syndications range from acquiring existing value-add self storage facilities to expanding existing facilities, from converting vacant big box stores into self storage to building from the ground up. The first step to investing with Self Storage Syndicated Equities is to fill out our investor onboarding webform. It is quick and easy and can be found on our website SSSE.com by clicking the “Investors” menu link in the upper left corner. Once you have submitted your investor webform, you will have the opportunity to schedule an introductory phone call with one of our investor relations team members. A scheduling program will automatically appear. After that, stay tuned for the next investment opportunity! If we have any active raises occurring that are a good fit for your investor profile, our investor relations team member will let you know on the call and will walk you through getting access to the investor portal. Otherwise, we typically will send out an email whenever there is a new investment opportunity. It will have the high level details including whether it is a 506(b) syndication (for both accredited and non-accredited investors that we have pre-existing relationships with) or a 506(c) syndication (for accredited investors only). There will also be a link to the investment opportunity’s web page! On the webpage will be more details including a short description at the top, followed by buttons to schedule a call, access the investor portal to review the documents, and a video summary. The investment process concludes with accessing the investor portal and signing the subscription documents and wiring funds through the investment portal. Our investor relations team will be there to help every step of the way.

How much does a drive up self storage facility cost to build?

The cost to build a non-temperature controlled, drive-up self storage facility is going to be one of the cheapest ways to build self storage, only more expensive than portable units. Self storage is primarily made of steel and concrete, with steel being a highly traded commodity susceptible to supply chain disruptions, geopolitical factors, and economic events. As a result, the cost to build any type of self storage can vary greatly from location to location, month to month. As of the time of this writing, we have seen the cost of non-temperature controlled, drive-up self storage range from $40 to $60 per square foot. Decisions like compacted gravel vs. asphalt vs. concrete for drive aisles will increase prices. Temperature controlled, drive-up self storage is increasingly popular but is more expensive because of the HVAC systems, increased utility costs, and the loss of rentable square footage for utility closets. The trade off is the potentially higher rental rates that temperature controlled units garner. Renters often like drive-up units because of the convenience of being able to load and unload directly at the unit opening.

Is self storage recession resilient?

From 2007-2009, self-storage dropped -3.8% in comparison to the S&P’s -22.0%. This was the smallest drop of any real estate asset class. Self storage had some of its best performing years during the COVID-19 Pandemic when some other real estate asset classes performed poorly. According to Trepp, a Commercial Mortgage Backed Securities research firm, of the 1,700 CMBS loans made to self storage in the first 3 quarters of 2020 only 3 were delinquent– that is a 0.17% delinquency rate . During the same time multi-family was defaulting at a rate 1,800% higher or 18x that of self storage.

Do banks like to loan on self storage?

From 2011-2018, self storage had the lowest default rate of any real estate asset class. When those rare few properties did default, the banks only lost an average of 1.52% per default. According to Trepp, a Commercial Mortgage Backed Securities research firm, of the 1,700 CMBS loans made to self storage in the first 3 quarters of 2020 only 3 were delinquent– that is a 0.17% delinquency rate . During the same time multi-family was defaulting at a rate 1,800% higher or 18x that of self storage. Lending on self storage is one of the safest loans a bank can make.

What is the ownership demographics of self storage?

Of the ~52,000 self storage facilities in the U.S., only 22% are owned by the 6 large REITS, and another 13% are owned by the next 100 largest operations. This leaves about 65% of facilities owned by “mom & pop” operators.

Is self storage subject to eviction laws?

Self storage is not guided by eviction laws. Self storage is guided by lien (property) law as opposed to eviction (tenant) law. This means self storage “loses” less days than any asset class that physically has people in it. When a renter is late on payment, their gate passcode is deactivated and/or their unit is over-locked. They are notified of their past due balance and if the delinquent unit does not come current, local lien law timelines are adhered to for the auction process. Typically, the lien and auction timeline allows for the recovery of balances owed and new rental to a paying tenant within 60 days.

Is the lien and auction timeline the same nationwide?

No, the lien and auction timeline is NOT the same nationwide. Each state has their own requirements for the lien and auction process. Typically, there are requirements of notification, a time period where the tenant has the ability to come current on balances owed, followed by public notice of auction, and then the sale of stored goods. Typically, the lien and auction timeline allows for the recovery of balances owed and new rental to a paying tenant within 60 days.

What is a reactive pricing model?

With self storage, you can adjust pricing based on real time supply and demand. When a certain type of unit (ex. 10’ x 10’) is in low supply in the market/facility, the pricing can raise by as much as 50%+ and tenants may still rent them. Conversely, when a certain type of unit is in high supply in the market/facility, the pricing can decrease in order to encourage rentals. While this may seem like a basic concept, it’s not one that is as easily implemented in other real estate assets like multifamily, and certainly not to the same premium as available to self storage.

What is the current demand for self-storage units?

The current demand for self-storage units varies depending on various factors such as location, market conditions, and economic trends. Generally, the self-storage industry has seen stable and consistent growth in recent years, driven by factors such as urbanization, lifestyle changes, and the growth of e-commerce. As of 2020, 10.6% of U.S households rent self storage. This is up from 9.4% in 2017. This provides a huge opportunity for growth since in theory, if we were to go from 1 in 10 households using self storage to 2 in 10 households, the national supply of storage facilities would need to potentially double. This sort of growth potential does not exist in many other real estate asset types.

What is the average occupancy rate for self storage?

The average occupancy rate of self-storage facilities varies depending on location, market conditions, and other factors. Typically, the average occupancy rate for self-storage facilities is between 80-90%. However, it is not uncommon for occupancy rates to fluctuate based on seasonal changes and local economic conditions. The self-storage industry as a whole has been stable and consistently growing, with high occupancy rates reflecting the growing demand for storage space.

According to the Self Storage Almanac and Radius+, as of 2022, the national occupancy was 93.4%.

What is the average rental rate for a self-storage unit?

The average rental rate for a self-storage unit varies greatly depending on factors such as location, unit size, and market conditions. On a national level, the average monthly rental rate for a standard 10x10 self-storage unit ranges from $50 to $200, with rates tending to be higher in urban areas and lower in rural areas. It is important to note that rental rates can fluctuate and can be affected by supply and demand, local economic conditions, and competition in the area.

According to Radius+, as of Q2 2022, historical national rental rates for non-temperature controlled units were as follows:

• $56.65 for 5’x5’

• $78.32 for 5’x10’

• $120.13 for 10’x10’

• $152.40 for 10’x15’

• $177.45 for 10’x20’

As of Q2 2022, historical national rental rates for temperature controlled units were as follows:

• $66.02 for 5’x5’

• $98.83 for 5’x10’

• $155.68 for 10’x10’

• $203.77 for 10’x15’

• $268.99 for 10’x20’

What is the market competition like for self storage?

The market competition for self-storage varies depending on location and the number of facilities in the area. In some markets, there is high competition among self-storage operators, while in others, there is limited competition. Competition can affect rental rates, occupancy rates, and the overall performance of self-storage facilities. The self-storage industry has seen significant growth in recent years, with new operators entering the market and existing operators expanding their portfolios. This growth has led to increased competition in some markets, which has driven innovation and improvements in the self-storage product offering.

According to Mini-Storage Messenger, in 2022 there were 51,206 self storage facilities up from 50,523 in 2021.

What is the typical size of a self-storage unit?

Self-storage units come in a range of sizes to accommodate different storage needs. The most common sizes for self-storage units are 5’x5’, 5’x10’, 10’x10’, 10’x15’, and 10’x20’, but larger units (such as 10’x30’ or larger) are also available. The size of the unit needed will depend on the amount and type of items being stored. Most self-storage facilities offer a variety of unit sizes to accommodate different storage needs, and many offer flexible month-to-month rental options to allow customers to adjust the size of their unit as their storage needs change.

According to the Self Storage Association 2020 Self Storage Demand Study, these are the percentages of various unit sizes rented:

• 15.6% 5’x5’

• 20% 5’x10’

• 24.4% 10’x10’

• 14.8% 10’x15’

• 12.5% 10’x20’

• 12.7% 10’x30’ or larger

What is the default rate for self-storage tenants?

The default rate for self-storage tenants, also known as the non-payment or delinquency rate, is a measure of the number of tenants who fail to pay their rent on time. The default rate for self-storage tenants can vary depending on a number of factors such as the economic climate, competition in the market, and the creditworthiness of tenants. On average, the default rate for self-storage tenants is low, typically less than 5%. This is because self-storage tenants are typically required to pay a deposit and provide credit or debit card information to secure their rental, which acts as a deterrent to default. In addition, self-storage operators often have processes in place to manage delinquent accounts and enforce payment, which helps to minimize the default rate. However, it is important to note that the default rate can fluctuate and can be affected by local economic conditions and the overall health of the self-storage market.

What is the future outlook for the self-storage industry?

The future outlook for the self-storage industry is generally positive, as demand for storage space is expected to continue to grow. Some of the factors that are expected to drive growth in the self-storage industry in the coming years include:

Population Growth: As the population grows, demand for storage space is expected to increase, as people need more space to store their belongings. As of 2020, there is only 10.6% penetration meaning that 1 in 10 US households use self storage. There is an immense opportunity for that penetration rate to increase agnostic of population growth itself.

Urbanization: As cities become more densely populated, many people are downsizing their living spaces and turning to self-storage as a solution for their extra belongings.

E-commerce: The growth of e-commerce is expected to drive demand for self-storage, as more and more people order goods online and need somewhere to store them.

Innovations in Technology: Advances in technology are expected to continue to shape the self-storage industry, making it more convenient, efficient, and customer-friendly.

Investment Opportunities: The self-storage industry is seen as a relatively stable investment opportunity, with low default rates and predictable rental income. Self storage has the highest return on investment in comparison to any other real estate asset class. From 1994-2017, storage returned an annual average of 17.43%. Based on that annual average, $100,000 invested in 1994 would be over $4,000,000 today. Self storage is recession resilient. From 2007-2009, self-storage dropped -3.8% in comparison to the S&P’s -22.0%. This was the smallest drop of any real estate asset class. Self storage had some of its best performing years during the COVID-19 Pandemic when some other real estate asset classes performed poorly. According to Trepp, a Commercial Mortgage Backed Securities research firm, of the 1,700 CMBS loans made to self storage in the first 3 quarters of 2020 only 3 were delinquent– that is a 0.17% delinquency rate . During the same time multi-family was defaulting at a rate 1,800% higher or 18x that of self storage.

While there are some challenges facing the self-storage industry, such as increased competition and changes in local zoning regulations, the overall outlook is positive. As long as demand for storage space continues to grow, the self-storage industry is expected to remain a thriving sector of the economy.

What is the typical customer base for self-storage facilities?

The typical customer base for self-storage facilities is quite diverse and can include:

Residential Customers: These customers use self-storage for personal items such as furniture, household goods, seasonal items, and recreational equipment. According to the 2023 Self Storage Almanac by MiniCo Insurance Agency, 79% of tenants are residential.

Business Customers: Small businesses often use self-storage to store excess inventory, equipment, and supplies. According to the 2023 Self Storage Almanac by MiniCo Insurance Agency, 14% of tenants are businesses.

Students: Many students use self-storage during the summer or when moving in or out of the dorms. According to the 2023 Self Storage Almanac by MiniCo Insurance Agency, 3% of tenants are students.

Military Personnel: Military personnel often use self-storage during deployments or when moving to new assignments. According to the 2023 Self Storage Almanac by MiniCo Insurance Agency, 4% of tenants are military.

Seniors: Seniors may use self-storage to downsize from a larger home or to store seasonal items. This is a sub-category of residential customers.

Homeowners and Renters: Homeowners and renters may use self-storage during renovations, moving, or to store items they do not have space for in their homes. This is a sub-category of residential customers.

Car and RV Owners: These customers use self-storage to park their vehicles in a secure and convenient location. This is a sub-category of residential customers.

Overall, the customer base for self-storage facilities is made up of people and businesses who need extra space to store their belongings, and are willing to pay for a convenient, secure, and accessible storage solution. The customer base can vary depending on the location, market conditions, and competition, but by understanding the needs and preferences of the target market, self-storage facilities can effectively target and attract the right customers for their facility.

Which real estate asset class performs best in a recession?

It is difficult to determine which real estate asset class will perform best during a recession, as real estate markets are influenced by many factors, including the overall economy, local market conditions, and the specific asset type. However, the following 4 asset classes are generally considered to be more resilient during a recession, with one clear winner.

Essential use properties: Properties with essential uses such as supermarkets, drug stores, and grocery stores tend to be more resilient during a recession as people still need to purchase necessities even during tough economic times.

Multi-Family Housing: The demand for rental housing typically remains relatively stable during a recession, making multi-family housing a relatively safe investment during tough economic times.

Industrial Properties: Industrial properties such as warehouses and distribution centers are often less affected by a recession, as the demand for goods and services continues even during a downturn.

Self-Storage: Self-storage facilities are considered to be the most recession resilient real estate asset. People may need to store their belongings due to downsizing or other economic factors. Historically, self storage has performed the best of any real estate asset in recessions. From 2007-2009, self-storage dropped -3.8% in comparison to the S&P’s -22.0%. This was the smallest drop of any real estate asset class. Self storage had some of its best performing years during the COVID-19 Pandemic when some other real estate asset classes performed poorly. According to Trepp, a Commercial Mortgage Backed Securities research firm, of the 1,700 CMBS loans made to self storage in the first 3 quarters of 2020 only 3 were delinquent– that is a 0.17% delinquency rate . During the same time multi-family was defaulting at a rate 1,800% higher or 18x that of self storage. Self storage has the highest return on investment in comparison to any other real estate asset class. From 1994-2017, storage returned an annual average of 17.43%. Based on that annual average, $100,000 invested in 1994 would be over $4,000,000 today.

It is important to note that real estate performance during a recession can vary widely depending on the specific asset and market conditions. Additionally, a recession can result in a decrease in property values, which may impact real estate investors negatively. It is always advisable to conduct thorough research and consult with a professional before making any real estate investment decisions.