Moorfield Group and Stor-Age form GBP100 million UK self storage joint venture
Moorfield Group, a UK-focused real estate fund manager, has entered into a joint venture with Stor-Age, a South African self storage Real Estate Investment Trust (REIT) and owner of leading UK self storage business Storage King. The joint venture aims to build an initial GBP50-100 million portfolio of modern, tech-enabled high-profile self storage assets in the UK.
Moorfield will be the majority investor, on behalf of its Moorfield Real Estate Fund IV. The joint venture aims to develop self storage assets with a focus on London and the South East. The portfolio will benefit from being operated under the Storage King brand, which currently trades from a platform of 28 stores, providing over one million sq ft of high-quality storage space across the UK.
The joint venture is in advanced discussions on a number of acquisitions, leveraging Storage King’s established relationships and industry experience to secure off-market opportunities. The pipeline comprises a mix of subject-to-planning development sites, turn-key developments and existing investment assets.
The partnership with Stor-Age represents Moorfield’s entry into the estimated £800 million (annual turnover) UK self storage industry, which has been growing at approximately 6.5 per cent pa since 2005 but which continues to be characterised by low penetration in key urban conurbations and a general lack of consumer awareness. Driven by ever-increasing levels of consumerism, densification and an upwardly mobile population, the product is also ideally positioned to continue servicing and supporting commercial customers as the structural shift from traditional bricks and mortar retail to online shopping takes place. Furthermore, the UK is substantially undersupplied at 0.73 sq ft per capita, which compares to 9.44 sq ft in the US, providing a cushion against the risk of oversupply. The sector has been one of the more resilient since the outbreak of the Covid-19 pandemic, with European rent collection rates outperforming logistics, retail and office.
The joint venture further extends Moorfield’s footprint in the real estate ‘alternatives’ space, which for many years has comprised investments in Build-to-Rent (More.), student accommodation (Domain) and retirement villages (Audley). More recently, Moorfield has entered the nursing and dementia care home sector with a GBP125 million partnership with Allegra Care and has invested in family homes through the acquisition and leaseback of a portfolio of show-homes from the housebuilder, Avant Homes.
Marc Gilbard, CEO of Moorfield Group, says: “As a specialist alternative real estate investor with a track record of generating strong returns from the timely recognition and discerning exposure to sectors benefitting from changing demographic and societal change, the UK self storage sector is a natural fit for our investment portfolio. Replicating the strategy of our recent nursing and dementia care-home partnership, we have selected a best-in-class partner whose operational and origination expertise will enable us to both access the sector and then scale a portfolio in a meaningful way. Self storage as an asset class has been one of the more resilient during this period of uncertainty and is set to benefit from a number of favourable structural trends, and with a strong pipeline of assets already identified, we are excited to be launching this latest venture on behalf of our investors.”
Steven Horton, Executive Director of Stor-Age, says: “We are delighted to have formed a partnership with Moorfield in order to execute our strategic growth plans in the UK over the medium-term. The UK self storage industry presents a significant and attractive growth opportunity and we remain encouraged by the consistent performance of the Storage King business this year, despite the backdrop of uncertainty and a muted economic environment as a result of COVID-19. All properties will be branded and managed by Storage King as part of our third-party management platform, Management 1st.”