Virtus Real Estate, an Austin, Texas-based private equity firm, purchased 20 self-storage properties throughout the Southeast in 2010. The company’s purchases represent more than 1,000,000 square feet of rentable space with an acquisition and renovation cost of nearly $50 million. They are part of Virtus’ efforts to leverage key demographic trends in the national economy.
“In times of fiscal decline, the self-storage market has demonstrated resilience, while also posting solid gains throughout economic resurgence,” said Terrell Gates, CEO and founder.
Virtus developed its investing strategy through emphasizing the role of specific demographic trends and seeking investments outside of traditional asset classes. According to the firm, it bases its strategy on trends including the aging and growth of the Baby Boomer Generation; the coming of age of the Millennial Generation; the growth of the U.S. Hispanic market; and the transitory nature and decreased job tenure of the American worker.
The most recent self-storage investment fund purchases have focused on acquiring, adding value and disposing of primarily second- and third-generation cash-flowing assets in major metropolitan areas such as Knoxville, Memphis and Nashville, Tenn.; Baton Rouge and Shreveport, La.; Montgomery, Ala.; Hattiesburg, Miss.; and Atlanta. After each investment is made, Virtus enhances value by improving management and marketing, repairing and upgrading facilities, and optimizing rental rates in each self-storage property.
In 2011, Virtus to acquire approximately $150,000,000 in self-storage properties while simultaneously launching a new student-housing fund. Since 2003, the company has purchased 125 properties with an acquisition price of nearly $1.6 billion.