15 Jun 2020
Story originally on Sparefoot.com
InSite Property Group is a multifaceted real estate investment group with 25 development deals in place across the country—22 of them are self-storage.
It operates its storage facilities under the name SecureSpace. The firm has completed and opened three so far, the latest is a 75,000 net rentable square foot facility in Camarillo, CA with 600 units. The project has an equal amount of office space for rent on the second floor. It has also opened projects in Titusville, FL and Piscataway, NJ.
Based in Redondo Beach, CA, InSite was established by Paul Brown and Zack Linford, who were previously partners of iStorage. That company sold its 66-facility portfolio to National Storage Affiliates for $630 million in 2016. Subsequently, Brown, Linford, and a small group of new partners joined forces with a large institutional investor with $90 billion in assets to start InSite Property Group.
SpareFoot recently spoke with Keith Wetzel, one of InSite’s partners who leads acquisition and capital raising efforts. Before joining InSite, Wetzel was Managing Director and Head of West Coast Real Estate at Goldman Sachs. Joining the conversation was Nathan McElmurry, who was recently hired as Head of Self Storage Acquistions. McElmurry was previously Senior Vice President of Acquisitions for SmartStop Self Storage.
While InSite has exclusively operated as a developer over the last two years, the addition of McElmurry to the team marks a new chapter for the firm as it embarks on strategy of acquisitions to grow its portfolio of storage facilities.
Nathan, as you lead the charge for acquisitions, what type of properties are you looking for?
Nathan McElmurry: You will see me buying existing product across the spectrum—anything from C of O on up to fully stabilized properties.
When it comes to size, the biggest determinant is revenue. If a stable property is generating less than $600,000 to $700,000 of gross revenue, or a lease-up won’t reach at least $800,000 to $900,000 at stabilization, it’s probably too small for us. In the case of stable assets, these small stores become inefficient to manage, and in the case of smallish lease-ups the carry costs weigh us down disproportionate to value. So either way, the lower-cashflow stores are dilutive to a portfolio.
Are their specific markets you are focused on?
Nathan: You will tend to see us clustering existing acquisitions around our ground-up developments for economies of scale. But ultimately, for geography, it is really more about our theory of where to buy when. What I mean by that is there are certain places where, if you can snag a property at something close to a tolerable price, you will generally do it because these locations can’t be replicated. Examples would be gateway cities such as New York and L.A...
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