SROA Capital has launched SROA Capital Fund X with a target of $750 million in capital commitments. The value-add real estate fund will acquire and improve self-storage properties and portfolios across the United States.
Fund X will continue SROA’s strategy of targeting under-managed and undercapitalized assets with the potential for net operating income growth. Net operating income generally represents property revenue after operating expenses but before debt costs, taxes and certain noncash items.
SROA plans to increase property performance through operational improvements, technology-based revenue management and capital investments. These initiatives could include changes to pricing, occupancy management, marketing, staffing and facility upgrades.
The firm follows a roll-up strategy that involves acquiring multiple assets in a fragmented market and combining them under a larger operating platform. SROA believes its centralized technology, management and operating capabilities can improve the performance of properties previously owned by smaller or less-resourced operators.
Fund X follows SROA Capital Fund IX, which raised more than $1.1 billion in total commitments, including co-investment capital. Fund IX exceeded its original fundraising target.
Investors in the previous vehicle included public pension plans, foundations, endowments, insurance companies, asset managers, registered investment advisers and family offices. SROA plans to seek commitments for Fund X from existing and new limited partners.
The firm views self-storage as an income-oriented real estate category supported by a broad customer base and fragmented ownership structure. However, investment performance can be affected by occupancy, rental rates, property expenses, financing costs, local competition and economic conditions.
Founded in 2013, SROA has deployed approximately $2.7 billion of equity across more than 700 properties. It describes itself as one of the largest private owners and operators of self-storage properties in the United States.
The firm owns and operates more than 34 million rentable square feet in the United States under the Storage Rentals of America brand. It also operates approximately one million rentable square feet in the United Kingdom through Kangaroo Self-Storage.
SROA is vertically integrated, meaning it combines real estate investment management with property operations and technology capabilities. This structure allows the firm to oversee acquisitions, pricing, property improvements and day-to-day operations within the same platform.
Fund X is being offered through a private placement under Rule 506(c) of Regulation D. Interests will be available only to investors who qualify as accredited investors and whose status is verified under applicable law.
The fund’s $750 million figure is a fundraising target rather than committed capital. There is no assurance that Fund X will reach its target or generate results comparable to SROA’s earlier investment vehicles.
KEY QUOTES:
“We believe that the self-storage roll-up strategy continues to offer a compelling risk-adjusted return profile, supported by a highly fragmented ownership base, a growing user base, and a durable, income-oriented cash flow model.”
“We expect that Fund X will allow us to continue executing the same disciplined, hands-on strategy that has defined SROA since our founding in 2013, while leveraging the scale and operating capabilities we’ve built over more than a decade.”
Benjamin S. Macfarland III, Co-Founder and CEO of SROA Capital
“The launch of Fund X follows a period of significant growth for our platform and strong support from our investor base.”
“We are grateful for the continued support of our longstanding investors and look forward to partnering with existing and new limited partners as we execute on the opportunities we see across the self-storage landscape.”
Owen Holm, Managing Director and Head of Investor Relations at SROA Capital
