A Deep Dive Into the 2023 Spartan Storage Funds
When we launched Spartan Storage Fund 1 in 2022, we knew we wanted to provide investors with a new way to solidify their stake in the flourishing self-storage market.
The Fund helped our clients to streamline their deals, achieve greater exposure and spread out risk. In addition, because it empowered Spartan to make all-cash offers on competitive properties, it gave us a stronger position from which to negotiate. This, in turn, allowed us to continue to extend the best opportunities — and the highest value — to our investors.
The 2023 Spartan Storage Funds are our way of building on that momentum. The three funds are each tailored to a specific investor profile, allowing investors to choose a personalized investment strategy.
For each of our Funds, we'll target well-located facilities, robust job and income growth, and proximity to other Spartan facilities so that we can capitalize on economies of scale.
From generating passive income to growing long-term wealth, the optionality of the Spartan Storage Funds can help our investors reach their financial goals faster — all while harnessing the power of self storage.
The Spartan Storage Income Fund
The $75 million Spartan Storage Income Fund is focused on existing core plus and value-add self-storage facilities that produce consistent monthly cash flow. It offers investors regular passive income, year-one depreciation, and a share in the upside potential from the sale.
Spartan's acquisitions team will target 10-20 on- and off-market properties that are 40,000 sq. ft. or greater and may be underpriced or charge below-market rents. We will then apply our value-add formula, boosting the operational efficiency of each facility, investing in infrastructure and augmenting marketing efforts. This will enhance the income capacity of the properties, leading to more substantial returns for our clients.
- Investor profile: We established the Income Fund specifically for investors looking to generate passive income through regular, monthly cash flow and benefit from upside potential and year-one depreciation.
- The breakdown: The Income Fund will target a hold period of five years and annualized returns of 14-20%. Investors can expect a year-one cash-on-cash return of 4-5%, increasing year-over-year to approximately 8%.
The Spartan Storage Growth Fund
At Spartan, our team has an excellent record of success in self-storage development. That's how we know that the key to unlocking the most potential upside is constructing a facility from the ground up.
Through our previous undertakings, we've created tremendous equity for our investors. In fact, our most recent ground-up development exited at an impressive investor return of 154% in just 22 months.
The $45 million Spartan Storage Growth Fund will leverage that expertise by concentrating on the most opportunistic self-storage investments — ground-up developments and lease-up properties with the most significant possible returns.
- Investor profile: Rather than targeting monthly cash flow, the Growth Fund is designed to capture the potential highest and best returns. It is a good match for ambitious investors whose primary goal is to build wealth.
- The breakdown: The Growth Fund will target a five-year hold period and annualized returns of 19-26%. Growth investors will receive 100% of the sales profit up to 12%, 14%, or 16% annualized at the sale of facilities. They will split the remaining earnings with Spartan.
The Spartan Storage Debt Fund
The $60 million Spartan Storage Debt Fund allows accredited investors to participate in notes. Spartan will leverage the debt raised to fund projects and improvements on our properties — meaning every dollar is backed by self-storage assets in our portfolio. While debt investors don't participate in the investment upside, the Debt Fund offers consistent passive income in a low-risk environment.
Spartan has a strong track record in private debt, having raised over $40 million in notes. We currently have approximately $10 million of private notes in our portfolio and have never defaulted.
- Investor profile: The Debt Fund is ideal for investors seeking a low-risk hedge against inflation on a shorter-term repayment schedule. It provides predictable monthly payments and an early redemption option for those who value additional flexibility.
- The breakdown: The Debt Fund has a five-year projected hold period. Class A note investors can opt-in to a 90-day redemption period and will receive an 8% annualized return. Class B note investors commit to a minimum two-year hold and are eligible for a 9% return.
To make it more profitable than ever to invest in self storage, Spartan is offering a limited-time promotion for early investors. Those who invest in the Spartan Storage Funds by May 1, 2023, will benefit from a stepped-up share class.
For example, those who sign up for the Income or Growth Funds as Class A investors will enjoy all the benefits of a Class B share, including a higher split after a hurdle is achieved. This positions investors to receive an additional 8% return, making their money go even further.
To subscribe to one or more of the Spartan Storage Funds, investors can log in or create an account on Spartan's investor dashboard. Once logged in, clients can browse open investments and choose the Fund(s) they would like to participate in.
Interested in learning more about the 2023 Spartan Storage Funds? Set up a call with a member of our Investor Relations team today!