Storage Investments Australia closes $40m fund for east coast expansion

Storage Investments Australia chairman Con Tragakis at Roomia Self Storage Seaford. Picture: Supplied by Storage Investments Australia

Specialist fund manager Storage Investments Australia (SIA) has raised $40m from investors for a new fund focused on expanding its self-storage footprint in the eastern states, and moving it closer towards its ambition of reaching $1bn in assets before a potential IPO.

Led by Adelaide businessman Con Tragakis, SIA has about $500m in assets under management, with a portfolio of 13 facilities operating across Victoria, South Australia, NSW, Queensland and Western Australia.

The latest fund was backed predominantly by a group of family offices out of Adelaide, and has already secured three of four sites it has earmarked for newly developed facilities – two in Melbourne and one in inner Sydney.

SIA runs a vertically integrated business model, beginning with the identification of suitable sites for development, and then moving onto design, construction and operating each site under its own store management platform Roomia.

Mr Tragakis, who spent almost three decades at KPMG in Adelaide before stepping down from his role as SA state chairman in 2017, said investor appetite for the alternative asset class remained strong, and SIA was already working on plans to launch another fund in the new year.

A Roomia self storage facility in Butler, WA. Picture: Supplied by Storage Investments Australia

“We’ve raised over $150m of equity over our journey since 2017, and we’re looking to open up another fund, probably March to June next year, of a similar size,” he said.

“Investors like the fact that we’re buying land and buildings, and also putting money into a sector that’s survived two recessions and a pandemic. And that’s the strength of the self-storage sector.

“All the thematics of storage are housing, density, migration, jobs displacement, death and divorce, businesses starting up, businesses shutting down – they’re all the big drivers of storage, and those thematics happen whether an economy is booming or whether it’s receding.

“Historically, we’ve been delivering over 25 per cent returns through all our funds, and this one will be no different.”

SIA’s new fund is also backed by a $55m debt facility that will go towards the acquisition and development of the four sites, and their working capital requirements.

Mr Tragakis said SIA had five facilities under construction and due to open next year, with another five openings planned in 2026, as it looks to build up to a $1bn portfolio of assets.

“Our target is to get to 30 stores over the next five to seven years … with $1bn of assets to hopefully look at creating an IPO or some sort of opportunity for liquidity down the track,” he said.

“I think we’re probably five to seven years away (from potential IPO), and we’re not sure exactly what it will look like, but we are focused on generating really great returns for the investors during that period of time.

“It’s just one of those things that scale brings with it a lot of benefits.”

SIA’s expansion comes amid a surge in investor interest in Australia’s self-storage market, which has been dominated by large operators such as ASX-listed players National Storage REIT and Abacus Storage King, and well-established private groups such as Kennards and Fort Knox.

Offshore players are making their move, with StorHub – the Warburg Pincus-backed operator headquartered in Singapore – recently adding three properties in Sydney to its portfolio of 11 sites with an estimated end value of more than $420m.

In March StorHub announced it had secured $460m of fresh equity commitments to expand its network in the highly fragmented Australian market.

The pandemic-era growth of e-commerce and hybrid working patterns has continued to drive demand for self-storage facilities, with the Self Storage Association of Australasia estimating there are now close to 2300 self-storage sites across Australia, with a pipeline of more than 250 new sites to come online over the next few years.