French private investment house Ardian is to expand its portfolio beyond offices to include new asset classes including self-storage, residential and data centres.
The firm has just made its debut investment in the self-storage segment and plans to invest €100 - €300 mln into what is ‘the purest property asset class in terms of CO2 emissions’, says managing director Omar Fjer.
‘The office market has shifted so we started to look at new asset classes that fit the Art. 9 nature of the fund we are currently deploying,’ Fjer tells PropertyEU in an interview. ‘We like self-storage very much because of its fundamentals. This is an asset class that basically offers good cash flow, has low carbon emissions, and today in Europe is very much undersupplied.’
There are currently around 50,000 self-storage facilities in the US, where the biggest property REIT in the country is a self-storage specialist with a market cap of $54 bn known as Public Storage. To the contrary, Europe accommodates only 5,000 such assets, with roughly 40% of it concentrated in the UK, and houses only one self-storage REIT, Shurgard, with a market cap of around €4 bn. In addition to a lack of supply and strong potential for growth, the sector benefits from growing demand driven by the shrinking size of apartments in urban areas across Europe.
‘The average apartment size in the Paris region has shrunk further to 60 m2 last year versus 70 m2 20 years ago, yet the composition of a family mostly remains the same so there is a growing need for storage space,’ Fjer explains. ‘At the same time self-storage assets are ‘green’ assets; they require no heat, no water, are low maintenance and offer an additional possibility for the conversion of obsolete offices.’
In its first move into this sector, Ardian bought a majority stake in Costockage, a French self-storage specialist. The platform was put on the market last year by the Spanish investment bank, Alantra. Fjer: ‘We immediately liked several things about this deal. We liked the founders and managers very much, as well as the data driven approach, because being founded as a market place for self-storage has allowed the firm to collect a huge amount of data.’
Founded in Paris in 2012, Costockage initially functioned exclusively as an online marketplace enabling professionals and individuals to rent storage units from established operators and/or unused storage spaces from individuals. In 2017, the platform also became an operator of self-storage facilities and currently operates 10 self-storage assets throughout the country through its Kostok self-storage centre operating arm.
Together with Costockage’s management, Ardian plans to transform the platform into an owner-operator and grow the portfolio to include France’s largest cities. Fjer: ‘We are looking at the 50 largest cities in France, both in urban and suburban areas, usually close to dynamic residential areas.’ The firm will consider assets ranging from 1,000 m2 to 15,000 m2, mostly for logistics and industrial use that can be easily converted to self-storage without urban planning changes.
Fjer: ‘We are looking at building a significant platform of €100 to €300 mln. For the next 12 months, we will be focusing on France but we will definitely be monitoring other European countries as well.’ Alongside the new self-storage investments, the firm will also be scouting the market for opportunities in the residential and data centre sectors as part of its diversification strategy. ‘Data centres are the opposite of self-storage, they are very technical and quite challenging but we will benefit from the Ardian group’s strong infrastructure team,’ notes Fjer.
