The four partners in TriCore Storage Fund I (MGT1) each have over 15 years in the self storage industry and have syndicated over $160 Million in self storage projects during that time. Our track record of over 36% IRR to our investors is hard to match in this industry or any other (and that includes two recessions, unlike most of the currently active syndicators in our space).
To clarify some of the questions, we did not project a quick sale at a low cap rate with aggressive rent appreciation, nor were our projections based on 2021 occupancy levels. We would not have been able to attract a single investor with that strategy.
Secondly, regarding “Fund I” investors, we are not offering any more single asset or portfolio acquisitions to selectively place certain properties inside or outside of our fund.
As we moved from a syndication model to a fund model, we made several changes to our business model. One was to migrate over to a 3rd party management company for the portfolio. Unfortunately, this relationship did not turn out the way we had hoped, and after falling short of their budgets and projections, we terminated them and proceeded to build out our own property management company to manage the facilities in the fund. This was a costly venture that, combined with several months of lackluster performance, did not allow for distributions to our shareholders.
We don’t ever use the “best case scenario” or quick sale strategies in our projections. Rather, we use a 2-point bump in our exit cap rate with realistic/conservative rent appreciation and occupancy based upon both our internal projections and a thorough market analysis. This is compared against our own internal historical performance with similar properties in the same/similar markets in which we operate.
One component of our communication consists of monthly news updates on the portfolio and individual site performance, which are uploaded to our investor portal, including monthly reporting of financials and individual facility performance. Our investors may login at any time to view or download this information. In addition, we hold live webinars with extended updates and the opportunity for investors to ask questions. Having encountered bandwidth difficulty with our accounting firm and CPA, we replaced them with a national company with capacity to handle our ever-growing portfolio.
Due to the nature of a fund model, the projections we shared with our investors, changes in the post-pandemic market, and the fact that a significant portion of the returns to our shareholders are realized as the facilities become stabilized and begin to churn out cash, high cash-on-cash returns during the first year of this fund – designed to acquire troubled, turn around assets – did not result. Distributions will commence as of Q3 of 2023, and the majority of profit will be realized upon the sale of stabilized assets in year 5, also per our projections.
We excel under current market conditions – the same ones that have many people panicking, as several of the major players in the real estate fund space are reporting losses, forced sales, foreclosures, and SEC investigations. We understand the concern and fear that some investors may have. Fortunately, that same fear and lack of experience in these market conditions have worked in our favor over the last two recessions, which is how and where we have seen our greatest growth and success.
