Publication IX

By Michael McCune
Argus Self Storage Sales Network

Financing Self Storage

    Five years ago, things were a little bleak when trying to obtain financing for self storage. Not very many lenders were willing to take on the “high” risk involved with this ugly duckling of investment real estate.    

Wow, how things have changed! In the latest Self Storage Almanac, 12 companies list themselves as self storage lenders.   

For those of you looking to refinance or purchase an existing facility, we’ve prepared the following chart of lenders we know to be active and effective in self storage. As you can see the market is very competitive with rates and spreads at historic lows.   

Many lenders recommend you allow at least six months to complete the financing process: 90 days to research and shop the various programs, and 90 days to secure the loan. Good luck!       

For more information on other lenders who specialize in self storage or alternative methods of financing, call your local ASSSN Affiliate or Argus at 1-800-55-STORE.

A Comparison of Self Storage Lending Programs
First Security
Commercial Mortgage		 Finova
Capital		 Heller
Financial		 Northland
Financial
Minimum Loan Amount $1,000,000 $1,000,000 $1,000,000 $1,000,000
Rate/Spread 160 to 200 Negotiable Negotiable 165-170
Loan Terms 5 to 20 years
Fixed		 10 year
Fixed		 10 year
Fixed		 5-10 years
Fixed
Amortization Period Up to 30 years Up to 30 years Up to 30 years Up to 30 years
Non Recourse Yes - with standard provisions Yes Yes - with standard carve outs Yes - carve out guaranteed by individual preferred
Due on Sale Assumable at lenders discretion Assumable Assumable for 1% fee Assumption allowed with 1% fee
Prepayment Provisions 5 year lock-out with
Treasury defeasance		 Negotiable 3 year lock-out with
defeasance		 4 year lock-out with
yield maintenance
Points *(Does not include costs which may vary by lender) 1% 0%-1% Negotiable up to 1% 1% of loan amount
Maximum Loan to Value Ratio 80% 80% 80% 75%
Minimum Debt Service Coverage 1.25 1.25 1.25 1.30
Small Loan Program Yes Yes Yes No
Loan Size $500,000+ $500,000+ $500,000+
Max. LTV 80% 80% 75%
Min. Coverage 1.35 1.30 1.25
Total Cost $10,000 + points $10-12,000 + points $11,000-$13,000
Rate/Spread 200 to 250 Negotiable Negotiable
Other Non-negotiable
loan documents		 Non-negotiable
loan documents		 Non-negotiable
loan documents
Contact Neal Gussis
Chicago, IL
312/425-3304		 Eric Snyder
Irvine, CA
949/442-8006		 Rich Cline
Chicago, IL
312/441-6771		 Steve Bye
Denver, CO
303/376-1688

Figure 1