Firm on pace to surpass $1 billion in deal volume for ISF portfolio in ‘22 as investor demand for outdoor storage, service facilities booms across the U.S.
Stonemont Financial Group, a private real estate investment firm specializing in industrial development, acquisitions and net lease investments, announced today that the firm’s Industrial Service Facility division oversaw nearly $700 million in total deal volume during its first year of operation, positioning the firm as a market leader for the fastest growing asset class in industrial real estate. Since launching its first ISF-focused fund in March 2021, Stonemont has forged several partnerships across the industry and plans to continue investing heavily in the asset class over the next 12 months.
In March, the firm announced its joint venture with Cerberus Capital Management targeting mission-critical logistics and outdoor storage real estate. Stonemont capped off its inaugural ISFcampaign with 48 transactions totaling 3.92 million building square feet and 1,175 acres of land across 83 properties in 22 states. Stonemont acquired a portfolio of 17 properties in the greater Chicago area totaling approximately $100 million and another 8-property portfolio totaling $34 million with properties in markets including Aurora, Illinois; Carlisle, Pennsylvania; Savannah, Georgia; and Houston, Texas. These transactions were completed under various financial structures and spanned the risk spectrum from vacant and value-add to stabilized, long-term net lease acquisitions.
ISFs are considered to be the “backbone” of the industrial real estate market and feature a heavy outdoor storage component with zoning that allows for a wide range of more complex and larger-scale industrial uses. Examples of ISFs include truck terminals, maintenance and repair facilities, truck and trailer drop lots, container storage yards and other similar assets that support Class A last-mile distribution centers and warehouses. These types of facilities tend to be clustered around critical masses of other industrial real estate facilities in large MSAs and are in close proximity to major transportation nodes such as highways, ports, intermodals, and airports.
“This was an incredible year of growth for our firm as we exceeded our expectations and fortified our portfolio with a number of properties in what has quickly become one of the industry’s most desirable asset classes,” said Stonemont CEO and Managing Principal Zack Markwell. “Stonemont’s full-service platform and capabilities as a last-mile developer has enabled us to pair many of our corporate tenants with an outdoor storage and parking network across the country. This one-stop-shop approach positions us well for 2022 and beyond as we anticipate expanding our ISF footprint into new markets nationwide.”
Stonemont also hired Ryan Meehan as senior vice president to lead the firm’s ISF acquisition platform. Meehan joined the firm in May, bringing 20 years of experience in acquisitions, dispositions, leasing and asset management. He has overseen more than $1.8 billion in direct commercial real estate investments and financings, while managing over 7 million square feet of commercial space ($2.5 billion) in major markets around the U.S.
“Since joining Stonemont, I have been impressed with the firm’s development expertise and ability to position itself in the first wave in markets with high barriers to entry,” said Meehan. “We will continue to be an active player in 2022 with our ISF portfolio on track to surpass $1 billion in total deal volume. This is the new frontier in industrial real estate and we look forward to pioneering new strategies and opportunities that will generate value for our corporate tenants and broad network of strategic investment partners.”
As e-commerce continues to grow, the need for new Class A outdoor storage warehousing will increase at the same pace. Stonemont plans to focus on the development of these buildings as well as acquisitions, partnering with users of varying sizes to build space in mission critical markets in all corners of the country.
ISFs have been historically overlooked by many institutional real estate investors due to misperceptions around the asset class and scale of the market. Contrary to popular belief, the ISFmarket is significant in scale and exhibits compelling fundamentals compared to other traditional industrial real estate. The vacancy rate for ISF properties nationwide stood at 3.1% in Q4 of last year, with the asset class continuing to produce steady returns owing to the sticky nature of its tenants, strong rent growth, and high barriers to entry.
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About Stonemont Financial Group
Stonemont Financial Group specializes in investing across a broad spectrum of real estate asset classes and geographies to deliver attractive risk-adjusted returns. Stonemont offers diversified and differentiated real estate investment strategies and vehicles to institutions, family offices, trusts and high net-worth individuals. The firm’s founders and managing principals have a combined track record of more than 60 years’ experience and $20 billion invested.
