CHICAGO-The first half of 2011 has shown that the markets are healthy again for the self-storage industry, according to the BSC Group, a financial firm that services this product type. The company has already originated $75 million in total transaction volume this year, and has a pipeline of more than $80 million in CMBS loans.

Shawn Hill, a BSC principal, tells GlobeSt.com that after focusing on distress for the past few years, he’s excited to find that debt and equity capital necessary to bring these transactions to fruition is now readily available.

“We’re actively seeing borrowers with problems getting deals worked out, special servicers have gotten their arms around the methodology and have staffed up, and equity is looking to invest again,” Hill says. “The grease has hit the sprockets, and the machine is working.”

He says the company had been a traditional mortgage bank to the self-storage industry before the downturn. The firm began to focus on distress to help their clientele. “You had a borrower who might have bought a property for $5 million and did it at 80%, and now the debt is coming due and they can only get a 65% loan, and they have to put up $1 million that they don’t have. These borrowers haven’t done really anything wrong. We wanted to find ways to help the borrower stay in their deals to live another day,” Hill says.

To this aim, BSC partnered with Dallas-based First Service Solutions. “We didn’t want to be the workout experts, so we found people who are,” Hill says. “As a result, we’ve done more than $100 million in workout transactions in self storage.”

His company is embroiled in a number of deals, including funding for a recent $186 million deal, which Hill says he can’t discuss further, and another 10-property portfolio that got “extra messy,” with three special servicers and two more banks fighting over various mortgages on the properties. “We closed on the first transaction June 15, the special servicer, Berkadia Commercial Mortgage, agreed to the payoff. The principal balance was $5 million, they took $3.8 million,” he says. BSC identified a self-storage REIT to join a venture into the property with the borrower. “We’re in the process of cleaning up the rest of the portfolio in a similar fashion.”