CHICAGO—The self-storage sector has been recording big gains in occupancy and revenue for several years, boosting its appeal among investors and lenders. And Aries Capital, a national real estate mortgage and investment banking firm in Chicago, has just joined the Self Storage Association, bringing members increased access to institutional, non-recourse permanent debt and bridge loans.

Aries specializes in securing non-recourse, 10-year, fixed rate, permanent debt for cash-flowing properties through institutional lenders beyond a borrower's local bank. Unlike a bank loan, non-recourse loans are secured by the property only and don't require a banking relationship or the burden of personal guaranties. This method of financing also allows higher leverage and may include closing cost reductions or credits back.

“We are increasing our focus on self storage, but we are not new to this segment,” says Eric Jones, vice president at Aries Capital. “We've successfully closed transactions on behalf of self storage clients and also own self storage facilities ourselves. In fact, Aries is currently working on an adaptive re-use project in the Chicago suburb of Mount Prospect, which will create a three-story, 657-unit self storage facility.”

Most experts believe that the sector has bright prospects for the next several years.

“The top 50 US metropolitan markets need about $25 billion, an estimated 3,450 new self storage facilities, in new self storage development to meet population growth and expected consumer demand during the next five years,” Dean Jernigan, chief executive officer of Jernigan Capital, Inc. said recently. The Miami-based REIT offers financing for ground-up construction of self storage facilities or major redevelopment opportunities, as well as for acquisitions.

“Due to its proven market resiliency, tight supply and increased customer demand, fueled by a growing economy, appetite for multifamily living and propensity to move, self storage should remain at the top of many Wall Street lenders' lists,” says Rushi Shah, senior vice president with Aries. “Many owners, however, don't realize that their properties are eligible for institutional loans, or they may be concerned that the process is too complex. Leveraging our years of successful closings, we can help self storage owners navigate the process. We mitigate the complexity on their behalf, so they can enjoy the lasting benefits.”