Fireside Pays $20M to Add to Growing Portfolio

EDWARDSVILLE, IL-Fireside Financial LLC expanded its portfolio by acquiring the 192-unit Hunter's Glen apartments in Chesterfield, MO and an 800-unit storage portfolio in Bourbonnais, IL. The local private equity real estate firm paid close to a combined $20 million to different sellers for its two new assets.

The just-acquired storage facilities operated under the brand name Boxes to Buses, and are located at 575 Larry Power Rd. and 1847-B Armour Rd. Fireside Financial has an agreement with Simply Self Storage, a third-party manager, to operate the facilities, which were acquired from a local private family.

"Both are in good shape, and there isn't much upgrade necessary, though we'll add some new buildings" says Scott B. Sandler, Fireside Financial's vice president of asset acquisition and finance.  He says there is high demand for larger storage units in the region; units that can fit recreational vehicles and boats.

Meanwhile, to the southwest, Fireside Financial plans minor upgrades to the 1980s-built Hunter's Glen, located at 2150 Village Green Pkwy. Sandler points out that Chesterfield is an ideal location in which to invest, given its proximity to St. Louis and high barriers to entry.

Furthermore, both transactions represent Fireside Financial's ideal transactions. According to Director of Acquisitions & Dispositions Eric A. Michel, the four-year-old equity firm is targeting multifamily properties and self-storage facilities in the Midwest, that offer cash flow and a little upside potential. Michel and Sandler tell GlobeSt.com that second-tier Midwestern cities – such as St. Louis; Louisville, KY and Indianapolis – offer investment opportunities  with higher cap rates, better cash-on-cash returns, and less competition.  "We wanted investments in something a little more stable and less volatile than other types of product," Michel adds.

Sandler goes on to explain that, while rent growth isn't necessarily as dynamic in these secondary markets as it might be in, for example, New York or Los Angeles, it's nothing to sneeze at. "Louisville, KY is a great market, with high occupancy and a huge demand for apartments," he says. "You also have a good job base there."

Michel and Sandler say Fireside Financial is on track to close on another multifamily property in St. Louis during November. The company is also examining large storage portfolios, some of which are bank-owned. Fireside Financial is also fund-raising for its second fund, which totals $100 million in equity – approximately $45 million is committed. As such, "we'll have some dry powder, so we'll be pretty aggressive during the beginning of next year," Sandler says.