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IRVINE, CA-Passco Cos. has formed a joint venture with Perdew Development LLC that plans to invest between $70 million and $90 million in the development, management and leasing of more than 25 self-storage facilities over the next five to seven years. William Winn, president of Passco, tells GlobeSt.com that the company will be called Patriot Self-Storage and will focus on secondary markets in Florida, Georgia, South Carolina, North Carolina, Arizona, Minnesota, Texas and Alabama .

“We’ve been looking at getting into the self-storage business for a few years because it’s a growing area, especially in certain markets where there is a lot of new housing growth, and it’s a product that is in demand with our investors, who are very cash-flow oriented,” Winn tells GlobeSt.com. He says that Passco is targeting secondary markets for a couple of reasons.

Winn explains that in the major markets, those with populations of 200,000 or more, the new Passco venture would have to compete head-to-head with the likes of Public Storage, which is well-established. By contrast, the competition in secondary markets tends to be mom-and-pop self-storage operators with lower-quality and less sophisticated facilities than those that Patriot Self-Storage plans to build.

Patriot will build “three-story, class A product that will be the best in the markets,” Winn says. It plans its first facility in Florida, where it is gearing up for two land acquisitions and subsequent development projects.

Winn notes that a significant part of the Florida self-storage market is driven by retirees who move from the Northeast and are often downsizing from larger houses, so they have more need for storage space and typically keep it in storage longer than the average self-storage customer. Although demand for storage space varies depending on the market, Winn says, “It’s definitely new rooftops that create the demand” in Florida and elsewhere.

Although Passco is a tenant-in-common sponsor, its new self-storage venture is not planned as a tenant-in-common play. Passco, which is entering the venture through its affiliate Passco Companies Development LLC, plans to stabilize and hold the properties for at least five years.

The long-range plan is to build the Patriot Self-Storage brand so that after five to seven years, the new joint venture will have established a brand name that will add value to the properties. Building more than 25 facilities and building a brand around the Patriot name also will provide a number of potential exit strategies, Winn adds.

The head of Patriot Self-Storage is Hal Perdew, CEO and president. Perdew previously was the regional vice president for Public Storage Pickup and Delivery, a subsidiary of Public Storage.

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