Self-Storage in a Bear Market: Big-Box Conversions, Distress, and Buying Below Replacement Cost | Neil Henderson
Summary
Host Chris Lopez interviews Neil Henderson of Nomad Capital on self-storage investing strategies. They discuss converting vacant big-box retail stores into climate-controlled facilities, highlighting the current bear market caused by reduced housing mobility and high interest rates. Henderson explains deal structures, capital stacks, and the shift toward shorter hold periods due to LP preferences. The episode also covers competitive threats from major REITs and identifies future opportunities in mixed-use properties with existing cash flow.
Topics discussed
Introduction and guest background
Neil's journey into real estate and forming Nomad Capital
Investment thesis: why self-storage and conversions
Conversion costs, timelines, and lease-up challenges
Acquisition targets: vacant big-box stores and K-marts
Deal examples: Danville and Reedsville K-mart conversions
Sponsor break: RentReady promotion
Debt structure and loan terms for conversions
Hold periods: long-term vs. opportunistic exits
Return profiles: IRR, MOIC, and distribution timing
The storage bear market: demand drop and supply glut
Current market cycle and finding deals in a downturn
Leading indicators for storage recovery
Market consolidation and REIT strategies
Impact of new competition on older assets and loan maturities
Future opportunities: mixed-use and retail components
Closing remarks and resources
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