SROA Capital Pays Quarterly Distributions – Sees Market Opportunity Ahead

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Company launches new fund, accepts investor commitments

Benjamin Macfarland, SROA Capital Co-Founder and CEO

SROA Capital, LLC ("SROA"), a West Palm Beach-based vertically-integrated real estate investment management firm with $1 billion of assets under management and owner/operator of Storage Rentals of America, announced today that it has paid its first quarter distribution of 1.85% or 7.4% annualized which represents the weighted average distribution yield across SROA’s dedicated self-storage funds. SROA anticipates continuing to pay quarterly distributions uninterrupted, despite the current market environment. SROA recently launched Fund VIII and has started accepting investor commitments. It expects to begin investing the capital in late 2020 or early 2021 as opportunities arise as the pressure builds on sellers in a post COVID-19 world.

“We are pleased with the performance of our self-storage portfolio and remain focused on seeking to provide our investors with regular quarterly distributions and strong risk-adjusted returns,” said Benjamin S. Macfarland III, Co-Founder and CEO. “SROA is in a strong financial position thanks in large part to our hands-on management, conservative underwriting, modest portfolio leverage (approximately 50% LTV), and ample dry powder. We believe that we are uniquely positioned to weather this period of economic uncertainty and to capitalize on any dislocation that may arise in the self-storage market.”

At a time when fixed income yields are at historic lows, investors have flocked to the private real estate equity and debt markets in search of yield. However, many real estate asset classes including retail, office, hospitality, and residential, have been adversely affected by the onset of COVID-19, causing managers to halt distributions. Macfarland believes that conservatively managed self-storage operators like SROA offer investors a safe alternative. “Over the past two decades, self-storage has shown that it is not as sensitive to macroeconomic downturns as other real estate sectors,” Macfarland added. “Over the past 5-, 10-, and 15-year periods, self-storage has outperformed all other real estate property types and self-storage REITs were the only REIT sector to post a positive total return in 2008 .”

Sector    5-year Average Return    10-year Average Return    15-year Average Return

Self-Storage     12.55%                        16.55%                        13.33%
Industrial             13.75%                        14.61%                        10.49%
Multifamily     9.85%                        12.67%                        10.47%
Retail             4.70%                        11.14%                         8.05%
Office             7.84%                        11.75%                         9.08%

Figure 4: List of commercial property return indices and their performance over a 5-, 10-, and 15-year periods (2004-2019)

About SROA
In a recent article, SROA Capital acknowledged the impacts of COVID-19 on our communities and the private real estate market. SROA Capital, LLC is a vertically-integrated real estate investment and management company that specializes in non-traditional commercial real estate with an emphasis on self-storage. SROA owns and operates approximately 7 million rentable square feet under the brands Storage Rentals of America and Storage Zone. For more information, please visit http://www.sroacapital.com.

1. Distribution does not include Elite Store Fund V which is self-storage development vehicle or SROA Capital Fund VIII which was recently launched and has yet to call capital.
2. Green Street Advisors, April 2019.
3. Self Storage Almanac 2015
4. Green Street Advisors, April 2019

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