Well, 2022 was interesting. Though it is hard to believe that 2022 is now a memory, there is little doubt that it will be a year that won’t be soon forgotten.

2022 Overview:

When we started the year the Fed Funds rate was 0.08%, as of 1/3/22 the rate was 4.10%. The Fed began drastically raising rates in March to combat the rapid increase in inflation caused by loose monetary policy. Notably, the 2/10 treasury spread has been inverted since July 5th; as of 1/11/23 this spread was the widest it has been since the early 1980’s at -0.66%. Many economists believe this is an indicator of a recession (either impending or transpiring) that will cause significant headwinds for the next 12 – 24 months. The sharp increase in rates has subsequently caused a “shock to the system” of sorts for much of the overall economy. Enough of the economics jargon, let’s get down to the brass tax, how did (and does) it affect us?

Where do we begin. The most obvious direct effect is the drastic increase in the cost of capital (debt) in such a short period of time. The majority of the financing we pursue during acquisitions is 5-year fixed rate financing. The pricing of this form of debt is, unfortunately, heavily correlated to the 2-year treasury. As mentioned above, the 2/10YR spread has not been this inverted since the early 1980’s. Better said, the interest rate on the debt we actively pursue is nearly 100% higher at the end of the year than it was at the beginning of the year. Since this is the case, our underwriting has drastically changed to take these economic factors into account. Our hope is that seller expectations will soon follow, but we aren’t holding our breath. Sellers are currently pricing their facilities as if market conditions haven’t changed over the last 12 months. Ultimately this will change but its anyone’s guess when that will happen.

RuCo Highlights:

Our goal for 2022 was to acquire 8 storage facilities, streamline the storage operational process and procedures, and double our storage footprint. We are fortunate to have an outstanding team of customer and operation support who have enabled much of this to happen.

2022 Summary:

• 2022 Facility Acquisitions: 4
• Total Acquisition Value: $15.5MM
• Avg. days to close: 49
• Rentable Square Footage Growth: +97.5%
• Facility Count Growth: +100%
• Unit Count Growth: +150.1%
• Equity Under Management Growth: 1.5x (end of 2021: $7,720,000, end of 2022: $17,271,000)

Total Portfolio:

• Total Facilities in the Portfolio: 10
• Total Square feet: 433,000
• Total Units: 2,772

We are proud of the accomplishments detailed above, but our biggest accomplishment this year was maximizing our efficiency to facilitate these outcomes. Juniper Square, DealPath, and Automatit are some of the tools we added to our arsenal that enabled these achievements. While we can hang our hat on the success of these feats, there is always room for improvement.

2023 Outlook:

If I take a second to peak behind the curtains, our primary objective was to double each year for the first three years. This objective remains within our grasp, and we remain focused honing our craft. As we enter 2023, we may face economic headwinds for the foreseeable future but remain steadfast on continued growth. Our team has several internal goals, to list a few worth mentioning:

• Acquire no less 10 self-storage facilities
• Continue to hire and build out our staff (RuCo operations and storage operations)
• Launch additional offering structures to our partners
• Prospecting for new LPs and growing our network
• Improve our local and property manager roles and responsibilities

Only time will tell what 2023 will bring for us and the overall economy. To maintain the growth objective set out by our team, we must continue to build out our team, improve and expand our processes and procedures, and acquire more storage facilities. With much of what the future holds out of our control, we will focus on controlling what we can so that when the economy rebounds, we are well positioned.

As the saying goes “if you always stay ready, you never have to get ready.”

To conclude, without the support of our partners, none of the aforementioned accomplishments, or our objectives, are remotely possible. To all our partners, thank you for your continued support and enabling us to execute on our vision. If you’re interested in partnering with us, please click on the “Become an Investor” link below.

All the best,

The RuCo Team