Ardian plans to use self-storage company Costockage as the cornerstone of a real estate platform that could grow up to €300 million, Omar Fjer, MD, and Stéphanie Bensimon, head of real estate at Ardian, told PE Hub Europe. The sector is particularly attractive for funds focused on carbon emission reduction, said Fjer.
Ardian completed the acquisition of Paris-based Costockage in mid-January, its first investment in the self-storage business. Costockage is an online marketplace that links professionals and individuals to storage units owned by businesses and individuals. It also has a self-storage centre operating arm called Kostok with 10 centres across France.
The firm’s real estate fund invested in both the operating company and its properties.
Ardian had been monitoring asset classes that would be compatible with Article 9 of the EU’s Sustainable Finance Disclosure Regulation, which defines funds with sustainable investment or carbon emission reductions as objectives.
“Self-storage was probably the purest asset class in terms of carbon emissions – because it’s not heated, not cooled, [has] limited consumption of water, limited lighting – which makes it an interesting asset class on its own,” Fjer said.
Within that sector, Costockage had several advantages, said Bensimon. Its marketplace “means that they have data knowledge that will be valuable for this type of strategy”, Bensimon said. The company has also digitised its customer and market coverage processes.
Its being the first self-storage marketplace in France was also key, as France is one of several European countries where the sector is not very well developed and needs consolidation, said Bensimon.
Metropolitan areas in France have little space left to build self-storage units, meaning the sector needs to be creative.
“We’ve moved from an average of 70 square metres for an average new apartment in Paris region in 2000 to 60 square metres in 2020,” Fjer said. “You need to find these 10 square metres somewhere because you still need to store things.”
However, there are potentially millions and millions of “obsolete square metres” of space previously used for offices in France, and more generally in Europe. “The question is what do we convert these square metres into, and how do we limit the carbon emissions while converting them?” Fjer said.
Growing the platform, which Ardian plans to make worth at least €100 million, will take two forms.
“We’re looking at institutionalising this asset class in France, which is already the case a little bit in the UK and very much in the US,” he said. “All means of development will be considered, from asset deal to exit, to reconversion, to M&A.”
“Double up the company and market share, benefit from the trends and create a very resilient asset”, said Bensimon. This will create “huge exit opportunities”.
Within the wider fund, Ardian is looking at specific “niche office repositioning” and developing a theme around residential, with the acquisition of residential assets that can be upgraded from an energy performance perspective, said Bensimon. “In continental Europe, there is a need for good quality serviced residential space.”
Given the low quality and low supply, there is strong demand around this type of asset class despite the market struggling with elevated interest rates, especially in countries where we see there is a strong need for upgrading units, she added.
The firm will continue to explore in the coming months everything related to use conversion as the market creates the “right entry conditions” to be able to think about multi-use buildings.
“We are a strong believer in mixed use, although it’s complicated, depending on regulation, depending on countries,” Bensimon said. “We like to focus on what is the real change in terms of supply and needs for the society, and we think there are lots of opportunities deriving from those trends right now.”