3650 Capital, a nationwide alternative commercial real estate lender, special servicer and solutions provider, has closed a $42 million senior loan for an affiliate of The Inland Real Estate Group LLC, secured by a portfolio of self-storage properties located in Wisconsin, Texas, Pennsylvania and Michigan.
The non-recourse, fixed-rate financing carries a 48-month term and includes an initial interest-only period. Proceeds were used to refinance existing debt on the portfolio, while remaining funding reserves will support the properties through stabilization. According to the companies, the structure enabled a cash-neutral transaction for Inland, allowing the firm to continue leasing activity without requiring an additional equity contribution.
“3650 Capital is delighted to deliver a flexible and tailored financing solution for this institutional-quality portfolio backed by Inland, a highly respected and experienced sponsor with a strong track record in the self-storage sector,” said Jonathan Roth, Co-Founder and Managing Partner at 3650 Capital. “This transaction highlights our team’s ability to structure capital for assets in various stages of transition and support sponsors executing value-add strategies in sectors with compelling long-term fundamentals. We see long-term tailwinds for the self-storage asset class and expect properties in submarkets with low square footage per capita to see compelling demand dynamics. We look forward to continuing to build our relationship with Inland and working together on future opportunities.”
The portfolio includes nearly 4,000 climate-controlled self-storage units encompassing more than 406,000 net rentable square feet. The properties were originally office, retail and light industrial buildings that were acquired in 2022 and later redeveloped into a mix of climate-controlled and exterior drive-up storage facilities.
Currently in the lease-up phase, the assets are positioned for future growth as occupancy levels increase and operations stabilize. The facilities are managed by Devon Self Storage, a member of The Inland Real Estate Group of Companies Inc., which oversees more than 200 facilities across 32 states and more than 109,000 storage units nationwide.
According to the companies, the portfolio is located in markets with high barriers to entry, limited new supply and fragmented ownership, particularly within the climate-controlled storage segment. Those characteristics are expected to support continued demand and long-term operating performance.
“This financing transaction with 3650 reflects their ability to deliver a thoughtful, well-executed solution aligned with our conviction in self-storage conversions,” said Joseph Binder, Chief Investment Officer of Inland. “The loan supports our investment thesis for this portfolio and allows us to continue executing our lease-up strategy. With Devon Self Storage’s operating platform and expertise, we believe these assets are well positioned to deliver long-term value.”
George Smith Partners served as advisor on the transaction, with Nate Weyer representing the borrower.