Dear Investors,
Given the recent developments unfolding with the COVID-19 pandemic in the United States, we, MG Self Storage Fund (“the Fund”), wanted to share with you our thoughts & the strategies the Fund is developing to prepare for what lays ahead in uncertain times.
Firstly, we are taking precautions as a company to keep our staff & customers safe and out of harm’s way. We have instituted a voluntary work from home policy for all corporate staff, and the sanitation & cleaning policy directives will be completed in all self-storage assets of the Fund.
Beyond these measures, the Fund operations are already poised well to conduct business with less disruption than other industries or even in comparison to other self-storage management platforms as all self-storage properties of the Funds are unmanned operated with no onsite management personnel. Thus, the Fund developer is experienced in operating facilities remotely so in that respect, it is business as usual for all self-storage assets. Additionally, storage facilities generally have low traffic volume of people coming & going so all customer-facing product is innately positioned well for minimal human contact & potential virus transmission scenarios.
From a business & defensive strategy standpoint, the Fund developer is reflecting on the personal experiences of commercial real estate in 2008 and the years following. The Fund is now actively reviewing all of real estate holdings & debt covenants. To this end, the Fund is in direct communications with its banking relationships to ensure those relationships & direct lines of communication remain open as navigate the near-term turmoil. As a corrective measure, if the Fund encounters a point of exposure from a debt perspective that it feels should be addressed, to the extent possible, the Fund will seek to immediately mitigate that concern by de-levering the asset or refinancing with another lender that offers more accommodative loan covenants. As recently as this afternoon, the Fund has confirmed via a reputable mortgage brokerage house that credit remains available to make theses change to the extent that becomes necessary. Furthermore, the current near-zero federal interest rate environment may benefit the Fund with even lower cost of financing, which will be resulting in even higher bottom-line return to our Fund and its investing members.
In closing and as silver lining, we wanted to share that self-storage historically has performed well in economic downturns. In the unfortunate scenario of a recession, self-storage benefits from the necessity of people downsizing, splitting households (divorce), dislocation (moving due to employment transitions) and death. In our industry, these are known as the four “D’s” of self-storage (Death, Divorce, Dislocation, and Downsizing). In fact, we observed a subscription booming this month and we are expecting to complete the financing process ahead of schedule (original end date is September 30, 2020). Thus, we are being prudent and pragmatic with each step forward based on our historical experiences that lay behind us but we feel prepared for what is surely going to be a tumultuous time for the general public.
We wish everyone the very best in these trying times but this will come to an end and we encourage all to remain level headed & band together to get through this as a collective community.
As always, thank you for your investment & continued support.
Best Regards,
Dandan Zou
Mainstay Global LLC
With respect to the COVID-19 virus, please review the Center for Disease Control website for guidance on how to protect yourself and your loved ones from the virus.