Commercial mortgages for self storage

How much can you borrow against a trading store?

Most lenders advance up to around 60 to 70 percent loan to value against the trading valuation of a stabilised self storage facility, on loans from around 250,000 pounds to 50 million pounds and more. Because the trading valuation reflects the earnings of the storage business rather than just the bricks and mortar, the cash a strong store can support is often well above what a vacant possession valuation would suggest.

The second ceiling is debt service cover. The lender sizes the mortgage so the EBITDA covers the interest and any capital repayments with a clear margin, and where leverage is pushed or the rate environment is high, that cover test sets the loan before the loan to value does. We model both ceilings against your store's actual accounts so you know the realistic number before any application goes in, not after a valuation lands.

What rates and repayment structures are available?

Rates on a self storage commercial mortgage start from around 6 percent and move with leverage, the store's trading record and the lender's cost of funds. The keenest interest rate goes to a stabilised store with several years of settled occupancy and growing income. You can fix the rate for an initial period for certainty, or track a reference rate if you expect to refinance or sell within a few years.

Repayment structure matters as much as the rate. Interest only keeps payments low and suits an operator prioritising cash flow for reinvestment in the business, while an amortising profile reduces the debt over the term and can unlock a slightly higher advance or finer pricing. Many storage loans blend the two, part repayment with a bullet at maturity. We model each structure against your store's cash flow so the mortgage fits the plan rather than dictating it.

How do lenders assess the trading income?

A storage lender reads the store like a business, because it is one. It wants two to three years of accounts, the monthly occupancy history against maximum lettable area, the net achieved rate per square foot, the discount and promotion policy, and the move-in and move-out pattern. It is testing whether the EBITDA is settled and durable or still moving, and whether the operator can sustain pricing without sacrificing occupancy.

It also assesses the operator behind the income: your track record running storage, the management systems in place and the depth of the local market. A store still in its occupancy build-up phase, before stabilisation, can still qualify, but the lender will size cover on current trading rather than the projected mature income, or bridge the gap with a shorter initial term. We present the trading data the way credit teams want to see it, which materially improves the terms offered.

What is the difference between trading value and vacant possession value?

A self storage facility has two valuations. The vacant possession value is what the empty building and land would fetch, essentially its worth as industrial space under B8 use. The trading valuation values the store as a going concern, capitalising its net operating income and EBITDA, and for a well-run store it is usually significantly higher because the customer base, brand and operating platform have real value.

Which basis your lender uses changes everything. A lender anchored to vacant possession value will offer a far smaller mortgage than one lending at 60 to 70 percent of the trading valuation, even at the same headline loan to value. Specialist lenders and banks with storage experience lend on the trading basis; generalists often do not. Placing the loan with the right kind of lender is the single biggest lever on proceeds, and it is exactly what we do.

Can you refinance or release equity from a store you own?

Yes, and for many operators this is the main event. If your store has grown its occupancy and EBITDA since the current debt was put in place, a refinance can cut the interest rate, extend the term, or release equity against the higher trading valuation to fund the next site, a fit-out phase or an acquisition. The storage business itself becomes the engine that funds its own expansion.

A remortgage is underwritten the same way as new money: trading accounts, occupancy, net achieved rate and debt service cover. We review the whole market at each refinance rather than rolling onto whatever the incumbent lender offers, because loyalty is rarely rewarded in commercial lending. Where you hold more than one store, we can also look at portfolio facilities that cross-collateralise the sites and release more capital than financing each store alone.