When a self storage owner refinances, the property loan on the facility is the debt that matters most. Smaller loans on the solar system, the gate and the cameras sit beside it. Its rate, its term and what secures it can all be reset, and the new loan can be sized on the facility's income today, as the valuation shows it.
IBISWorld counts 1,417 self-storage businesses in Australia in 2026, 5.2% fewer than in 2025.
Was the property loan set when half the units sat empty, and is the facility close to full now? Does the interest-only period, when repayments cover the interest alone, end soon, with repayments that roughly double the month after? Have land tax and council rates climbed while the rent paid by existing customers has held? Is the family home still on the loan from the day you bought?
Ardent Capital Group can help a storage owner refinance the loan on the facility and the equipment loans next to it, and it would be a pleasure to sit down with yours.
Why a storage facility's loan comes up for a fresh look
A self storage facility earns its income from many small customers, each renting a unit month by month. The loan on the facility, though, was set once, at the moment of purchase. If the facility was bought while it was still filling, that loan was set when the site was half empty.
The years since then are the lease-up. Lease-up is the stretch in which a facility fills its units and builds a record of rent. Once occupancy settles at a steady level, the industry calls it stabilised occupancy. A stabilised facility has something a part-filled one does not: a history of income that a valuer can work from.
A few events bring the loan up for review.
- The interest-only period ends. Until then, the full amount borrowed is still owed. Afterwards, each payment also reduces the balance.
- The bank term or an annual review falls due. Either one opens the rate and the conditions to change.
- The owner plans a further stage. A second building or a block of climate-controlled units is a new project with its own funding.
- The running costs rise. Land tax is a state tax charged on the land's value, and it sits beside council rates as a fixed cost of holding the site.
Example: a drive-up storage facility's loans side by side
Seeing the debts together makes it easier to tell which one is driving the pressure. The facility here is illustrative. Five years ago the owner bought a part-filled drive-up facility on industrial land. The bank loan was written for 15 years, interest-only for the first five, and the family home went on as extra security.
Since buying, the owner has added a rooftop solar system on one equipment loan, and replaced the gate access control and the CCTV cameras on another. On each loan, the owner owes a balance at an assumed rate, with a set count of months to go and a payment due monthly.
| What the loan is on | Amount owed | Rate | Months remaining | Paid each month |
|---|---|---|---|---|
| The facility (interest-only this month) | $3.2M | 7.2% (assumed) | 120 | $19,200 |
| Rooftop solar system | $120k | 8.5% (assumed) | 48 | $2,958 |
| Gate access control and CCTV | $45k | 9.5% (assumed) | 24 | $2,066 |
| Total | $3.365M | $24,224 |
The owner pays $19,200 a month on the $3.2M loan on the facility, which is the interest alone at an assumed 7.2%. With the two equipment loans, $24,224 leaves the account each month.
The interest-only period ends this month. From next month, the loan on the facility must clear $3.2M over the 120 months left of its term, and its repayment rises to $37,485. That is $18,285 more a month. The three loans together then come to $42,509 a month.
Each rate in this example is an assumption used to show the arithmetic. No lender is quoting them.
How a refinance changes a storage facility's loan
Refinancing swaps the facility's existing loan for a fresh one with different settings. Three settings shape what the owner pays each month and what the loan costs in the end.
- The rate. Lowering the rate while keeping the months shrinks the payment and the interest together. Lenders price a loan on what secures it, how the facility trades, and the credit records of the owner and the business.
- The term. Stretching the loan over more months makes each repayment smaller. Because interest accrues on the balance through every added month, more is paid overall. For a facility with units still to fill, that can be a deliberate choice for a set period.
- Interest-only or principal and interest. Principal is the facility debt itself, separate from the interest added to it. A new loan can include a fresh interest-only period, subject to the lender. The repayment stays lower for that time, and the balance does not fall.
Once principal is being repaid, the loan is amortising: it runs down to nil by the end of the term, unless it ends in a balloon, a lump sum left to the final repayment. In the first months, most of each repayment is interest, because interest is charged on a balance that has barely moved.
Worked example: the first principal-and-interest month
The first repayment after the interest-only period shows how the bigger payment is split. In month one, $19,200 of the $37,485 still goes to interest. The remaining $18,285 is the first money off the $3.2M balance. Across the first year, about $226,800 comes off. If the loan simply runs on to the end of its term, about $1.3M of interest is still to be paid on it.
Refinancing each of the facility's loans
A building on industrial land and a set of cameras do not age at the same rate. So the property loan and the equipment loans are weighed one at a time first.
The loan on the facility
For this owner the property loan is nearly all of the debt. It is also where the facility's growth since purchase shows up, because the facility is valued on its income.
A self storage facility can be valued by capitalising its net operating income. Net operating income is the rent and other income the facility earns, less the costs of running it. Capitalising converts that income into a value using a capitalisation rate, which is a yield taken from sales of comparable facilities. A yield is a property's income shown as a percentage of its price. A facility earning more from the same units is generally valued higher.
The LVR, short for loan-to-value ratio, measures what is borrowed against what the valuer says the facility is worth. This guide quotes no LVR for self storage. The size of a new loan comes from each lender's own view of the valuation and of the income it earns. Bank terms on commercial property commonly run 10 to 15 years, and non-bank terms 25 to 30.
On refinancing, the term and rate of the loan on the facility can move, an interest-only period can be added or ended, and the home can be released. If the loan on the facility is fixed, leaving early can bring a break cost, a fee for ending a fixed rate early. The more rates have fallen since the rate was fixed, the bigger it is. The lender holding the loan can confirm the figure in writing. Our page on refinancing a self storage facility you own explains the property loan further, including releasing equity, the value of the facility above what is owed on it.
Funding the next stage of units
A facility with spare land can be extended with another building or a block of units. Building that stage is a construction project, financed as one and drawn as the work progresses. The equity in the trading stage can support it. Our page on commercial development finance covers self storage facilities developed in stages.
Solar, the gate and the cameras
The equipment on a storage site is small beside the property loan, but it runs on shorter loans with higher repayments for their size. It tends to be the solar system, the access control at the gate and doors, and the CCTV. Some sites add a forklift for container storage or a trailer hired out to customers.
A machine or system's effective life is the number of years an asset can be used to produce income, taken from the ATO's determination or worked out by the business. It is a tax figure, not a promise of how long the equipment will run. The ATO's effective life determination lists solar photovoltaic systems at 20 years, access control code pads at 5 and CCTV cameras at 4. Its entry for non-residential property operators, the ANZSIC class that includes self storage, lists office building assets only. Table B, the ATO's list of assets used across many industries, does list demountable partitions. Your accountant or a quantity surveyor, a specialist in costing buildings, works out how the storage units, roller doors and buildings are treated.
That gap between lives matters for a refinance. The solar system could reasonably sit on a long loan. The cameras, on a 25-year property loan, could need replacing several times before the balance is cleared.
An equipment contract settled before its final month may carry an early payout charge: the cost of settling the contract ahead of schedule. Each contract sets its own terms, and the finance company can put the figure in writing.
Working capital, land tax and the ATO
A storage business needs only a small amount of working capital, the cash that covers day-to-day running costs, once it is full, because rent arrives monthly in advance. The pressure falls on the big annual bills. Land tax and council rates arrive as lump sums, and insurance and power add to them.
Land tax is owed to the state revenue office, not the ATO, and it is not something an ATO payment plan covers. GST is the goods and services tax, and PAYG withholding is the tax taken out of staff pay. If the business is paying off either under an ATO plan, the refinance can pay that out too, where the lender agrees. The interest on the facility's loans may be deductible, and since 1 July 2025 the interest the ATO adds to tax paid late has not been. A deductible cost is one the business can claim against its taxable income. Your accountant confirms how each applies.
Putting the facility's loans together
With each debt understood, the choice is how far to stretch the loan on the facility, and whether the equipment rides along with it.
Worked example: five paths once the interest-only period ends
Every path starts from the same three debts in the month the interest-only period ends. Each is measured against letting the loan change over as written, by the monthly payment and by all the interest still to come.
| Path | Payment each month | Against no refinance, monthly | Interest to come | Against no refinance, interest |
|---|---|---|---|---|
| Let the loan on the facility change to principal and interest as written From next month | $42,509 | Starting point | $1,325k | Starting point |
| New loan on the facility at a lower rate, same 120 months | $42,014 | $495 less | $1,265k | $60k less |
| New loan on the facility over a fresh 15 years | $33,608 | $8,901 less | $1,972k | $647k more |
| New loan on the facility over 25 years | $28,464 | $14,045 less | $3,859k | $2,534k more |
| All three loans in one, over 25 years | $24,649 | $17,860 less | $4,030k | $2,705k more |
Rounded, illustrative arithmetic. No rate here is pricing or a quote; each is an assumption. Break costs, early payout charges, valuation and establishment fees, and any new interest-only period are not included.
A lower rate over the same 120 months takes $495 off the monthly payment and saves $60k of interest. The term does not move at all.
Moving the loan on the facility to 25 years brings the payment down by $14,045 a month, though it stays above the $24,224 the owner pays today. The cost is $2,534k more interest over the life of the loan, because the $3.2M is repaid over 300 months instead of 120.
Putting all three loans in one over 25 years also moves the solar, gate and cameras onto the property loan. The cameras have a 4-year effective life and could need replacing several times inside a 25-year loan. Apart from the lower rate on the same term, each path trades a smaller payment for more interest. Which suits the facility depends on its occupancy, its rent reviews and any stage still to build. Our part is collecting each payout figure, the sum that settles a debt in full, and setting these paths out side by side for the owner. The figures are not offers or approvals.
What can secure the new loan
For a storage owner, the facility itself is the main security, and the question is what else can be offered with it.
- The facility. The mortgage over the site and its buildings secures the property loan, and it can carry the equipment debts too.
- The equipment. An equipment financier registers its interest on the PPSR, the national register of security interests in personal property. It does not cover land, buildings or fixtures to land. Paying that loan out leads to its removal from the register.
- A general security agreement. It gives the lender a charge over the business's assets, including the rent owed by customers.
- Guarantees. A lender can ask the directors to guarantee a company's loan, promising to repay it personally if the business does not.
- The home. A home that went on as extra security at purchase can come off at a refinance, subject to the lender, once the facility's income and valuation support the loan by themselves.
A facility held by a trust or a separate company
Some owners hold the land in a trust and operate through a company paying rent to that trust. A lender assessing the refinance reads both entities, the rent between them and each guarantor's own borrowing. How the facility is owned is a matter for your accountant, and the finance is arranged around it.
Preparing the facility for a refinance
A storage facility's application rests on its records, so the work before applying is mostly about having them in order.
When to start, and what can wait
In this example, the end of the interest-only period sets the timetable.
- Start before the interest-only period ends. Lining the refinance up ahead of that date means the higher repayment need not start in the meantime.
- A break cost larger than the saving. If the written figure shows that, the timing can be looked at again as the fixed period runs down.
- Rent reviews just applied. A few months of income at the new rates show what the reviews have done.
- BAS or returns outstanding. BAS is the business activity statement used to report GST. Lodging any outstanding ones first lets the application go in on current figures.
An annual review is the lender's check on the loan on the facility. The rent reviews you apply to customers' units set what they pay for storage. At the loan review, the lender may look most closely at how full the facility is and what customers are paying. Our guide walks through a storage facility’s loan review, start to finish.
What the records show about storage income
A storage facility's income is spread across hundreds of small agreements, and the records show how steady it is.
- Occupancy, two ways. Occupancy by area counts the square metres let. Occupancy by units counts the units let. A site full of small units can read differently on each measure, so both are shown.
- In-place rates against advertised rates. In-place rates are what existing customers pay. Advertised rates are what new customers are offered. The gap shows how much rent reviews could still add.
- Month-to-month storage agreements. Customers rent on agreements that run month to month rather than on leases.
- Ancillary income. Sales of boxes and packing materials, storage protection products and trailer hire sit alongside the rent.
Records to pull together
The facility management software holds most of what an application asks for.
- Written payout figures for all three loans
- Monthly occupancy reports by area and by units for the past two years
- A rent roll, the list of every unit let and what its customer pays, with in-place and advertised rates, and the history of rent reviews
- Two years of accounts and lodged returns, with the latest BAS
- Land tax assessments, council rates notices and the insurance schedule
- The ATO account statement and the equipment contracts
- Personal loan, card and home loan statements for each director
Common questions from storage owners about refinancing
We're at 90% occupancy now and were half full when we bought. Will that count?
Subject to the lender, it can. A fresh valuation can work from the income the site earns today, and the occupancy reports show how it got there.
My interest-only period ends in three months. Is that enough time?
It can be, with the records ready. Starting before the date gives the most choice, and the current lender may also agree to extend the interest-only period.
Can I get a new interest-only period on the refinance?
That is for the lender to agree. Repayments stay lower for that time, while the balance stays where it is and total interest goes up.
Why won't anyone tell me an LVR for my facility?
Each lender sizes the loan from its own view of the valuation and the net operating income.
Should the loan on the solar system be folded into the refinance?
It can be. Its rate may fall, but it would then be repaid over the property loan's term, so the interest on it rises.
We raised rents on existing customers last quarter. How soon does that show?
Once a few months of income at the new rates are in the reports. The rent roll shows the new in-place rates straight away.
Does land tax count against what I can borrow?
It is one of the running costs, alongside council rates and insurance, taken out of the net operating income.
Can the house come off the loan?
Subject to the lender, it can come off at a refinance. The facility's valuation and income then need to support the loan without it.
We hold the land in a trust and run the business in a company. Is that a problem?
Not necessarily. Both entities and the rent between them go in with the application. Your accountant confirms the ownership side.
Does a refinance now affect building the next stage?
It can. The repayments set now sit beside any construction loan for the next stage, and equity used in one cannot also support the other.
Talking about your facility's loans with us
A storage facility's loans work best when the property loan follows the income the site now earns and the equipment loans follow the life of what they paid for. We can assist with the facility's property loan, the equipment loans on the solar and security systems, and releasing the home. Drawing on a background in financial planning, the Ardent Capital Group team can set out how the new loans fit the facility and your household debts, and your accountant confirms the tax detail. When you are ready, send through your loan statements and occupancy reports and we will go through them with you.
