Extra Space leads an active November in self-storage facility acquisitions

December 3, 2013 2
Extra Space leads an active November in self-storage facility acquisitions

November proved to be another busy month for self-storage acquisitions–for REITs as well as other operators. Self-storage REIT Extra Space Storage Inc. led the way with about $400 million in acquisitions during the month.

Extra Space inked a deal to acquire 17 facilities in Virginia from Mini Price Storage for about $200 million. The portfolio covers 1.5 million square feet of rentable space in 14,000 units. As of the end of September, the facilities were 90 percent occupied.

Salt Lake City-based Extra Space gobbled up another portfolio consisting of 20 facilities and 1.4 million square feet. The purchase price was around $200 million, according to an industry source.

The portfolio, sold jointly by Harbert U.S. Real Estate Fund IV and New York City-based W.P. Carey Inc., is in nine states: Arkansas, California, Connecticut, Florida, Georgia, Illinois, Massachusetts, Ohio and Texas. As of the end of September, the average occupancy for the portfolio was 85 percent. The facilities contain 12,500 units.

Harbert and W.P. Carey joined forces in 2009 to acquire unstable properties, turn them around and sell them. Third parties managed the facilities.

“We are very pleased with the execution of the portfolio roll-up strategy,” said Travis Pritchett, managing director at Birmingham, AL-based Harbert Management Corp.

Strategic Storage Trust Grabs Nine Facilities
In another sign that the self-storage acquisition market is on fire, Strategic Storage Trust Inc. recently bought nine facilities for about $64 million.

Strategic Storage Trust, a publicly registered, non-traded REIT specializing in self-storage, bought five facilities in the Dallas-Fort Worth and Midland areas in Texas, and four facilities in Alabama and Tennessee. The facilities are being rebranded under the REIT’s SmartStop Self Storage name.

The identity of the sellers was unclear.


A SmartStop Self Storage facility

In all, the nine facilities encompass about 710,000 square feet and 5,200 units. Ladera Ranch, CA-based Strategic Storage Trust said it paid about $27 million for the Texas portfolio and about $37 million for the Alabama and Tennessee portfolio.

“We targeted these self-storage facilities due to their high occupancy levels and solid locations,” said Michael Schwartz, chairman and CEO of Strategic Storage Trust. “Both portfolios are an ideal fit for our growing brand and strategy, allowing for continued expansion in these markets.”

The Strategic Storage Trust portfolio comprises about 77,000 units in 10.2 million rentable square feet at more than 120 facilities in the U.S. and Canada.

Joint Venture Buys Oklahoma City Property
Austin, TX-based Virtus Real Estate Capital LLC, in a joint venture with McKinney, TX-based Advantage Storage, bought a 59,400-square-foot self-storage facility in Oklahoma City for $3.8 million. Grand May LLC sold the 404-unit facility, which operated as Nichols Hills Self-Storage.

Advantage Storage

An Advantage Storage facility

The deal marks the first joint venture deal between Advantage and Virtus. Advantage operates more than 20 facilities in the Dallas-Fort Worth market.

“With its dynamic growth and diverse economy, Oklahoma City is a target market for Virtus,” said Scott Humphreys, acquisitions manager at Virtus.

Morningstar Picks Up Three Facilities
Morningstar Properties LLC bought three properties in two states for a combined $17.7 million.

The company purchased two facilities in Tallahassee, FL: a 92,985-square-foot property for $4.99 million and a 66,630-square-property for $8.44 million. The company also acquired an 81,860-square-foot facility in Bentonville, AR, for $4.27 million.

“This gives us great presence in two more strong university markets, which is key to our marketing and business strategy,” said Dave Benson, president and CEO of Morningstar.

In October, Morningstar sold a 43-property portfolio it owned jointly with Harrison Street Real Estate Capital LLC. Public Storage bought the facilities for $315 million.

Other Notable Deals

  • Walnut Creek, CA-based Pegasus Group bought Pearl Self Storage, a 68,646-square-foot self-storage facility in Portland, OR, for $18 million from Walt Bowen.
  • Monrovia Stor-All LLC purchased a 63,398-square-foot self-storage facility in Covina, CA, for $6.9 million. RJ Covina Investors sold the property. The facility, called RJ Self Storage, has 451 units. The property also includes a multitenant retail park.
  • CubeSmart LP sold a 119,085-square-foot self-storage facility in Memphis, TN, for $7.9 million. The buyer was WCP of DSSH Holdings 16 LLC of Emeryville, CA.
  • Wave Crest Investments LLC bought an 85,684-square-foot self-storage facility in Melbourne, FL, for $3.7 million. The seller was Viera Storage Co. LLC of Maitland, FL.
  • Value Self Storage, an 82,295-square-foot self-storage facility in Holiday, FL, was sold for $3.5 million. The facility was purchased by a private investor in New York and sold by a local private investor. The facility features 689 units with 71,830 square rentable feet and an on-site car wash.
  • Cross Creek Storage, a 69,984-square-foot self-storage facility in Tampa, FL, was sold for $4.8 million. Local private investors sold the property to a Maryland company. The facility contains 476 units with a total of 56,830 rentable square feet.
  • New York City-based Andover Properties LLC, doing business as Storage King USA, bought a 64,323-square-foot self-storage facility in Chattanooga, TN, for $3.3 million. The seller was Scenic Self Storage. In 2003, the facility was converted from a big-box retail store to a 495-unit storage facility.

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