Fund Buys 3 MSF Self Storage Portfolio

Image courtesy of NKF

A joint venture between a state pension fund and an investment fund has acquired a 50-property self storage portfolio spread across six states. The fund, SROA Capital Fund VII, bought the 3.1 million-square-foot portfolio from an institutional investment advisor and a storage REIT.

Newmark Knight Frank, who represented the seller in the transaction, described the deal as the largest widely-marketed, non-merger self storage transaction in history. An NKF team of Aaron Swerdlin and Kenneth Cox represented SROA Capital Fund VII in the deal, while an NKF team of Bert Sanders, Aaron Sommer and Fred Liesveld represented the seller locally.

The self storage properties comprise a total of 21,787 units in the states of Tennessee, Georgia, North Carolina, South Carolina, Michigan and Florida and will be operated under the brand Storage Rentals of America. NKF said the interest in the portfolio and its sale pointed to a healthy self storage market nationwide.

A healthy pipeline   

The self storage market has recently experienced a wave of completed projects, leading to oversupplied markets that ultimately resulted in declining rents across the country, according to a recent Yardi Matrix report. On a year-over-year basis, street-rate rents dropped by 1.7 percent for the average non-climate-controlled storage unit and by 2.2 percent for the average climate-controlled unit, according to the report.

Last month, W.P. Carey and Extra Space Storage announced they had entered into a 25-year triple net lease agreement for 36 self storage properties across the country that are owned by the net lease REIT. Extra Space Storage had already been managing the majority of the properties and added the remaining five to its management portfolio.