Storage Pros Sells Most of Portfolio

By Scott Baltic, Contributing Editor

David Levenfeld

In one of the largest sales this year in the self-storage sector, Storage Pros has completed the sale of 30 of 37 self-storage properties in a $242.5 million transaction, it was announced Thursday by NGKF Capital Markets, which represented Storage Pros in the portfolio sale. The remaining seven properties are due to close in the first quarter of 2016.

The properties were purchased by a joint venture led by a Chicago-based institutional investment firm and will be managed by a publicly traded self-storage REIT, Storage Pros president and CEO David Levenfeld told Commercial Property Executive.

The portfolio being sold totals more than 2.4 million square feet, including nearly 600,000 square feet of boat/RV/vehicle parking, and encompasses 37 assets: 17 in Michigan, 10 in Tennessee, seven in Massachusetts and three in Florida.

Before this sale, Storage Pros owned 51 properties, so after the first quarter the company will still own 14. “We plan to continue strategic, value-add acquisitions, and, as well, we are actively developing self-storage facilities in the Northeast corridor, from the Boston area, down to Metro D.C.,” Levenfeld told CPE.

Aaron Swerdlin, executive managing director, and Kenneth Cox, senior managing director, led the NGKF Capital Markets team that represented Storage Pros.

“This transaction is one of the largest this year in the self-storage industry and further solidifies the big-transaction trend of the last several years,” Swerdlin said in a prepared statement.

“Interest in the portfolio was profound and there was a wide pool of potential purchasers, from existing storage operators, to private equity funds to public REITs,” Cox added. “The storage industry in particular is very appealing to the institutional community as investor confidence increases.”

“The self-storage investment market is building momentum as buyer interest rises and banks loosen financing criteria,” according to a second-half report from Marcus & Millichap, which noted the growing number of institutional buyers and their competition with REITs for assets in primary markets.

This competition is in turn driving an ongoing compression of cap rates, the M&M report explains. The national average cap rate reportedly is 6.5 percent, down about 30 basis points from one year ago.

Interestingly, given the portfolio’s properties in Tennessee and Florida, the M&M report highlights Nashville, Chattanooga, Tampa–St. Petersburg and Pensacola as among the most desirable self-storage markets.