An Acquisitive Mind: InStorage REIT's Phenomenal Growth
|Copyright 2014 by Virgo Publishing.|
|By: Elaine Foxwell|
|Posted on: 04/17/2008|
InStorage REIT is the first and only Canadian REIT focused exclusively on the ownership and management of self-storage facilities. Based in Toronto, the REIT has a current portfolio of 52 self-storage properties in Alberta, Ontario, Quebec and Saskatchewan. The company owns and operates properties in small towns and large cities with a customer base of more than 25,000 individuals and businesses.
During 2007, the REIT made several purchases to increase its holdings in the storage industry. “Growth has exceeded our expectations,” says T. James Tadeson, chief executive officer.
In addition to its wholly owned properties, the company manages four other properties for third parties and five for its development partner, InScotia Developments.
Growth Through Purchase
During 2007, InStorage purchased several portfolios that brought the REIT’s holdings up to almost 3 million square feet of leaseable space. “It was a very busy year for us in terms of acquisitions and development,” Tadeson says. The company’s 2007 activities included:
February 2007: Purchased four facilities comprising the Store Edge Self Storage portfolio in Alberta and Saskatchewan for $28.5 million. These properties total 223,000 square feet. Three other properties were acquired for $11.1 million for the REIT’s development partner, InScotia Developments.
March 2007: The REIT entered into an agreement with the developer/owner of the Windsor, Ontario, facility in which InStorage will receive fees for the management of the facility until it is fully stabilized and acquired. The property is fully climate-controlled, and contains 48,000 square feet of gross leaseable area (GLA) with expansion capability to add a further 17,000 square feet. InStorage expects it will acquire the facility upon full stabilization, which is anticipated in 2010.
During this month, the company also opened a new facility in Calgary, Alberta, aggregating 80,000 square feet of GLA. This property was developed by InScotia. The REIT provided mezzanine loan financing for the construction of the property, and will receive management fees until the facility is fully stabilized and acquired, expected in 2010.
April 2007: Bought 11 facilities from Storage Now, Storage MAXX and Storage One, collectively known as the Storage Now portfolio, for $110 million. The facilities in Alberta, Ontario and Saskatchewan total 660,000 square feet. Purchased a 24,000-square-foot facility in Milton, Ontario, for $3 million.
May 2007: Paid $114 million for the Apple Self-Storage portfolio that consists of 10 properties in Ontario and Quebec.
June 2007: Purchased Entreposage Domestik, a 226,000-square-foot portfolio in Quebec for $22 million.
August 2007: Acquired a 53,000-square-foot property in Airdrie, Alberta, just north of Calgary, for $8 million, which includes expansion potential for an additional 60,000 square feet. Bought a facility in Milton, Ontario, for $4 million. The 27,000 facility has room for an additional 48,000 feet and expansion is under construction.
October 2007: The REIT bought out its co-owner’s 50 percent share in a property in Vaughan, Ontario, for $5 million. The 56,000-square-foot facility is being expanded by an additional 20,000 feet.
In addition, two new two facilities opened this year, adding approximately 128,000 square feet of GLA to the REIT’s managed portfolio.
Growth through Development
“Our relationship with InScotia continues to provide us with an expanding pipeline of state-of-the-art properties for future acquisition,” Tadeson says. InScotia will develop a property and the REIT will manage it until it is fully leased up and stabilized at around 85 percent occupancy. At that point, InStorage will the buy the property from InScotia.
The REIT also provides InScotia with mezzanine financing and has a call-option on the property. It gets paid management fees on the new property once it is built, then can purchase the property when fully leased.
InScotia has 10 projects in place and is committed to two more. “We are actively looking to continue to grow InScotia’s development pipeline,” Tadeson says. “Here at InStorage, we have completed a lot of acquisitions, so our main push now is integrating all of those properties. The REIT is re-branding all the properties with the InStorage name and colors.”
The REIT is always interested in buying facilities across the country. It will conduct a single-property transaction in addition to portfolios, and plans to have facilities coast-to-coast. “If people are interested in selling a property or want to partner with us, give us a call,” Tadeson says.
The Move to the TSX
This year the REIT has not only been busy with acquisitions but also its transition onto the Toronto Stock Exchange (TSX). In March 2008, InStorage began listing its units on the TSX, consolidated its outstanding units and implemented a Unitholder Rights Plan. “We are pleased to make the move to the TSX and complete our unit consolidation, both of which represent important milestones for us,” Tadeson says. “We anticipate that the result will be more visibility and enhanced liquidity for our investors. Achieving these objectives was important to the continued execution of our business plan.”
The REIT also implemented a Unitholder Rights Plan designed to ensure the fair treatment of InStorage’s holders in any transaction involving a change of control of the REIT, and will provide the board of trustees and holders with adequate time to evaluate any unsolicited take-over bid. If appropriate, it will also seek out alternatives to maximize unitholder value.
The Rights Plan is similar to others adopted by various Canadian income trusts and corporations. Until the occurrence of certain specific events, the rights will trade with the units of the REIT and be represented by any certificates for such units.
“For 2008, we will continue to grow; it will be moderated growth in both the acquisitions and development, however, as we focus on integration and re-branding initiatives,” Tadeson says. “The fundamentals of our business are strong, and we are getting good performance from the properties. We are looking forward to tightening up the operations, and developing some good consumer awareness across the country.”
Anyone interested in selling or partnering with InStorage, contact President and COO Tom Gualtier-Walters at 416.867.9701. For further information, call 416.867.9705; visit www.instoragereit.ca.