Overview of Self-Storage in Western Canada: Holding Steady During Difficult Times

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Buyers and Sellers

The self-storage market in British Columbia in 2007 and 2008 was characterized by few sales. This was mainly because of lack of product on the market. One Lower Mainland portfolio was under offer for almost a year at a cap rate of about 6.3 percent before the purchaser closed the transaction in March 2008.

In 2008, there was one share sale of a small interior facility in the 9 percent-plus range. There is a reported recent sale of a small facility in Edmonton, which had not closed at the time of this writing in March. No income information is available, but the price per square foot is just under $100. The previous sale in 2006 was $71 per square foot.

The last sale in Edmonton was negotiated in 2007, closed in January 2008, and comprised the largest facility in the city. It is located on 12 acres of land, and the cap rate was in the 6.4 percent range. There have been no confirmed sales of self-storage facilities in British Columbia and Alberta since mid-2008.

On the national scene, InStorage REIT is in the process of being acquired by Canadian Storage Partners ULC, an acquisition that began with an unsolicited offer to the unit holders in mid-October. Canadian Storage Partners is a member of the TKG-StorageMart group that owns, operates or is developing 67 self-storage facilities in North America (principally in the United States).

By December 2008, the initial offer of $3.75 per unit (cash) had been raised to $4 per unit, and the InStorage board of directors recommended acceptance. The most recent announcement by Canadian Storage Partners (at the time of this writing) is the offer had been extended from Feb. 26 to March 13 pending consent from certain lenders or servicers of mortgage loans to InStorage.

InStorage made no new acquisitions in 2008 other than acquiring its own development arm, InScotia Developments, which added eight properties in varying stages of lease-up to a portfolio that now contains 60 operating facilities.

Public Storage, the second largest owner of self-storage facilities in Canada, purchased three development sites in 2008. The company operates 49 facilities in Canada, 25 owned by Public Storage Canadian Properties, a publicly held limited partnership, and 24 privately held by the Hughes family. Development has been initiated in Dorval and La Salle, Quebec, and the facilities are anticipated to be completed in late 2009. In October 2008, Public Storage purchased a site in Orleans, Ontario.

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