Campostella Self Storage in Chesapeake, Va., was recently sold for $3.45 million. The 675-unit, 70,600-square-foot facility was sold by a Virginia Beach-based investor to a Washington, D.C.-based development firm that specializes in self-storage. Capital improvements are to be made and the property will be immediately rebranded as Uncle Bob's Self Storage, as it will be managed by Sovran Self Storage Inc.
Stuart Wade, owner of SCW Realty Advisors, acted in a consulting role to the seller and helped to raise equity capital for the buyer, according to a press release. SCW is a private consulting practice specializing in self-storage.
The property meets institutional investment criteria and was purchased off market, Wade said. "The acquisition cap rate on 2011 net operating income is 8.9 percent, while institutions are acquiring comparable properties in the 7 percent range."
The property had assumable senior debt that is slightly above market (5.75 percent fixed non-recourse) but has an aggressive principal amortization of 20 years, according to Wade. "When the loan matures in four years, new ownership will be able to put in place better financing and likely cash out much of the original equity investment expended."
As part of the acquisition, the property will undergo improvements in several areas. For example, the property's leasing office, which was designed to meet the lifestyle needs of the resident managers, will be reconfigured to accommodate ancillary income sources such as truck rentals and the retail sale of packing and moving supplies.
The seller did not have a revenue-management system in place and had not implemented a rent increase in more than two years, Wade said. The new management team will implement new software that will automate and implement periodic rate increases.
Sovran is a real estate investment trust that operates more than 440 self-storage facilities in 25 states, with a large presence in Texas. The company also provides third-party management services.