CubeSmart, a self-storage real estate investment trust (REIT), has purchased a 36-property self-storage portfolio with locations in North Carolina and Texas from Private Mini Storage Inc. for $326.2 million. The portfolio encompasses 2.1 million rentable square feet, with 28 facilities in Houston; seven in Austin, Texas; and one in Charlotte, N.C.
CubeSmart completed the acquisition through a newly formed joint venture with an affiliate of Heitman LLC for an aggregate purchase price of $315.7 million. Each contributed capital equal to their 50 percent ownership in the venture. The venture intends to pursue debt financing subsequent to closing and targeting overall leverage levels at 30 percent to 45 percent of cost, considering secured and unsecured debt. The remaining facility, in Houston, was purchased by CubeSmart for $10.5 million.
The overall occupancy for the portfolio was 88 percent at the time of sale. All three markets are characterized by strong economies with robust job expansion, a healthy housing market and high-growth suburbs, supporting the fundamentals of the transaction, according to representatives from Clarion Partners LLC, a real estate investment firm and partner to Private Mini Storage.
“Our initial objective in assembling this portfolio was to acquire high-quality assets in desirable growth areas along highly visible traffic corridors, and to add value by expanding the assets, modifying unit mixes, improving management and executing some ground-up development,” said Jason Glasser, a senior associate at Clarion Partners. “We have achieved our objectives, stabilized the assets, and are now taking advantage of solid market fundamentals to sell the portfolio to operators in the sector.”
Aaron Swerdlin, an executive managing director in the Houston office of NGKF Capital Markets, a group within commercial real estate advisory firm Newmark Grubb Knight Frank, was engaged to advise Clarion Partners and Private Mini Storage in the transaction.
“This truly was one of the most unique portfolio opportunities in the self-storage space I’ve ever seen,” Swerdlin said. “The geographic concentration in Austin and Houston, two of the best economies in the country, really accentuated the value of the high-quality self-storage portfolio that Clarion and Private Mini had developed and assembled.”
Headquartered in New York, Clarion Partners has been a real estate investment manager for more than 30 years. The firm has offices in major markets throughout the United States as well as in London and São Paulo, Brazil, with a presence in Mexico. With $28.6 billion in total assets under management, the company has more than 200 institutional investors.
Based in Houston and founded in 1986, Private Mini Storage operates 41 facilities in North Carolina and Texas, according to the Inside Self-Storage 2013 Top-Operators List . The portfolio encompasses 3 million square feet of storage space and more than 20,000 units.
NGKF is a commercial real estate advisory firm. Together with its affiliates and London-based partner Knight Frank, the company employs more than 12,000 professionals, operating from more than 320 offices in established and emerging property markets on five continents.
Based in Wayne, Pa., CubeSmart owns or manages 518 self-storage facilities across the United States and operates the CubeSmart Network, which consists of more than 700 additional self-storage facilities.