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Investment Fund Managed by SROA Capital Acquires 50-Property Self-Storage Portfolio From CubeSmart Joint Venture

Update 8/5/19 – The 50-property portfolio purchased in June by SROA Capital Fund VII was acquired from HVP III, a joint venture formed in 2015 between self-storage real estate investment trust (REIT) CubeSmart and real estate investment firm Heitman LLC. The sale price was $293.5 million, according to the REIT’s second-quarter earnings announcement.

The properties were part of a 68-property portfolio owned by the joint venture. On June 6, CubeSmart acquired Heitman’s 90 percent ownership interest in the venture’s remaining 18 properties for $128.3 million. The REIT paid $120 million in cash and $8.3 million in proceeds earned from the joint venture’s sale of the 50 facilities, the release stated.

As SROA rebrands the portfolio under Storage Rentals of America, CubeSmart continues to manage most of the facilities, according to Tim Martin, CubeSmart’s chief financial officer.


7/16/19 – An investment fund managed by SROA Capital LLC, an equity investor focused on the self-storage industry and operator of the Storage Rentals of America and Storage Zone brands, has acquired a 50-property portfolio across six states. SROA Capital Fund VII LP, a joint venture between investment and state-pension funds, made the purchase. The properties comprise more than 3.15 million net rentable square feet of self-storage in 21,787 units. They’ll be rebranded under Storage Rentals of America, according to a press release.

The seller was a joint venture between an unidentified institutional-investment adviser and a publicly traded, self-storage real estate investment trust. The deal, which includes facilities in Florida, Georgia, Michigan, North Carolina, South Carolina and Tennessee, is believed to be the largest “non-merger transaction” in industry history, the release stated.

“The level of interest generated by the portfolio transaction was a strong indicator of the health of the self-storage market, overall,” said Aaron Swerdlin, vice chairman of Newmark Knight Frank (NKF), the real estate firm that represented the seller. “Its successful sale gives the industry confidence that self-storage remains one of the strongest product types, one in which institutional investors are still eagerly interested.”

The portfolio is comprised of “mature properties with a long, stable cash flow history,” according to Kenneth Cox, executive managing director of NKF, who co-leads the company’s Self Storage Group with Swerdlin. “The self-storage sector continues to be well-positioned to deliver exceedingly strong operating metrics,” Cox said. “The headline risk remains centered on new supply, but interest rates and stable revenue growth are driving any surprises to the downside.”

A May filing with the U.S. Securities and Exchange Commission indicates that SROA Capital Fund VII intended to raise up to $250 million.

Based in West Palm Beach, Fla., SROA Capital is a real estate investment company focused on the acquisition and operation of self-storage properties nationwide as well as direct-equity investments with developers. The company operates more than 7 million rentable square feet of storage space at 140 properties. In 2017, it changed its name from Elite Stor Capital Partners LLC to better align with the Storage Rentals of America brand name. It acquired the Storage Zone portfolio in Ohio last year.

NKF is a commercial real estate advisory firm that provides valuation and consulting services for the self-storage industry. Its global workforce includes 16,000 professionals operating out of 430 offices on six continents.

Source:
SpareFoot Storage Beat, CubeSmart Joint Venture Unloaded 50-Facility Portfolio for $294 Million

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