Update 2/4/16 – The recent Sovran acquisition included a 13-property portfolio owned by Harrison Street Real Estate Capital LLC (HSRE), a real estate private-equity firm. The $186.4 million purchase comprises four properties in California, six in New England and three in Texas. The portfolio features more than 1.1 million square feet of storage space, including more than 55,000 square feet of vehicle parking.
HSRE was represented in the sale by Kenneth Cox, senior managing director, and Aaron Swerdlin, executive managing director, of NGKF Capital Markets, a group within commercial real estate advisory firm Newmark Grubb Knight Frank (NGKF).
"The sale of the Harrison Street portfolio marks the biggest transaction to close so early in a year, and its high-quality assets provided Sovran Self Storage with an entry into the competitive Los Angeles market,” Swerdlin said. “It is a big step forward for the company, which has been looking to make the right entry into the L.A. market for some time.”
The transaction supports the continued trend of portfolio investment sales in the self-storage sector, Cox said. “The capital is out there, and the deep demand continues to support the aggressive portfolio environment,” he added. “There is no question the storage industry is generating great interest in the institutional community as investor confidence in the product type has solidified over the last several years.”
Headquartered in Chicago, HSRE has more than $8.4 billion in assets under management through commingled funds and public securities products. The funds focus exclusively on the education, health-care and self-storage segments.
NGKF offers appraisal and valuation advisory services, debt placement, investment sales, proprietary lending, and transaction management. Together with its affiliates and London-based partner Knight Frank, the company employs more than 11,000 professionals, operating from more than 340 offices on five continents.
1/28/16 – Sovran Self Storage has closed the public offering of common stock it opened on Jan. 19 to help fund a portion of its pending property acquisitions and repay debt tied to an unsecured line of credit used in connection with its recent real estate transactions. The REIT sold nearly 2.65 million shares at $105.75 per share, raising about $269.7 million after deducting underwriting discounts, commissions and expenses, according to a press release.
The offering included the full 345,000 shares of common stock set as the underwriters’ over-allotment option.
1/20/16 – Real estate investment trust (REIT) Sovran Self Storage Inc., which operates the Uncle Bob’s Self Storage brand, has agreed to acquire 25 self-storage facilities in eight states for approximately $371 million. The company also recently purchased five facilities for $27 million. Those transactions occurred during the fourth quarter of 2015 and earlier this month. In total, the 30 facilities comprise about 2.3 million square feet of rentable space, according to a press release.
The acquisitions under contract include four portfolios and five single properties. The largest portfolio comprises 13 facilities, while the other three contain four assets each. Twenty-two of the purchased and contracted properties are in existing Sovran markets. Those include one in Arizona, one in Colorado, five in Florida, eight in New England, two in New York, two in Pennsylvania and three in Texas.
“We are very excited to acquire such an excellent group of high-quality properties,” said CEO David Rogers. “Those in our existing markets will be tremendous additions to the portfolio; and while all are well-run facilities, we expect improved operating results as we apply our customer-service standards and transition these stores onto our Web-marketing and revenue-management platforms.”
Eight of the acquisitions under contract are in the Los Angeles metro area, signaling the REIT’s entrance into the California market. Those assets account for $185.6 million of the total acquisitions cost and comprise 828,877 square feet. Seven of the facilities are established locations and one was recently developed, the release stated.
“While it’s taken us a while to get there, we are thrilled to enter the Los Angeles market,” Rogers added. “We are doing it the way we intended, with a group of high-quality facilities in sufficient scale, on an immediately accretive basis, with the opportunity to improve operating results in a meaningful way. This will present a future growth vehicle for Sovran.”
Sovran expects to close on all 30 properties between now and the end of April. Company officials believe the acquisitions “will be accretive on a leverage neutral basis to funds from operations in 2016,” according to the release.
The REIT is also under contract to acquire four storage properties in “certificate of occupancy” purchases later this year. One of the facilities is in Charleston, S.C., two are in Chicago, and the fourth is in Miami. Sovran will buy the facilities for a total of $38 million once construction on each is complete, the release stated.
To help pay for the portfolio expansion, Sovran recently increased the borrowing limit on a revolving credit line from $300 million to $500 million. In addition, the company has commenced a public offering of 2.3 million shares of common stock to fund property acquisitions and corporate expenses. Underwriters have been granted a 30-day option to purchase up to an additional 345,000 shares, according to a press release. Jefferies LLC and Wells Fargo Securities are acting as joint book-running managers for the offering.
Sovran operates more than 500 self-storage facilities in 25 states, with a large presence in Texas. Its portfolio of owned and managed facilities comprises more than 36 million square feet.
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