One Of 2015's Largest Self-Storage Transactions Just Closed: What REIT Investors Should Know
One of 2015's largest sales in the self-storage property market has its roots in Michigan.
Located in Farmington Hills outside of Detroit, Storage Pros Management LLC recently completed the sale of $242.5 million worth of properties to a joint venture led by a major institutional investment firm.
The properties, located in Michigan, Tennessee, Massachusetts and Florida, will be managed by a publicly-traded real estate investment trust (REIT) that has yet to be named.
Deal One Of Market's Largest
Approximately $2 billion in self-storage transactions occur annually, indicating Storage Pros' latest move could have comprised over 10 percent of last year's deal volume. "This transaction is one of the largest this year in the self storage industry and further solidifies the big-transaction trend of the last several years,” NGKF Capital Markets' Aaron Swerdlin said in mid-December.
Swerdlin added that the timing of the sale maximizes the value of Storage Pros' 30 properties involved.
Interest In Portfolio 'Profound'
According to NGKF managing director Kenneth Cox, "interest in the portfolio was profound."
Storage Pros CEO David Levenfeld added that the company's aim before the sale was to "create value in the portfolio."
Of note, there are only five publicly-traded self-storage REITs: CubeSmart (NYSE: CUBE), Extra Space Storage, Inc. (NYSE: EXR), Public Storage (NYSE: PSA), National Storage Affiliates (NYSE: NSA) and Sovran Self Storage Inc (NYSE: SSS).
Assuming a larger diversified REIT is not involved in the transaction, investors looking to capitalize on this sale could consider buying a basket of all four self-storage REITs. Given the heavy interest in the Storage Pros portfolio, it's possible the market will reward whichever publicly-traded name is involved in the transaction when the information is made public.
According to NGKF, the sale of seven more Storage Pros properties is expected to close in the first quarter of 2016.
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