BUFFALO, NY—Sovran Self Storage has entered into contracts to acquire 25 self storage facilities in eight different states for approximately $371 million. In addition, the self-storage REIT also announced the acquisition of five facilities during the fourth quarter of 2015 and January 2016 for about $27 million, bringing the total acquired and under contract to 30 self-storage facilities.
The newly announced facilities include five single store acquisitions and four portfolio acquisitions; one comprised of 13 stores, and three comprised of four properties each. In aggregate, the newly announced transactions include 21 stabilized properties in Sovran's existing markets, which breaks down to six in Boston/SE New Hampshire; five in Central/Southern Florida; two in Connecticut; three in Dallas; one in Denver; two in the New York City metro area and two in Philadelphia. A recently developed facility in Phoenix, AZ, another market in which the company has a presence, also will be acquired.
The company also has executed contracts to acquire eight properties in the Los Angeles, CA metro area, a new market for the company. Seven of these properties are stabilized and account for approximately $167 million of the overall transaction costs, while the eighth property is a newly developed store in North Los Angeles county being acquired for $18.6 million. Collectively, the properties total approximately 2.3 million square feet of rentable storage space. The seven stabilized Los Angeles stores account for 749,042 square feet, and the newly opened Los Angeles store has 79,835 square feet.
Says David Rogers, the company's CEO, "We are very excited to acquire such an excellent group of high-quality properties. 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."
Regarding the California purchases, Rogers notes, "While it's taken us a while to get there, we are thrilled to enter the Los Angeles market. 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."
The company expects to drive increased occupancy levels, rental rates, and ancillary income as the stores and new employees become integrated with Sovran's systems. It believes the acquisitions of the stabilized properties will be accretive on a leverage neutral basis to funds from operations this year.
Sovran has taken—or anticipates taking—title to all 30 of the stores at various dates between late December 2015 and April 2016.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
