Partnership Takes a Deep Dive into Self Storage
Trez Capital and Hines recently acquired a four-building 235,400-square-foot self-storage facility, at double the size of most storage facilities and representing the first self-storage property for the partnership.
PLANO, TX—Trez Capital, a real estate investment firm and commercial real estate debt financing provider, and partner Hines recently acquired a four-building 235,400-square-foot self-storage facility at 525 N. Ave. This acquisition marks the first self-storage property for the Trez Capital-Hines partnership.
“Our partnership with Hines spans six years and we’ve primarily focused on land for the development of single-family home communities in Colorado and Texas,” said John Hutchinson, president, central and southwestern US for Trez Capital. “We look forward to growing our portfolio with similar assets in the near future.”
The size of the property is atypical in that it has nearly double the square footage of a conventional self-storage development. The facility has 1,603 units and 124 existing for-lease parking spaces. Hines and Trez Capital plan to expand the facility’s for-lease parking by 30% to 40%.
“Self-storage facilities that are strategically located in booming markets like Plano are an attractive asset for real estate investors,” said Luis Castellanos, director of Hines’ self-storage platform. “We expect demand for this product type to continue to grow in key markets like North Texas, as the population growth in this area shows no signs of slowing down.”
The property is strategically located near the northeast corner of President George Bush Tollway and US 75 near the city line of Plano and Richardson. Climate-controlled self-storage is in demand in this area due to the influx of large businesses and office park developments such as State Farm’s 2 million-square-foot campus and the $1.6 billion CityLine mixed-use development.
“Overall, this is a diversification/growth strategy,” Castellanos tells GlobeSt.com. “Both Trez and Hines are nimble, entrepreneurial groups that seek the best outcomes for their communities, investors and companies.”
Hines and Trez have a long-standing relationship which started with lot development/master-planned communities, he points out. Approximately three years ago, Hines added the self-storage product to its development/acquisition strategy in the Southwest region. And, a part of that strategy is to designate land for self-storage in its large master-planned developments.
“Class-A self-storage is a desirable amenity that residents use to extend their storage needs in a flexible way,” Castellanos tells GlobeSt.com. “From an investor standpoint, class-A self-storage is a leading risk-adjusted product which provides steady cash flows, lower CAPEX requirements than most other product types and is recession resistant. Therefore, it made logical sense for Trez to expand its partnership with Hines on class-A self-storage, providing its investors with additional product diversity and additional investment options.”
Self-storage sales prices continue to improve in Texas and Oklahoma despite the dampening impact of substantial new supply on asking rents. Favorable demographic trends and some of the lowest entry costs in the nation encourage investment. In June, the average sale price rose to $79 per square foot, while the average cap rate remained flat at 7.4%, according to a mid-year report by Marcus & Millichap.