Public Storage will buy the 127-facility Simply Self Storage portfolio from Blackstone Real Estate Income Trust for $2.2 billion.
The REIT, an arm of New York-based private equity behemoth Blackstone, is selling the portfolio as it navigates a backlog of redemption requests driven by international investors. Blackstone has owned the portfolio for less than three years.
The Simply portfolio is located in 18 states, with 65 percent of facilities located in the sought after Sunbelt markets. Eastdil Secured served as financial adviser to Public Storage. Wells Fargo and Newmark Group represented BREIT. The deal is expected to close in the third quarter.
‘Immediate upside’
“Simply is one of their real big successes, so making a quick $2.2 billion so they can return capital to the investors who want it makes a lot of sense,” said Marc Boorstein, principal of self-storage advisory MJ Partners.
Blackstone netted a profit of $600 million on the deal, according to a press release detailing the transaction. The REIT purchased Simply for $1.2 billion from Brookfield Asset Management in 2020. Brookfield acquired a major stake in the portfolio in 2016, investing $830 million at the time. Simply was founded in Orlando in 2003 by Kurt O’Brien, which he grew to more than 175 facilities at the time of the Brookfield deal.
As for Public, Boortstein said they will enjoy immediate upside from the transaction due to their shear size and scale.
“Public has higher margins and will be able to extract a lot more out of this portfolio than Simply was. Simply was not a bad operator, but Public is one of the best,” Boorstein said.
Consolidation continues on
The deal comes on the heels of Extra Space Storage’s successful $12 billion acquisition of Life Storage. That deal came together after Life Storage publicly turned down an unsolicited offer from Public Storage.
Blackstone started shopping the Simply portfolio around the time that Public Storage was turned down.
“They were out positioned by Extra Space Storage for the biggest deal in self-storage history, but they have plenty of firepower [to do other deals],” Boorstein said. “More consolidation and more acquisitions from all of the public companies will continue on.”
Boorstein said overall deal volume this year is down 80% so far compared to last year as mom and pop operators sit on the sidelines. As a result, the industry is seeing a spate of large strategic buys with high-dollar amounts.
“Two years ago there was $20 billion in storage deals. Last year it slowed down,” Boorstein said, “With these two acquisitions, this year is already going to be more than last.”
