A West Palm Beach, FL-based storage operator has purchased a portfolio of 23 self-storage facilities in Kentucky and Ohio for $35 million.

Elite Stor Capital Partners, an affiliate of private equity real estate firm Calidus, bought the portfolio from Storage Rentals of America. The facilities will continue to operate under the current brand.

The purchase brings the total number of facilities owned by Elite Store to 35. The firm owned only five as of 12 months ago. It operates four facilities under the Elite Stor name in Florida.

“This transaction was critical to our company’s continuing growth plan,” said Benjamin Macfarland, CEO of Elite Stor.

The buyer financed the purchase with a $26.25 million 10-year CMBS loan originated by Greystone, a New York City, NY-based lender.

Finding a buyer

The portfolio consists of 17 facilities in Kentucky and six in Ohio. The facilities cover 731,875 rentable square feet with 5,825 units.

The portfolio went on the market two years ago. Barbara Guffey, director of capital advisory firm HFF, represented the seller.

Guffey said an existing CMBS loan on the portfolio made it challenging to find a buyer. A potential buyer either had to assume the existing loan, which carried a higher interest rate than current rates, or pay a considerable premium to defease the seller’s loan.

“As time went on, we got closer to the maturity date and some of that cost ended up burning off,” Guffey said.

Upside in the deal

Guffey said the deal was attractive to Elite Stor because it provided the scale to enter a new market, along with a lot of upside.

“The previous owner never raised rents in 10 years,” Guffey said.

With an average occupancy rate above 90 percent, the new owner has plenty of room to raise rates and bring in higher-paying tenants, she said. The operator plans to expand a couple of the facilities.

Alexander Harris