CubeSmart has expanded its presence in the Boston area with its $11.1 million acquisition of a suburban storage facility.
The self-storage REIT paid $11.1 million for the 90,000-square-foot 495 Storage facility, which is at 545 Clark Road in Tewksbury, MA. The seller was 495 Storage LLC, an entity controlled by a local residential real estate development group.
The purchase brings CubeSmart’s total footprint in the Boston area to five facilities.
Joe Mendola, a broker with NAI Norwood who represented the seller, said Malvern, PA-based CubeSmart outbid other self-storage REITs to buy the facility. “There was a fair amount of interest, but CubeSmart was first to the plate,” he said.
Seller shifts gears
Mendola said the seller is a group that primarily develops land for residential use and that 495 Storage was its only storage facility. With the housing market quickly improving in Boston, Mendola said, the owners wanted to cash out and invest in the local housing market.
“These fellas are just special people,” Mendola said. “They felt that they could turn their capital over more quickly now that the housing market has come around. You never hear that story; most people don’t have an alternative to put their money into.”
The 495 Storage facility, built in 2006, features three stories of climate-controlled storage. It is about 25 miles north of downtown Boston.
Mendola, the northern New England representative for the Argus Self Storage National Sales Network, said it’s rare for Class A facilities to hit the market in the region. “It’s very difficult to get people to part with facilities in the Northeast,” he said.
CubeSmart’s growing presence
The deal marks CubeSmart’s second acquisition in the Boston market in the past 12 months. In June 2013, it bought a facility in Stoneham, MA, for $10.6 million.
Boston is CubeSmart’s smallest major market in the Northeast. According to recently released financial reports, the company had 213,406 square feet of rental space in Boston as of March 31.
For the three Boston facilities CubeSmart has owned for more than a year, revenue grew 1.5 percent during the first quarter compared with the same period in 2013. At those three facilities, occupancy declined slightly to 82.7 percent from 84 percent.
During the same period, revenue grew by 6.6 percent for the entire Northeast, where CubeSmart has 99 same-store locations, 41 of which are in New York and northern New Jersey.
In the Boston area, CubeSmart competes with the other three self-storage REITs. Extra Space has 25 branded locations, followed by Public Storage with 15 locations and Sovran Self Storage (Uncle Bob’s) with eight. Publicly traded U-Haul has 18 facilities in the Boston area.