The operator of The Lock Up Storage Centers has obtained a $131.7 million loan from Prudential Mortgage Capital, primarily as a way to refinance its properties.
The loan is secured by 18 self-storage facilities owned by Northfield, IL-based Lock Up/Evergreen Storage LLC. This is The Lock Up’s third portfolio financing with Prudential.
The facilities feature 1.15 million of rentable square feet in more than 13,400 units. The properties are in Florida, Hawaii, Illinois, Massachusetts, Minnesota and New Jersey. As of April, the portfolio’s occupancy rate exceeded 86 percent.
Rick Hielscher, a partner at BRB Development, owner of The Lock Up, said most of the loan proceeds went toward the refinancing of maturing debt. Some of the proceeds are being earmarked for future development, he said.
“We’ve grown almost entirely through development as opposed to acquisition. We try to build three or four [facilities] a year,” Hielscher said.
The Lock Up is working on three developments. A 90,000-square-foot project in the Chicago suburb of Woodridge, IL, has received preliminary approval from local officials. The other two developments are in Connecticut and Minnesota.
Active lender in the industry
Prudential is no stranger to the self-storage business.
In 2008, Prudential provided financing for the purchase of a 21-facility portfolio sold by Hendry Investments to a joint venture between Heitman LLC and Sovran Self Storage (Uncle Bob’s). The $144 million purchase combined cash, debt and new loans.
Frances Bo, a loan originator in Prudential’s San Francisco office, helped closed the Lock Up deal.
“As the U.S. economy improves with many Americans choosing to rent instead of own, the fundamentals of the self-storage market continue to improve, especially for high-quality, proven assets in major markets,” Bo said.
The Lock Up financing comprises two parts: a $20 million loan with a seven-year term and a floating rate, and a $111.7 million loan with a 10-year term and a fixed rate.
Prudential also invests in the storage industry. For instance, the investment arm of the insurance giant participated in the recent $91 million acquisition of Best Florida Storage by Atlanta-based operator Storage Post. Prudential’s investment arm is separate from its mortgage division.