Winter Haven, FL-based iStorage has struck a deal to sell its 66-facility portfolio to a publicly traded self-storage REIT for $630 million.

National Storage Affiliates (NSA) has partnered with an undisclosed state pension fund to acquire the company.  The pension fund is providing 75 percent of capital for the purchase, with Glenwood Village, CO-based NSA putting up the remaining 25 percent. The deal carries a cap rate of 5.3 percent.

“There is no question we are going through the institutionalization of our asset class,” said Jay Crotty, managing partner at Tampa-based SkyView Advisors, a self-storage focused advisory firm.

Institutional trend

Crotty was not involved with the deal, but as an industry observer said that the transaction was a prime example of increasing interest in the space from institutional investors such as pension funds, endowments, family officers and private equity firms.

“Every deal we take out as a firm we see more and more institutional money that has an interest in deals,” Crotty said, “The trend is largely driven by the consistency of returns over the last 10 to 15 years.”

iStorage portfolio

The portfolio’s more than 36,000 units are 86 percent occupied.  The iStorage portfolio spans 4.5 million square feet across 24 markets in 12 states. NSA plans to purchase the iStorage management platform and brand name in a separate transaction.

The deal is scheduled to close during the fourth quarter, and will bring the total number of NSA facilities to 415. NSA will also enter four new states: Ohio, Pennsylvania, New Jersey and Virginia.

A map of iStorage properties to be acquired by NSA. Image via National Storage Affiliates.

Quick expansion

iStorage was founded in 2008. As of 2012 the company operated just 15 properties, but quickly expanded to its current size over the last four years.

The new joint venture between NSA and its pension fund partner plan to expand the portfolio, committing $100 million in equity to fund the purchase of up to $200 million in additional acquisitions.

The $630 million payment will be funded 50 percent equity and 50 percent secured non-recourse debt.

Hard work, sacrifice

iStorage founder and chairman Chris Miller said that the deal is the culmination of years of hard work and sacrifice.

“I couldn’t be more proud of our iStorage team on the ground and look forward to watching them grow with the new opportunities this integration presents,” Miller said in a statement.

Alexander Harris