A three-facility portfolio in the Los Angeles area has been sold for $16.4 million.
Los Angeles-based operator Storage Etc. bought the three facilities from American Mini Storage, a small family-run company. The 1,424-unit portfolio covers 155,005 square feet.
The portfolio attracted significant interest from an array of bidders, said Marc Boorstein, principal of MJ Partners Real Estate Services. MJ Partners represented both sides in the deal, and Fred Cordova, executive vice president of Kennedy Wilson, represented the buyer.
“There were over 25 offers from coast to coast,” Boorstein said.
Boorstein said the pool of potential buyers consisted of private operators, private equity groups that are new to the self-storage industry, and publicly traded REITs.
Boorstein declined to disclose the cap rate for the deal.
The deal generated so much interest because barriers to entry in the L.A. market are so high, Boorstein said. Demand for self-storage development in the region is healthy, but opportunities are limited because of a shortage of available space, entitlement issues and a lack of self-storage lending.
It was time to redo the offices and add some things, and the family was not willing to do it.
— Marc Boorstein, principal of MJ Partners Real Estate Services
“Construction lending is still speculative development,” Boorstein said. “There are some smaller regional banks making loans, but there is not one dominant lender for self-storage.”
As such, the chance to snatch up three existing facilities in the area was attractive to self-storage investors.
Boorstein said the three facilities — one of which is about 40 years old — need to be spruced up. At the time of the sale, the portfolio’s occupancy rate was 80 percent.
The portfolio “was not being run to its maximum potential. It was time to redo the offices and add some things, and the family was not willing to do it,” Boorstein said.
Storage Etc. now operates 22 facilities, mostly in Southern California. Since it was founded in 1999, the company has built or purchased more than $100 million worth of storage facilities. Greg Houge, co-founder and president of Storage Inc., is a former executive at Public Storage, the country’s largest storage operator.
Storage Etc.’s newly acquired facilities are:
- 863 Towne Center Drive, Pomona, CA.
- 21320 E. Golden Springs Drive, Diamond Bar, CA.
- 8659 E. Garvey Ave., Rosemead, CA.