With its acquisition of the U-Stor-It portfolio of 21 self-storage facilities earlier this month, Robb Kone’s Best Self Storage is off and running.
The Riverside, California-based Best Self Storage’s purchase of the U-Stor-It properties in Texas, New Mexico and Arkansas was the company’s first foray into the self-storage business – and Kone, himself a 15-year veteran of the industry, says the goal is to own 100 or more facilities within four years.
“We’re off to a good start,” Kone, president and CEO of Best Self Storage, said of the U-Stor-It takeover. “It was a really nice (purchase). It worked out well.”
The portfolio was sold for a reported $24.9 million.
Ready to rip
Best Self Storage was formed by Kone, a former executive at Westport Properties and Strategic Storage Trust, Chris Sonne, a top commercial appraiser specializing in self-storage properties at CBRE, and a third partner who Kone would only identify as a “high net-worth homebuilder” who’s provided much of the firm’s early capital.
The company was just getting organized earlier this year when officials tied to Argus Self Storage Advisors, a self-storage brokerage and management company, alerted Best Self Storage about the availability of the U-Stor-It portfolio of 12 facilities in Texas, seven in New Mexico and two in Arkansas, totaling 563,000 square feet.
Argus Professional Storage Management, a unit of Argus, had been operating the U-Stor-It portfolio on behalf of the previous owners, a joint venture between GB Capital of Denver and another unidentified private-equity investor.
“The timing really worked well,” Ben Vestal, president of Argus, said of the U-Stor-It properties coming up for sale as Best Self Storage was hunting for its first acquisition. “It’s a high-yielding secondary acquisition.”
A contrarian strategy
Peter Pappageorge and Doug Shea of INCO Commercial, which belongs to the Argus affiliate network, ultimately closed the deal on behalf of the buyer, Best Self Storage.
The U-Stor-It properties fit into Best Self Storage’s strategic plan of acquiring smaller facilities in smaller markets not dominated by major self-storage REITs and investors, said Kone.
“It’s really a contrarian strategy,” said Kone, president and chief executive at Best Self Storage. “We don’t want to compete against the REITs and large private investors. We’re looking at smaller markets and mom-and-pop shops.”
Argus Professional Storage Management will continue to manage Best Self Storage’s newly acquired facilities, which will continue to operate under the U-Stor-It brand. Vestal and Kone had professionally known each other before the U-Stor-It deal, so the new corporate relationship makes sense, said Kone.
In for the long haul
Moving forward, Kone said Best Self Storage will continue to hunt for smaller properties valued around $2.5 million each, in the 25,000 to 60,000-square-foot range. If all goes well, the firm’s portfolio purchases will proceed at about a $25 million-per-year clip, he said.
For now, Best Self Storage will focus on properties west of the Mississippi River, roughly matching Argus’s current property-management footprint, said Kone. Argus currently manages about 85 properties in 10 states – and Best Self Storage is committed to working with Argus in the future, said Kone.
Best Self Storage hasn’t ruled out one day expanding to the east of the Mississippi, though Kone indicated that won’t be anytime soon.
“They’re not a fix-flip operation,” said Vestal, referring to Best Self Storage’s strategy. “They’re in it for the long haul.”