A group of investors sold a 70,600-square-foot storage facility to public REIT Sovran Self Storage for almost twice the amount they paid for it nearly two years ago.
Sovran, operator of Uncle Bob’s Self Storage, recently paid $6.4 million to buy a 675-unit facility at 1907 Campostella Road in Chesapeake, VA. Chesapeake is in the Virginia Beach-Norfolk-Newport News metro area, which is home to 12 major military installations.
“The product wasn’t for sale,” said Stuart Wade, a member of the ownership group that sold the property. “It was an unsolicited offer from Sovran.” Wade said it took 45 days to close the deal.
The regional group of owners, under the name Chesapeake Self Storage LLC, bought the property in December 2012 for $3.45 million. The group had hired Sovran to manage the facility.
Uncle Bob’s operates more than 500 storage facilities in the U.S., including 12 in the Virginia Beach-Norfolk-Newport News metro area. Additional information about the Chesapeake deal was not available from Sovran.
Wade, a self-storage broker for Norfolk, VA-based The Nicholson Companies, said he and his partners didn’t expect to sell the facility so quickly.
When the previous owner tapped him to help sell the property, Wade offered to manage the property temporarily to help fetch a higher purchase price. The owner didn’t want to wait, so Wade assembled a group of investors to buy the facility.
Over dinner, Wade advised the group it would take several years to boost the property’s value and gain a solid return on their investment. “I told them this would be a five-year period to move the needle,” Wade said.
Wade said the Uncle Bob’s third-party management program and the overall strength of the self-storage market combined to turn around the Chesapeake property faster than anticipated.
“We knew the pendulum was going to swing, but we didn’t know it would swing that fast,” Wade said.