One of the country’s largest self-storage companies is starting the year by refinancing the bulk of its U.S. portfolio with a major CMBS deal.
Columbia, MO-based self-storage operator StorageMart landed the $814.1 million financing from Citi Real Estate Funding. The CMBS (short for commercial mortgage-back securities) funding is secured by 101 self-storage facilities spread across 17 states. That is roughly half of the company’s total number of 208 facilities in the United States, UK and Canada. It has 125 locations in the U.S. alone.
Why now? One big reason is rising property values.
Alex Burnam, senior acquisitions analyst at StorageMart, said the timing was right to refinance because property values of some of the company’s older U.S. facilities had appreciated significantly since the last time the facilities were financed.
“In addition, with our most recent acquisitions — specifically in Kansas City, Des Moines, and Nebraska — StorageMart has successfully executed on our value-add investment strategy, bringing formerly non-institutional assets up to institutional-grade storage facilities,” Burnam told the SpareFoot Storage Beat in an email, “The resulting increase in market value of these facilities made a very convincing case for us to refinance them in the current market environment.”
Details of the loan were first reported by the Commercial Observer, which noted that the loan is one of the first CMBS deals to be struck in 2019. The loan carries 4.76 percent interest with no principal due until maturity. The fixed-rate loan carries a five-year term and was issued at a loan-to-value ratio of 54.3 percent. The bulk of the debt will be collateralized into the upcoming CGCMT 2019-CMRT loan package. That portion includes a $107.7 million cash out, and $8.5 million portion for new development. The remaining $170 million come from two mezzanine loans underwritten by Citi.
“Now that the refinancing has been completed, StorageMart is able to proceed on an even more solid footing with our development and expansion plans for 2019 and beyond,” Burnam said.
Aside from enabling StorageMart to redeploy part of the loan proceeds toward development and expansion, the refinancing allows the company to consolidate several complex facilities into more streamlined properties, so that main facilities and annexes can operate as one entity, Burnam said.
StorageMart is the largest private operator of self-storage according to Inside Self-Storage, and the seventh largest operator overall by total square footage.