Seeking to concentrate on growing its hotel business, Virginia Beach, VA-based real estate company Suburban Capital Inc. has sold its entire self-storage portfolio for $75 million.

Suburban Capital executives said March 28 that Glendale, CA-based self-storage REIT Public Storage bought most of the 12 self-storage facilities in its portfolio — primarily in Virginia’s Hampton Roads region and Richmond metro area — while an unidentified investor purchased the rest. In all, the facilities contain more than 7,000 units.

The facilities operated under Suburban Capital’s Happy Boxes brand. Chris Perry, founder and CEO of Suburban Capital, said one of the 12 facilities was under development, and the 11 others were up and running.

The Suburban Capital sell-off alone appears to eclipse the number of self-storage facilities that collectively changed hands last year in the Hampton Roads and Richmond markets.

Data provider Yardi Matrix recorded just five self-storage facility sales in 2018 across those two markets. Columbia, MO-based StorageMart bought two of those facilities, while Charlotte, NC-based Madison Capital Group LLC, Saratoga Springs, NY-based Prime Group Holdings LLC and Virginia Beach investor Walter Graham each bought one facility, according to Yardi Matrix. Combined, those five facilities offer nearly 288,000 rentable square feet.

One of several storage locations Suburban Capital has sold in Virginia.

Suburban Capital entered the self-storage business two decades ago. At one point, the company was “actively looking to grow the Happy Boxes brand through new development and acquisitions,” according to the company’s website.

Does the recent shedding of its 12 storage facilities mean Suburban Capital is exiting the self-storage sector forever?

“Never say never,” Perry told the SpareFoot Storage Beat. “However, the current plan is to focus on hospitality. Plans for the remainder of [our] portfolio are under review.”

For now, Suburban Capital owns and operates a portfolio of more than 25 hotel, office, retail and industrial properties throughout six states in the Southeast.

Suburban Capital has several hotel projects in the works, including a $26.3 million, 127-room Hyatt Place in Virginia Beach, VA, and a 120-room Marriott property in Norfolk, Va. The company operates franchised hotels under the Choice Hotels, Hilton, Hyatt, Marriott, Starwood and Wyndham banners.

In 2015, the principals of Virginia Beach-based Afton Real Estate Investments merged with Suburban Capital in a move to expand the company’s real estate holdings, including hotels.

Perry founded Suburban Capital in 2000. His father, J. Douglas Perry, and his uncle, Macon Brock, co-founded Chesapeake, VA-based discount retailer Dollar Tree Inc. in 1986 alongside colleague Ray Compton. The elder Perry was CEO of Dollar Tree from 1986 to 1993; he retired as chairman in 2001. Dollar Tree posted sales of $6.2 billion in 2018.

John Egan