Prime Storage Group, one of the country’s largest privately held owners and operators of self-storage facilities, is refinancing debt through a CMBS loan package totaling $278 million.
This transaction is backed by two fixed-rate loans collateralized by 49 facilities in 17 states that are owned and operated by Saratoga Springs, NY-based Prime Storage Group, according to credit-rating agency Moody’s Investors Service. For the CMBS deal, the 49 facilities are split into two portfolios — one with 38 facilities and the other with 11. New York City, NY, is the biggest market in both portfolios.
The five-year, interest-only CMBS (commercial mortgage-backed securitization) loans carry a combined interest rate of 4.75 percent, according to Moody’s. The deal is expected to close July 25.
The originator of the two loans is Citi Real Estate Funding Inc., part of banking giant Citigroup. Robert Moser, founder and owner of Prime Storage Group, is the guarantor of the loans.
More than $56 million, or 17 percent, of the total amount being borrowed is going back to Prime Storage Group’s sponsor equity funds in the form of a cash-out equity payment, according to Moody’s.
Prime Storage Group, founded in 2013, owns and operates more than 200 self-storage facilities in 24 states with over 12.5 million square feet. A representative of Prime Storage Group couldn’t be reached for comment.
Storage facilities into cash
Manus Clancy, senior managing director of Trepp LLC, which provides data about securitized mortgages, said the CMBS deal offers a “low-cost vehicle” for Prime Storage Group to generate cash, as opposed to issuing stock, initiating a bond offering or tapping other funding sources.
Earlier this year, Columbia, MO-based StorageMart, another of the country’s largest privately held owners and operators of self-storage facilities, arranged an $814.1 million CMBS deal backed by about half of its portfolio. Citi Real Estate Funding also originated the StorageMart package.
With roughly $15 billion in outstanding CMBS loans, the self-storage industry represents a small sliver of the CMBS market in the U.S., according to Trepp. By comparison, the office sector accounts for around $140 billion in CBMS loans, with the retail sector at close to $135 billion.