CubeSmart to acquire self-storage wallet for $ 1.69 billion
CubeSmart announced that it has reached a deal to acquire 100% of the outstanding partnership shares of LAACO, owner of the Storage West platform, for approximately $ 1.69 billion.
The deal includes approximately $ 40.9 million in LAACO debt that will be repaid at or shortly after closing. Storage West owns and operates 59 self-storage assets in Southern California, Phoenix, Las Vegas and Houston. Two of these properties are owned by two separate joint ventures, each 50% owned by LAACO.
CubeSmart CEO Christopher Marr notes that the portfolio he is acquiring complements the REIT’s existing holdings. The properties are all in the top 40 MSAs that represent key growth markets, he said in prepared remarks.
The transaction is expected to close in the fourth quarter of 2021 and is subject to customary closing conditions.
This is the second major self-storage transaction this month after Public Storage Acquisition from the All Storage portfolio for $ 1.5 billion.
The CubeSmart transaction illustrates the strong return available in this asset class.
“The self-storage sector continues to outperform other asset classes due to various demand drivers and a business model that generates impressive cash yields, making it an attractive core asset,” said said Drew Dolan, director and fund manager of DXD Capital. GlobeSt. “As cap rates continue to compress in more traditional commercial real estate investments such as multi-family buildings, we are seeing more and more institutions starting to pursue the return on self-storage. “
The four storage REITs, including CubeSmart, own about 25% of the facilities in the United States.
“With so much fragmentation in the industry, the sector is appearing on the radar with many investors equally ripe for the opportunities,” Dolan said. “Regional operators like Storage West are attractive to large buyers looking for scale.
He also notes that data analytics will play an increasingly important role for self-storage investors as the industry continues to gain sophistication.
Dolan mentions DXD Capital’s $ 50 million self-storage fund, which will develop approximately 12 air-conditioned self-storage facilities, using data “to select and develop assets in areas that today exhibit imbalances between supply and demand with solid growth fundamentals for the future “.