Public Storage Acquires ezStorage for $1.8B
The REIT has made $4.1 billion worth of acquisitions, development, and redevelopment since 2019.
Self-storage REIT Public Storage has acquired ezStorage in a deal valued at $1.8 billion.
The portfolio consists of 48 properties of 4.2 million net rentable square feet across submarkets in Washington D.C., Virginia, and Maryland. Public Storage’s development team will assume responsibility for one property currently under construction and will expand another eight properties to yield an estimated 10% increase in square footage through 2023.
Public Storage is funding the deal with unsecured debt, and the transaction is slated to close in May 2021. The deal marks the latest in a string of portfolio expansions by Public Storage, which says it’s increased its footprint by approximately 21 million net rentable square feet, or 13%, since the beginning of 2019. Since that time, the company has engaged in $4.1 billion worth of acquisitions, development, and redevelopment.
More acquisitions are likely, according to comments by Mike McGowan, Public Storage Senior Vice President of Acquisitions. “Looking ahead, we see a wide range of opportunities to acquire and develop properties in desirable markets as part of Public Storage’s broader growth initiatives,” he said.
Self-storage transactions hit an all-time high in 2020, with sales totaling $7.7 billion—one-third higher than in 2019, according to Real Capital Analytics. BREIT’s acquisition of Simply Self Sotrage and Nexpoint’s acquisition of Jernigan Capital accounted for more than a quarter of annual volume last year, but single-asset sales also rose 13% year-over-year to $3.5 billion.
Private investors claimed 58% of investment in the sector last year, with BREIT and Nexpoint emerging as the top buyers, followed by Public Storage—which was also the only top 10 investor and developer last year, according to RCA. New development tapered off last year, however, with the value of construction falling 20% from 2019 levels. Self-storage cap rates clocked in at 6.1% last year.
Despite cap rate compression, many buyers see self-storage as an opportunity to diversify their portfolios.
“As wealth advisors, sometimes we recommend going out of multifamily investments and finding value in something like a net-lease or self-storage transaction,” Robert Johnston of Levin Johnston at Marcus & Millichap told GlobeSt.com in an earlier interview. “These product types can often yield the types of returns our clients are seeking because some of these types are not as well-known and there is less competition driving up prices.”
And from a broader perspective, interest in the sector reflects a growing awareness among investors in so-called alternative assets, which include self-storage, life sciences, medical offices, data center assets and manufactured housing, which grew 32% year-over-year. Altogether, those asset types were responsible for more than $47.9 billion in transaction volume last year.