Public Storage has acquired All Storage’s portfolio for $1.5 billion.
The portfolio comprises 56 self-storage properties (or 7.5 million net rentable square feet) with 52 located in the growing Dallas-Fort Worth market and the rest in Oklahoma City and Killeen, Texas.
The Pandemic’s Disruption
Drew Dolan, Principal and Fund Manager, DXD Capital, tells GlobeSt, “Self storage has been the best performing asset class through the past three recessions. The diverse demand drivers and secular growth in the industry have further benefited from disruption caused by the pandemic.
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“We ended 2020 with record high occupancies and pricing across the United States. The interest in the asset class from institutional capital has also increased significantly in the last year.”
New investors to the sector, including Bill Gates’ Cascade Investment Group, Blackstone, GIC and other large capital players, are driving additional interest in the space, Dolan said.
DXD Capital’s $50 million ground up development fund was formed to capitalize on data driven analytics “that allows unprecedented efficiency in evaluating investment opportunities,” Dolan said. “With the upward trend in rates and occupancies across the asset class, the next bull cycle in self storage has arrived.”
Chris Loeffler, CEO and co-Founder of CaliberCos Inc., tells GlobeSt, “This transaction offers a prime example of the consolidation trend occurring in storage assets and globally in all real estate asset classes. Investors seeking consistent, stable income in their retirement portfolios are the force behind this trend, as asset managers seek to maximize their operating results.”
Opportunities for Growth
All Storage’s 75% average portfolio occupancy during Q3 2021 provides significant growth opportunities for Public Storage’s operating platform.
The REIT has been actively expanding its portfolio through acquisitions and development. Since the start of 2019, Public Storage has grown its portfolio by approximately 36 million net rentable square feet, or 22%, through $6.3 billion of acquisitions, development, and redevelopment, including properties under contract.
“The acquisition is a direct reflection of how the team at Public Storage is committed to driving growth through our four-factor platform, which includes acquisitions, development, redevelopment, and third-party management,” Joe Russell, Public Storage Chief Executive Officer, said in a prepared statement. “We continue to see a wide range of opportunities to acquire and develop properties in desirable markets as part of Public Storage’s broader growth initiatives.”