The Amherst, NY-based self-storage REIT partnered with Heitman LLC of Chicago to buy the portfolio. Sovran's plan is to re-brand the 84%-leased portfolio to Uncle Bob's Self Storage. The facilities in Florida, Texas, Colorado, Kentucky and Ohio currently carry the Lock-N-Key brand.
"We had serious, legitimate interest from around 15 bidders, ranging from state pension funds to large private equity funds to public companies," says Aaron Swerdlin, managing director of Holliday Fenoglio Fowler LP in Houston. Swerdlin says bidders were quickly whittled down to half a dozen, with Sovran winning the day because of its previous relationship with the seller.
"They'd sold to Sovran in the past, albeit on a much smaller scale," Swerdlin tells GlobeSt.com. "I think what it came down to was that, with most of the other groups, we were talking to institutional money teaming up with an existing operator. With Sovran, they are the operator. The seller felt more comfortable dealing with an entity that had a direct understanding of the product type."
Swerdlin says the portfolio, with buildings averaging 78,000 sf, has excellent locations in all cities. He says some sites were bought more than a decade ago so the market has grown out to them, but the developments, with an average weighted age of nearly 13 years old, are in excellent shape. "If there are any costs Sovran has to put into these, it'll be re-branding costs rather than fix-up costs," he says.
Swerdlin adds that the buyer particularly liked the locations, like one in Dallas at 5720 Milton St. "This was a great opportunity for them to grow more into their markets and to set the stage for more acquisitions," he says.
The sale was financed through a combination of cash, assumption of existing debt and origination of new debt. Prudential Mortgage Capital Co. of Chicago provided the new debt. The Locke Acquisition Group LLC represented Sovran and acted as adviser for issues related to the equity partner and first mortgage financing. The Williamsville, NY-based Locke's team was made up of CEO Angelo Tomasello, CFO Tony Rider and acquisitions officers Peter Weimer and Jonathan Attea. In June, Sovran and Heitman unveiled their plan to acquire $350 million of self-storage assets in US markets. Sovran's role is to manage the portfolio.
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