Heitman closes all-equity self-storage acquisition

The JV venture between Chicago-based Heitman and US self-storage REIT Sovran Self Storage has added four more self-storage units to its portfolio. The $26.3m deal, including a $12.3m first mortgage, closed only after the JV agreed to fund the remaining amount in cash.

Sovran HHF Storage Holdings, the joint venture between real estate investment firm Heitman and self-storage REIT Sovran Self Storage, has acquired another four properties in Florida, Georgia and Ohio in an all-equity deal.

The portfolio of properties was valued at $26.3 million, including the assumption of a $12.3 million first mortgage. However in order to close the deal, Heitman and Sovran paid off the remaining amount – $14 million – in cash.

The transaction, according to the JV’s adviser, The Locke Acquisition Group, was a “challenge” given the current credit markets and owing to its 50 percent loan-to-value capital structure.

Angelo Tomasello, who led the deal, told PERE the assumable debt was “slightly below” the 50 percent LTV level, resulting in Heitman and Sovran funding the remaining amount as an all-equity acquisition.

To date, the JV has acquired $170 million in self storage facilities, with a target of $300 million of deals.

In August, the JV closed on a $144 million, 21-property portfolio of properties, totaling 1.6 million square feet. The properties include facilities in Tampa, Florida; San Antonio, Houston and Dallas, Texas; Denver, Colorado; Louisville, Kentucky; and Columbus, Ohio. The properties were 84 percent occupied.

The JV between Chicago-based Heitman and Buffalo, New York-based Sovran was formed in June to invest in the US self-storage market, with Sovran contributing 20 percent equity to the JV and Heitman contributing the remaining 80 percent, with typical leverage of up to 65 percent.