WP Carey & Co has acquired a 24-property portfolio of self-storage facilities in the US from A-American Self Storage for $86 million.
According to the New York-based real estate sale and leaseback business, the portfolio was purchased through its public, non-traded REIT affiliate, CPA 17. The properties comprise a total of 1.6 million square feet. WP Carey director Liz Raun Schlesinger told PERE that the firm intends this acquisition to be a “long-term investment”.
Of the 24 properties WP Carey purchased, 18 are in California, five are in Illinois and one is in Hawaii. The California and Hawaii facilities will be managed by Extra Space Storage. The Illinois properties will be managed by SecurCare Self Storage. Neither management firm has an ownership stake in the assets.
Schlesinger said there were a number of reasons the portfolio was attractive to the firm, the first of which being that portfolios of self storage facilities this large are rarely up for sale. “We don’t often get opportunities to purchase storage portfolios this size, since they don't typically trade.” She added that since the market collapse, portfolios in this asset class often had only two to four properties in them.
Additionally, since WP Carey entered the self-storage sector in 2004, the firm has sought out assets in markets with “strong populations, good population growth and solid median income,” criteria that “tend to correlate to growth in the storage sector”. The firm's interest in California, for example, stemmed from it being a market that bottomed out during the recession and revealing a recent “uptick in revenue trends”.
The firm's first investment in the self-storage sector was the acquisition of 78 U-Haul facilities for $312 million in 2004. “Since then we have expanded our involvement in the space,” said WP Carey's president and CEO Trevor Bond in a statement, adding that “the consistent long-term income that can be generated by self-storage investments makes this an ideal addition to CPA 17’s portfolio”.