StorageMart, which operates more than 200 self-storage properties across Canada, the United Kingdom and the United States, is refinancing a large portion of its portfolio in an effort to direct money toward development and expansion as well as to consolidate the operation of some assets, according to a source. The company has said it intends to grow its portfolio to more than 300 facilities by 2020.
As part of its plan, StorageMart received $814.1 million from Citi Real Estate Funding, mostly in commercial mortgage-backed securities (CMBS). About $644 million will be split into tranches, but the deal also includes $8.5 million for development and a $107.7 million cash-out, according to the Kroll Bond Rating Agency (KBRA), which analyzed the transaction. The other $170 million comes from a pair of $85 million mezzanine loans underwritten by Citi, a source reported.
The $644 million non-recourse loan is secured by 101 self-storage facilities comprising 7.5 million square feet, representing nearly half of the StorageMart portfolio and nearly all of its U.S. operating assets. The collateral properties are in 24 Metropolitan Statistical Areas across 17 states, with about 44 percent in Florida, Illinois and Missouri. The facilities were built between 1925 and 2016, with the average property age about 26 years old. As of September, the portfolio had a weighted average occupancy of 88.2 percent, according to KBRA.
The timing of the deal also coincides with an appreciation in value of some of the operator’s older U.S. properties. “In addition, with our most recent acquisitions—specifically in Kansas City, Mo.; Des Moines, Iowa; and Nebraska—StorageMart has successfully executed on our value-add investment strategy, bringing formerly non-institutional assets up to institutional-grade storage facilities,” Alex Burnam, senior acquisitions analyst at StorageMart, told a source. “The resulting increase in market value of these facilities made a very convincing case for us to refinance them in the current market environment.”
Founded in 1999 and based in Columbia, Mo., StorageMart is privately owned and operated by the Burnam Family, which has been in the storage industry for three generations. Its portfolio consists of more than 16 million square feet of storage. It serves more than 75,000 self-storage customers, and operates in Chinese, English, Punjabi, Quebecois French and Spanish.
Sources:
BusinessWire, KBRA Assigns Preliminary Ratings to CGCMT 2019-SMRT
Commercial Observer, First Big ‘19 CMBS Deal Lands as $814M Self-Storage Refi
SpareFoot Storage Beat, Private Storage Operator Secures $814 million CMBS Loan
