Real estate investment firm Regency Affiliates Inc. has entered the self-storage sector by acquiring a five-property portfolio in Harrisburg, Pa., for $35 million. The acquisition is part of a joint venture with Self Storage Capital Partners (SSCP). The portfolio comprises 310,257 rentable square feet in more than 2,500 units. The facilities are branded as Storage Depot and were owned by PFG Capital LP, according to a press release from HFF (Holliday Fenoglio Fowler LP), the commercial real estate and capital-markets services provider that represented the seller in the transaction.
The combined 2015 revenue for the assets was more than $3 million, according to a Regency press release. The facilities will be managed by SSCP Property Management LLC, an affiliate of SSCP, which has a minority investment under the joint venture, the release stated.
The portfolio includes 87 vehicle-storage spaces and eight warehouse/commercial units totaling 14,054 square feet. The assets also have 28,880 square feet in expansion area, HFF officials said. The properties are:
- 4401 N. 6th St.
- 350 S. 7th St.
- 6325 Allentown Blvd.
- 115 Cumberland Parkway
- 32 Milroy Road
"We are excited about Regency's entry into the self-storage sector, and we believe that the Harrisburg facilities will prove to be valuable initial assets. Self-storage as an asset class fits squarely within our investment objectives of investing in assets that generate attractive, predictable and sustainable returns on capital,” said Laurence S. Levy, chairman and CEO of Regency. “The business requires low operational intensity and has modest capital-expenditure requirements while offering high margins and strong potential for revenue growth through both rate increases and increased utilization. Moreover, the facilities have long useful lives and have proved to be recession-resistant."
The HFF team representing the seller included director Barbara Guffey, managing director Richard Schontz and associate director Matthew Weckesser. An HFF debt-placement team led by managing director James Conley also arranged $25.25 million in acquisition financing on behalf of the buyer.
“The balance of the purchase price, the transaction expenses and initial working capital were financed by an approximate [$11.2 million] capital contribution from Regency to the joint-venture purchaser,” according to the Regency release.
The investment firm’s entry into the self-storage sector comes while it is in the midst of a common-stock offering of more than 1.2 million shares at $8.25 per share. As of April 18, Regency had raised proceeds of more than $9 million toward its $10 million goal. The expiration date for the offering is May 12.
HFF and its affiliate, HFF Securities LP, are owned by HFF Inc. The firm operates out of 22 offices nationwide and specializes in advisory services, commercial-loan servicing, debt and equity placement, and investment and loan sales.
SSCP is a Philadelphia-based, privately held real estate investment and management company specializing in self-storage. The SSCP team collectively has more than 20 years of experience in acquiring, operating, repositioning and underwriting self-storage properties.
Based in New York, Regency’s previous investment holdings included a 50 percent interest in the Mobile Energy facility on 11 acres in Mobile, Ala., and a 50 percent stake in the 717,000-square-foot Security West complex in Woodlawn, Md.
