Harrison Street Picks Up Hefty Self-Storage Portfolio

Chicago-based Harrison Street Real Estate Capital L.L.C. has acquired a portfolio of 19 self-storage facilities across six states. The buyer was described only as “a national lending institution,” and the purchase price was not disclosed. The deal, according to Harrison Street, positions the company in the top 15 owners of self-storage assets nationally, by giving it a total of more than 4.6 million square in 65 properties across 17 states and valued at well over $600 million. Christopher Merrill, Harrison Street co-founder & managing director, told CPN that although the self-storage business is competitive, and no asset class is truly recession-proof, “We like storage…. It’s not a high-cost monthly item for the consumer.” In fact, he added, depending on the location, demand for self-storage can rise in bad times, because of homeowners and businesses downsizing to smaller premises. Harrison Street’s overall strategy is to focus on recession-resistant asset classes such as senior housing, medical office and healthcare properties, marinas, self-storage facilities and student housing. One result of that, Merrill explained, is that the values of individual assets tend to be small. Overall, he said, Harrison Street’s properties, across the company’s entire portfolio, average between $4 million and $5 million, with the self-storage properties at the lower end of that. The properties in this latest acquisition are in Illinois, Ohio, Florida, Rhode Island, New York and Nevada and total more than 1.4 million square feet of space across some 11,600 units. Merrill told CPN that Harrison Street found the properties attractive in terms of both quality (all have been built since 2000) and location. One, for example, is adjacent to Chicago’s McCormick Place, one of the world’s largest convention and exposition centers. The 19 new additions will be rebranded and managed by two of Harrison Street’s exclusive property-management companies, United Storage (United Stor-All) and Morningstar Properties (Morningstar Mini-Storage). The acquisition was made on behalf of Harrison Street Real Estate Partners II L.P., a recently-established $430 million closed-end opportunity fund with gross buying power of approximately $2 billion. With the acquisition, the fund will have acquired or commenced development on over $700 million of real estate consisting of more than 60 properties in 2008. Harrison Street was founded by Chicago’s Galvin family, the founders of Motorola. In addition to Merrill, who was formerly a managing director and partner at Heitman L.L.C., the company’s management and investment committee consists of former Motorola chairman & CEO Christopher Galvin and Michael Galvin, a former partner in the law firm of Winston & Strawn, who also served as Assistant Secretary of Commerce from 1989 to 1992.