NSA Trust to Buy 29-Property Self-Storage Portfolio

The Colorado-based REIT is shelling out $190 million to acquire roughly 2.1 million square feet of self-storage space across the U.S.
National Storage Affiliates Trust headquarters, Greenwood Village, Colo.

National Storage Affiliates Trust headquarters, Greenwood Village, Colo.

DenverNational Storage Affiliates Trust has agreed to acquire 29 self-storage properties across six states, totaling about 2.1 million rentable square feet and about 18,000 storage units, for a total price of about $190 million, the REIT announced Tuesday. The largest part of the acquisition is a 22-property portfolio in California, for which NSA will pay about $154 million.

Almost all of the properties will be acquired in third-party transactions, and the vast majority of the funding, about $187 million, will be in cash. The acquisitions are expected to close in the third quarter.

With this batch of acquisitions, NSA “will have successfully completed or currently have under contract approximately $390 million of acquisitions, representing 54 properties and over 36,500 units since the end of the first quarter 2016 and approximately $480 million, representing 71 properties and over 44,000 units since the end of the fourth quarter 2015,” NSA CEO Arlen Nordhagen said in a prepared statement.

NSA declined to provide Commercial Property Executive with additional information.

Cap rates in the self-storage sector continue to compress, though lately at a more modest pace, and “investors are exploring secondary markets in their search for deals,” according to a new Self Storage Investor Survey released—also on Tuesday—by CBRE’s Valuation & Advisory Services.

Since 2010, cap rates have compressed 275 basis points, an average pace of nearly 5 bps per quarter, according to the investor survey, though more recently the compression has slowed to 4 bps per quarter.

“The spread among Class A, B and C narrows slightly, suggesting buyers are looking more to secondary and tertiary markets for product,” Chris Sonne, executive vp & National Self Storage Valuation group leader with CBRE, said in a prepared statement. “There remains a 65 basis point spread from Class A to Class C, but this can range much higher depending upon the asset and location.”