Sovran Announces Acquisitions Worth $398M, Enters California

Sovran Self Storage is undergoing a major expansion with an agreement to buy 25 properties totaling $371 million, adding about 2.3 million square feet of rentable storage space.

By Adriana Pop, Associate Editor

Buffalo, N.Y.Sovran Self Storage, which operates under Uncle Bob’s Self Storage trade name, has entered into agreements to purchase 25 facilities in eight different states for an approximate total of $371 million. During fourth-quarter 2015 and earlier this month, the REIT also invested $27 million into the acquisition of five self-storage properties.

Sovran Self Storage Brand
Sovran Self Storage Facility

The newly announced transactions include five single-store acquisitions and four portfolio acquisitions—one consisting of 13 stores, and three comprising four properties each.

Most of the assets are located in the company’s existing markets of Boston/SE New Hampshire (6), Central/Southern Florida (5), Connecticut (2), Dallas (3), Denver (1), New York City metro area (2) and Philadelphia (2). Sovran will also acquire a recently developed facility in Phoenix, another market in which the company has a presence.

Sovran also signed agreements to purchase eight properties in the Los Angeles metro area, which mark the company’s entry into the market. Seven of the assets are stabilized and account for approximately $167 million of the overall transaction costs, while the eighth property is a newly developed store in North Los Angeles County, which is being acquired for $18.6 million. The seven stabilized stores account for 749,042 square feet, while the newly opened facility totals 79,835 square feet.

Overall, Sovran’s recent expansion totals approximately 2.3 million square feet of rentable storage space. The transactions have closing dates that vary between late December 2015 and April 2016.

The 22 stores the company is adding in its existing markets will improve Sovran’s already significant physical and digital operating presence in those cities, while the eight Los Angeles acquisitions constitute sufficient scale to perform competitively in a market the REIT has long considered desirable.

Sovran is now planning to increase occupancy levels, rental rates and ancillary income as the stores and new employees become integrated with the company’s proprietary web marketing and management systems.

Additionally, the REIT has agreed to buy four storage properties in “certificate of occupancy” purchases later this year. Two of the facilities are located in Chicago, one in Miami and one in Charleston, S.C.

Once construction on each store is complete, Sovran will pay a total of $38 million to acquire these properties.

In another recent announcement, the company has launched a public offering of 2.3 million shares of common stock at $105.75 per share. Net proceeds will be used to fund property acquisitions and corporate expenses. Underwriters have been granted a 30-day option to purchase up to an additional 345,000 shares. Jefferies LLC and Wells Fargo Securities are acting as joint book-running managers for the offering.

Image courtesy of Sovran Self Storage