Sovran, LifeStorage Become One
- Jul 20, 2016
By Barbra Murray, Contributing Editor
New York—Sovran Self Storage Inc. has wrapped up the acquisition of LifeStorage LP, creating a company with a portfolio of approximately 650 self-storage facilities spanning 29 states. The price tag on the deal: $1.3 billion.
A billion dollars is nothing to sneeze at, but Sovran handily financed the purchase of LifeStorage with proceeds from the sale of 6.9 million shares of common stock, which netted roughly $665.3 million, and the disposition of $600 million of 10-year notes. It appears it was money well spent, as it’s a fine time to be in the self-storage business. Revenue in the sector reached a whopping $31.6 billion in 2015 and is projected to increase to $32.7 billion in 2016, according to a report by Integra Realty Resources. Self-storage has been on the upswing for the last few years and there’s no end in sight.
“The self-storage industry remains strong, driven in part by the lack of new supply and rising consumer demand,” Diane Piegza, vice president of investor relations and community affairs with Sovran Self Storage, told Commercial Property Executive. “Occupancy levels are at record highs, and the large operators continue to gain market share by leveraging the web and social media, sophisticated revenue management systems and employing skilled sales agents in centralized call centers.”
The transaction allows Sovran to further solidify its position as one of the five largest self-storage companies in the U.S., adding LifeStorage’s 84 premier properties to its holdings. LifeStorage came to the table with a portfolio of 73 stabilized stores and an additional 11 lease-up facilities, all of which the five-year-old company had developed or acquired within the last five years. But Sovran walks away with more than just an additional 6.5 million square feet; the REIT was able to expand its national footprint to new locations, gaining a 17-property foothold in Las Vegas and a 10-property presence in Northern California overnight.
With marriage often comes a name change, and Sovran will take LifeStorage’s name—sort of. The merged company will be known as Life Storage. The addition of a space between the two words, inconsequential though it may initially seem, is of significance.
“Using two distinct words offers us an advantage with search engines, creating a semantic relationship with our business and the keywords used to find our service,” Piegza shared. Sovran, which currently operates under the trade name Uncle Bob’s Self Storage, will also rebrand its existing 563 Uncle Bob’s facilities as Life Storage properties. The changes will be instituted in mid-August of this year.