W.P. Carey REIT Affiliate Pays $163M for Self-Storage Portfolio

Corporate Property Associates 17-Global Inc., a non-traded REIT affiliate of W.P. Carey & Co., has spent $163.4 million on a 42-property portfolio of self-storage facilities located in California, Illinois and Hawaii.

November 30, 2011
By Barbra Murray, Contributing Editor

San Diego location

A nearly 2.8 million-square-foot self-storage portfolio has changed hands, courtesy of a $163.4 million transaction orchestrated by the National Self-Storage Group of Marcus & Millichap Real Estate Investment Services. NSSG marketed the assets on behalf of A-American Self-Storage and represented both the seller and the buyer, Corporate Property Associates 17-Global Inc., a non-traded REIT affiliate of W.P. Carey & Co. L.L.C., in the transaction.

“We had over 50 offers on either part or all of the portfolio,” Charles LeClaire, a senior vice president in investments and senior director with NSSG, told Commercial Property Executive. Indeed, the opportunity to get one’s hands on such a sizeable collection of assets does not come along every day. The group consists of 42 facilities accounting for an aggregate 24,917 units in California, Illinois and Hawaii. The closing of CPA:17-Global’s acquisition of the portfolio occurred in separate tranches; the last CMBS assumptions reached completion earlier this month.

According to LeClaire, the sale marks one of the largest trades in the self-storage real estate sector ever. In terms of square-footage, the A-American portfolio deal surpassed other recent big-ticket transactions by leaps and bounds. In October, CubeSmart entered into an agreement to purchase a 1.6 million-square-foot group of Class A facilities in metropolitan New York City from Storage Deluxe for $560 million.

“There’s an appetite for self-storage from investors because it’s proven over the last 30 years to be a stable investment,” LeClaire said.

The allure of the sector has a great deal to do with the fact that the properties provide consistent cash flows, high returns and low loss ratios. Additionally, unlike, say, office buildings, the facilities require little maintenance and no tenant improvements. “It’s stable in that respect and it’s stable in that there’s demand for the properties even when the economy is bad,” LeClaire added. “During the recession, people were downsizing from houses into apartments and wanted to store their excess belongings. There are people retiring and moving into condos that want to save some of their belongings for their children. There are people that are combining families in one residence and they’re storing their belongings. So there’s a multitude of reasons why it’s stayed pretty constant, and it did well in the most recent downturn.”