2-State Self-Storage Portfolio Changes Hands

By Keith Loria

The Los Angeles facility

Cardiff Mason Development has sold the Self Storage 1 portfolio, two trophy self-storage properties in Houston and Los Angeles, totaling 158,000 square feet, to a well-capitalized, national owner/operator. Cushman & Wakefield and JLL arranged the transaction on behalf of the seller. 

The Houston self-storage facility is located at 5321 Richmond Ave. in the Galleria-Uptown area of the city. The property’s nearby traffic count exceeds 29,000 cars per day and there are more than 218,000 people and approximately 2,500 new apartment units under construction or in the planning stages within 3 miles.

Situated at 11820 W. Olympic Blvd. in West Los Angeles, the other facility serves the highly affluent communities of Brentwood, Beverly Hills, Santa Monica and West Los Angeles. The location has more than 340,000 people within a 3-mile radius and an average household income of more than $120,000. The asset is also highly visible from the road and just a few blocks from the intersection between interstates 10 and 405.

“Both assets are institutional quality construction and design with high visibility locations in high-end, core trade areas,” Greg Wells, Cushman & Wakefield’s senior director of brokerage services in the Self Storage Industry Group, told Commercial Property Executive. “The properties generated a significant amount of interest from various different investor types: REITs, institutional capital and private national/regional operators.”

The two properties are purpose built, institutional quality self-storage projects offering modern designs and amenities.

The Houston facility

“The market is lacking in Class A institutional properties that are being offered for sale,” said JLL Managing Director Steve Mellon for CPE. “Investors are seeking real estate assets that are cash flowing today and provide a substantial hedge against rising interest rates.” In addition to the portfolio offering existing cash flow, they are considered core markets and irreplaceable real estate. According to Mellon, both of these assets are not only in major cities, but in the top submarket of their respected city.

JLL’s Brian Somoza was also part of the team representing the seller.

Self-storage in the Lone Star State

Self-storage rents in Texas metros, such as Austin and Dallas, have seen declining rents. According to a recent Yardi Matrix report, rents were down 4.7 and 6.6 percent in these cities. Rent rates remained flat in Houston, where existing supply per capita is 60 percent higher than the national average of six net rentable square feet.

In October, Greysteel arranged the acquisition financing of a 463-unit Extra Space Storage facility in Houston. The firm’s Dallas-based office secured the non-recourse bridge loan on behalf of Montfort Capital Partners. Earlier this year, Greysteel also arranged the acquisition financing of a 480-unit facility located in Garland, Texas.

Image courtesy of Cushman & Wakefield, JLL