Storage Deluxe Closes Half-Billion-Dollar Sale of 1.6 MSF Portfolio to CubeSmart

By Barbra Murray, Contributing Editor

It’s a big deal, a very big deal. Storage Deluxe has sold a 1.6 million-square-foot self-storage portfolio in the Northeast to CubeSmart for a whopping $560 million, courtesy of a transaction orchestrated by HFF on the seller’s behalf.

“It will be a while before the industry sees another transaction like the Storage Deluxe deal,” Aaron Swerdlin, senior managing director with HFF, told Commercial Property Executive.

The CubeSmart has now enhanced its holdings by 22 facilities in New York, Pennsylvania and Connecticut. Only a select few had the opportunity to compete for the group of properties.

“Having fully marketed several deals for Storage Deluxe, and having achieved pricing in-line with our guidance on those deals, Storage Deluxe was comfortable that CubeSmart’s pricing was consistent with what we would achieve with a full process but without the disruption and distraction of a widely marketed deal,” said Swerdlin.

CubeSmart had the inside track, buoyed by an established relationship with Storage Deluxe. In September 2010, the REIT acquired two of Storage Deluxe’s New York facilities totaling 2,200 units in Brooklyn and the Bronx.

Had HFF marketed the portfolio widely, the firm would most certainly have had to field a bevy of offers.

“For large deals and core one-off deals in major markets, it’s honestly as good as I’ve ever seen it,” Swerdlin added. “I’ve focused exclusively on self-storage sales transactions for almost 20 years and I’ve never seen investor appetite like we see today.”

The self-storage market is on the upswing across the country and in the East, supply constraints and the migration of households to major employment centers continue to strengthen demand, according to a mid-year report by Marcus & Millichap Real Estate Investment Services. The year-over-year occupancy level is expected to increase 210 basis points to 87 percent in 2012.