GlobeSt.com EXCLUSIVE: Self-Storage Duo Nets $9.7M

HOUSTON-A local self-storage merchant builder has collected about $9.7 million in back-to-back, all-cash deals with separate buyers for a total of 1,121 units in Sugar Land and the Woodlands.

United Storage Center sold the 571-unit holding in Sugar Land to Dallas-based Ladd Commercial Holdings, which paid close to the $5-million asking price. The 550-unit asset in the Woodlands went to locally based Private Mini Storage for about $4.7 million. Aaron A. Swerdlin, vice president of the self-storage advisory group in CB Richard Ellis Inc.’s local office, tells GlobeSt.com that the seller is a merchant developer who brought the assets to market once they were stabilized.

The Sugar Land asset at 9870 Highway 90A was on the market 40 days before Ladd put it under contract, according to Swerdlin. He says several others expressed interest in the 80%-leased, four-year-old complex, but the contract was already in place.

The Woodlands property at 765 Sawdust Rd. was about 70% leased at sale time. The two-year-old project, on the market about three weeks, received a “handful of offers,” says Swerdlin, the only broker working the transactions.

Swerdlin says the velocity of trading for the self-storage sector is at its strongest point in 10 years. He attributes the current momentum in part to increased attention to real estate by investors still fleeing the stock market.

Self-storage investments are particularly popular, Swerdlin explains, because they offer steadily increasing upside because leases renew every 30 days. In some cases, some owners are capturing a 7% rent hike each year, he says, adding that tenants on the average rent for eight to 14 months.