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An Orlando, Florida-based self-storage company will be sold for the second time in three years — this time trading for $1 billion more than the last transaction.
Glendale, California-based self-storage giant Public Storage announced July 24 that it had entered into an agreement with Blackstone Real Estate Income Trust, or BREIT, to buy Simply Self Storage for $2.2 billion. The deal is expected to close in the third quarter of this year.
The announced transaction comes less than three years after BREIT agreed to buy the Orlando company in October 2020 for $1.2 billion, a deal it closed in December 2020.
Simply Self Storage was founded in 2003 by Orlando real estate executive Kurt O'Brien and has had previous majority investors including Tavistock Group and Brookfield Asset Management, which acquired an $830 million stake in 2016.
Its rapid growth has seen the company become one of the largest operators of self-storage space in the nation, with its portfolio of 127 properties and 9 million net rentable square feet of space largely in high-growth Sunbelt markets, according to a news release by Public Storage (NYSE: PSA).
“This acquisition reflects the continued execution of our multi-factor external growth platform, which includes acquisitions, development, redevelopment, expansion and third-party management," said Public Storage CEO Joe Russell in a prepared statement.
As of midday June 24, Public Storage was trading for $293.59 per share — up 0.64% on the day and 7.1% for the year.
The move for BREIT, a subsidiary of New York-based Blackstone Inc. (NYSE: BX) comes at a time when the REIT — viewed as one of the nation's strongest and most dependable — is experiencing many of the same challenges widespread throughout the commercial real estate sector. For instance, Yahoo Finance reported in June that Blackstone was limiting investor withdrawals from BREIT.
Nadeem Meghji, a senior managing director with Blackstone and the head of the firm's real estate in the Americas, said in a prepared statement that this sale will allow BREIT to further concentrate its portfolio in its highest growth sectors.
"Where you invest matters, and this transaction demonstrates the strong investor demand for the high-quality assets and platforms we have assembled within BREIT. This sale is a terrific outcome for BREIT stockholders."
Meanwhile, though there are reports of the self-storage sector cooling in demand from its pandemic heights, the asset type remains popular with investors — especially in high-growth markets like Orlando.
So said CBRE Senior Vice President Morgan Windbiel, who is part of CBRE's Self Storage Advisory Group that represented the seller in the June 15 sale of a 609-unit self-storage facility in metro Orlando's west Orange County for $23.1 million.
"We saw some slowdown in the fourth quarter of last year and the first quarter of this year, just because of the uncertainty of everything that was going on with interest rates and everything else in the world economically, but we have come through that with a tremendous amount of interest," Windbiel said. "New groups are coming into the space and new funds are coming into the space, so we're not expecting to see any huge slowdown on our side — we actually think it's only going to pick up as we go later into this year."
What's more, a recent self-storage report from RentCafe notes that Houston; San Antonio, Texas; and Orlando have the largest amounts of new construction of the product type planned for the rest of 2023. Orlando is expected to add 691,000 square feet of new storage space by the end of this year, per the report — or 8% more than the existing inventory.
