Ladera Ranch-based Strategic Storage Trust Inc. is nearing a $20.9 million deal in its hometown that would rank as one of its largest purchases to date.
The firm, which specializes in self-storage properties, has raised close to $220 million from investors in the past two years. It is under contract to buy a 980-unit self-storage facility and an adjacent 3.6-acre parcel of land on Terrace Road near Antonio Parkway.
Strategic Storage is expected to pay $17 million for the Public Storage facility, which has about 102,000 square feet of rentable space. It will pay an additional $3.9 million for the undeveloped land, according to a filing with the Securities Exchange Commission.
The price of the self-storage property includes the assumption of a $7 million loan.
The deal—one of the larger commercial real estate sales seen in Ladera Ranch in the past few years—is expected to close next quarter. The seller hasn’t been disclosed.
The deal would give Strategic Storage a “flagship self-storage facility” just a few blocks from the company’s headquarters, said Chief Executive H. Michael Schwartz.
No decision has been made on what might be done with the additional parcel of land, Schwartz said. It is one of the last pieces of undeveloped commercial property in Ladera Ranch.
Building another storage facility at the site or using the land for something else such as an assisted living facility are possibilities, he said.
The proposed Ladera Ranch deal comes as Strategic Storage ramps up its pace of acquisitions.
In the fourth quarter, the company bought more than 7,100 self-storage units in the U.S. and Canada. It paid just less than $70 million for the properties, which totaled about 924,000 square feet of space.
“We’re consistently buying,” said Schwartz, adding that the company has another $70 million or so of deals in the pipeline.
Recent Deals
Recent local deals have included a $12.9 million property in Long Beach, and a $13.1 million buy in Los Angeles that added a combined 1,600 units to the company’s portfolio.
Last week, the company closed on the roughly $30 million purchase of the 80% stake it didn’t already own in a 10-property portfolio of facilities in Texas, North Carolina and Georgia.
That brought Strategic’s holdings to about 55 properties totaling nearly 37,000 units and 4.7 million square feet of rentable space.
About half of the properties have been renamed under the company’s new SmartStop Self Storage brand or are slated for the change.
The company is one of about 10 national self-storage operators that are doing the bulk of buying these days, said Eric Snyder, a principal with Costa Mesa’s Talonvest Capital Inc., a real estate financing company that arranges deals for self-storage investors.
“There’s definitely more activity,” Snyder said. “There’s more sales going down today than six months ago.”
The self-storage industry has seen property values tumble the past few years, much like the rest of the commercial real estate sector. Declines haven’t been as steep as some other buildings because the uncertain economy has driven plenty of new customers to rent space at the company’s properties, Schwartz said.
“This is an industry that’s focused on people in transition,” said Schwartz, a real estate executive with 19 years of experience.
Before Strategic Storage, he was the managing director of private structured offerings for Santa Ana’s Triple Net Properties LLC, now part of Grubb & Ellis Co.
