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Buffalo, NY Sovran Self Storage has exercised the expansion feature of its credit facility and increased the borrowing limit on its bank revolving credit line by $200 million, to $500 million. All other material terms and conditions remain unchanged, and the maturity date remains December 2019.
Wells Fargo Securities, LLC and M&T Bank acted as joint lead arrangers in the transaction.
“The expansion of our line enhances our ability to execute our growth plans and further increases our liquidity position,” commented Sovran’s CFO, Andy Gregoire. “It is also evidence of continued lender confidence in our platforms, our credit profile, and in the strength of our properties.”
According to Sovran, it has also recently entered into contracts to acquire 25 self storage facilities in eight states for a total purchase price of $371 million. In addition, the company has acquired five facilities during the 4th quarter of 2015 and January 2016 for a purchase price of $27 million, bringing the total acquired and under contract to 30 self storage facilities. The company has taken, or anticipates taking title to all 30 of the stores at various dates between late December 2015 and April 2016.
The facilities include five single store acquisitions and four portfolio acquisitions; one comprised of 13 stores, and three comprised of four properties each. In aggregate, the transactions include 21 stabilized in the company’s existing markets of Boston/SE N.H. (6), Central/Southern Fla. (5), Conn. (2), Dallas, Tx. (3), Denver, Co. (1), New York City metro area (2) and Philadelphia, Pa. (2). A recently developed facility in Phoenix, Az. also will be acquired.
The company has also executed contracts to acquire eight properties in the Los Angeles, Ca. metro area.
Seven of the L.A. properties are stabilized and account for $167 million of the overall transaction costs, while the eighth property is a newly developed store in North Los Angeles County being acquired for $18.6 million. Collectively, the properties total 2.3 million s/f of rentable storage space. The seven stabilized Los Angeles stores account for 749,042 s/f, and the newly opened Los Angeles store has 79,835 s/f.
David Rogers, the company’s CEO, said, “We are very excited to acquire such an excellent group of high-quality properties. Those in our existing markets will be tremendous additions to the portfolio, and while all are well-run facilities, we expect improved operating results as we apply our customer service standards and transition these stores onto our web marketing and revenue management platforms.”
Regarding the California purchases, Rogers said, “While it’s taken us a while to get there, we are thrilled to enter the Los Angeles market. We are doing it the way we intended – with a group of high quality facilities in sufficient scale, on an immediately accretive basis, with the opportunity to improve operating results in a meaningful way. This will present a future growth vehicle for Sovran.”
The new acquisitions strengthen the company’s strategic position in its existing markets as well as open a new market for future growth. The 22 stores being acquired in the company’s existing markets will improve its already significant physical and digital operating presence in those cities, while the eight Los Angeles acquisitions constitute sufficient scale to perform competitively in a market the company has long considered desirable. The company also expects to drive increased occupancy levels, rental rates, and ancillary income as the stores and new employees become integrated with Sovran’s proprietary web marketing and management systems. The company believes that the acquisitions of the stabilized properties will be accretive on a leverage neutral basis to funds from operations (FFO) in 2016.
The company is also under contract to purchase four “certificate of occupancy” properties; two in Chicago, one in Miami and one in Charleston, S.C. The company expects to execute the purchase of all four of these properties upon completion of construction at various dates later in 2016 for total consideration of $38 million.
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