Blackstone to Buy Simply Self Storage for About $1.2 Billion
By Miriam Gottfried
Blackstone Group Inc. has struck a deal to buy Simply Self
Storage from Brookfield Asset Management Inc., making a bet on a
sector that has remained strong throughout the coronavirus
The private-equity firm's nontraded real-estate investment
trust, known as BREIT, is buying the 8 million square-foot
portfolio of self-storage facilities for about $1.2 billion, the
two firms said. The deal is expected to be announced later
In an industry dominated by publicly traded giants such as
Public Storage, Simply's more than 120 locations across 23 states
make it one of the largest private players.
BREIT, which already owns 2.6 million square feet of
self-storage facilities, plans to continue to acquire smaller
assets in the fragmented industry and run them under the Simply
brand, according to Tyler Henritze, head of acquisitions in the
Americas for Blackstone's real-estate group.
"The opportunity to acquire a $1 billion-plus storage portfolio,
including a brand and a team, is incredibly rare," Mr. Henritze
He said Blackstone decided to do the deal based in part on the
performance of its own self-storage assets. Such facilities are
attractive businesses because they require little in the way of
capital expenditures, have relatively low turnover and offer the
ability to raise rents since they typically don't represent a major
portion of their tenants' monthly expenditures.
Like industrial warehouses used for e-commerce, another sector
Blackstone's $167 billion real-estate business has favored, self
storage has also remained resilient through economic cycles. That
has proven even more true during the pandemic as Americans who
might no longer be tied to their office locations have moved out of
cities or gone to stay with relatives, Mr. Henritze said.
"People in motion is a positive for the storage business," he
Brookfield acquired Simply in 2016 for $830 million when it had
90 locations and grew it to more than 200 locations over the next
two years through a combination of acquisitions and new
development. Much of its expansion has happened in markets that
have experienced strong economic growth, including Seattle, Dallas,
the New York metropolitan area and Southern California.
In 2018, Brookfield sold 112 self-storage facilities to a joint
venture of National Storage Affiliates Trust and an affiliate of
Heitman Capital Management LLC for $1.3 billion. The deal allowed
it to recoup the entirety of its investment up until that point,
according to people familiar with the matter.
Simply fits the mold for BREIT, which focuses on stable,
income-generating properties in growing markets, including
warehouses, multifamily housing and assets like the real estate of
the MGM Grand, Mandalay Bay and Bellagio Las Vegas casinos, which
offer a guaranteed rent stream.
Formally known as Blackstone Real Estate Income Trust Inc., it
has been the pillar of Blackstone's strategy to attract more
individual investors after years of catering primarily to
institutions and the ultrarich. The vehicle, which Blackstone
launched in 2017, has a net-asset value of $19 billion, up 46% from
the end of 2019.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
October 25, 2020 16:16 ET (20:16 GMT)
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