Blackstone Group Inc, an American private equity alternative investment management company, has come to an agreement to buy Simply Self Storage, a US-based, privately owned storage firm from Brookfield Asset Management Inc.
Simply Self Storage has over 120 locations in 23 states, making it one of the largest private storage facilities. BREIT, Blackstone Group’s nontraded real-estate investment trust is buying the 8 million sq. foot portfolio of self-storage facilities for about $1.2 billion.
Blackstone’s Head of Acquisitions Americas and the Senior Managing Director in its real estate group, Tyler Henritze confirmed that BREIT already owns 2.6 million sq. feet of self-storage facilities and is planning to continue the acquisition of smaller assets in the fragmented industry and operate them under the Simply brand. The chance to acquire a $1 billion-plus storage portfolio that includes both a team and brand is extremely rare, he expressed.
He further claimed that Blackstone decided to do the agreement based on the performance of its own self-storage assets. He called such facilities attractive businesses as they need less capital expenditure, have comparatively low turnover, and provide the opportunity to increase rents as they usually do not show a major portion of monthly expenditures of the tenants.
Brookfield Asset Management took over Simply in 2016 for $830 million, when it was operating in 90 locations, and expanded to 200 locations over the next couple of years through new developments and acquisitions. Most of the expansion was done in the markets that had witnessed strong economic growth like Dallas, the New York metropolitan area, Seattle, and Southern California.
While BREIT focuses on stable, income-generating properties in expanding markets like multifamily housing, warehouses, and assets like the real estate of the MGM Grand, Bellagio, and Mandalay Bay Las Vegas casinos, that offer a guaranteed rent; Simply becomes a perfect fit for it.