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Brookfield Selling Self-Storage Portfolio for $1.3 Billion to Heitman, National Storage

Simply Self Storage Sale Will Add 112 Properties to National Storage REIT's iStorage Portfolio
July 11, 2018
The Simply Self Storage facility at 5605 S Cedar Lake Rd, Saint Louis Park, MN, is one of 112 properties being sold to National Storage Affiliates

Heitman Capital Management is teaming up with National Storage Affiliates Trust to acquire Brookfield Asset Management's controlling stake in Simply Self Storage for $1.325 billion.

The portfolio contains 112 self-storage properties totaling 8.7 million rentable square feet in over 68,000 storage units across 17 states and Puerto Rico, according to a securities filing.

Following the sale, which is expected to close in the third quarter of 2018, National Storage expects to rebrand the majority of the properties under its iStorage brand. A previous joint venture between the National Storage REIT and Heitman put together the iStorage portfolio in 2016.

Brookfield entered the self-storage market in 2016 when it bought a majority stake in Orlando-based Simply Self Storage for $630 million through its Brookfield Strategic Real Estate Partners II fund. At that time, the portfolio consisted of 90 self-storage properties with an estimated 67,000 storage units.

With Brookfield's substantial financial backing, Simply Self Storage rapidly expanded, acquiring development sites and existing facilities to expand its footprint in Florida, Metro New York, Southern California and Texas.

With its new joint venture with Heitman, Greenwood Village, Colorado-based National Storage has committed $160.8 million in exchange for a 25 percent ownership interest. The self-storage REIT is also selling 5.9 million shares in a public offering to help fund the acquisition. Heitman has committed $482.3 million and will own the remaining 75 percent.

In addition, National Storage has committed an additional $64 million to the joint venture to acquire six self-storage properties in the portfolio located in Puerto Rico and one in Ohio. The REIT plans to sell the Puerto Rico properties following the acquisition.

The joint venture has signed a non-binding term sheet with two unidentified institutional lenders to provide $643 million in secured debt financing to the joint venture. The term sheet financing would carry an interest rate of 4.34 percent per annum and have a maturity of 10 years.

Following the acquisition, National Storage will own or manage 580 self-storage properties totaling about 37.2 million rentable square feet.

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