Citi, JPMorgan and Goldman Sachs lend $ 468 million for self-storage wallet – Business Watcher
A joint venture between the Singapore sovereign wealth fund GIC, Centerbridge Partners and self-storage real estate agency Capital of Merit Hill secured $ 468 million in senior debt from a trio of bank lenders to acquire a portfolio of 57 self-storage facilities, according to analysis by Kroll Bond Rating Agency (KBRA).
Citi, JPMorgan Chase and Goldman Sachs came together to create the two-year commercial mortgage-backed securities (CMBS) loan, which includes three one-year extension options provided borrowers do not default on the loan.
CMBS single-borrower financing also includes interest-only payments, which will pay investors at the one-month LIBOR rate plus a spread of 1.85%, per KBRA. The agreement includes a zero percent LIBOR floor.
Citi contributed about half of the loan amount, while JPMorgan Chase and Goldman Sachs each provided a quarter. The loan is waiting to be securitized in the MHP 2021-STOR CMBS Agreement.
The developers used debt financing and $ 168.3 million of their own equity to purchase the set of 57 properties from Primary storage group and pay the reserves and costs associated with the closing of the transaction, which closed on July 14, according to KBRA.
The deal is secured by the borrowers’ fee simple interest in the properties, which will now be operated by a publicly traded real estate investment company. Additional storage space, whose branding will also be associated with each of the assets. Founded in 1977, Extra Space is currently the second largest self-storage operator in the country, owning or operating more than 1,800 facilities representing approximately 145 million square feet and 1.3 million storage units in 40 states, as well than in Washington, DC, and Puerto Rico.
CMBS loans on 11 of the 57 properties in the transaction were previously included in the CGCMT 2019-PRM CMBS Agreement. Each of these loans is expected to be repaid and released from this trust no later than August 3; a reserve account has been established with the lenders to officially acquire these 11 properties and integrate them into this securitization once they are cleared.
The properties themselves were built between 1960 and 2014, and the portfolio comprises approximately 4 million square feet. The assets are located in or around 23 metropolitan areas in more than a dozen states, with New Jersey, Virginia, Maine and South Carolina being the states most exposed to the portfolio.
Self-storage space within the portfolio, in particular, stands at 3.3 million square feet, spread over nearly 26,700 units, while there is also over 678,000 square feet of commercial space and parking that complete the total. Almost 30 percent of the self-storage area is air-conditioned.
In May, the average portfolio occupancy – based on square footage – was 93.1%, per KBRA.