Extra Space Storage spends $20M for three Orlando-area properties, seeks more locally

UPDATED: November 24, 2015 12:17 PM — Salt Lake City-based Extra Space Storage, a publicly traded REIT and second largest operator of self storage in the U.S., spent more than $19.9 million last Thursday to buy three Orlando-area properties from Noah's Ark Self Storage in Bulverde, Texas.

The company is now prioritizing the Greater Orlando market for new acquisitions in the future, after its existing sites here posted a 95.6 percent occupancy rate at the end of the third quarter, and population growth projections for the area continue to rise, Zach Dickens, vice president of real estate with Extra Space, told GrowthSpotter on Tuesday.

"We feel like we have a lot of roow to grow in Orlando," Dickens said. "Given the manageable level of supply today in Orlando as it pertains to self storage, and the favorable market conditions, we actively look for opportunities to expand in the market. We are also interested in Seminole, Lake and Osceola County for the same reasons we like Orlando."

The company bought the following properties on Nov. 19 through an affiliate LLC:

- 5753 Hoffner Ave. in Orlando, a property of 2.7 aces with nine self storage buildings built in 2008, totaling 83,388 square feet of indoor space, at a price of $6.7 million;

- 2631 E. Semoran Blvd. in Apopka, a property of 4.04 acres with eight self storage buildings built in 2005, totaling 81,295 square feet indoor, at a price of $6.6 million;

- 831 N. Park Ave. in Apopka, a property of 3.84 acres with two buildings built in 2009, totaling 78,420 square feet indoor, at a price of $6.6 million.

Extra Space now owns and/or manages more than 1,330 self storage properties in 35 states nationwide, including eight in Orlando, two in Apopka, and one in both Lake Mary and Ocoee.

"The addition of these three sites allows us to build a better managerial platform in the market," Dickens said. "The three properties increases our critical mass of stores in the region, which lends itself to better management practices. We expect to get more out of our properties as a whole by continuing to grow in the region."

The sale of all but one Florida property owned by Noah's Ark Storage comes after the company's founder, Mike Parham, died in November 2014 of a heart attack at age 59.

The self storage market is ripe for consolidation in the coming years by a handful of REIT owner-operators, led by Public Storage as the market's largest, followed by Extra Space. About 86 percent of the U.S. self storage market's total square footage is controlled by non-REIT owners, Self Storage highlighted during its most recent quarterly earnings report.

Calls to Extra Space requesting comment on the Orlando-area purchases were not returned on Monday.

In June, Extra Space announced it was acquiring SmartStop Self Storage for $1.4 billion, a public, non-traded REIT that's the seventh largest owner-operator in the market with 169 properties in 21 states, and Toronto. None of those properties are in the Greater Orlando area.

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