Prime Group Holdings, LLC has made its first Canadian self-storage acquisition in the hamlet of Sherwood Park, just east of Edmonton.
The 2018-constructed, 64,050-square-foot single-storey building at 70 Broadview Rd. is comprised of 54,677 rentable square feet, a combined 472 indoor climate-controlled and drive-up units, a management office and 22 parking spaces. The facility sits on approximately five acres, with two of those being vacant for future expansion.
The business, which is nearly 90 per cent occupied, previously operated under the Pockit Self Storage banner.
“We have owned and operated self-storage for decades, successfully navigating throughout market cycles,” Prime Group founder, principal and chief executive officer Robert Moser told RENX in an email interview.
“Since we raised our first private equity real estate fund dedicated to self-storage in 2015, we have expanded our geographic footprint throughout the United States. As we continue to expand our portfolio, we view the Canadian market as the natural next step in our firm’s evolution.
“For the Canadian markets we are targeting, we see investment characteristics similar to those we target in the U.S., with a particular emphasis on markets with high-growth, affluent populations.
“As a result, we made the deliberate and strategic decision to enter the Edmonton market and, following our careful due diligence process, we have high conviction in the strength of the Canadian self-storage market — now and in the future.”
Moser cited Edmonton’s growing population, a lack of self-storage facilities and “more residents and businesses experiencing meaningful life changes and business opportunities that are driving the need for high-quality storage options” as the reason why the market became Prime Group’s entry point into Canada.
Sherwood Park is also the second-most affluent neighbourood in Alberta.
Prime Storage Fund III, LP
The off-market acquisition in Sherwood Park was made for an undisclosed price through the firm’s third flagship fund, Prime Storage Fund III, LP.
Prime Group raised $2.5 billion US for the fund in January, well exceeding its initial $1.5-billion US target.
The fund received support from a diverse base of new and existing Prime Group investors, including sovereign wealth funds, public pension plans, university endowments, banks, insurance companies, family offices and foundations.
More than 30 countries are represented in its investor base.
“The demand for self-storage is not closely correlated with GDP (gross domestic product) growth or other market forces, but rather with demographic shifts, life events and small business formation,” Moser said.
“In fact, the self-storage industry features many defensive characteristics that allow this real estate sector to be resilient — and oftentimes thrive — during periods of economic uncertainty.
“Our investors have been attracted by the combination of reliable cash flow and value creation, along with the benefits and economies of scale that come with the aggregation of a large self-storage portfolio.
“All in all, we believe that self-storage has tremendous tailwinds that will continue to propel this real estate asset class forward for the foreseeable future.”
Prime Group’s American operations
Prime Group is a vertically integrated private equity real estate company focused on self-storage and other alternative real estate asset classes. It manages assets worth more than $4 billion US.
Prime Group is headquartered in Saratoga Springs, N.Y., with a regional office in Jupiter, Fla. and investment origination offices in Denver and Hackensack, N.J.
It has more than 650 employees, including investment professionals, property managers, an investor reporting team, construction and marketing personnel, and deal-sourcing professionals.
Since inception, Prime Group has owned and operated approximately 360 self-storage facilities representing more than 201,000 storage units and more than 25.2 million rentable square feet.
Future Canadian expansion
All Prime Group properties are branded as Prime Storage and Moser said the company would self-source and self-manage its Canadian real estate holdings.
“We are committed to growing our footprint and presence in Canada in a thoughtful and disciplined manner,” Moser said. “As part of this, we are actively evaluating high-quality assets that meet our investment criteria — and our pipeline is strong and growing.”
Prime Group has made significant investments in its business and processes to ensure it provides the “best customer experience possible” across the industry, according to Moser.
“This includes: customer sales and our 24/7 call centre with its fully trained staff; developing new technologies for on-site support; and driving innovation across the entire firm.”