Blackstone writes £83m whole loan for UK self storage deal

Blackstone Real Estate Debt Strategies (BREDS) provided an £83 million whole loan for the acquisition of UK self storage company Big Box last month.

BREDS-managed Blackstone Mortgage REIT (BXMT)  provided the finance for US-based StorageMart’s circa £112 million acquisition of UK operator Big Box Self-Storage.

StorageMart’s take-over was the largest-ever of UK self-storage assets and the five-year financing in the form of a three-year loan, plus two one-year extensions, was put together by BREDS’ London-based European team led by Michael Zerda. The loan-to-value is in the low 70 percent.

BXMT makes senior loans in the US and internationally, but most of the mortgage REIT’s recent lending has been in the US.

In BXMT’s Q3 earnings call on 26 of October, CEO Stephen Plavin said that after a year of making no loans in the UK, “we are seeing an improved environment in terms of new opportunities. The banks have taken a step back.”

BXMT will be keener than ever to find good deals having experienced a high level of repayments, spiking at $1.6 billion during Q3 compared with fundings of $926 million, driven by repayments of some of the loans Blackstone acquired from GE Capital in 2015.

Coincidentally, knowledge of the UK self-storage market gained through a loan acquired from the GE deal is believed to have helped BREDS get comfortable with the StorageMart transaction.

Blackstone acquired a senior loan made by GE Capital to UK operator Access Self Storage in 2013. The £95 million, five-year facility was secured on 23 stores in Greater London called the Enddora portfolio; a £17 million mezzanine ticket was written by LaSalle Investment Management, where Zerda previously worked before joining BREDS last February.

StorageMart was founded in 1999 and is said to be the world’s largest privately-owned self-storage operator. The Big Box acquisition gives the company its first foothold outside the US and Canada with 15 stores in south east England.

JLL’s debt advisory team advised on the debt funding.

Last month BXMT provided a $145.5 million, non-recourse floating-rate loan to The Generation Companies and StepStone Group Real Estate for a portfolio of 23 extended stay hotels.