Prudential Mortgage Capital Company has provided $131.7m in first mortgages to refinance a Lock Up/Evergreen Storage portfolio of 18 US properties.
The financing is comprised of a $20m, seven-year, floating rate tranche, and a $111.7m, 10-year, fixed rate tranche.
Prudential said that the post-recession shift in housing demand from owning to renting continues to drive its faith in the self-storage industry, particularly in high-income, high-density areas.
“This meets all the qualities we’re looking for in self-storage finance,” said Fred Van Overbeek, a principal with Prudential. “If we’re going to lend on that kind of property, we want to lend on the types of locations that [Lock Up/Evergreen Storage] focuses on: dense, urban areas with street visibility and high incomes.”
The 18 properties account for 13,422 units totaling 1,148,000 rentable square feet in Chicago, Minneapolis, Florida, New Jersey, Massachusetts and Hawaii.
The shift in housing demand after the recession bolstered the storage industry, creating a “general shift in increased demand for multifamily and a relative decrease in people living in traditional single family homes,” Overbeek noted.
He spoke via telephone from Honolulu, where one of the 18 properties is located – at 1901 Kapiolani Boulevard – in an area that is reflective of the entire portfolio.
“It’s an urban, infill location with a lot of density, close to Waikiki and downtown,” he said. “It’s the heart of where people live and Kapiolani is a four-lane road where you get a lot of visability.”
“There’s a lot of workforce housing where people are working in the hospitality industry, for instance, and so many of the residents are renters as opposed to owners,” he added.
The properties were built or converted for self-storage between 1982 and 2009 and are collectively 86.5 percent occupied as of April, 2014. The new mortgages represent a refinancing of an existing nine-year-old loan on a majority of the properties.
Prudential Mortgage Capital Company is the commercial mortgage lending business of Prudential Financial, Inc., which maintains a loan servicing portfolio of approximately $76.7bn.