StoreLocal Sheds Asset for 50pc Above Book Value

Self-storage investor and operator StoreLocal Group has divested a Melbourne asset, netting a significant increase on its 2018 purchase price. 

The self-storage asset at 77 High Street, Thomastown, was sold to a private investor off market for 50 per cent above book value in a deal brokered by CBRE agents Joe Brzezek and Daniel Eramo. 

The 24ha industrial-zoned land was sold for an undisclosed sum, which the StoreLocal Group had acquired for $8.6 million in 2018. 

The self-storage asset was acquired and rebranded, and The Urban Developer believes its new owner will look to reposition the asset again for a higher and better use. 

StoreLocal chief executive Hans Pearson said the asset had delivered an equity internal rate of return to investors of 18 per cent a year since its acquisition in 2018. 

Pearson said cost of living was impacting storage customers, but he said the self-storage market was just “growing a little less rapidly” in response. 

“When market conditions are like this it just means that the bigger operators can take a bigger market share,” Pearson told The Urban Developer.  

“It’s a really effective inflation hedge, we capture inflation at the front door.

“There’s a wall of capital globally that’s focusing on alternative living, and the emergence of small-to-medium enterprises, all of which are core drivers of self-storage.”

▲ A render of the proposed four-storey StoreLocal facility at Olsen Avenue, Southport.

Pearson said the US was the home of a mature storage market, and investors over there believe the Australian market is well positioned with population growth and a good economic growth outlook. He said the sector was “significantly underdone”.

But Pearson said the vendor-buyer price expectation gap continued to stymie development and a lack of available land was ensuring prices remained high. 

“There’s been no movement on cap rates and we don’t think we will see any either,” he said. 

The developer and asset manager filed plans for a four-storey self-storage facility late last year, which would replace the longstanding headquarters of Gold Coast bakery group Goldsteins at 509 Olsen Avenue, Southport.

StoreLocal has almost completed the deployment of its $100-million equity capital partnership with Swiss-based investor Partners Group, which it secured in 2022.

Pearson said the group would look to begin a new capital cycle once this was completed, with a healthy development pipeline and further acquisitions in the wings. 

“There’s good tailwinds but the acquisition strategy has really been slower in the last two years.”

The group will deploy the capital from the Thomastown divestment to further acquisitions. 

“It was just a great piece of industrial land and had a higher and better use in the hands of the buyer,” Pearson said.

“As a fund manager our obligation is to our investors. That’s our sixth disposal over the last 10 to 15 years ... we will continue to grow.”