Investing

Blackstone Adds More Self Storage to BREIT Assets in $1.2 Billion Acquisition

In 2019, the Blackstone Real Estate Income Trust (BREIT), an affiliate of Blackstone Group Inc. (NYSE: BX), spent in the neighborhood of $30 billion on commercial and industrial real estate properties. BREIT also spent about $7 billion in 2019 and 2020 on two deals with casino operator MGM Growth Properties Inc. (NYSE: MGP) to establish joint ventures in the Bellagio and Mandalay Bay casino and resort properties.

So the $1.2 billion acquisition announced Monday morning is fairly modest by comparison. BREIT has agreed to acquire Simply Self Storage from a real estate fund belonging to Brookfield Asset Management Inc. (NYSE: BAM). The storage company is among the top five private owners of self-storage in the United States, and its portfolio includes 8 million square feet of storage facilities across the country.

Brookfield acquired Simple Self Storage in 2016 for $800 million and has since doubled the size of the company and “helped transform the business into a fully-integrated institutional platform.”

BREIT’s board chair and chief executive, Frank Cohen, commented: “Simply Self Storage is a best-in-class company with significant potential for growth through future acquisitions in a highly fragmented sector, and similar to logistics, self-storage is a resilient sector through economic cycles because of low tenant turnover, minimal maintenance costs and stable cash flows.”

According to the announcement, BREIT’s current portfolio of self-storage buildings is valued at $300 million. Upon completion of this transaction, BREIT will be the third-largest, non-publicly listed owner of storage in the United States.

Less than two weeks ago, Blackstone sold its BioMed Realty portfolio company for $14.6 billion to a group led by existing investors. The asset management giant paid about $8.1 billion for BioMed Realty in 2016. The sale was called a “recapitalization,” and now we know where some of the new cash will go.

The deals BREIT made last year included the acquisition of 179 million square feet of U.S. warehousing space from Singapore’s GLP Pte for $18.7 billion and about 60 million square feet of so-called infill logistics assets from Colony Capital for $5.9 billion.

Blackstone’s shares were down 1% to $54.10 just after Monday’s open. Over the past year, the stock has gained less than 3%. Shares hit a five-year high of around $65 in February of this year, before plunging to a 52-week low of $33.00 in mid-March.

Blackstone is scheduled to report third-quarter results on Wednesday. Analysts are looking for earnings per share of $0.55, slightly below last year’s $0.58, and revenue of $1.26 billion, again slightly less than last year’s $1.37 billion for the same period. Blackstone pays a dividend yield of 3.4%.