Equity Based Services (EBS) announced today that it has purchased two more self-storage facilities. It now has a total of 66 facilities. The properties in question were previously operated as "Access Self Storage." The first property is located in Colorado Springs, Colorado, and the second property is located in Missouri City, Texas. The deal used a combination of equity and debt financing.
EBS financed the purchase in part with non-recourse loans, showing that non-recourse mortgages are still viable financing options within the self-storage market. Non-recourse loans are preferable to recourse debt when it is possible to obtain them. The debt financing, which was set up by Tavernier Capital Partners, came from a life insurance company.
The equity financing for the deal came from EBS' private investor pool and from the EBS Income Fund III, which was recently closed. The fact that EBS was able to arrange privately placed equity financing in addition to its mortgages shows that investors consider self-storage facilities to be strong, viable, low-risk businesses in which to invest.
"These acquisitions, which were brokered through the Locke Group, should complete the portfolio for the EBS Income Fund III," commented fund manager Troy Downing. "These two Access Self Storage facilities are strong class-A properties. The debt financing we were able to facilitate for these deals has allowed the EBS Income Fund III to wrap up its year on a very positive note." He went on, "In the current tight capital market environment that usually features short, 1 to 3 year loan terms, we were very happy to have been able to secure 10-year note terms for these projects."
Saul Hoppenstein, a principal at Tavernier Capital Partners, agreed, noting that life insurance companies are a good alternative to banks when one is looking for long term, fixed rate non-recourse debt. "Due to low delinquency rates in the self-storage sector," Hoppenstein continued, "lenders are actively looking to finance cash flowing, well located facilities with established operators."
The other terms of the loans were a 7% fixed rate interest, 62% loan to purchase price ratio, and that have a 10-year term with a 25-year amortization.