Andover Properties and global real estate investment management firm Heitman have formed a series of joint ventures to expand a diversified portfolio of self-storage properties across the United States.
The partnerships launched with a portfolio of more than 106 self-storage properties across 16 states and will pursue both value-add and core-plus investment strategies. The firms plan to expand the portfolio through additional acquisitions in markets nationwide.
The joint ventures reflect the companies’ view that current market conditions present opportunities to acquire self-storage assets at discounted valuations and create long-term value. Andover and Heitman cited declining new supply, potentially strengthening demand and opportunities for operational improvements as factors supporting their investment strategies.
“We are excited to partner with Heitman, whose experience in self-storage investing dates back to 1996,” said Brian Cohen, president and CEO of Andover Properties. “We believe the self-storage sector is at an inflection point and represents an attractive opportunity in commercial real estate today. Following a period of normalization in the wake of COVID-19, we believe a recovery in rents and occupancy may be driven by declining new supply and strengthening demand. Further, the sector's fragmented ownership presents an opportunity to create value through our vertically-integrated operating platform. We therefore believe the current market environment presents an exceptional buying opportunity. Our joint ventures with Heitman help position us for these opportunities.”
Zach Harding, CIO of Andover Properties, said the partnerships strengthen the firm's investment strategy and operating capabilities by combining Heitman's investment experience with Andover's acquisition and property-management expertise.
“Our joint ventures with Heitman represent a significant milestone for our platform and enhances the strength of our operating capabilities, investment strategy, and portfolio,” Harding said. “We believe that Heitman's long-standing expertise in the self-storage sector coupled with Andover's ability to source opportunities and drive operational improvements at the property-level will help maximize the value of the investments.”
Heitman is targeting markets with favorable demographic trends and limited new development. Doug Gurr, the firm's head of U.S. self-storage acquisitions, said current market conditions offer opportunities to purchase properties below replacement cost.
“We are focused on markets with strong fundamentals, which we believe, should benefit from demographically-driven demand and limited new supply,” Gurr said. “Today's entry point provides the opportunity to acquire assets well below replacement cost.”
Heitman began investing in self-storage in July 1996. Since then, the firm has invested more than $15 billion in 1,600 self-storage properties across 14 countries. It has acquired more than 1,200 facilities in more than 140 U.S. markets and is one of the largest private owners of self-storage properties in North America.
Founded in 2003 by Brian and William Cohen, Andover Properties invests in alternative real estate sectors, including self-storage, manufactured housing, RV parks, small-bay industrial properties and car washes. The firm operates a self-storage portfolio exceeding 15 million square feet across more than 180 facilities in 20 states. Headquartered in New York City, Andover also maintains offices in Miami and San Francisco.