Sovran Self Storage is heading to California.
The Amherst company, which runs Uncle Bob’s self-storage facilities across the eastern half of the country, has long looked at California as a prime market, but never pushed into the Golden State while it built up its portfolio of more than 500 stores in its existing markets.
But that is changing now.
The company is buying eight self-storage facilities in the Los Angeles area as part of a series of acquisitions valued at nearly $400 million. While most of the 30 stores that Sovran is acquiring are in markets where Uncle Bob’s facilities already are located, the Los Angeles stores push the company into an entirely new part of the country.
“It’s taken us a while to get there,” said David Rogers, Sovran’s chief executive officer.
By purchasing a portfolio of eight stores in Los Angeles for a combined price of $167 million, Sovran executives believe the company will have enough of a presence within the market to be able to operate efficiently and profitably.
“We are doing it in the way we intended – with a group of high-quality facilities in sufficient scale,” Rogers said. “This will present a future growth vehicle for Sovran.”
To help pay for the acquisitions, Sovran on Wednesday sold 2.3 million shares of its stock in a secondary stock offering that capitalized on the strength of its stock price, which has jumped by more than 60 percent since the end of 2013 as stronger occupancy levels and higher rents have bolstered the company’s earnings. Sovran’s shares fell nearly 5 percent, or $5.25, to $104.54 in early afternoon trading.
The stock sale raised $234.5 million for Sovran, which the company plans to use to fund the acquisitions.
The acquisitions added six stores to Sovran’s stable of stores in the Boston and southeastern New Hampshire market, along with five in central and southern Florida, three in Dallas and two each in Connecticut, Philadelphia and the New York City markets. The company also added a single store in Denver and a newly developed facility in Phoenix.
While Rogers described the new stores as “high-quality properties,” he said Sovran hopes to improve their performance by incorporating them into the company’s Internet marketing campaigns and its centralized reservation and customer service systems.
Sovran also said it has signed contracts to acquire four additional properties that are now under construction, including two stores in Chicago and one each in the Miami and Charleston, S.C., markets. Those deals are valued at a combined $38 million.