Gelt has closed escrow on the sale of SouthMark Storage in Pasadena, California. South Pasadena marked Gelt’s entry into the self-storage asset class. The property was listed for sale in 2018 by CBRE and marketed as a redevelopment deal. Gelt was approached due to its existing relationship with CBRE, and familiarity with the seller group, from whom we had previously acquired apartments.
Upon carrying out an in-depth analysis of the site, Gelt determined the existing self-storage use had quantified upside in bringing rents to market and improving the condition of the property to cater to a strong local area demographic. Gelt outbid a competitive buyer pool of dozens of investment groups including sophisticated self storage operators. Subsequently, a decision was made to continue existing storage operations and implement our value-add business plan.
As part of the business plan, Gelt hired a best-in-class storage operator on favorable terms, implemented superior revenue management and advertising strategies, optimized unit mix, captured select expansion potential and carried out a focused capex plan which included security upgrades, digital access systems, asphalt improvements, renovation & painting; which helped attract a higher paying tenant base.
As of the end of Year 5 of ownership, NOI had tripled, thereby substantially surpassing the 7-year proforma. The investment generated industry leading returns upon sale in November, 2023 with an equity multiple of 4.5x and a 36% IRR.
