Property giant CapitaLand has forked out some $39.2 million to buy a majority stake in the fast-growing, self-storage business of Hersing Corporation.
The two firms said that they have set up a joint venture (JV) company – 38 percent owned by Hersing and 62 percent owned by CapitaLand – to purchase more than four self-storage properties under the StorHub brand of Hersing, as well as the brand itself.
The JV company shelled out $60 million for the acquisition of four properties situated in Changi and Toa Payoh, and another $3.2 million for the management business. CapitaLand’s 62 percent stake works out to $39.2 million.
According to Mr. Jack Chua, president of Hersing Corporation, the two property firms will now channel more funds into their new JV firm to grow the StorHub business in China and other markets within the region. The business model of StorHub is based on providing clients with month-to-month rentals of storage areas of different sizes and giving them 24/7 access to their stored goods.
“We need a lot of capital to grow the business (to buy the properties and convert them) and so we needed to partner someone,” said Mr. Chua. “We think that CapitaLand is a very good partner for us because of their excellent regional network.”
On its part, Hersing will have a $14.5-million surplus from the disposal of the properties, which it plans to inject into the JV company to grow StorHub in Asia.
The self-storage business was initiated by Hersing when it started StorHub in 2003 and opened its first outlet in Changi. The business earned the group a total revenue of $900,000 that year. However, on the back of growing demand for self-storage space, the unit’s revenue has since climbed significantly, earning $13.4 million in 2009. StorHub now manages five facilities – one in a rented property in Kallang and four in buildings it owns in Toa Payoh and Changi – with a net rentable space of 316,000 sq ft and a total of 4,122 storage units.
The JV partners could inject the properties into a real estate investment trust (REIT) and take it public if the StorHub business grows large enough, added by Mr. Chua.