Montreal Mini-Storage (MMS) will add approximately 1,000 storage units to its portfolio with the acquisition of four self-storage facilities in Greater Montreal.
With units ranging in size from 20 to 500 square feet, the storage centres are located in the boroughs of Saint-Leonard, Parc-Extension and municipalities of Varennes and Sainte-Julie. The total building area is approximately 120,000 square feet, while the total land acquisition is 251,491 square feet.
There are also plans to add drive-up units at Saint-Laurent, Sainte-Julie and Varennes in 2023. All properties will receive security and user experience upgrades.
Some of these neighbourhoods represent new markets for the company. No financial terms were disclosed.
“Saint-Leonard is new. Sainte-Julie and Varennes are both new. (In) Park Ex we have a sizeable centre already that performs well with 1,200 units. So that would be an add-on in that area, where we've been very bullish for the last 15 years,” said MMS CEO and co-founder Simon Berman in an interview with RENX.
“As far as Saint-Leonard, it's highly complementary, because along that Hwy. 40 corridor, we have a spot just in Ville Saint-Laurent, then we have another one at Saint-Laurent Boulevard. Then we have a gap until Anjou.
"They're all basically within a block of that highway just to the north. It really is a straight line with a gap in it and we plug that gap with Saint-Laurent.”
MMS has acquired 10 properties in 2022.
Founded in 2004, MMS is a subsidiary of Avenir Properties, a Canadian real estate group focused on the development and management of industrial and commercial projects. It has nearly 10,000 storage units in Quebec at 20 facilities, and has served over 50,000 customers.
MMS’ new acquisitions
Berman explained the Saint-Leonard acquisition began in conversations with the vendors over a decade ago. They were reintroduced by a broker who was a mutual contact.
MMS learned that the vendors were ready to pass the torch and so the company “jumped at the opportunity.”
The Parc-Extension property was a similar story. Both were off-market acquisitions.
“Conversation started over five years ago with the vendor, and the circumstances in the family and within the family business, those dynamics dictated a certain opening probably about six, eight months ago,” Berman said. “After that, there was quite intensive negotiations regarding price obviously, conditions (and) a leaseback of part of the property to a family business that remains in the building.”
The Sainte-Julie and Varennes properties were listed for sale by a single owner.
Self-storage industry prospects
Berman anticipates an economic slowdown imposed by the market, but also that the company will continue to grow aggressively if everything goes to plan.
“We really do need the market to cooperate with us, specifically interest rates as well as the expectations of sellers,” he said. “We cannot afford to meet our return thresholds if we buy at yesterday's prices and tomorrow's interest rates."
While he doesn’t anticipate distressed sellers in the self-storage world, there is the possibility of buying vacant commercial and industrial buildings for conversion into self-storage.
Berman believes MMS’ overall delinquency rate will be impacted, although he said “we’ve been through these cycles before.”
What is worrisome, he said, is rising inflation and the potential necessity of raising rents, something he said the company is monitoring closely.
MMS’ 2023 outlook and beyond
In May, RENX reported on MMS’ acquisition of 1,500 storage units in five facilities in Quebec’s Laurentians for $40 million. At that time, Berman told RENX the company planned to add about 2,500 units, which were under development, to its portfolio through the spring of 2023.
He said the plan was to add roughly 20 new locations and at least 10,000 units by 2025 by acquisition and development in Quebec. That plan – and the provincial focus on Quebec – hasn’t changed.
“(Expansion) outside of the province still remains a long-term goal,” he said. “We're going to focus on our core market, which is the Greater Montreal Area and continue to extend our circle very deliberately and very patiently as our infrastructure grows to support that.”
Berman said MMS has several other properties under contract which he hopes to close on in Q1 2023, including an existing self-storage facility on Montreal's South Shore. The others are currently industrial properties.
He also said MMS plans to adopt new proptech tools to help manage and expand the company’s portfolio: “Really piecing together certain pieces of a puzzle to help us acquire more intelligently.
"So (data such as) demographics of all kinds, and percentage of renters versus owners," he explained. "Is the economy growing? Are there new developments going on nearby? That obviously influences the unit mixes that we're going to propose for those markets or submarkets.”