The latest single loan CMBS is backed by a portfolio of self-storage facilities.
The $274.4 million BAMLL Commercial Mortgage Securities Trust 2015-HAUL refinances a 20-year, fixed-rate mortgage secured by 60 self-storage properties owned by Mark V. Shoen, the son of the founders of U-Haul.
Fifty-six of the properties are owned fee simple with four properties held in leasehold.
The loan is being used to refinance prior mortgage debt of $214.8 million, repay subordinate debt of $56.8 million and pay closing costs.
Among the strengths of the deal, according to Fitch Ratings, is the fact that loan is fully amortizing it pays both interest and principal throughout its term. Leverage is also low; Fitch puts the loan-to-value ratio at 78.3% and a debt service coverage ratio of 1.22x.
The portfolio of buildings has also performed well, with year-over-year growth in both occupancy and net operating income since 2010.
Competition is a concern, however. The self-storage industry has experienced rapid growth over the past 10-20 years but is still quite fragmented, with the smaller owners and operators controlling the majority of facilities, according to Fitch. The 10 largest self-storage companies in the U.S. own approximately 13.1% of facilities, with the top 50 controlling only 17.1%
Strength of property management is another key driver of Fitch’s ratings. Shoen owns the properties via two holding companies: he controls Blackwater Invesments, which in turn owns 100% of Private Mini Storage, the owner of the properties. Schoen is also a significant shareholder in AMERCO, the holding company of U-Haul, according to Fitch.
The portfolio is managed by U-Haul through management agreements with U-Haul subsidiaries in each of the states where the portfolio properties are located.
The securitization trust will issue two tranches of class A notes with a preliminary rating of AAA’ from Fitch that benefit from credit enhancement of 42.1%; the class B notes are rated AA’ and benefit from credit enhancement of 30.5%.
BofA Merrill Lynch and Drexel Hamilton are the underwriters.