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Gelt Buys Self-Storage Portfolio, Gets Financing from 3650 REIT

By Orest Mandzy
Commercial Real Estate Direct

Gelt Inc. has paid $41 million for a portfolio of eight self-storage facilities in the Memphis, Tenn., area, including northern Mississippi.

The Los Angeles investor, which focuses on workforce apartment properties, also owns office, retail, and self-storage properties. It bought the latest portfolio, which has 3,884 units, from Merit Hill Capital, a New York owner of self-storage properties, in a deal brokered by Cushman & Wakefield.

Gelt financed its purchase with a $31 million loan from 3650 REIT. The 10-year loan was facilitated by BSC Group of Chicago.

The loan was originated under 3650 REIT's stable cash-flow program. The lending company, which also funds short-term loans, always retains a substantial risk piece of every loan it writes, even if it funds them through the CMBS market, which very well could be the case with the self-storage loan. It's also a rated special servicer, so it retains the servicing relationship with its borrowers.

The self-storage portfolio has properties in Memphis and Bartlett, Tenn., as well as in the Olive Branch, Miss., and Nesbit, Miss., areas that haven't seen many new properties constructed.

"Self-storage assets backed by national brands are historically well-positioned to weather economic instability, and today's market environment due to Covid-19 is no exception," said Toby Cobb, co-founder and managing partner of 3650 REIT, which stepped in to originate the loan after Gelt's original lender backed out.

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