PROPERTY giant CapitaLand has shelled out some $39.2 million to acquire a majority stake in Hersing Corporation’s fast-growing self-storage business.
Yesterday, the two companies said that they have set up a joint venture (JV) company – which is 62 per cent owned by CapitaLand and 38 per cent owned by Hersing – to buy over four self-storage properties under Hersing’s StorHub brand, as well as the brand itself.
The JV company paid $60 million for the four properties located in Toa Payoh and Changi and another $3.2 million for the management business. CapitaLand’s 62 per cent share of this works out to $39.2 million.
The two property companies will now channel more funds into their new JV company to grow the StorHub business in China and other markets in the region, said Hersing president Jack Chua. StorHub’s business model is based on offering clients month-to-month rentals of storage areas of varying sizes and allowing 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,’ Mr Chua said. ‘We think that CapitaLand is a very good partner for us because of their excellent regional network.’
On its part, Hersing will get a surplus of $14.5 million from the disposal of the properties, which it intends to to inject into the joint venture company to grow StorHub in Asia.
Hersing pioneered the self-storage business when it started StorHub in 2003 and opened its first outlet in Changi. That year, the business earned the group total revenue of $900,000. But on the back of growing demand for self-storage space, the unit’s revenue has since climbed significantly, coming in at $13.4 million in 2009. StorHub now operates five facilities – four in buildings it owns in Changi and Toa Payoh and one in a rented property in Kallang – with a total of 4,122 storage units and close to 316,000 square feet of net rentable space.
Mr Chua added that if the StorHub business grows large enough, the JV partners could inject the properties into a real estate investment trust (Reit) and take it public.
Source: Business Times, 17 Apr 2010