Warburg Pincus’ Storhub Buys Two More Floors in Kowloon Self-Storage Building

Top fund managers continue to snatch up properties to expand self-storage businesses in Asia’s biggest markets, with Warburg Pincus-backed Storhub having expanded its holdings in a Hong Kong industrial building for the second time in two months and the third time this year.

Already the largest self-storage operator in Singapore, in this latest deal, Storhub has agreed to acquire two floors and a pair of parking spaces in the Precious Industrial Centre in Cheung Sha Wan for a combined HK$98 million ($12.4 million), according to Land Registry records seen by Mingtiandi.

Storhub’s latest purchase in the 1977-vintage building will give it ownership of 10 of the 13 floors in the property at 18 Cheung Yue Street in northwestern Kowloon, potentially setting it up to take full ownership of the tower, which is located within a two minute walk of an industrial building acquired by a Blackstone self-storage joint venture earlier this month.

Taking Over in Cheung Sha Wan

In its latest acquisition, Storhub is buying the seventh and eighth floors in the Precious Industrial Centre from a local private company named Cathay United Garment Factory Ltd, adding 19,210 square feet (1,784 square metres) in gross floor area to its Hong Kong portfolio, according to local media accounts.

At the agreed compensation and given the reported area of the properties, the mini-storage firm is paying the equivalent of HK$5,102 per square foot – slightly less on a unit basis than it paid in a HK$66.27 million purchase of the second floor of the building last month.

During the first quarter, Storhub paid HK$350 million to acquire seven floors, including the lowest levels of the building and six parking spaces.

Strata title sales of similarly aged industrial buildings in the area have been transacted at prices running from HK$4,500 to HK$5,000 per square foot, said Alex Leung, senior director at CHFT Advisory and Appraisal, in an earlier comment to Mingtiandi.

Storhub’s latest acquisition is its fifth major buy in the city this year, and would add to the 75,297 square feet which it already owns in the building about a 3-minute walk from the Lai Chi Kok MTR station.

Situated in an area where the Urban Renewal Authority plans to build 1,830 residential units, Storhub sees its Cheung Sha Wan location benefiting from potential demand from new residents in the neighbourhood, according to its website.

The Precious Industrial Centre is also a 5-minute drive from four private residential estates containing 8,827 flats, known locally as “Four Little Dragons”, which analysts say would provide steady demand for self-storage due to high flat prices in Hong Kong.

Mini-Storage Strategy

With 713 self-storage facilities in Hong Kong as of September 2022, according to government statistics, the biggest demand drivers for the sector continue to be high population density and expensive home prices, said CHFT’s Leung, with operators rushing to acquire aged industrial assets in the city to meet growing demand.

About 400 metres (437 yards) from the Precious Industrial Centre, a Blackstone joint venture this month acquired an industrial building in Cheung Sha Wan for HK$850 million from the family of the late “Wool Magnate” Chao Kuang Piu, marking the partners’ fourth en-bloc purchase in the city since April of 2021.

One month before that deal, Canadian investment giant Brookfield acquired a pair of units in the Chai Wan Industrial Centre, and a ground floor parking area in the property, in a move to beef up its self-storage portfolio, for HK$55 million.

Separately, Dutch pension fund manager APG and Singapore’s CapitaLand Investment announced this week that they would commit up to S$1.14 billion ($810 million) to take over and expand the region’s largest self-storage operator, Extra Space Asia.