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NKF Leads Largest Widely Marketed, Non-Merger Self Storage Transaction in History

50-Property portfolio sale indicates healthy self storage market with strong interest from multiple investor types

Houston, TX (07/11/2019)

10:00 AM

Newmark Knight Frank (NKF) has announced a 50-property self storage portfolio sale to SROA Capital Fund VII, L.P. (https://sroacapital.com/). Located in six states - Tennessee, Georgia, North Carolina, South Carolina, Michigan and Florida - the portfolio measures 3,150,819 square feet of total net rentable area, or 21,787 total units, which will be operated under the brand Storage Rentals of America. Based on the number of assets, the sale is the largest widely marketed, non-merger transaction completed to-date in the self storage market.

Vice Chairman Aaron Swerdlin and Executive Managing Director Kenneth Cox, who jointly lead NKF's Self Storage Group, represented the seller, a joint venture between an undisclosed institutional investment advisor and a publicly traded storage real estate investment trust (REIT). Additionally, NKF Vice Chairman Bert Sanders, Senior Managing Director Aaron Sommer and Managing Director Fred Liesveld acted locally on behalf of the seller. NKF Valuation & Advisory Executive Vice President and Self Storage Co-Leader Chris Sonne and team handled the appraisals for all 50 assets. The buyer of the portfolio was a joint venture between a state pension fund and an investment fund.

"The level of interest generated by the portfolio transaction was a strong indicator of the health of the self storage market, overall," noted Swerdlin. "Its successful sale gives the industry confidence that self storage remains one of the strongest product types, one in which institutional investors are still eagerly interested."

Known as national experts of the self storage space, Swerdlin and Cox are uniquely positioned with deep insight into the self storage industry. As co-leaders, Swerdlin and Cox steer the direction and development strategies of the self storage specialty practice group, nationally. NKF is the leader in large portfolio transactions in the self storage space with industry experts offering deep understanding of all components of the business, including insights into key players, capital sources, operational nuances and trends.

"During the offering process, the portfolio of seasoned, mature properties with a long, stable cash flow history generated a wide range of interest from varied buyer profiles, validating that the self storage industry is mainstream and in high demand. From pension funds to private equity, family office to public REITs and private capital, the offer list read like a who's-who of international and national investors," said Cox.

"The self storage sector continues to be well positioned to deliver exceedingly strong operating metrics," continued Cox. "The headline risk remains centered on new supply, but interest rates and stable revenue growth are driving any surprises to the downside."

NKF Research noted that same store operating performance for the publically traded self storage REITs remained resilient through the first quarter of 2019 with non-weighted average NOI growth just below 3.5%, and non-weighted same store revenue averaging 3.1%. In 2018 and first quarter 2019, same store NOI and revenue for the self storage sector have both recorded at least 300 basis points of sequential year-over-year quarterly growth. Excluding joint venture acquisitions and mergers, wholly owned acquisition activity for the first quarter of 2019 totaled 61 properties across the five REITs for an aggregate volume of just over $586 million.

About Newmark Knight Frank
Newmark Knight Frank ("NKF"), operated by Newmark Group, Inc. ("Newmark Group") (NASDAQ: NMRK), is one of the world's leading and most trusted commercial real estate advisory firms, offering a complete suite of services and products for both owners and occupiers. Together with London-based partner Knight Frank and independently-owned offices, NKF's 16,000 professionals operate from approximately 430 offices on six continents. NKF's investor/owner services and products include investment sales, agency leasing, property management, valuation and advisory, diligence, underwriting, government-sponsored enterprise lending, loan servicing, debt and structured finance and loan sales. Occupier services and products include tenant representation, real estate management technology systems, workplace and occupancy strategy, global corporate services consulting, project management, lease administration and facilities management. For further information, visit www.ngkf.com.

Discussion of Forward-Looking Statements about Newmark Group
Statements in this document regarding Newmark Group that are not historical facts are "forward-looking statements" that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. Except as required by law, Newmark Group undertakes no obligation to update any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Newmark Group's Securities and Exchange Commission filings, including, but not limited to, any updates to such risk factors contained in subsequent Forms 10-K, 10-Q, or Forms 8-K.

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