Behind the Deal: Inland’s Majority Stake in Devon Self-Storage

Since 2016, The Inland Real Estate Group of Companies, Inc., (“Inland”) has been an active player in the self-storage sector, amassing a $1.7-billion portfolio of both stabilized assets and development projects across 30 states. The Oak Brook, IL-based company doubled down on its commitment to self-storage at the start of 2024, acquiring a majority interest in the business of Devon Self Storage Holdings (US) LLC, (“Devon”) one of the largest privately owned national self-storage operators.

The acquisition added scale to Inland’s self-storage platform. Currently, Devon manages 202 properties and approximately 109,000 units nationally. Launched in 1988 by Ken Nitzberg, Devon has established itself as a leader and pioneer in the self-storage industry, having owned, managed or developed over its history more than 350 self-storage facilities in 27 states and three European countries.

At the same time, the acquisition will allow Inland to leverage Devon’s existing senior management team, which has been in place for more than two decades. From Devon’s standpoint, the deal means the additional capital and infrastructure necessary to further drive the going-forward platform’s innovation and expansion plans, including growth of Devon’s third-party management and development platform.

“Acquiring a vertically integrated self-storage platform aligns perfectly with Inland’s long-term strategic plans,” Tony Chereso, CEO and president of The Inland Real Estate Group LLC, said when the deal was announced in early January. “Ken and his team have built a powerful brand and platform that will not only integrate well within Inland, but also provide tremendous growth opportunities across our many investment and commercial real estate operating companies.”

It was also a natural evolution of the relationship between Inland and Devon, pointed out G. Joseph Cosenza, vice chairman of the Inland Real Estate Group, LLC and president of Inland Real Estate Acquisitions, LLC. “They had managed maybe a third of what we purchased” in self-storage, Cosenza told Connect CRE.

Devon was one of a handful of companies that Inland utilized to manage its self-storage acquisitions, said Cosenza. “They all had their own unique styles,” he said. “And you learn all those styles” of management.

Relying on outside management firms was necessary from Inland’s standpoint. Cosenza acknowledged that although he was skeptical at first about the long-term viability of self-storage, his acquisition team convinced him, and the company began pursuing the sector in earnest. “When we learn something and we want something, we go after it,” he said. “And we don’t stop until we can get the price we want, and we can get the product we want, etc., but on top of that, we didn’t know exactly how to manage it yet.”

It was Inland’s late founder, Daniel Goodwin, who broached the idea of bringing the Devon platform in-house, about a year ago. “He said, ‘Why are we having somebody else manage our product? They might be good, but they don’t have the heart and soul and the money that we have into it, and the liability that we have into it, and the heart and soul of our investors into it,’” said Cosenza.

Chereso and Matthew Tice, SVP of acquisitions for Inland Real Estate Acquisitions, LLC and co-CEO and President of Devon negotiated “a very good deal for Inland and for the sellers of Devon,” Cosenza said. “We have an opportunity to reduce the cost to the investors and we have a great management team on those properties. It is a perfect deal for everybody involved.”

At Inland Private Capital Corporation, president and CEO Keith Lampi commented, “Devon has been an integral strategic partner as Inland has expanded our presence in the self-storage sector. As the sector continues to institutionalize, creating operational efficiencies for the benefit of our investors through scale has never been more important. I am looking forward to the synergies created by this transaction.”

Please see Inland Private Capital Blazes a Trail in Tax-Oriented CRE Investing, Inland Sees Brighter Days Ahead for CRE, Inland Execs Discuss Self-Storage, Student Housing, Senior Living and Inland’s Kristin Orlando Counsels on Tax Compliance for additional in-depth coverage of Inland Private Capital Corporation.