SmartStop, Strategic Storage Merge in $280M Deal
The combined portfolio comprises 150 properties across multiple states.
SmartStop Self Storage has merged with Strategic Storage Growth Trust II (SSTG II) in an all-stock transaction. SSGT II is planned to merge into a newly formed subsidiary of SmartStop. The combined portfolio comprises 150 operating properties, totaling approximately 11.5 million net rentable square feet and 100,500 units. The merger is expected to close during the first half of 2022. The transaction will help the owner potentially create greater value due to the benefits of a larger portfolio.
According to the merger agreement, SmartStop will acquire all the properties owned by SSGT II, comprising 10 wholly-owned operating self storage facilities located across seven state. In addition, the purchased an interest in an operating property owned by an unconsolidated joint venture with an unaffiliated third party and two properties in different development stages held by a joint venture with an unaffiliated third party. This whole portfolio represents approximately 8,500 self storage units and 900,000 rentable square feet. Additionally, the merger will own SSGT II’s interest in a parcel of land that is currently being developed into a self storage facility in an unconsolidated joint venture with a third party, and SSGT II’s rights to acquire another property in Southern California.
Merger stock details
SSGT II stakeholders are expected to receive 0.9118 shares of SmartStop common stock for every share of SSGT II common stock. This ratio represents an increase of 37 percent above SSGT II’s most recent offering price. The assets’ value is estimated at $280 million, based on September 2021 share counts. Existing SmartStop stockholders will own approximately 79 percent of the combined company, while SSGT II stockholders will own approximately 11 percent. Management will also own approximately 10 percent, based on the companies’ shares and operating partnership unit counts.
The agreement provides SSGT II 30 days during which the company can solicit alternative acquisition proposals from third parties. SSGT II will temporarily suspend its distribution reinvestment plan and will pay all future distributions in cash, starting February. No change has been made to the amount or frequency of these distributions. Robert A. Stanger & Co. is SmartStop’s financial advisor, while Venable LLP is the company’s special committee legal counsel. Nelson Mullins Riley & Scarborough LLP is SmartStop’s legal counsel. KeyBanc Capital Markets Inc. is SSGT II’s financial advisor, while Berry & Sims PLC and Shapiro Sher Guinot & Sandler are SSGT II’s board of directors’ legal counsel.
Last October, SmartStop acquired its seventh storage facility in the Denver metro. The 1998-built asset spans 87,000 square feet across 10 single-story buildings in Lakewood, Colo.