SmartStop Self Storage REIT, Inc., a self-managed and fully-integrated self storage company, and Strategic Storage Growth Trust II, Inc., a private REIT sponsored by an indirect subsidiary of SmartStop, announced today that the companies have entered into a definitive agreement to merge in an all-stock transaction, in which SSGT II will merge into a newly-formed subsidiary of SmartStop. The combined company will have a combined portfolio of 150 wholly-owned operating properties, representing approximately 11.5 million net rentable square feet and 100,500 units. This transaction will allow the combined company to, among other things, achieve further economies of scale and potentially create greater value as it takes advantage of the benefits of a larger aggregate portfolio.
We are excited to announce this transaction and look forward to combining the high-quality assets in the SSGT II portfolio with SmartStop’s existing portfolio”
Per the merger agreement, SmartStop will acquire all of the real estate owned by SSGT II, consisting of 10 wholly-owned operating self storage facilities located across seven states, an interest in one operating property held through an unconsolidated joint venture with an unaffiliated third party and two properties in various stages of development that are held through an unconsolidated joint venture with an unaffiliated third party. The total SSGT II operating portfolio, including the operating joint venture property, currently represents approximately 8,500 self storage units and 900,000 net rentable square feet. Additionally, the company will obtain SSGT II’s interest in one parcel of land being developed into a self storage facility in an unconsolidated joint venture with an unaffiliated third party, as well as SSGT II’s rights to acquire a property located in Southern California.
“We are excited to announce this transaction and look forward to combining the high-quality assets in the SSGT II portfolio with SmartStop’s existing portfolio,” said H. Michael Schwartz, Chairman and Chief Executive Officer of SmartStop. “With this merger, the combined company will be better positioned to recognize expense efficiencies and aggregate size and scale for the future. Since all of the SSGT II portfolio is already branded as SmartStop® Self Storage, there will be total continuity of operations throughout the process.”
Under the terms of the agreement, SSGT II stockholders will receive 0.9118 shares of SmartStop common stock for each share of SSGT II common stock they own. This exchange ratio represents an increase of 37 percent above SSGT II’s most recent offering price, when using SmartStop’s most recent estimated NAV of $15.08 per share. The transaction values SSGT II’s real estate assets at approximately $280 million, based on September 30, 2021 share counts and debt principal balances outstanding, and using the agreed exchange ratio and SmartStop’s estimated NAV per share of $15.08. Upon completion of the transaction, existing SmartStop stockholders will own approximately 79% of the combined company, SSGT II stockholders will own approximately 11%, and management will own approximately 10%, based on SmartStop and SSGT II’s share and operating partnership unit counts as of September 30, 2021.
The merger is expected to close during the first half of 2022. The merger agreement provides SSGT II a 30-day go shop period, during which SSGT II (through the board of directors of SSGT II and its representatives and advisors) may solicit alternative acquisition proposals from third parties as described in the merger agreement. Additional information regarding the merger and the merger agreement can be found in the Form 8-K filed by SmartStop with the Securities and Exchange Commission on February 24, 2022.
Suspension of Distribution Reinvestment Plan
In connection with the signing of the merger agreement, SSGT II temporarily suspended its distribution reinvestment plan (“DRP”), and will proceed paying all future distributions in cash, beginning with February’s declared distribution. There has been no change to the amount or frequency of SSGT II distributions.
Advisors
Robert A. Stanger & Company, Inc. serves as financial advisor and Venable LLP serves as legal counsel to the SmartStop special committee, while Nelson Mullins Riley & Scarborough LLP serves as legal counsel to SmartStop. KeyBanc Capital Markets Inc. serves as financial advisor and Bass, Berry & Sims PLC and Shapiro Sher Guinot & Sandler, P.A. serve as legal counsel to the SSGT II board of directors.
About SmartStop Self Storage REIT, Inc. (SmartStop)
SmartStop is a self-managed REIT with a fully integrated operations team of approximately 420 self storage professionals focused on growing the SmartStop® Self Storage brand. SmartStop, through its indirect subsidiary SmartStop REIT Advisors, LLC, also sponsors other self storage programs. As of February 23, 2022, SmartStop is one of the largest self storage companies in North America, with an owned and managed portfolio of 163 properties in 19 states and Ontario, Canada and comprising approximately 111,000 units and 12.6 million rentable square feet. SmartStop and its affiliates own or manage 19 operating self storage properties in the Greater Toronto Area, which total approximately 16,200 units and 1.7 million rentable square feet. Additional information regarding SmartStop is available at www.smartstopselfstorage.com.
About Strategic Storage Growth Trust II, Inc.
SSGT II focuses on opportunistic self storage properties. SSGT II wholly owns 10 self storage facilities comprising approximately 7,700 self storage units and 850,000 net rentable square feet of storage space, as well as one operating property in a joint venture in the Greater Toronto Area with SmartCentres REIT, one of the largest real estate investment trusts in Canada.
