SmartStop REITs Complete Merger, Secure Multi-Currency Credit Facility
SmartStop Self Storage REIT Inc. and Strategic Storage Trust IV Inc., two affiliated non-traded real estate investment trusts, have closed the previously announced merger.
SmartStop Self Storage REIT Inc. and Strategic Storage Trust IV Inc., two affiliated non-traded real estate investment trusts, have closed the previously announced merger, an all-stock transaction valued at approximately $380 million.
SmartStop Self Storage REIT acquired all of the real estate owned by Strategic Storage Trust IV, consisting of 24 wholly-owned self-storage facilities located across nine states and six joint venture properties located in the Greater Toronto Area. Strategic Storage Trust IV approved the merger last week, as reported by The DI Wire.
The resulting consolidated portfolio consists of 136 wholly-owned properties and six joint venture properties with a combined gross book value of approximately $1.5 billion.
“This merger allows us to recognize expense efficiencies and reduce borrowing costs, among other benefits, which better positions the combined company to execute on future growth plans,” said H. Michael Schwartz, founder and executive chairman of SmartStop.
SmartStop Self Storage REIT also entered into a multi-currency credit facility of up to $500 million with a syndicate of banks led by KeyBank National Association, Wells Fargo N.A., Citibank N.A. and Bank of Montreal. The facility consists of a $250 million revolving credit facility and a $250 million term loan, and has an accordion feature permitting expansion of the credit facility up to $850 million.
SmartStop used the majority of net proceeds to pay off existing debt, which was held by the two REITs.
“The multi-currency nature of the facility allows us to execute our growth plans both in the U.S. and across the border in Canada,” said Schwartz. “The facility was 1.35x oversubscribed in the initial syndication, with sizeable commitments from eight of the largest financial institutions in the world, a testament to SmartStop as a company and our tremendous team, as well as the strength and value of our best-in-class self storage portfolio.”
The revolver has a three-year term with a maturity date of March 17, 2024 and a one-year extension option. The term loan has a five-year term with a maturity date of March 17, 2026. Borrowings under the credit facility may be in either U.S. dollars or Canadian dollars at SmartStop’s election.
Initial advances under the term loan bear interest at 195 basis points over 30-day LIBOR or 30-day CDOR, while initial advances under the revolver bear interest at 200 basis points over 30-day LIBOR or 30-day CDOR.
The credit facility is initially secured by a pledge of equity interests in certain of SmartStop’s property owning subsidiaries. SmartStop can elect to release the pledges upon the achievement of certain financial conditions, making the Credit Facility fully unsecured and resulting in a reduction in the applicable interest rate, among other changes.
SmartStop Self Storage REIT Inc., formerly known as Strategic Storage Trust II Inc., is a self-managed REIT that sponsors self-storage programs through its indirect subsidiary SmartStop REIT Advisors, LLC. SmartStop has approximately $1.7 billion of real estate assets under management. The REIT launched its initial public offering in January 2014 and raised $566 million in investor equity prior to closing in January 2017.
