SmartStop Self Storage REIT Inc., a publicly registered non-traded real estate investment trust, and Strategic Storage Growth Trust II Inc., an affiliated private REIT, have agreed to merge in a $280 million all-stock transaction.
Storage Growth Trust II will merge into a newly formed subsidiary of SmartStop Self Storage REIT, and the combined portfolio will include 150 operating self-storage properties, representing approximately 11.5 million rentable square feet and 100,500 units.
SmartStop Self Storage REIT plans to acquire all of Storage Growth Trust II’s real estate, including 10 operating self-storage facilities located in seven states, an interest in one operating joint venture property, and two joint venture properties in various stages of development. The operating portfolio represents approximately 8,500 self-storage units and 900,000 rentable square feet.
“We are excited to announce this transaction and look forward to combining the high-quality assets in the [Storage Growth Trust II] portfolio with SmartStop’s existing portfolio.” said H. Michael Schwartz, chairman and chief executive officer. “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 [Storage Growth Trust II] portfolio is already branded as SmartStop Self Storage, there will be total continuity of operations throughout the process.”
Storage Growth Trust II shareholders will receive 0.9118 shares of SmartStop common stock for each share of common stock they own. This exchange ratio represents an increase of 37 percent above Storage Growth Trust II’s most recent offering price, when using SmartStop’s most recent estimated net asset value of $15.08 per share.
The transaction values Storage Growth Trust 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.
Upon completion of the transaction, existing SmartStop stockholders will own approximately 79 percent of the combined company, Storage Growth Trust II stockholders will own approximately 11 percent, and management will own approximately 10 percent.
The merger is expected to close during the first half of 2022.
In connection with the proposed merger, Storage Growth Trust II temporarily suspended its distribution reinvestment plan and will pay all future distributions in cash, beginning with February’s declared distribution. There has been no change to the amount or frequency of the distributions, the company said.
Strategic Storage Growth Trust II launched its Regulation D private placement offering at the end of 2018 and sought to raise $270 million in investor equity.