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Strategic Storage Introduces New Offering

From the folks who brought you Strategic Storage Trust, Inc. comes a new offering in the self storage industry. Strategic Storage Trust II (SST II) was declared effective by the SEC on January 10, 2014. The newly organized Maryland corporation intends to qualify as a REIT for the taxable year ending December 31, 2014.

Like its predecessor, Strategic Storage Trust, Inc., SST II will invest in self-storage facilities and other storage-related real estate. Self storage facilities are properties that offer do-it-yourself, month-to-month storage space rental for personal or business use. The minimum offering size is $1.5 million and the maximum offering size is almost $1.1 billion. Its initial public offering will be open until January 10, 2016.

The sponsor of both offerings is Strategic Capital Holdings, LLC. H. Michael Schwartz has been president of the company since 2004 and is responsible for overseeing its growing portfolio. Storage facilities sponsored by Strategic Capital Holdings are branded as SmartStop Self Storage throughout the country.

Strategic Storage Trust terminated its initial public offering on September 16, 2011, shortly after this it commenced a “best efforts” public offering which ended September 22, 2013. As of November 2013, the California-based REIT owned 122 properties in 17 states and Canada, totaling approximately 77,000 storage units and 10.2 million rentable square feet of storage space. Strategic Storage Trust, Inc. was the fifth public self storage company in the United States and the first self storage REIT in the public non-traded REIT marketplace.

According to the Self Storage Association (SSA), the self storage industry generated an estimated $24 billion in annual U.S. revenues in 2013. The self storage industry is driven by life events such as marriage and change of residence. While the majority of tenancy is residential, more than 6% of units nationwide are rented to military personnel, which provide for a lengthy lease term. The student segment is also small but very stable and the percent of units occupied by commercial businesses has grown in recent years. SSA also tells us that on average, occupancy rates for self storage facilities as of Q3 2013 were 87.4% (percentage of units rented per facility).