SmartStop (Strategic Storage Trust) Scores Big in $1.4 Billion Merger

Extra Space Storage Inc. (NYSE: EXR), an owner and operator of more than 1,100 self-storage properties in 35 states, is acquiring SmartStop Self Storage Inc. for $13.75 per share in a deal valued at $1.4 billion.

SmartStop, formerly known as Strategic Storage Trust, is currently the seventh largest owner and operator of self-storage facilities in the United States, operating 169 self-storage properties in 21 states and Toronto, Canada.

SmartStop stockholders will receive $13.75 per share in cash which represents a total purchase price of $1.4 billion. Extra Space will pay $1.29 billion, and the remaining $120 million will come from the sale of certain assets by SmartStop at or prior to the closing.

“The $13.75 per share price represents a premium of approximately 27 percent over SmartStop’s most recently announced net asset value, and assuming the reinvestment of all prior dividends, results in an average annual return on investment in excess of 15.3 percent,” said H. Michael Schwartz, president and chief executive officer of SmartStop. “SmartStop’s board of directors, with the assistance of legal and financial advisors, thoroughly evaluated potential options to maximize value for our stockholders. We are confident this merger is in the best interests of all stockholders.”

Upon completion of the acquisition, Extra Space will own 121 SmartStop stores and will assume the property management of 43 third-party managed stores, all located in the United States.

The acquisition is subject to the approval of SmartStop’s stockholders and other customary closing conditions. Extra Space management expects the acquisition to close in the latter half of 2015.

Latham & Watkins; Holland & Hart; Sive, Paget & Riesel; and Jones Waldo Holbrook & McDonough acted as Extra Space Storage’s outside legal counsel in connection with this transaction.


SmartStop Acquires Sixth Property in the Phoenix Market

Sponsor of non-traded self-storage REITs SmartStop Self Storage recently announced that it has acquired Air Conditioned Self Storage in Tempe, Arizona for $4.4 million. 

The facility consists of about 350 units on two floors and 32,400 net rentable square feet. Units are climate controlled and offer drive-up access. 

“This facility is in a solid retail location — a growth market with excellent demographics,” said H. Michael Schwartz, SmartStop’s chairman and CEO. “We will continue to focus on major metros like the greater Phoenix market which offer tremendous long term value.”

At the time of purchase, the facility was 89% occupied. 

This acquisition adds to SmartStop’s presence in the Phoenix market, which now totals six facilities consisting of 2,800 self-storage units in aggregate. 

“The Tempe facility adds a high quality, in-fill, fully air-conditioned store to our growing Phoenix portfolio,” commented Wayne Johnson, SmartStop’s chief investment officer (CIO).

SmartStop sponsors Strategic Storage Trust II, a public non-traded REIT that invests in stabilized self storage facilities, and Strategic Storage Growth Trust, Inc., also a public non-traded REIT, but differs in that its focus is on growth opportunities in the sector. 


SmartStop Announces the Hiring of a New Controller

Strategic Storage Trust II, Inc. and Strategic Storage Growth Trust, Inc., two public, non-traded REITs sponsored by SmartStop Self Storage recently hired a controller.  The new hire, Matt Lopez, joins the self-storage REITs after 14 years with PricewaterhouseCoopers, LLP where he served as a senior manager. 

Lopez, a certified public accountant (CPA), earned a bachelor’s degree in economics from UCLA.  He has significant auditing and accounting experience serving Real Estate Funds and REITs in addition to other real estate related firms. 

“Matt comes to us with significant experience in REITs and real estate,” commented SmartStop’s president and CEO H. Michael Schwartz. “We’re excited to have him join our organization and take a leadership role in the accounting department as SmartStop continues to grow.”

“I’m excited about the opportunity to apply the knowledge I gained servicing top real estate companies at PricewaterhouseCoopers to SmartStop’s two dynamic and rapidly growing affiliated REITS,” added Lopez. 


Strategic Storage Trust II Acquires 354,200 Square Feet in the Carolinas

Strategic Storage Trust II, Inc. (SSTI II), a public non-traded REIT, recently acquired five self-storage properties through its first portfolio transaction. Consisting of properties located in North and South Carolina, the portfolio is comprised of 354,200 net square feet and has an 88.8% occupancy rate.

The 2,490 unit portfolio was purchased for approximately $22.1 million and will be re-branded under the name of self-storage company, SmartStop® Self Storage. In addition, the properties feature ground level drive-up and climate control units.

“These assets are an ideal fit for our first five acquisitions with SSTI II,” said H. Michael Schwartz, chairman and CEO of SSTI II. “The self storage sector’s strong performance in these markets continues to drive our decision to keep acquiring facilities in the Carolinas,” he added.

The North Carolina properties in the portfolio consist of 150 Airport Blvd., Mooresville, 120 Centrewest Ct., Cary, and 5012 New Bern Ave., Raleigh. Additionally, the South Carolina properties include 338 Jesse St., Myrtle Beach and 4639 Dick Pond Rd., Myrtle Beach.

The acquisition adds to SSTI II’s Myrtle Beach portfolio, which currently features another self-storage facility within 8 miles away.

“These acquisitions allow us to expand into the Raleigh and Myrtle Beach markets with well located, performing facilities and provides a solid management base to acquire additional locations,” said Wayne Johnson, senior vice president of acquisitions for SSTI II. “In addition, several properties have expansion opportunities, which would capitalize on the portfolio’s strong physical occupancy,” he added.


Strategic Storage Trust Acquires in Vegas

Following their recent acquisition on Russell Road, Strategic Storage Trust, Inc. (SSGT) has acquired a 1,040-unit facility located on 4349 South Jones Blvd for a purchase price of $6.1 million.

The private REIT’s latest acquisition is a four building facility consisting of self-storage buildings and one manager’s apartment, which will be re-branded under the name of self-storage company, SmartStop® Self Storage.

With 92,000 net rentable square feet and a 55% occupancy rate, the property consists of several amenities such as drive-up access at the ground level as well as climate control units.

The acquisition adds to SSTI’s Las Vegas portfolio, which currently features eight other self-storage facilities all within a 15 mile radius.

Wayne Johnson, SVP of acquisitions for SSGT, commented, “The Las Vegas facility is located in a strong traffic corridor between Flamingo Road and Tropicana Avenue in a market where SmartStop has a strong footprint,” He adds, “This acquisition adds another high quality, infill location to our growing Las Vegas portfolio. We look forward to significantly expanding occupancy through our SmartStop brand of management.”

Strategic Storage Trust, Inc. is a private REIT with 3,000 self storage units and 352,000 rentable square feet branded under the SmartStop® Self Storage name.


Strategic Storage Growth Acquires Two Facilities for $13.3 Million

Strategic Storage Growth Trust (SSGT), formerly known as Strategic Storage Opportunity Trust, recently announced that it has acquired two self-storage facilities. One is located in Las Vegas, Nevada while the other is located in Fort Pierce, Florida. Both facilities will be rebranded under the SmartStop Self Storage trade name.

“Our goal for Strategic Storage Growth Trust is to capitalize on the next wave of development and lease-up properties that will become available over the next five years,” Chairman and CEO of SSGT and Strategic Storage Trust, H. Michael Schwartz. He continued, “We acquired the Las Vegas and Fort Pierce facilities due to the properties’ low occupancies as compared to properties we currently own and manage in the same trade areas, which have higher occupancy levels.”

The Las Vegas property, located at 4866 East Russell Road, was purchased for approximately $9.45 million. The 14 building facility was built in 1999 and consists of 1,210 units as well as a retail office and manager’s apartment. Currently, the property is approximately 68% occupied.

The Fort Pierce property is located at 3252 North US Highway 1 and was constructed in 2008. The property has approximately 770 units and 88,400 net rentable square feet in a three-story building with a retail office. It was purchased for approximately $3.85 million and is 42% occupied.

All properties acquired by SSGT will be branded under SmartStop.

“These sites are perfect examples of the latest generation of self-storage buildings, especially the Fort Pierce site,” added Wayne Johnson, Senior Vice President of Acquisitions for SSGT. “This site represents a great opportunity to purchase bank-owned real estate that has been through a management transition over the past two years. By incorporating these sites into the SmartStop management and advertising platform, we expect to grow occupancy to stabilized levels.”

SSGT is an entity of Strategic Storage Trust, a company launched in 2008. Strategic Storage Trust has 126 self-storage facilities in 17 states and Canada. Its portfolio consists of approximately 80,000 units and 10.5 million rentable square feet of storage space, all branded under the SmartStop trade name.

On June 17, 2013, SSGT commenced a private offering of up to $109.5 million in shares of common stock. As of January 17, 2014, the company had sold approximately $0.9 million in shares pursuant to the private placement offering.

Presumably as a result of the slow capital raise, SSGT, on January 22, 2014, elected to register a public offering of up to $1.095 billion in shares and upon commencement, terminate the private offering.


Strategic Storage Trust Purchases Canadian Land

Non-traded self-storage REIT, Strategic Storage Trust, Inc. (SSTI), announced last week that it has acquired 2.5 acres of land in Toronto, Canada. The site, which was purchased for $3.8 million CAD in an all-cash deal, will be used for a ground-up self-storage development opportunity.

This is not SSTI’s first venture into Canada; the REIT already owns four self-storage properties in Ontario.

Located at 505 & 515 Centennial Road, SSTI’s latest project will feature six buildings that total approximately 870 units.

“We targeted this land in the district of Scarborough due to its prime access from the 401 Expressway and Kingston Road (Highway 2A),” commented H. Michael Schwartz, chairman and CEO of SSTI. “This new ground-up development underscores our long term commitment to self storage in the Greater Toronto Area.”

The completed property will be branded under the SmartStop® Self Storage trade name like SSTI’s other properties.

Since its launch in 2008, SSTI’s portfolio has grown to include 125 properties across the U.S. and Canada, totaling approximately 79,000 self-storage units.

The REIT has been closed to new investors since September 22, 2013.


Strategic Storage Trust Makes $4.9 Million Purchase

This week, Strategic Storage Trust, Inc. (SSTI) announced that it has acquired a 480-unit facility in Chandler, Arizona. The publicly registered, non-traded self-storage REIT paid approximately $4.9 million for the property, which contains about 51,000 square feet of net rentable space.

Formerly Armored Mini Storage, the facility will be rebranded under the SmartStop® Self Storage trade name. Six single-story storage buildings sit on the three-acre property along with a single-story retail office that features a manager’s apartment. The facility is currently 97% occupied and also features air-cooled self storage units.

The acquisition adds to SSTI’s Arizona portfolio, which features four other self-storage properties that total 2,445 units. H. Michael Schwartz, chairman and CEO of SSTI, commented, “This facility is in a solid retail location, and adds to SSTI’s cluster of properties in Arizona, a growth market with excellent demographics.”

SSTI was founded in 2008 and its portfolio includes 124 properties in 17 states and Canada that are branded as SmartStop® Self Storage and total approximately 78,000 self storage units. The trust closed to new investors on September 22, 2013.


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).