LADERA RANCH, CA—SmartStop Self Storage Inc. has entered into a definitive merger agreement under which it will be acquired by Extra Space Storage Inc. 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 boards of directors of both companies have approved the merger, which is subject to approval by the holders of a majority of SmartStop's common stock and other customary closing conditions. SmartStop's board of directors has recommended that its stockholders vote in favor of the merger.
“We believe this transaction delivers compelling value to our equity holders and that SmartStop's properties are an excellent addition to the Extra Space portfolio,” says H. Michael Schwartz, CEO, president and chairman of the board of directors. “We also believe that Extra Space recognizes the tremendous value of our properties, employees and customer base.”
Wayne Johnson, SmartStop's CIO, adds, “We are extremely proud of our high quality, national portfolio of properties, and the resulting value recognized by our stockholders.”
SmartStop, formerly known as Strategic Storage Trust Inc., was initially formed in 2007 as a public, non-traded real estate investment trust with the objective of providing regular income to its investors with the potential for growth through appreciation of its assets. SmartStop raised approximately $568 million of equity capital from investors, and during its approximately eight-year operating period, SmartStop consistently provided investors with cash distributions at an annual rate equal to 7% of investment (based on a $10 per share offering price). Upon consummation of the merger, SmartStop will have achieved its final objective, a successful liquidity event for its stockholders.
“The $13.75 per share price represents a premium of approximately 27% 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%, says Schwartz. “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.”
Certain assets of SmartStop will be sold prior to the closing of the merger, including one store in California, beneficial interests in two stores in Alabama and five stores in Toronto, Canada. The purchase price for these assets is included in the $13.75 per share price payable to stockholders.
At the closing of the merger, the parties will enter into property management agreements for the management of properties owned by Strategic Storage Trust II Inc. and Strategic Storage Growth Trust Inc. by Extra Space. SmartStop Asset Management LLC will be sold simultaneously with the closing of the merger to an entity controlled by Schwartz and will serve as the sponsor of SST II and SSGT following the merger.
The merger is expected to close during the latter half of 2015. Citigroup Global Markets Inc., KeyBanc Capital Markets Inc. and Robert A. Stanger & Co., Inc. served as financial advisors to SmartStop, and Baker, Donelson, Bearman, Caldwell & Berkowitz, PC and Nelson Mullins Riley & Scarborough LLP served as legal advisors to SmartStop. Robert A. Stanger & Co., Inc. also provided a fairness opinion to the board of directors of SmartStop in connection with the merger.
As GlobeSt.com reported in March, SmartStop Self Storage's two affiliated REITs (Strategic Storage Trust II, Inc. and Strategic Growth Trust, Inc.) recently acquired 27 of the 32 facilities in a portfolio transaction totaling approximately 18,000 units and 1.9 million net rentable square feet with an aggregate purchase price of approximately $145 million. That was one of its largest transactions to date. At the time, Johnson said that “The 32 facilities are located in prime retail locations within growth markets offering excellent demographics” … traits he said the company continues to pursue as it grows and expands.
GlobeSt.com will update this story as we learn more.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
