StorageVault Canada has signed a term sheet with Conundrum Capital Corp. and Canstore Self Storage LP, a fund managed by Conundrum, to create a PUPS (portable units portable storage) business in conjunction with Canstore’s self-storage facilities in Kanata and North Peterborough, Ontario.
Canstore will fund all infrastructure and capital expenditures related to the establishment of PUPS at the sites. StorageVault will purchase a 15 percent interest in the properties through a limited partnership with Canstore and retain a 15 percent carried equity interest in PUPS at both locations. StorageVault will also receive a franchise royalty of 3.5 percent of the PUPS gross revenue.
StorageVault will have an option to purchase the facilities on or before Dec. 31, 2013, and a right of first refusal to purchase the sites until Dec. 31, 2014. The term sheet outlines arrangements under which StorageVault will manage the properties together with four additional Canstore properties in Ontario in return for a management fee equal to 5 percent of gross revenue from each site.
The key terms outlined in the agreement are not comprehensive and are conditional on several factors.
StorageVault is also terminating an agreement with Conundrum at AMJ Self Storage in Kanata as previously announced in a press release dated May 28, 2009. The proof of concept attained the required benchmarks to be deemed a success, however, the companies were unable to negotiate a mutually beneficial financing and funding arrangement as originally contemplated.
StorageVault continues to manage the facility and the PUPS operations in Kanata on a month-to-month basis. In the event the parties are unable to finalize the above-mentioned agreements, StorageVault will reacquire the PUPS assets in Kanata under the terms and conditions as described in the original press release.
StorageVault owns and operates Canadian PUPS portable storage in Saskatoon, Trans Can Mini-Stor in Regina, and Kenaston Self Storage in Winnipeg. The company intends to grow through the acquisition of self-storage properties and the development of portable-storage facilities in Canada. Its common shares are listed on the TSX Venture Exchange.