National Storage Affiliates Trust (NSAT), a Maryland real estate investment trust (REIT) specializing in self-storage, has formed a joint venture (JV) with an affiliate of Heitman Capital Management LLC to acquire 112 Simply Self Storage (SSS) facilities from a private real estate fund managed by Toronto-based Brookfield Asset Management Inc. (BAM). The $1.325 billion deal will be partially paid for through the public offering of 5.9 million common shares of NSAT stock. Heitman has committed $482.3 million toward the acquisition in exchange for 75 percent interest in the SSS assets. NSAT will own 25 percent, according to a press release.

The deal comprises 8.7 million rentable square feet across 17 states and Puerto Rico. NSAT intends to rebrand the locations as iStorage and will manage the properties through that platform, the release stated. NSAT and Heitman acquired the iStorage portfolio under a separate JV agreement in 2016 for $630 million.

In addition to the public offering, NSAT expects to grant underwriter BMO Capital Markets Corp. a 30-day option for the purchase of another 885,000 common shares. Heitman will supply the balance of the equity capital required to complete the transaction. The JV has also signed a non-binding term sheet with two lenders to secure $643 million in 10-year debt financing if necessary, according to the release.

Once the deal closes, NSAT plans to purchase full ownership of the six SSS facilities in Puerto Rico and one property in Ohio for $64 million. It’ll use proceeds from the public offering for that element of the deal. It’ll also use a portion to repay all outstanding debt under its revolving credit line. It expects to make $160.8 million in capital contributions from a combination of revolving credit and public-offering proceeds for its 25 percent stake.

NSAT ranked No. 5 in owned square footage on the 2017 Inside Self-Storage Top-Operators List behind Public Storage Inc., Extra Space Storage Inc., Life Storage Inc. and CubeSmart. SSS ranked No. 7, behind U-Haul International Inc. Based on figures reported in the list and on the NSAT website, the acquisition will bring the NSAT portfolio to 663 facilities and 42.7 million square feet.

SSS was acquired in 2016 by Brookfield Asset Management Inc. (BAM), a global asset manager with large investments in commercial real estate, for $830 million. BAM currently has $285 billion in assets under management, according to its website. It owns and operates assets with a focus on infrastructure, private equity, property and renewable energy. The company offers a range of public and private investment products and services, and is co-listed on the New York, Toronto and Euronext stock exchanges.

Headquartered in Greenwood, Colo., NSAT is a self-administered and -managed REIT focused on the acquisition, operation and ownership of self-storage properties within the top 100 U.S. Metropolitan Statistical Areas throughout the United States. The company has ownership interest in 551 storage facilities in 29 states. Its portfolio comprises approximately 34 million net rentable square feet. It's owned by its affiliate operators, who are contributing their interests in their self-storage assets over the next few years as their current mortgage debt matures.

Founded in 1966, Heitman is a global real estate investment management firm with $39.9 billion in assets under management. It operates out of 11 offices globally.

Sources:
BusinessWire, National Storage Affiliates Trust Launches Public Offering of Common Shares to Fund Capital Contribution to Joint Venture Slated to Acquire a $1.325 Billion Portfolio from Simply Self Storage
GlobeSt.com, JV To Buy Brookfield Self-Storage Portfolio For $1.3B