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SmartStop Self Storage REIT Merges With Strategic Storage Trust IV in $370M Deal

Update 3/19/21 – The merger between SSSR and SST IV has closed. The consolidated portfolio consists of approximately 22,500 storage units and six joint-venture properties.

Robert A. Stanger & Co. Inc. served as the financial advisor. Venable LLP presented legal counsel to the SmartStop special committee, with Nelson Mullins Riley & Scarborough LLP serving in this role to SmartStop. KeyBanc Capital Markets Inc. was the financial advisor and Bass, Berry & Sims PLC served as legal counsel to the SST IV special committee.

“We are thrilled to announce the closing of this transformational deal for both SmartStop and SST IV shareholders,” Schwartz said. “This merger allows us to recognize expense efficiencies and reduce borrowing costs, among other benefits, which better positions the combined company to execute on future growth plans.”

The merged companies have already recognized potential cost savings, as it simultaneously closed a $500 million credit facility, which was primarily used to refinance existing debt at a more attractive rate, Schwartz said. “With the power of the SmartStop Self Storage platform and the tremendous team behind it, we believe the combined company will generate strong future risk-adjusted returns for our shareholders.”


11/13/20 – SmartStop Self Storage REIT Inc. (SSSR), a self-managed real estate investment trust, has agreed to merge with Strategic Storage Trust IV Inc. (SST IV), a public non-traded REIT it sponsors through its indirect subsidiary SmartStop REIT Advisors LLC. Under the agreement, SSSR will acquire SST IV in a $370 million, all-stock transaction. SST IV will then merge into a new SmartStop subsidiary with a portfolio comprising 136 wholly-owned self-storage facilities worth about $1.5 billion, according to a press release. The merger is expected to close during the first half of 2021.

As part of the agreement, SSSR will acquire all of the real estate owned by SST IV. The portfolio includes 24 wholly-owned facilities across nine states and five joint-venture properties in Greater Toronto that are in various stages of development. Combined, the properties comprise 2.6 million net rentable square feet, the release stated.

“We are excited to announce this transaction and look forward to combining the high-quality assets in the SST IV portfolio with SmartStop’s existing portfolio and operational platform,” said Michael S. McClure, CEO of SSSR. “With this merger, the combined company will be better positioned to recognize expense efficiencies, reduce borrowing costs, and aggregate size and scale for the future. Since all of the SST IV portfolio is already branded as SmartStop Self Storage, there will be total continuity of operations throughout the process.”

SST IV stockholders will receive 2.1875 shares of SSSR common stock for each share of SST IV common stock they own. Once the deal closes, SSSR stockholders will own approximately 64 percent of the combined company, while SST IV shareholders will own about 25 percent. Company management will own the remaining 11 percent, according to the release.

“Combining with SmartStop provides a unique opportunity for SST IV to build on its existing portfolio of high-quality assets, diversifying into a larger portfolio of 136 properties and consolidating with the SmartStop Self Storage brand,” said H. Michael Schwartz, chair and CEO of SST IV. “The economies of scale and financing options that will be available will help drive overall returns, and we believe that being a part of SmartStop should compress SST IV stockholders’ timeline for liquidity.”

SmartStop and SST IV each formed independent special committees from their boards of directors to negotiate and review the merger. Both unanimously approved the deal, which remains subject to customary closing conditions and the approval of SST IV stockholders. If SST IV were to abandon the agreement, certain conditions would require it to pay SmartStop a termination fee of about $7.2 million.

In addition to SST IV, SSSR sponsors other private programs through SmartStop REIT Advisors. It has about $1.7 billion of real estate assets under management, including an owned and managed self-storage portfolio of 148 properties in 19 states and Toronto. The portfolio comprises approximately 11.2 million net rentable square feet.

Sources:
PR Newswire, SmartStop Self Storage REIT Inc. to Acquire Strategic Storage Trust IV Inc. in $370 Million All-Stock Transaction
PR Newswire, SmartStop Self Storage REIT, Inc. Closes Acquisition of Strategic Storage Trust IV, Inc. in $380 Million All-Stock Transaction

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