Strategic Storage Growth Trust Inc. (SSGT) and Strategic Storage Trust II Inc. (SST II), both public, non-traded, self-storage real estate investment trusts (REIT) sponsored by SmartStop Asset Management LLC, have agreed to merge. Under the agreement SST II will acquire SSGT for $340 million, with SSGT stockholders receiving $12 per share in cash. The transaction, which is expected to close during the first quarter of 2019, was negotiated on behalf of SSGT by an independent special committee of its board of directors created to review “potential strategic alternatives,” according to a press release.
All boards of directors involved in the deal have approved the merger, though the transaction must still be approved by SSGT shareholders. It’s also subject to customary closing conditions.
“This merger will provide our stockholders full-cycle liquidity in an all-cash transaction at $12 per share, a price above the most recently announced net asset value,” said H. Michael Schwartz, CEO. “We are proud of the high-quality portfolio of properties we have built and the value it will bring to our stockholders upon the closing of the merger.”
SSGT stockholders will vote on the transaction at a special meeting that’s yet to be scheduled. Under terms of the agreement, SST II would be required to pay SSGT a termination fee of $9.6 million if SST II fails to close the deal.
The deal includes a provision that allows SSGT to “actively solicit alternative proposals from third parties for the next 45 days,” concluding on Nov. 1. SSGT would owe SST II $2.9 million if it terminates the transaction during its “go shop” period. It would have to pay $9.6 million if it opts out of the deal after the 45-day window closes.
The SSGT portfolio includes 27 self-storage facilities in Canada and the United States comprising approximately 2 million net rentable square feet in 18,400 units. The SST II portfolio includes 83 self-storage facilities in Canada and the United States. It comprises approximately 51,300 self-storage units and about 6 million rentable square feet of storage space. Both companies are sponsored by SmartStop, a diversified real estate company with a managed portfolio of 118 self-storage facilities in Canada and the United States. Its managed properties comprise approximately 8.6 million rentable square feet.