Business Context and Reporting Period
This Form 8-K, filed on February 19, 2015, by Strategic Storage Trust II, Inc. (a Smartstop Self Storage REIT, Inc. affiliate), reports the completion of the fourth phase of a multi-phase acquisition of a 26-property self-storage portfolio. The filing details the closing of two specific facilities and the financing structure utilized.
Key Financial Metrics and Transaction Details
- Transaction Value: The fourth phase acquisition totaled approximately $10.8 million, plus closing costs and acquisition fees of approximately $189,000.
- Assets Acquired: Two self-storage facilities (Whittier, CA and Bloomingdale, IL) comprising 1,080 units and 116,800 net rentable square feet.
- Occupancy: Average physical occupancy was approximately 86% as of December 31, 2014.
- Financing Structure:
- Approximately $5.0 million funded via issuance of Series A Cumulative Redeemable Preferred Units (200,500 units).
- Approximately $5.9 million funded via a Eurodollar Loan draw under the KeyBank Facility at an interest rate of approximately 3.4%.
- Management Fees: One-time fee of $3,750 per property; ongoing fees equal to the greater of $3,000 per month or 6% of gross monthly revenues.
Material Changes and Portfolio Progress
The filing confirms the progression of the $128.2 million total portfolio acquisition initiated in August 2014. Prior to this filing, three phases had closed:
- First Phase (Jan 23, 2015): 7 facilities for ~$25.9 million.
- Second Phase (Jan 29, 2015): 5 facilities for ~$28.4 million.
- Third Phase (Feb 5, 2015): 7 facilities for ~$45.4 million.
- Fourth Phase (Feb 19, 2015): 2 facilities for ~$10.8 million.
The two properties acquired in this phase now serve as additional collateral under the KeyBank Credit Agreement.
Outlook, Risks, and Contingencies
- Future Closings: Management expects the remaining five properties of the 26-property portfolio to close during the first quarter of 2015.
- Funding Strategy: Future phases are expected to be funded through additional Preferred Unit issuances and KeyBank Facility draws.
- Financial Reporting: Audited or unaudited financial statements for the acquired real property are not currently available. The registrant intends to file these statements by May 7, 2015, via an amendment to this Form 8-K.
Investor Verification Checklist
- Verify the closing dates and final purchase prices for the remaining five properties expected to close in Q1 2015.
- Review the upcoming amendment (due May 7, 2015) for audited financial statements of the acquired properties to assess historical performance.
- Confirm the total outstanding balance and remaining capacity under the KeyBank Facility following the $5.9 million draw.
- Monitor the issuance of additional Series A Preferred Units and the associated dilution or dividend obligations.