Business Context and Reporting Period
This Form 8-K filing by Strategic Storage Trust II, Inc. (a non-listed REIT) reports the Board of Directors' determination of an estimated net asset value (NAV) per share. The valuation is calculated as of March 31, 2019, and was approved on June 26, 2019. The filing serves to assist broker-dealers in meeting FINRA reporting obligations for customer account statements.
Key Financial Metrics
| Metric | March 31, 2019 | December 31, 2017 |
|---|---|---|
| Estimated NAV Per Share (Class A & T) | $10.66 | $10.65 |
| Total Assets | $1,426,567,007 | $1,016,579,152 |
| Real Estate Properties (Appraised) | $1,401,326,048 | $999,660,000 |
| Total Liabilities | $801,754,748 | $407,059,402 |
| Debt (Secured Notes Payable) | $775,218,482 | $397,507,764 |
| Cash and Restricted Cash | $19,886,772 | $11,868,412 |
| Net Asset Value (Total) | $624,812,259 | $609,519,750 |
Material Changes Versus Prior Period
- Asset Growth: Total assets increased by approximately $410 million, driven primarily by a $401.7 million increase in the appraised value of real estate properties.
- Debt Expansion: Total debt more than doubled, increasing from approximately $397.5 million to $775.2 million.
- NAV Stability: Despite significant growth in both assets and liabilities, the estimated NAV per share remained relatively stable, increasing only $0.01 from $10.65 to $10.66.
- Portfolio Appreciation: The appraised value of the real estate portfolio represents a 15.3% increase over the aggregate purchase price and capital improvements invested since inception.
Guidance, Outlook, and Valuation Methodology
The Board approved an Estimated Per Share NAV of $10.66 for both Class A and Class T common stock. This valuation was performed by independent third-party firm Robert A. Stanger & Co., Inc. ("Stanger") in accordance with IPA Valuation Guidelines.
- Valuation Method: Stanger utilized the income approach with direct capitalization analysis for 112 of 113 properties. The weighted average direct capitalization rate used was 5.16% (range 4.75% to 6.50%).
- Sensitivity Analysis: The filing notes that a 25 basis point increase in capitalization rates would lower the NAV to $9.63, while a 25 basis point decrease would raise it to $11.71.
- Advisor Promote: The valuation accounts for the Advisor's subordinated participation (promote) in net sale proceeds, estimated at $5.6 million.
- Limitations: The filing explicitly states the NAV is not audited, does not represent GAAP fair value, and does not reflect a liquidation value or market trading price. It also does not account for disposition costs on properties not held for sale.
- Future Reporting: The Registrant anticipates publishing a new estimated share value on an annual basis.
Investor Verification Checklist
- Verify the independence and qualifications of the third-party valuation firm, Robert A. Stanger & Co., Inc.
- Review the specific capitalization rates (4.75% - 6.50%) applied to individual properties to assess market alignment.
- Confirm the impact of the significant increase in debt ($775M) on the company's debt-service coverage ratios.
- Understand that the $10.66 NAV is an estimate for reporting purposes and does not guarantee a resale price or liquidation value.
- Note that the valuation excludes estimated disposition costs for properties not currently held for sale.