Business Context and Reporting Period
This Form 8-K was filed by SmartStop Self Storage REIT, Inc. on September 21, 2020. The report details a capital transaction involving SSSR Preferred Investor, LLC, an indirect subsidiary of the Company, and Strategic Storage Growth Trust II, Inc. (SSGT II).
Key Financial Metrics and Transaction Details
- Investment Agreement: The Company's subsidiary agreed to purchase up to 1.6 million Preferred Units in SSGT II OP for an aggregate of up to $40 million.
- Initial Closing: As of September 21, 2020, an initial tranche of approximately $6.5 million was closed.
- Unit Economics: Each Preferred Unit carries a liquidation preference of $25.00 plus accumulated unpaid distributions.
- Investment Fee: The Company is due a 1% fee on the investment amount of each tranche upon closing.
- Use of Proceeds: Funds are designated for self-storage acquisition, development, improvements, working capital, or general partnership purposes.
Material Changes and Distribution Structure
The filing outlines a tiered distribution schedule for the Preferred Units based on the holding period:
- 0 to 180 days: 7.25% per annum.
- 181 to 360 days: 8.25% per annum.
- After 360 days: 9.25% per annum.
Distributions are payable monthly in arrears. The filing does not provide comparative financial metrics (revenue, profit, cash flow) for the Company as a whole, as this report focuses solely on the specific investment event.
Outlook, Risks, and Management Commentary
Management commentary is limited to the terms of the Series A Cumulative Redeemable Preferred Unit Purchase Agreement. The transaction is structured to provide the Company with investment income through fees and distributions while supporting the growth activities of SSGT II. No specific risks, contingencies, or forward-looking guidance regarding the Company's overall operations are disclosed in this specific filing.
Key Facts for Investor Verification
- Verify the total capital commitment of up to $40 million and the remaining unfunded portion after the initial $6.5 million tranche.
- Confirm the relationship and governance structure between SmartStop Self Storage REIT, Inc. and Strategic Storage Growth Trust II, Inc.
- Monitor the timing of future tranches to assess the realization of the 1% investment fees and the accrual of tiered distributions.
- Review subsequent filings for updates on the deployment of the $40 million into self-storage assets.