Business Context and Reporting Period
This Form 8-K, filed on May 8, 2015, by Strategic Storage Trust II, Inc. (Registrant), reports the completion of the fifth phase of a multi-phase acquisition of a 26-property self-storage portfolio. The Registrant is a real estate investment trust focused on self-storage facilities.
Key Financial Metrics and Transaction Details
- Transaction Value: The fifth phase acquisition of three Michigan properties totaled approximately $11.9 million, plus closing costs and acquisition fees.
- Asset Details: The acquired portfolio includes approximately 1,720 units and 197,400 net rentable square feet with an average physical occupancy of 86% at closing.
- Financing Structure: The purchase was funded by approximately $3 million from a Preferred Equity Investment (issuance of 120,000 Series A Cumulative Redeemable Preferred Units) and a $6.5 million draw under the KeyBank Facility.
- Debt Terms: The KeyBank Facility draw is a Eurodollar Loan bearing interest at approximately 3.4%. The three new properties serve as additional collateral.
- Acquisition Fees: Approximately $200,000 in fees were incurred for this phase.
- Management Fees: The sponsor's affiliate will receive a one-time fee of $3,750 per property and ongoing management fees equal to the greater of $3,000 per month or 6% of gross monthly revenues.
Material Changes and Portfolio Progress
The filing details the sequential closure of the 26-property portfolio originally agreed upon in July 2014. Prior to this filing, four phases totaling 21 properties had been closed between January and February 2015. This fifth phase adds three properties in Michigan (Warren I, Warren II, and Troy). The Registrant expects the remaining two properties to close in the second quarter of 2015.
Outlook, Risks, and Contingencies
- Future Closings: Management expects to fund the remaining two properties using earnest money deposits and further draws under the KeyBank Facility.
- Financial Reporting: The filing explicitly states that audited or unaudited financial statements for the acquired real property are not currently available. The Registrant intends to file these statements by July 24, 2015, via an amendment to this Form 8-K.
- Collateralization: The new properties have been added as collateral to the existing KeyBank Credit Agreement.
Investor Verification Checklist
- Verify the July 24, 2015 amendment to this filing for the required financial statements of the acquired properties.
- Confirm the closing dates and purchase prices for the final two properties of the 26-property portfolio.
- Review the terms of the Series A Cumulative Redeemable Preferred Units issued to SSTI Preferred Investor, LLC.
- Monitor the utilization of the KeyBank Facility to ensure the remaining acquisition phases are funded as planned.