Business Context and Reporting Period
Company: Strategic Storage Trust II, Inc. (Note: Request metadata referenced "Smartstop Self Storage REIT, Inc.", but the filing text identifies the registrant as Strategic Storage Trust II, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: August 14, 2014
Event: Entry into Material Definitive Agreements for the acquisition of two self-storage property portfolios.
Key Financial Metrics and Transaction Details
This filing reports on two distinct acquisition agreements. No historical revenue, profit, or cash flow data is provided in this specific 8-K filing.
26 Property Portfolio
- Total Purchase Price: Approximately $128.2 million (plus closing costs and fees).
- Asset Count: 26 self-storage facilities.
- Geographic Distribution: 14 in California, 4 in Michigan, 3 in Colorado, 2 in Illinois, and 1 each in New Jersey, Washington, and Maryland.
- Total Net Square Footage: Approximately 1,506,700 sq. ft.
- Total Units: Approximately 14,490 units.
- Financing Plan: Net proceeds from public offering, credit facility, or other debt financing.
- Expected Closing: Third or fourth quarter of 2014 (in several tranches).
Raleigh/Myrtle Beach Portfolio
- Total Purchase Price: Approximately $22.1 million (plus closing costs and fees).
- Asset Count: 5 self-storage facilities (3 in Raleigh, NC; 2 in Myrtle Beach, SC).
- Total Net Square Footage: Approximately 317,140 sq. ft.
- Total Units: Approximately 2,350 units.
- Existing Debt Assumption: Approximately $12.8 million loan encumbering the properties.
- Financing Plan: Net proceeds from public offering, assumption of existing loan, and other financing sources.
- Expected Closing: Third or fourth quarter of 2014.
Material Changes and Conditions
The filing does not report material changes to prior financial periods as it is a current report regarding new agreements. However, the consummation of these acquisitions is subject to significant conditions:
- Financing Contingency: Ability to raise sufficient net proceeds from the public offering and secure debt financing.
- Due Diligence: Satisfactory completion of due diligence on properties and sellers.
- Approvals: Approval by seller investors (26 Property Portfolio) and current lender approval for loan assumption (Raleigh/Myrtle Beach Portfolio).
- Adverse Changes: No material adverse changes regarding properties, sellers, or economic conditions.
Outlook, Risks, and Contingencies
Management Commentary: The Registrant explicitly states there can be no assurance that either acquisition will be completed. The closing is not considered probable due to the considerable conditions attached to the agreements.
Risks and Contingencies:
- Forfeiture Risk (26 Property Portfolio): If the acquisition fails, the Registrant may forfeit up to approximately $4.4 million in earnest money, in addition to incurred acquisition costs.
- Forfeiture Risk (Raleigh/Myrtle Beach Portfolio): If the acquisition fails, the Registrant may forfeit up to $0.2 million in earnest money.
- Substitution Risk: Other properties may be identified and acquired prior to or instead of these specific portfolios.
Investor Verification Checklist
- Verify the status of the Registrant's public offering to confirm if sufficient net proceeds are available to fund the $150.3 million total acquisition cost.
- Confirm whether the lender for the Raleigh/Myrtle Beach Portfolio has approved the assumption of the $12.8 million existing loan.
- Monitor for updates on the due diligence process, as failure here could trigger the forfeiture of up to $4.6 million in total earnest money.
- Review the full text of the attached Purchase Agreements (Exhibits 10.1 and 10.3) for specific closing conditions and termination rights.