Strategic Storage Trust II agreed to acquire its affiliated but smaller Strategic Storage Growth Trust for $340 million, extending the trend of consolidation within the self-storage sector as property values soar.
SmartStop Asset Management of Ladera Ranch, California, sponsors and manages both non-traded real estate investment trusts.
It was just three years ago this month that H. Michael Schwartz, chairman of the three entities acquired and combined, SmartStop Self Storage and Extra Space Storage Inc. in a $1.4 billion merger.
"The SSGT portfolio will infuse SST II with a key growth driver, along with adding assets in key SST II markets for further economies of scale," Schwartz said in a statement announcing the deal.
Strategic Storage Trust II will acquire all the real estate owned by Strategic Storage Growth Trust, consisting of 28 self-storage facilities located in 10 states and in the Greater Toronto Area of Ontario, Canada, and comprising an aggregate of about 19,300 self-storage units and approximately 2.1 million net rentable square feet of storage space.
Strategic Storage is paying about $17,615 per self-storage unit.
Strategic Storage Trust II will obtain the rights to acquire two self-storage facilities currently under contract with its sister REIT.
Strategic Storage Trust II currently owns 83 self-storage facilities in 14 states and Ontario, Canada, made up of about 51,300 self-storage units and approximately 6.0 million net rentable square feet of storage space.
The merger is expected to close during the first quarter of 2019, subject to customary closing conditions, including the approval of Strategic Storage Growth Trust's stockholders,
Strategic Storage Growth Trust originally announced it was exploring strategic alternatives this past August in an effort to maximize shareholder value.
The month before that, the self-storage industry saw Heitman Capital Management team up with National Storage Affiliates Trust to agree to acquire Brookfield Asset Management's controlling stake in Simply Self Storage for $1.325 billion.
That deal highlights a serious run up in value of self-storage facilities.
That portfolio contains 112 self-storage properties totaling 8.7 million rentable square feet in over 68,000 storage units across 17 states and Puerto Rico. The Heitman group is paying about $19,460 per self-storage unit.
Brookfield paid about half that two years earlier in acquiring a majority stake in Orlando-based Simply Self Storage through its Brookfield Strategic Real Estate Partners II fund. At that time, the portfolio consisted of 90 self-storage properties with an estimated 67,000 storage units. Brookfield paid just about $9,400 per unit.