Strategic Storage Trust IV Enters Four JV Projects with SmartCentres REIT in Greater Toronto
July 16, 2020
Pursuant to a joint venture arrangement with SmartCentres Real Estate Investment Trust (“SmartCentres REIT”), subsidiaries of Strategic Storage Trust IV, Inc. (the “Company”) have entered into four joint venture projects with subsidiaries of SmartCentres REIT to develop and operate self storage facilities on tracts of land located in the cities of Oshawa, Leaside, Bramport, and Vaughan, each in the Greater Toronto Area of Canada (collectively, the “JV Properties”). Each tract of land is owned by a limited partnership in which each of the Company and SmartCentres REIT, through their respective subsidiaries, hold a 50% limited partnership interest (the “JV Partnerships”).
On July 9, 2020, the Company and SmartCentres REIT, through the JV Partnerships, entered into a master mortgage commitment agreement (the “MMCA”) with SmartCentres Storage Finance LP (the “SmartCentres Lender”) (collectively, the “SmartCentres Financing”). The SmartCentres Lender is an affiliate of SmartCentres REIT.
The initial maximum amount available is $60 million CAD, however, the SmartCentres Financing includes an accordion feature such that borrowings pursuant thereto may be increased to $120 million CAD subject to certain conditions set forth in the MMCA. The proceeds of the SmartCentres Financing will be used to finance the development and construction of self storage facilities on the JV Properties.
The SmartCentres Financing is secured by first mortgages on each of the JV Properties. Interest on the SmartCentres Financing is a variable annual rate equal to the aggregate of: (i) the BA Equivalent Rate, plus: (ii) a margin based on the External Credit Rating, plus (iii) a margin under the Senior Credit Facility, each as defined and described further in the MMCA. The total initial interest rate was approximately 3.0% at the execution of the SmartCentres Financing.
The SmartCentres Financing matures on May 11, 2021, and may be extended annually as set forth in the MMCA. Monthly interest payments are initially capitalized on the outstanding principal balance. Upon a JV Property generating sufficient Net Cash Flow (as defined in the MMCA), the SmartCentres Financing provides for the commencement of quarterly payments of interest. The borrowings advanced pursuant to the SmartCentres Financing may be prepaid without penalty, subject to certain conditions set forth in the MMCA.
Source: SEC
