SmartStop Acquires 6.3% Stake in Jernigan Capital for $27M
April 29, 2020
SmartStop Self Storage REIT Inc. and its affiliates acquired a 6.3% stake in Jernigan Capital amounting to 1,466,214 common shares for a total of about $27.0 million, according to a Schedule 13D filing.
The transaction was funded from the company’s cash flow from operations and proceeds from its private offering.
SmartStop saw the shares to be undervalued at the price at which they were purchased, and an attractive investment opportunity based on Jernigan’s real estate investments and financial position.
Due to the coronavirus pandemic and the prevailing market volatility, SmartStop said it may take steps to protect its investment, including pursuing discussions with Jernigan’s management, its board directors, other significant stockholders and others regarding the business, strategy and future plans, as well as alternatives that could maximize shareholder value. These alternatives could include extraordinary corporate transactions, such as a merger, reorganization or liquidation.
According to Jernigan Capital’s annual report:
“We are a commercial real estate company that invests primarily in new or recently-constructed and opened self-storage facilities located predominately in dense urban submarkets within the top 50 United States metropolitan statistical areas (“MSAs”). Facilities in which we invest are largely vertical (three to ten floors), 100% climate controlled and technologically adapted buildings, which we call Generation V facilities.”
“As of December 31, 2019, our self-storage investment portfolio consisted of 15 wholly-owned self-storage facilities (one of which was placed into service on February 10, 2020), 50 on-balance sheet development property investments with a Profits Interest (33 of which are secured by facilities in lease-up and 17 of which are secured by facilities under construction), six development property investments with a profits interest in our SL1 Venture (all of which are secured by facilities in lease-up), and five self-storage facilities wholly-owned by the SL1.”
Source: S&P Global Market Intelligence, SEC
