8-K: SmartStop Self Storage REIT Announces Updated Net Asset Value Per Share of $15.25

SmartStop Self Storage REIT has declared an updated estimated net asset value per share of $15.25 for its Class A and Class T shares, as of September 30, 2023.

Summary

• SmartStop Self Storage REIT announced an updated estimated net asset value (NAV) per share of $15.25 for both Class A and Class T shares, effective as of September 30, 2023.
• This valuation was determined by the board of directors, based on the estimated value of the company's assets less its liabilities, divided by the number of shares outstanding on a fully diluted basis.
• The NAV was calculated with the assistance of an independent third-party valuation firm, Robert A. Stanger & Co., Inc. (Stanger).
• Stanger appraised 156 wholly-owned properties and eight properties held in unconsolidated joint ventures.
• The mid-point appraised value of the wholly-owned properties was approximately $2.7 billion, a 35.5% increase over the aggregate purchase price and improvements.
• The valuation process followed the Institute for Portfolio Alternatives (IPA) guidelines for publicly registered non-listed REITs.
• The previous estimated NAV per share was $15.21 as of September 30, 2022.
• The updated NAV will be used for the company's Distribution Reinvestment Plan (DRP) and Share Redemption Program (SRP).
• The DRP share price is set at $15.25, effective for distributions paid in February 2024.
• The SRP redemption price is also set at $15.25, effective for requests submitted in the fourth quarter of 2023 and redeemed at the end of January 2024.

Sentiment

Score: 7

Explanation: The document conveys a positive sentiment due to the increase in NAV per share and the growth in the value of the real estate portfolio. However, the document also includes cautionary language about the limitations of the valuation and potential risks, which tempers the overall sentiment.

Positives

• The estimated NAV per share increased from $15.21 to $15.25.
• The real estate portfolio has increased in value by 35.5% over the aggregate purchase price and improvements.
• The valuation process was overseen by a committee of independent directors.
• The valuation was performed by an independent third-party firm.
• The company is using the updated NAV for its DRP and SRP, providing consistency for investors.

Negatives

• The estimated NAV is not audited and does not represent fair value according to GAAP.
• The estimated NAV does not represent a liquidation value or the amount the shares would trade at on a national securities exchange.
• The share redemption program remains suspended except for specific circumstances.
• The estimated asset values may not represent current market value or book value.

Risks

• The estimated NAV is based on assumptions and estimates that may not be accurate or complete.
• Different parties using different assumptions could derive a different NAV.
• The value of the company's shares will fluctuate over time due to various factors.
• The estimated NAV does not reflect a real estate portfolio premium or discount.
• The estimated NAV does not take into account disposition costs and fees for properties not held for sale.
• Changes in market interest rates could impact the valuation of the company's debt and thus the NAV.

Future Outlook

The company anticipates publishing a new estimated share value on an annual basis.

Management Comments

• H. Michael Schwartz, Chairman and CEO of SmartStop, stated that the estimated NAV per share has increased from the most recently declared NAV.
• He also noted that the valuation reflects the company's investment strategy and technology-powered operations.

Industry Context

The announcement is consistent with the practice of non-listed REITs to provide periodic NAV updates to assist broker-dealers in meeting their customer account statement reporting obligations. The valuation process adheres to industry guidelines and standards.

Comparison to Industry Standards

• The valuation process followed the Institute for Portfolio Alternatives (IPA) Practice Guideline 2013-01, which is a standard for publicly registered non-listed REITs.
• The appraisals were performed in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), the real estate appraisal industry standards.
• The use of an independent third-party valuation firm, Robert A. Stanger & Co., Inc., is a common practice in the industry to ensure objectivity.
• The company's approach to valuing its real estate portfolio using the income approach and direct capitalization analysis is consistent with industry practices.
• The company's disclosure of the assumptions and limitations of the valuation process is in line with industry best practices.

Stakeholder Impact

• Shareholders will see an increase in the value of their shares based on the updated NAV.
• Shareholders participating in the DRP will purchase shares at the new NAV of $15.25.
• Shareholders participating in the SRP will have their shares redeemed at the new NAV of $15.25, subject to program limitations.

Next Steps

• The company will use the updated NAV for its Distribution Reinvestment Plan (DRP) and Share Redemption Program (SRP).
• The company anticipates publishing a new estimated share value on an annual basis.

Key Dates

Keywords

Net Asset Value, NAV, Self Storage, Real Estate, Valuation, REIT, Distribution Reinvestment Plan, Share Redemption Program, Property Appraisal, Robert A. Stanger & Co.