8-K: SmartStop Self Storage REIT Recommends Stockholders Reject Unsolicited Mini-Tender Offer

SmartStop Self Storage REIT's board of directors has unanimously recommended that stockholders reject an unsolicited mini-tender offer from MacKenzie Capital Management, LP.

Summary

• SmartStop Self Storage REIT has received an unsolicited mini-tender offer from MacKenzie Capital Management, LP to acquire up to 150,000 shares of Class A or Class T common stock at $8.05 per share.
• The Board of Directors of SmartStop unanimously recommends that stockholders reject this offer.
• The company believes the offer is an attempt to capitalize on the partial suspension of their share redemption program.
• MacKenzie is a for-profit business that seeks to profit from the illiquidity of shares by buying them at a discount.
• The Board believes the offer undervalues the company's shares based on historical financial data and positive trends.
• The offer is for approximately 0.2% of the total outstanding common stock, making it a mini-tender offer.
• The SEC has cautioned investors about the risks associated with mini-tender offers.
• The company encourages stockholders to consult with financial advisors before making a decision.

Sentiment

Score: 3

Explanation: The document expresses a negative sentiment due to the unsolicited mini-tender offer and the company's recommendation to reject it. The suspension of the share redemption program and the perceived undervaluation of the company also contribute to the negative sentiment.

Positives

• The Board of Directors has significant knowledge of the Company and its assets.
• The company has identified positive financial trends based on historical data.
• The Board believes the MacKenzie offer undervalues the company's shares.
• The company is actively communicating with shareholders about the offer.
• The company is providing links to SEC guidance on mini-tender offers.

Negatives

• The company's share redemption program is currently partially suspended and may soon be fully suspended.
• MacKenzie is attempting to capitalize on the illiquidity of the company's shares.
• MacKenzie's offer is at a price the company believes is below the true value of the shares.
• MacKenzie did not retain an independent person to evaluate the fairness of the offer price.
• The company cannot verify that MacKenzie has the funds to pay for all tendered shares.
• Mini-tender offers typically do not provide the same disclosure and procedural protections as larger offers.

Risks

• The mini-tender offer is for less than 5% of the company's shares, which carries heightened risks.
• Investors may feel pressured to tender their shares quickly without having solid information.
• Investors may not be able to withdraw from mini-tender offers.
• The MacKenzie offer may not adequately address the risks associated with the offer.
• There is a lack of clarity on the methodologies used by MacKenzie to determine its offer price.
• There is a lack of disclosure regarding MacKenzie's financial wherewithal.

Future Outlook

The company encourages stockholders to carefully evaluate the offer and consult with financial advisors. The company will continue to monitor the situation and provide updates as necessary.

Management Comments

• The Board of Directors unanimously recommends that you IGNORE the materials that were sent to you by MacKenzie Capital Management, LP and its affiliates and REJECT its offer.
• We believe the MacKenzie Tender Offer is an attempt to capitalize on this situation.
• The MacKenzie Tender Offer indicates that MacKenzie believes that our shares will be worth more than the price MacKenzie is offering.
• The Board has significant knowledge of the Company and its assets, and based upon the historical financial data disclosed in the Companys Form 10-Q and Form 10-K filings over the past several quarters, there are positive trends, which indicate that the MacKenzie Tender Offer undervalues the per share value of the Company.
• We encourage you to follow the recommendation of the Board and not tender your shares in connection with the MacKenzie Tender Offer.

Industry Context

Mini-tender offers are a known tactic used by some firms to acquire shares at below-market prices, often targeting companies with less liquid stock. This announcement highlights the importance of shareholder awareness and due diligence when faced with such offers.

Comparison to Industry Standards

• The company's response to the mini-tender offer is consistent with industry best practices, which emphasize transparency and shareholder protection.
• The SEC's warnings about mini-tender offers are well-known and the company is directing shareholders to this information.
• The company's decision to not mail responses to these offers directly is a cost-saving measure that is becoming more common in the industry.
• Other REITs have faced similar unsolicited offers, and the response from SmartStop is similar to how other companies have handled these situations.

Stakeholder Impact

• Shareholders are advised to reject the mini-tender offer, which could impact their investment decisions.
• The company's employees are not directly impacted by this announcement.
• The company's customers and suppliers are not directly impacted by this announcement.
• The company's creditors are not directly impacted by this announcement.

Next Steps

• Stockholders are encouraged to ignore the MacKenzie Tender Offer materials if they do not wish to tender their shares.
• Stockholders are encouraged to consult with financial advisors before making a decision.
• The company will continue to monitor the situation and provide updates as necessary.

Key Dates

Keywords

mini-tender offer, SmartStop Self Storage REIT, MacKenzie Capital Management, share redemption program, unsolicited offer, stockholders, SEC, illiquidity, tender offer