8-K: SmartStop Self Storage REIT Rejects Unsolicited Mini-Tender Offer from CMG Partners

SmartStop Self Storage REIT's board of directors has unanimously recommended that stockholders reject an unsolicited mini-tender offer from CMG Partners, LLC, deeming it significantly undervalued.

Summary

• SmartStop Self Storage REIT has advised its stockholders to reject an unsolicited mini-tender offer from CMG Partners, LLC to purchase up to 225,000 shares of Class A common stock at $7.50 per share.
• The company's board of directors believes the offer is significantly below the company's estimated net asset value (NAV) of $15.25 per share.
• The board considers the offer an attempt to capitalize on the partial suspension of the company's share redemption program.
• The company will no longer mail responses to mini-tender offers directly to stockholders, instead posting them on the SEC website and the company's investor relations website.
• Stockholders can request a printed copy of the response by contacting their financial advisor or the company's Investor Services team.

Sentiment

Score: 6

Explanation: The document is defensive, highlighting a low-ball offer, but also shows the company is taking steps to protect shareholders. The sentiment is neutral to slightly negative due to the unsolicited offer.

Positives

• The board of directors is actively protecting shareholder value by recommending rejection of the low-ball offer.
• The company is transparently communicating its position and providing resources for stockholders to make informed decisions.
• The company is taking steps to reduce unnecessary costs associated with responding to frequent mini-tender offers.
• The company highlights positive trends based on historical financial data, suggesting the company is undervalued.

Negatives

• The unsolicited mini-tender offer from CMG Partners indicates potential vulnerability in the company's share structure.
• The partial suspension of the share redemption program creates an opportunity for opportunistic offers.
• The company is facing frequent mini-tender offers, which can be disruptive and costly.

Risks

• Mini-tender offers can be confusing and may pressure stockholders to make hasty decisions.
• CMG Partners may not have the financial capacity to pay for all tendered shares.
• The company's share price may be negatively impacted by the perception of vulnerability to these types of offers.
• The partial suspension of the share redemption program may create uncertainty for stockholders.

Future Outlook

The company will continue to post responses to mini-tender offers on the SEC website and its investor relations website, and will mail a copy of the letter to a stockholder upon request.

Management Comments

• The Board of Directors unanimously recommends that you IGNORE the materials that were sent to you by CMG Partners, LLC and its affiliates (CMG) and REJECT its offer.
• We believe the CMG Tender Offer is an attempt to capitalize on the partial suspension of the SRP.
• 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 CMG Tender Offer undervalues the per share value of the Company.

Industry Context

Mini-tender offers are a known tactic used to exploit illiquidity in the market, particularly with REITs and other less liquid securities. This announcement highlights the need for investors to be cautious and well-informed about such offers.

Comparison to Industry Standards

• The company's estimated NAV of $15.25 per share is a key metric, and the CMG offer of $7.50 is significantly below this, indicating a potential undervaluation.
• Other REITs with similar asset profiles and market capitalization may have different share redemption programs and may be subject to similar mini-tender offers.
• The company's use of an independent valuation firm to determine its NAV is a standard practice in the industry, contrasting with CMG's lack of independent appraisal.

Stakeholder Impact

• Shareholders are advised to reject the offer, protecting their investment from a low-ball bid.
• The company is taking steps to reduce costs, which could benefit shareholders in the long term.
• The company is providing clear communication to shareholders, which is important for maintaining trust.

Next Steps

• Stockholders are advised to ignore the CMG Tender Offer materials and not respond.
• The company will post future responses to mini-tender offers on its website and the SEC website.
• Stockholders can request a printed copy of the response by contacting their financial advisor or the company's Investor Services team.

Key Dates

Keywords

mini-tender offer, shareholder, SmartStop Self Storage REIT, CMG Partners, net asset value, NAV, share redemption program, unsolicited offer, illiquidity