Real Estate Facilities
 12 Months Ended
Dec. 31, 2021
Real Estate [Abstract]  
Real Estate Facilities
Note 3. Real Estate Facilities
The following summarizes the activity in real estate facilities during the years ended December 31, 2021 and 2020:
 
Real estate facilities
   
Balance at December 31, 2019
    $ 1,173,825,368  
Impact of foreign exchange rate changes
      4,147,798  
Acquisitions, additions and other
(1)
      32,129,416  
  
 
 
  
Balance at December 31, 2020
      1,210,102,582  
Facilities acquired through merger with SST IV
      324,344,636  
Facility acquisitions
      47,162,974  
Impact of foreign exchange rate changes
      (138,457 ) 
Improvements and additions
(2)
      12,151,893  
Other facility acquisitions
(3)
      15,689,143  
Disposition due to deconsolidation
(3)
      (15,689,143 ) 
  
 
 
  
Balance at December 31, 2021
   
$
1,593,623,628
  
  
 
 
  
Accumulated depreciation
   
Balance at December 31, 2019
    $ (83,692,491 ) 
Depreciation expense
      (31,711,102 ) 
Impact of foreign exchange rate changes
      (499,452 ) 
  
 
 
  
Balance at December 31, 2020
      (115,903,045 ) 
Depreciation expense
      (40,158,233 ) 
Disposition due to deconsolidation
(3)
      62,466  
Impact of foreign exchange rate changes
      71,937  
  
 
 
  
Balance at December 31, 2021
   
$
(155,926,875
)
 
  
 
 
  
 
(1)
Such amount includes approximately $13 million of construction in process that was placed into service during the year ended December 31, 2020.
(2)
Included herein is an addition to our Riverview, Florida property of approximately $2.3 million, which added approximately 25,400 net rentable square feet and approximately 150 additional units, and opened in June of 2021. The remainder consists primarily of solar panel installations, LED lighting conversions, and other general capital improvements.
(3)
Such activity represents the acquisition of a property completed by SST VI OP, which as of the acquisition date was consolidated within our consolidated financial statements. On May 1, 2021, we deconsolidated SST VI OP as we were no longer the primary beneficiary, which resulted in the removal of such facility from our consolidated balance sheet. Our investment in SST VI OP is now included within “Investments in and advances to managed REITs” within our consolidated balance sheet.
Merger with Strategic Storage Trust IV, Inc.
On November 10, 2020, we, SST IV Merger Sub, LLC, a Maryland limited liability company and a wholly-owned subsidiary of ours (“SST IV Merger Sub”), and SST IV entered into an agreement and plan of merger (the “SST IV Merger Agreement”). Pursuant to the terms and conditions set forth in the SST IV Merger Agreement, on March 17, 2021 (the “SST IV Merger Date”), we acquired SST IV by way of a merger of SST IV with and into SST IV Merger Sub, with SST IV Merger Sub being the surviving entity.
On the SST IV Merger Date, each share of SST IV common stock outstanding immediately prior to the SST IV Merger Date (other than shares owned by SST IV and its subsidiaries or us and our subsidiaries) was automatically converted into the right to receive 2.1875 Class A Shares​​​​​​​ (the “SST IV Merger Consideration”). Immediately prior to the SST IV Merger Effective Time, all shares of SST IV common stock that were subject to vesting and other restrictions also became fully vested and converted into the right to receive the SST IV Merger Consideration.
As a result of the SST IV Merger, we acquired all of the real estate owned by SST IV, consisting of 24 wholly-owned self storage facilities located across nine states and six self storage real estate joint ventures located in the Greater Toronto Area of Ontario, Canada. As of the SST IV Merger Date, the real estate joint ventures consisted of three operating properties and three properties in various stages of development.
The following table reconciles the total consideration transferred in the SST IV Merger:
 
Fair Value of Consideration
Transferred:
   
Common stock issued
    $ 231,412,470  
Cash
(1)
      54,250,000  
Other
      365,703  
  
 
 
  
Total Consideration Transferred
    $ 286,028,173  
  
 
 
  
 
(1)
The approximately $54.3 million in cash was primarily used to pay off approximately $54.0 million of SST IV debt that we did not assume in the Merger, as well as approximately $0.3 million in transaction costs.
We issued approximately 23.1 million Class A Shares to the former SST IV shareholders in connection with the SST IV Merger. The estimated fair value of our common stock issued was determined by third party valuation specialists primarily based on an income approach to value the properties as well as our Managed REIT Platform, adjusted for market related adjustments and illiquidity discounts, less the estimated fair value of our debt and other liabilities.
These fair value measurements are based on significant inputs not observable in the market and thus represent a Level 3 measurement as discussed in Note 2 – Summary of Significant Accounting Policies. The key assumptions used in estimating the fair value of our common stock included a marketability discount of 6%, and projected annual net operating income, land sales comparisons, growth rates, discount rates, and capitalization rates.
The following table summarizes the relative fair values of the assets acquired and liabilities assumed in the SST IV Merger:
 
Assets Acquired:
   
Land
    $ 54,385,560  
Buildings
      257,618,228  
Site improvements
      12,340,848  
Construction in progress
      1,467,090  
Intangible assets
      20,052,449  
Investments in real estate joint ventures
      17,495,254  
Cash and cash equivalents, and restricted cash
      7,763,490  
Other assets
      4,145,394  
  
 
 
  
Total assets acquired
    $ 375,268,313  
Liabilities assumed:
   
Debt
(1)
    $ 81,165,978  
Accounts payable and other liabilities
      8,074,162  
  
 
 
  
Total liabilities assumed
    $ 89,240,140  
  
 
 
  
Total net assets acquired
    $ 286,028,173  
  
 
 
  
 
(1)
Debt assumed includes approximately $40.5 million of debt on the KeyBank SST IV CMBS Loan, a $0.1 million fair market value discount on such debt, and the approximately $40.8 million SST IV TCF Loan. See Note 6 – Debt for additional information.
Self Storage Facility Acquisitions
On April 16, 2021, we purchased a self storage facility (the “Oakville III Property”) located in the Greater Toronto Area of Ontario, Canada. We acquired the Oakville III Property from an unaffiliated third party for a purchase price of approximately $25.0 million Canadian Dollars (“CAD”), plus closing costs. Upon acquisition, the property was approximately 42% occupied.
On May 27, 2021, we purchased a self storage facility located in Riverside, California (the “Riverside III Property”). The purchase price for the Riverside III Property was approximately $10.7 million, plus closing costs. Upon acquisition, the property was approximately 95% occupied.
On October 19, 2021 we purchased a self storage facility (the “Lakewood Property”) located in the greater Denver, Colorado area. The purchase price for the Lakewood Property was approximately $17.5 million, plus closing costs. Upon acquisition, the property was approximately 91.3% occupied.
The following table summarizes our purchase price allocation for our acquisitions during the year ended December 31, 2021:
 
Acquisition
  
Acquisition
Date
    
Real Estate
Assets
    
Construction
in Process
    
Investment
in Real
Estate Joint
Ventures
    
Intangibles
    
Total
(1)
    
2021
Revenue
(2)
    
2021
Net
Operating
Income
(2)(3)
  
SST IV Merger
     3/17/2021     $ 324,344,636     $ 1,467,090     $ 17,495,254     $ 20,052,449     $ 363,359,429     $ 24,956,689     $ 17,312,323  
Iroquois Shore Road- Oakville III
     4/16/2021       20,061,045       —         —         332,840       20,393,885       568,351       269,764  
Van Buren Blvd - Riverside III
     5/27/2021       10,216,645       —         —         450,145       10,666,790       509,698       330,084  
Alameda Parkway- Lakewood
     10/19/2021       16,885,284       —         —         626,258       17,511,542       241,967       151,443  
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
2021 Total
    
$
371,507,610
 
  
$
1,467,090
 
  
$
17,495,254
 
  
$
21,461,692
 
  
$
411,931,646
 
  
$
26,276,705
 
  
$
18,063,614
 
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
(1)
The allocations noted above are based on a determination of the relative fair value of the total consideration provided and represent the amount paid including capitalized acquisition costs.
(2)
The operating results of the self storage properties acquired during the year ended December 31, 2021 were included in our consolidated statements of operations since their respective acquisition date. Such amounts do not include activity from our investments in real estate joint ventures, which are included in Other in our consolidated statements of Operations. For additional information see Note 4 - Investments in Unconsolidated Real Estate Ventures.
(3)
Net operating income excludes corporate general and administrative expenses, interest expenses, depreciation, amortization and acquisition expenses.
Subsequent Acquisitions
On February 8, 2022, subsequent to December 31, 2021, we purchased a self storage facility located in Algonquin, Illinois (the “Algonquin Property”). The purchase price for the Algonquin Property was approximately $19 million, plus closing costs. Upon acquisition, the property was approximately 72.4% occupied. See Note 14 - Subsequent Events for additional information.
Potential Acquisitions
On December 28, 2021, one of our subsidiaries executed a purchase and sale agreement with an unaffiliated third party for the acquisition of an existing operating self storage facility located in the city of Portland, Oregon (the “Portland Property”). The purchase price for the Portland Property is $15 million, plus closing costs. There can be no assurance that we will complete this acquisition. If we fail to acquire the Portland Property, in addition to the incurred acquisition costs, we may also forfeit earnest money as a result.
On January 31, 2022, one of our subsidiaries executed a purchase and sale agreement with an unaffiliated third party for the acquisition of an existing operating self storage facility located in the city of Vancouver, Washington
(the “Vancouver Property”). The purchase price for the Vancouver Property is $25 million, plus closing costs. There can be no assurance that we will complete this acquisition. If we fail to acquire the Vancouver Property, in addition to the incurred acquisition costs, we may also forfeit earnest money as a result.
On February 23, 2022, one of our subsidiaries executed a purchase and sale agreement with an unaffiliated third party for the acquisition of an existing operating self storage facility located in the city of Sacramento, California (the “Sacramento Property”). The purchase price for the Sacramento Property is $25.8 million, plus closing costs. There can be no assurance that we will complete this acquisition. If we fail to acquire the Sacramento Property, in addition to the incurred acquisition costs, we may also forfeit earnest money as a result.
On February 24, 2022, one of our subsidiaries executed a purchase and sale agreement with an unaffiliated third party for the acquisition of two existing operating self storage facilities located in the cities of Levittown, Pennsylvania, and Newark, Delaware (the “Levittown and Newark Portfolio”). The purchase price for the Levittown and Newark Portfolio is approximately $40.7 million, plus closing costs. There can be no assurance that we will complete this acquisition. If we fail to acquire the Levittown and Newark Portfolio, in addition to the incurred acquisition costs, we may also forfeit earnest money as a result.
On March 17, 2022, one of our subsidiaries executed a purchase and sale agreement with an unaffiliated third party for the acquisition of an existing operating self storage facility located in the city of St. Johns, Florida (the “St. Johns Property”). The purchase price for the St. Johns Property is $16.3 million, plus closing costs. There can be no assurance that we will complete this acquisition. If we fail to acquire the St. Johns Property, in addition to the incurred acquisition costs, we may also forfeit earnest money as a result.
On March 11, 2022, one of our subsidiaries executed a purchase and sale agreement with an unaffiliated third party for the acquisition of an existing operating self storage facility located in the city of Chandler, Arizona (the “Chandler Property”). The purchase price for the Chandler Property is $25.5 million, plus closing costs. There can be no assurance that we will complete this acquisition. If we fail to acquire the Chandler Property, in addition to the incurred acquisition costs, we may also forfeit earnest money as a result.
We may assign certain of the above purchase and sale agreements in part or in full to one of our Managed REITs.
Acquisition Completed by SST VI OP and Other SST VI OP Events
On March 10, 2021, SmartStop OP made an investment of $5.0 million in SST VI OP, in exchange for common units of limited partnership interest in SST VI OP.
On March 11, 2021, SST VI OP, through a wholly-owned subsidiary, used these funds, in part, to acquire its first self storage facility in Phoenix, Arizona for approximately $16 million. In connection with SST VI OP’s acquisition of the Phoenix property, we provided a $3.5 million mezzanine loan to a wholly-owned subsidiary of SST VI OP with an initial interest rate of 8.5% and term of six months; as well as a 180 day extension option which was exercised and increased the interest rate to 9.25% for the remainder of the term.
In addition to the mezzanine loan, SST VI financed the acquisition, in part, by obtaining a third party mortgage loan on the property of approximately $9 million.
SST VI commenced its private offering in the first quarter of 2021. Given our level of ownership as of March 31, 2021, SST VI OP and its subsidiaries were consolidated in our financial statements, and all related intercompany transactions were eliminated.