Storage company CubeSmart will expand its storage offerings and market position in a deal announced on November 15.
CubeSmart (NYSE: CUBE) is set to acquire all of the outstanding partnership units of LAACO, Ltd., which owns and manages Storage West, in a $1.69 billion cash deal, including approximately $40.9 million of LAACO debt to be repaid at or soon after closing.
According to the press release, Storage West “is the owner and operator of 59 self-storage assets in the highly desired western markets of Southern California (22), Phoenix (17), Las Vegas (13), and Houston (7).” Meanwhile, according to its website, CubeSmart is “a self-administered and self-managed real estate company on the ownership, operation, acquisition, and development of self-storage facilities in the United States,” where it owns or manages about 1,251 across the U.S.
“The Storage West portfolio represents a very strategic transaction that will enhance our portfolio and further diversify our geographic exposure,” Christopher P. Marr, President and CEO of CubeSmart said. “This immediately accretive transaction is a unique opportunity to acquire a sizable portfolio of high-quality assets across the Southwest. The properties are all in top-10 MSAs that represent key growth markets with strong demographics that perfectly fit our external growth strategy and complement our existing portfolio.”
According to the filing, CubeSmart anticipates financing this transaction through a combination of “net proceeds from the issuance and sale” of its equity securities and “proceeds from new long-term debt financing, such as term loan or debt securities.”
The deal is expected to close in Q4 2021, pending customary closing conditions. The reverse triangular merger also has a no-shop provision.
The filing also notes that CubeSmart anticipates acquiring LAACO’s wholly owned subsidiaries the Los Angeles Athletic Club and the California Yacht Club in the future.
LAACO is represented by Winston & Strawn LLP and its financial advisors are Eastdil Secured and Duff & Phelps. CubeSmart is represented by Morgan, Lewis & Bockius LLP.
Prior to the announcement, CubeSmart’s stock was at $54.60 on Friday November 12. On the day of the announcement, November 15, stock closed at $55.04, and a week later closed at $53.71 on November 22.
On November 19, CubeSmart announced the close of its underwritten public offering of 15,525,000 common shares at a price of $51 per share, which includes the 2,025,000 shares that were sold in compliance with the underwriters’ option to purchase additional common shares. This garnered approximately $791.7 million. These funds will help to fund its LAACO acquisition.
