Sovran Self Storage, Inc. SSS raked in $690 million in gross proceeds from a public offering of 6.9 million shares at $100.00 per share. The move is aimed at partly meeting its funding for the acquisition of LifeStorage, LP. Besides funding for the pending acquisition, the company also plans to use the proceeds to prepay debt and meet general corporate needs.
The stock offering included issuance of 0.9 million shares of common stock with underwriters’ exercise of over-allotment option in full. It resulted in the company receiving $665.3 million, after deducting the underwriting discounts and commissions and expenses.
Notably, last week Sovran Self Storage came out with the announcement of a definitive deal to acquire the privately owned self storage operator – LifeStorage, LP – for a gross aggregate purchase price of around $1.3 billion in cash.
The buyout would lead to Sovran Self Storage owning 84 LifeStorage stores, with a purchase contract for three additional certificates of occupancy deals slated for delivery in late 2016 and early next year, the company said. Sovran Self Storage expects the acquisition to close in third-quarter 2016, subject to closing norms.
Notably, with more than 550 self storage facilities in 26 states under the name “Uncle Bob’s Self Storage”, Sovran Self Storage seems well poised to leverage on the strong fundamentals of the self storage industry. Amid limited supply, demand remains solid because the need for self storage remains high on the back of favorable demographic changes and events like marriages, shifting and death.
Moreover, raking up capital for the LifeStorage acquisition is a strategic fit given the opportunity to boost the company’s physical footprint as well as digital presence.
Sovran Self Storage currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like DCT Industrial Trust Inc. DCT, PS Business Parks Inc. PSB and Whitestone REIT WSR. Each of these stocks carries a Zacks Rank #2 (Buy).
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