NexPoint Advisors Announces $900M Merger

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Under the terms of a merger agreement, an affiliate of NexPoint Advisors LP will acquire Jernigan Capital Inc., a Memphis-based self storage owner and lender, for approximately $900 million in cash. The transaction includes debt and preferred stock to be assumed or refinanced.

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Upon closing, holders of Jernigan’s common stock and holders of units in Jernigan Capital Operating Co. LLC will receive $17.30 per share/unit in cash. This represents a 30 percent premium over the 90-day volume-weighted average share price ending July 31. The transaction is expected to close in the fourth quarter and is subject to customary closing conditions, including the approval of Jernigan stockholders.

In a prepared statement, Jernigan CEO & Chairman John Good highlighted the portfolio the company has built since its initial public offering in March 2015.

Jernigan Capital’s financial advisor is Jefferies LLC, and its legal advisors are Spencer Johnson and Tony Rothermel, partners at King & Spalding, along with and John Anderson, senior associate. NexPoint’s financial advisors are Raymond James and KeyBanc Capital Markets, and its legal advisor is Winston & Strawn LLP.

Selective acquisitions

Jernigan prefers to focus on what it calls Generation V facilities, which are largely vertical (three to 10 floors), 100 percent climate-controlled and “technologically adapted buildings.”

According to Jernigan’s 2019 annual report, the company has 15 wholly owned self storage facilities, as well as multiple development property investments, plus six development property investments and five wholly owned self storage facilities, all 11 in connection with the SL1 venture, which Jernigan formed in 2016 with Heitman Capital.

Those numbers reflect multiple acquisitions over the last few years. For example, last September Jernigan bought a five-property portfolio of self storage properties from MCSS Development and Investment. The assets, all in metro Miami and all operated under the CubeSmart brand, total 4,141 units and 480,000 gross square feet.

More recently, Jernigan tightened up its financial situation, securing a new credit facility that added $140 million to the company’s borrowing capacity, extended the maturity of the previous facility by more than a year and trimmed credit spreads in the process, too.