Blue Door Property II, DST

Offering Overview

Three stabilized self-storage facilities (~301,000 rentable SF; 2,281 storage units and 98 vehicle/RV spaces) held debt-free in a parent/operating DST structure and operated under the SmartStop Self Storage brand: 6707 Narcoossee Road, Orlando FL (97,300 SF, 677 units, 2003 vintage, in the high-growth Lake Nona/Narcoossee corridor), 3701 FM Road 2181, Corinth TX (97,050 SF, 766 units, 2000-2005 vintage, Denton County/DFW), and 7905 Spencer Highway, Pasadena TX (106,618 SF, 838 units plus 81 vehicle spaces, 2003-2007 vintage, Houston/Bay Area). Portfolio occupancy is ~91.2%. The properties are leased to an affiliated master tenant under a 10-year master lease with a base/additional/bonus-rent waterfall, and managed by a SmartStop-affiliated property manager. Thesis is inflation-responsive operating income from necessity-based self-storage in Sun Belt growth markets, with month-to-month rental structure enabling active revenue management and an optional Section 721 rollover into the sponsor's affiliated operating partnership.

Investment Highlights

• The portfolio is operated under the SmartStop Self Storage platform (ultimate parent SmartStop Self Storage REIT, NYSE: SMA), a scaled institutional self-storage owner-operator with established revenue-management systems. Operating control, master-tenant, and property-management functions all sit with SmartStop affiliates, aligning the assets with a national operator's pricing and marketing infrastructure; the same arrangement concentrates execution dependence on a single, vertically affiliated operator rather than diversified third parties.
• The Orlando asset anchors the portfolio in the Lake Nona/Narcoossee corridor, among the fastest-growing submarkets in the Sun Belt, with heavy 2023-2024 residential delivery (multiple 250-350 unit multifamily projects and a 156-room hotel) generating new household formation that drives storage demand. The same pipeline, however, includes a 100,000 SF self-storage facility delivered in 2024, an explicit competitive-supply signal in a sector where demand is hyper-local to a roughly three-mile trade area.
• Self-storage's month-to-month rental structure permits near-continuous repricing through revenue management, providing inflation pass-through that fixed long-term net leases cannot replicate; the master-lease waterfall channels this upside to investors via Additional Rent and Bonus Rent (80% of gross income above stated breakpoints), so forecast distributions escalate from 4.41% to 5.06% on operating performance rather than contractual escalators. The offset is structurally higher tenant churn and occupancy volatility than credit-tenant net lease.
• The portfolio was acquired free and clear with cash, eliminating mortgage, refinancing, maturity, rate-cap, and foreclosure risk, and removing the equal-or-greater-debt replacement requirement for 1031 investors averse to boot-offsetting leverage. The trust agreement nonetheless preserves the ability to incur future financing, so the debt-free position is a current state rather than a permanent covenant.
• For cash (non-1031) investors the structure delivers substantial depreciation shelter, with roughly 74-77% of forecast cash flow sheltered and a tax-equivalent yield averaging approximately 6.16% against a 40% assumed effective tax rate. Combined with the bonus-rent participation, this positions the offering as an income vehicle with embedded tax efficiency and modest operating upside rather than a fixed-coupon instrument.

Forecasted Cash Flow

Projected annual cash-on-cash distributions with the corresponding tax-equivalent yield over the hold, based on the sponsor’s underwriting assumptions.

Illustrative projections only — targeted distributions are not guaranteed and actual results will vary. Tax-equivalent yield assumes depreciation shelter of distributed income.

Analyst Notes

This is a debt-free, core-plus self-storage vehicle whose return mechanics differ structurally from net-lease DSTs: distributions track operating NOI through a base/additional/bonus-rent waterfall rather than fixed credit-tenant escalators, so the 4.41% to 5.06% ramp is a function of SmartStop's revenue-management execution and submarket fundamentals, not a contractual obligation. The unlevered structure is defensive against the rate environment but caps return, leaving the investment case resting on self-storage's inflation pass-through, the depreciation shelter (~75% of cash flow; ~6.16% average tax-equivalent yield for cash investors), and the optional 721 rollover. Underwriting feasibility hinges on sustaining and growing ~91% occupancy and street rates across three Sun Belt facilities against visible new supply in Lake Nona. The dominant risk-adjusted question is whether revenue-management upside and bonus rent justify a sub-5% going-in yield and a ~13% load over a 10-year horizon, with terminal value and the form and liquidity of any 721 consideration, private SSGT III OP units, as the principal exit sensitivities.

Financing

This offering is unleveraged — the DST holds its assets debt-free (0% loan-to-value), so no mortgage financing applies.

Benchmark Comparison

Benchmark reflects the average of comparable Self-Storage offerings. Differences are relative to the benchmark.

Offering Documents

Offering Documents Available By Request

About the Sponsor

SmartStop

SmartStop is a self-storage REIT (NYSE: SMA) that completed an $810 million IPO in April 2025 and sponsors self-storage DSTs through its broader platform, with assets in the $7 billion-plus range post-listing. Its pure-play self-storage focus, internal management and combined U.S.-and-Canada footprint give it a clean, single-sector thesis, and the recent public listing adds a transparency and liquidity dimension uncommon among DST sponsors. For exchangers, it offers concentrated exposure to a resilient, low-operating-intensity asset class.