NexPoint Completes Acquisition of Jernigan Capital, Outlines Growth Plan for NexPoint Storage Platform

Rhea-AI Summary

NexPoint Advisors announced the completion of its acquisition of Jernigan Capital, Inc. (JCAP) in a cash deal valued at approximately $900 million. JCAP will rebrand as NexPoint Storage Partners, receiving $17.30 per share for common stock and $25.00 per Series B preferred stock. The acquisition is supported by $300 million from Extra Space Storage and $512 million in financing from JPMorgan Chase Bank. NexPoint aims to expand its self-storage platform and leverage JCAP's existing assets and management, led by John Good.

Positive

• Acquisition valued at approximately $900 million enhances NexPoint's self-storage portfolio.
• Strategic support of $300 million from Extra Space Storage indicates confidence in the acquisition.
• Management continuity with JCAP's legacy team expected to drive operational success and growth.

Negative

• None.

DALLAS, Nov. 10, 2020 /PRNewswire/ -- NexPoint Advisors, L.P. (together with its affiliates "NexPoint") announced today the completion of NexPoint's previously announced acquisition of Jernigan Capital, Inc. ("JCAP") in an all-cash transaction valued at approximately $900 million, including debt and preferred stock to be assumed or refinanced. JCAP will change its corporate name to NexPoint Storage Partners and will do business under that corporate name going forward.

Holders of JCAP common stock and holders of units of operating company interests in Jernigan Capital Operating Company, LLC received $17.30 per share/unit in cash, and holders of JCAP Series B preferred stock received $25.00 per share, which is the liquidation preference per share of Series B preferred stock, plus accrued dividends to the closing date. Upon closing the transaction, JCAP's common stock and Series B preferred stock have been delisted and have ceased trading on the New York Stock Exchange. Upon closing of the transaction, shares of Series A preferred stock of JCAP owned by NexPoint were converted into JCAP common stock.

Extra Space Storage Inc. (NYSE: EXR), a leading self-storage REIT, provided $300 million of proceeds to finance the acquisition through the purchase from JCAP of $300 million of newly authorized and issued Series A and Series B preferred stock. In addition, JPMorgan Chase Bank, N.A. provided approximately $512 million of financing for the acquisition of JCAP and future growth of the combined company through two separate secured credit facilities.

Following the acquisition, nine members of JCAP's legacy team, led by John Good, Chairman of CEO of JCAP, will comprise the NexPoint Storage Partners team. Property management of the 37 self-storage facilities wholly owned by JCAP at the time of the acquisition will be transitioned to Extra Space Storage, while property management of the self-storage facilities for which JCAP has provided financing will continue to be determined by the developers of such projects. Going forward, the NexPoint Storage Partners platform will continue to acquire well-located Generation V self-storage facilities in growing markets and provide financing to self-storage entrepreneurs to develop such facilities.

"We are delighted to join the NexPoint family and to lead the continued development of the NexPoint Storage Partners platform," said John Good, Chairman and Chief Executive Officer of JCAP and CEO of the surviving corporation. "Since going public at the beginning of Q2 2015, we delivered to JCAP stockholders a 27.3% total shareholder return, which is 12.6% higher than the total shareholder return of the MSCI U.S. REIT Index and 46.5% higher than the average total shareholder return of small cap REITs (under $2 billion of market capitalization) over that same period. NexPoint was a key contributor to this outperformance, providing us with a sizeable and very important allocation of capital in July 2016 that funded our investment activities in 2017, our highest year of growth. We have developed a strong partnership with the NexPoint team over that period and are looking forward to integrating our respective teams, building on our strong investment track record and turning NexPoint Storage Partners into a household name in the industry for years to come."

"By acquiring JCAP, we believe we have provided a cost effective and certain capital structure for the company, while establishing NexPoint as a world-class self-storage platform with significant growth capacity," said Matt McGraner, Executive Vice President and Chief Investment Officer of NexPoint. "We view the sizable investments in the platform by Extra Space Storage and JPMorgan as ringing endorsements of the transaction itself, the quality of the JCAP properties and team, and the positioning of NexPoint Storage Partners for substantial growth and as a key player in the self-storage industry."

Jefferies LLC acted as exclusive financial advisor to Jernigan. King & Spalding LLP acted as Jernigan's legal advisor. Raymond James & Associates, Inc. and KeyBanc Capital Markets acted as financial advisors to NexPoint and Winston & Strawn LLP and Wick Phillips acted as legal advisors to NexPoint.

About NexPoint
NexPoint is an alternative investment platform comprised of a group of investment advisers and sponsors, a broker-dealer, and a suite of related investment vehicles. NexPoint's platform provides differentiated access to alternatives through a range of investment solutions, including public and private real estate investment trusts, tax-advantaged real estate vehicles, other private real estate investments, closed-end funds, interval funds, and a business development company. NexPoint is based in Dallas, Texas and is part of a network of affiliates with expertise across the asset management and financial services spaces. For more information visit www.nexpointgroup.com.

Forward-Looking and Cautionary Statements
The information in this presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include words such as "anticipates," "estimates," "expects," "projects," "intends," "plans," "believes," "entitled," "will" and words and terms of similar substance in connection with discussions of future operating or financial performance.

These forward-looking statements are based on our current expectations and assumptions regarding the investment portfolio and performance, the economy and other future conditions and forecasts of future events, circumstances and results. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied in its forward-looking statements.

CONTACTS

NexPoint Advisors, L.P.
Jackie Graham
Investor Relations
(972) 628-4024
jgraham@nexpointadvisors.com

Jernigan Capital, Inc.
John Good
(901) 567-9517
john@jernigancapital.com

Media Contact
Lucy Bannon
(972) 419-6272
lbannon@nexpointgroup.com

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SOURCE NexPoint Advisors, L.P.

FAQ

What is the value of the NexPoint acquisition of Jernigan Capital (EXR)?

The acquisition is valued at approximately $900 million.

What cash amount will Jernigan Capital shareholders receive from the acquisition (EXR)?

Holders of JCAP common stock will receive $17.30 per share, and Series B preferred stockholders will receive $25.00 per share.

How will the acquisition impact NexPoint Storage Partners (EXR)?

The acquisition is expected to enhance NexPoint's self-storage platform and expand its market presence.

Who leads the NexPoint Storage Partners team after the acquisition (EXR)?

John Good, the former Chairman and CEO of JCAP, will lead the NexPoint Storage Partners team.