SmartStop Self Storage REIT, Inc. Reports Second Quarter 2025 ResultsAugust 06, 2025 at 16:16 PM EDT
SmartStop Self Storage REIT, Inc. (“SmartStop” or “the Company”), a self-managed and fully-integrated self storage company, announced its overall results for the three and six months ended June 30, 2025. “We posted a highly successful inaugural quarter as a publicly traded REIT,” said H. Michael Schwartz, Chairman and Chief Executive Officer of SmartStop. “We had a robust second quarter, both in terms of performance and activity, as we execute on the business plan we outlined earlier this year. The quarter was highlighted by capital raises totaling over $1.3 billion, transforming both our balance sheet and our Company’s future in the public markets, for the better. Additionally, we have been prudently deploying our IPO proceeds, with total capital deployment of nearly $200 million during the quarter. Lastly, we bolstered our Board of Directors with the addition of Lora Gotcheva after quarter end. “We continue to see improving operating metrics across our portfolio as the sector stabilizes following years of elevated new supply,” continued Mr. Schwartz. “This is despite the macro-economic uncertainty we’ve experienced both in the U.S. and Canada. Our same-store occupancy averaged 93.1% during the quarter, 90 basis points ahead of last year. We have been opportunistic in our revenue management strategy during rental season and prudent in managing our operating expenses. This has led us to maintain the midpoint of our full year 2025 NOI guidance and raise the midpoint of our FFO, as adjusted per share guidance.” Three Months Ended June 30, 2025 Financial Highlights:
Six Months Ended June 30, 2025 Financial Highlights:
Underwritten Public Offering and Listing During the quarter, we closed an underwritten public offering of 31,050,000 shares of common stock, including 4,050,000 shares of common stock issued upon the exercise in full by the underwriters of their option to purchase additional shares to cover over-allotments, at a public offering price of $30.00 per share, before underwriting discounts and commissions. The net proceeds from the offering were approximately $875.6 million, after deducting underwriting discounts and commissions. As set forth in more detail below, we used the net proceeds from the offering to redeem 100% of issued and outstanding Series A Convertible Preferred Stock, pay down existing debt under our Credit Facility and repay an acquisition facility. The remaining net proceeds were used to fund external growth with property acquisitions, and fund other general corporate uses. Shares of SmartStop’s common stock began trading on April 2, 2025 on the New York Stock Exchange under the ticker symbol “SMA”. The closing of the offering, including the over-allotment shares, occurred on April 3, 2025. Financing Activities During the quarter, we used the net proceeds from our underwritten public offering to redeem 100% of issued and outstanding Series A Convertible Preferred Stock for a total of approximately $203.6 million including accrued dividends, pay off the Keybank Acquisition Facility for approximately $175.1 million including accrued interest, pay down existing debt under our Credit Facility in the amount of approximately $472.1 million, and fund other general corporate uses. During the quarter, we achieved the Security Interest Termination Conditions for our Credit Facility and 2032 Private Placement Notes (as defined in the Credit Facility Loan Agreement and Note Purchase Agreement), which resulted in both facilities becoming fully unsecured. Accordingly, the credit spread pricing grid of the Credit Facility was immediately reduced by 25 basis points, and the unused line fees on the Credit Facility were reduced by five basis points. In addition, we elected to reduce the commitment line under the Credit Facility by $100 million. As a result of this election, the total commitment under the Credit Facility was reduced to $600 million. In connection with the acquisition of the Kelowna Property discussed below, the Company assumed a loan from the seller in the amount of approximately $24.5 million CAD, or approximately $17.7 million USD, (the "Kelowna Loan"). The Kelowna Loan incurs interest at a fixed rate of 3.45% with amortizing principal payments based on a 25-year amortization schedule. The Kelowna Loan is due in full on September 30, 2028. In connection with the acquisition of the Holzwarth, Houston Property on June 17, 2025, we assumed a loan from the seller in the amount of approximately $8.8 million, (the "Houston Property Loan"). The Houston Property Loan incurs interest at a fixed rate of 5.15% and principal payments are required on a 25-year amortization schedule. The Houston Property Loan is due in full on May 1, 2034. On June 16, 2025, we, as guarantor, and the Operating Partnership, as issuer, completed the sale on a private placement basis in all of the provinces of Canada, an aggregate principal amount of $500 million CAD senior unsecured notes (the "2028 Canadian Notes"), which 2028 Canadian Notes incur interest only at a fixed rate of 3.91% and become due on June 16, 2028. The 2028 Canadian Notes bears interest at a rate of approximately 3.91% per annum, payable semiannually on June 16 and December 16 in each year, beginning on December 16, 2025, until maturity. The 2028 Canadian Notes were rated BBB (Stable) by Morningstar DBRS. On June 16, 2025, the 2027 NBC Loan was paid off, and the associated interest rate swap was terminated and settled with the proceeds received from the 2028 Canadian Notes. Credit Ratings During the quarter, we received an initial credit rating from DBRS Morningstar (“DBRS”), and in connection with our 2028 Canadian Notes offering, of BBB with stable trends. Subsequent to quarter end, we received an upgrade from Kroll Bond Rating Agency, LLC (“KBRA”) to BBB/Stable. External Growth On April 15, 2025, we purchased a self storage facility in Kelowna, British Columbia (the "Kelowna Property") for approximately USD $29.1 million, plus closing costs. The Kelowna Property comprises approximately 74,000 net rentable square feet and 800 storage units. On May 29, 2025, we purchased a self storage facility located in Lakewood, Colorado (the "Lakewood II Property"). The purchase price for the Lakewood II Property was approximately $12.7 million, plus closing costs. This acquisition was funded with proceeds drawn from the Credit Facility. On June 17, 2025, we purchased a portfolio of five self storage facilities located in Houston, Texas. The combined purchase price for these five properties was approximately $108.1 million, plus closing costs. This acquisition was funded with proceeds from the 2028 Canadian Notes. Under Contract As of August 6, 2025, we, through our wholly-owned subsidiaries, were party to four purchase and sale agreements with unaffiliated third parties for the acquisition of eight self storage facilities or development sites located in Canada. The total purchase price for these properties and sites is approximately $80.3 million, plus closing costs. We plan to close on six of the properties, five of which are currently operational, the other is a development site. Such six properties have a combined purchase price of approximately $73.1 million, with the remaining assets to be acquired by one of the Managed REITs. There can be no assurance that we will complete these acquisitions. Managed REIT Platform Update SmartStop, through an indirect subsidiary, serves as the sponsor of Strategic Storage Growth Trust III, Inc. (“SSGT III”), Strategic Storage Trust VI, Inc. (“SST VI”), and Strategic Storage Trust X (“SST X” and together with SSGT III and SST VI, the “Managed REITs”). SmartStop receives asset management fees, property management fees, acquisition fees, and other fees, as applicable and receives substantially all of the tenant protection program revenue earned by the Managed REITs, which had a combined portfolio of 48 operating properties and approximately 38,600 units and 4.2 million rentable square feet at quarter end. Assets under management for the Managed REITs was approximately $973.9 million at quarter end. SmartStop also manages one additional property, not owned by the Managed REITs. On June 18, 2025, we and various affiliated entities, entered into a Separation and Settlement Agreement (the “Separation Agreement”) with Pacific Oak Holding Group, LLC (“POHG”) and its subsidiary Pacific Oak Capital Markets, LLC, the former dealer manager for SST VI, SSGT III and other affiliated programs (the “Former Dealer Manager”) resulting in 1) the repurchase of the 17.5% non-voting membership interest in the SST VI Advisor previously held by POHG, and 2) termination of a contract whereby services were provided to our programs on our behalf, including the distribution relationship for SST VI, SSGT III and other affiliated programs. In connection with the Separation Agreement, we made a payment to POHG of approximately $3.0 million related to the repurchase of equity, inclusive of contract termination costs. Approximately $1.2 million of contract termination costs were immediately recorded in full to Managed REIT Platform expenses, and added back to FFO, as Adjusted during the three and six months ended June 30, 2025. In connection with the POHG termination, on June 12, 2025, we entered into a new retail distribution relationship with Orchard Securities, LLC (“Orchard”). Through this relationship, Orchard will distribute certain of our investment programs, including Delaware Statutory Trust (DST) and potentially other Managed REIT offerings, to the independent broker dealer and RIA channels. These programs provide individual investors access to institutional-quality self-storage assets across the United States and Canada. Declared Distributions On May 30, 2025, our board of directors approved a distribution amount for the month of June 2025 such that all holders of our outstanding common stock for the month of June, inclusive of our Class A, Class T and unclassified shares of Common Stock, received a distribution equal to $0.1315 per share. The June 2025 distribution payable to each stockholder of record at the end of June was paid on July 15, 2025. On June 27, 2025, our board of directors approved a distribution amount for the month of July 2025 such that all holders of our outstanding common stock for the month of July, inclusive of our Class A, Class T and unclassified shares of Common Stock, will receive a distribution equal to $0.1359 per share. The July 2025 distribution payable to each stockholder of record at the end of July will be paid on or about August 15, 2025. Board of Directors On June 30, 2025, Paula Mathews gave notice of her retirement as a member of our Board of Directors (the “Board”) and, accordingly, tendered her resignation from the Board, effective immediately. Effective on July 10, 2025, Lora Gotcheva was appointed as an independent director of the Company. Ms. Gotcheva has more than 25 years of financial management and investment experience with several firms in the financial services industry. From July 2010 until April 2025, Ms. Gotcheva served in various roles at CPP Investments, one of the largest pension fund managers in Canada, which invests the funds of the Canada Pension Plan. Most recently, Ms. Gotcheva served as a Managing Director, specializing in private real estate investments, joint ventures, and public REIT investments. Ms. Gotcheva earned a Bachelor of Arts degree from Mount Holyoke College and an MBA from The Wharton School at the University of Pennsylvania. Webcast & Conference Call Management will host a conference call and webcast to discuss the results on Thursday, August 7, 2025, at 1:00 p.m. Eastern Daylight Time. During the call, company officers will review operating performance, discuss recent events, and conduct a question-and-answer period. The question-and-answer period will be limited to registered financial analysts. All other participants will have listen-only capability. A live webcast of the call will be available in the Investor Relations section of the Company’s website at investors.smartstopselfstorage.com. To access the live webcast, participants are encouraged to visit the site at least 15 minutes before the start time to register and download any necessary software.
Our same-store revenue increased by approximately $0.2 million, or approximately 0.4%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to an approximately 0.9% increase in average occupancy, an increase in late and administrative fees of approximately $0.2 million, slightly offset by an approximately 1.0% decrease in annualized rent per occupied square foot. Property operating expenses increased by approximately 3.5%, primarily attributable to increased property taxes and payroll costs. Net operating income, or NOI, is a non-GAAP measure that we define as net income (loss), computed in accordance with GAAP, generated from properties before corporate general and administrative expenses, asset management fees, interest expense, depreciation, amortization, acquisition expenses, tenant protection economics, stock compensation related to our IPO Grant and other non-property related income and expense. We believe that NOI is useful for investors as it provides a measure of the operating performance of our operating assets because NOI excludes certain items that are not associated with the ongoing operation of the properties. Additionally, we believe that NOI (sometimes referred to as property operating income) is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount. In addition, NOI is not a substitute for net income (loss), cash flows from operations, or other related financial measures, in evaluating our operating performance.
Our same-store revenue increased by approximately $1.8 million, or approximately 1.8%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to an approximately 0.5% increase in average occupancy, an approximately 0.5% increase in annualized rent per occupied square foot, and an increase in late and administrative fees of approximately $0.5 million. Property operating expenses increased by approximately 4.3%, primarily attributable to increased property taxes and payroll costs.
ADDITIONAL INFORMATION REGARDING NOI, FFO, and FFO, as adjusted Net Operating Income (“NOI”) NOI is a non-GAAP measure that SmartStop defines as net income (loss), computed in accordance with GAAP, generated from properties, excluding tenant protection plan revenue, before corporate general and administrative expenses, asset management fees, interest expense, depreciation, amortization, acquisition expenses, tenant protection economics, stock compensation related to our IPO Grant and other non-property related income and expense. SmartStop believes that NOI is useful for investors as it provides a measure of the operating performance of its operating assets because NOI excludes certain items that are not associated with the ongoing operation of the properties. Additionally, SmartStop believes that NOI is a widely accepted measure of comparative operating performance in the real estate community. However, SmartStop’s use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount. In addition, NOI is not a substitute for net income (loss), cash flows from operations, or other related financial measures, in evaluating our operating performance. Funds from Operations (“FFO”) and FFO, as Adjusted Funds from Operations Funds from operations ("FFO"), is a non-GAAP financial metric promulgated by NAREIT that SmartStop believes is an appropriate supplemental measure to reflect operating performance. SmartStop defines FFO consistent with the standards established by the white paper on FFO approved by the board of governors of NAREIT, or the White Paper. The White Paper defines FFO as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of property and real estate related asset impairment write downs, plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Additionally, gains and losses from change in control are excluded from the determination of FFO. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. SmartStop’s FFO calculation complies with NAREIT’s policy described above. FFO, as Adjusted SmartStop uses FFO, as adjusted, as an additional non-GAAP financial measure to evaluate their operating performance. FFO, as adjusted, provides investors with supplemental performance information that is consistent with the performance models and analysis used by management. In addition, FFO, as adjusted, is a measure used among SmartStop’s peer group, which includes publicly traded REITs. Further, SmartStop believes FFO, as adjusted, is useful in comparing the sustainability of their operating performance with the sustainability of the operating performance of other real estate companies. In determining FFO, as adjusted, SmartStop makes further adjustments to the NAREIT computation of FFO to exclude the effects of non-real estate related asset impairments and intangible amortization, acquisition related costs, other write-offs incurred in connection with acquisitions, contingent earnout expenses, accretion of fair value of debt adjustments, amortization of debt issuance costs, gains or losses from extinguishment of debt, adjustments of deferred tax assets and liabilities, realized and unrealized gains/losses on foreign exchange transactions, gains/losses on certain foreign exchange and interest rate derivatives not designated for hedge accounting, and other select non-recurring income or expense items which SmartStop believes are not indicative of their overall long-term operating performance. SmartStop excludes these items from GAAP net income (loss) to arrive at FFO, as adjusted, as they are not the primary drivers in their decision-making process and excluding these items provides investors a view of their continuing operating portfolio performance over time, which in any respective period may experience fluctuations in such acquisition, merger or other similar activities that are not of a long-term operating performance nature. FFO, as adjusted, also reflects adjustments for unconsolidated partnerships and jointly owned investments. SmartStop uses FFO, as adjusted, as one measure of their operating performance when they formulate corporate goals and evaluate the effectiveness of their strategies. Presentation of FFO and FFO, as adjusted, is intended to provide useful information to investors as they compare the operating performance of different REITs. However, not all REITs calculate FFO and FFO, as adjusted, the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and FFO, as adjusted, are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance, as an alternative to cash flows from operations as an indication of SmartStop’s liquidity or indicative of funds available to fund their cash needs including their ability to make distributions to their stockholders. FFO and FFO, as adjusted, should be reviewed in conjunction with other measurements as an indication of our performance. Neither the SEC, NAREIT, nor any other regulatory body has passed judgment on the acceptability of the adjustments that SmartStop uses to calculate FFO or FFO, as adjusted. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the publicly registered, non-traded REIT industry and SmartStop would have to adjust its calculation and characterization of FFO or FFO, as adjusted. This press release, a financial supplement, and additional information about SmartStop are available on our website, investors.smartstopselfstorage.com. About SmartStop Self Storage REIT, Inc. (“SmartStop”): SmartStop Self Storage REIT, Inc. (“SmartStop”) (NYSE: SMA) is a self-managed REIT with a fully integrated operations team of more than 600 self-storage professionals focused on growing the SmartStop® Self Storage brand. SmartStop, through its indirect subsidiary SmartStop REIT Advisors, LLC, also sponsors other self-storage programs. As of August 6, 2025, SmartStop has an owned or managed portfolio of 230 operating properties in 23 states, the District of Columbia, and Canada, comprising approximately 167,200 units and 18.7 million rentable square feet. SmartStop and its affiliates own or manage 44 operating self-storage properties in Canada, which total approximately 39,000 units and 3.9 million rentable square feet. Forward-Looking Statements Certain of the matters discussed in this earnings release, other than historical facts, constitute forward-looking statements within the meaning of the federal securities laws, and we intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in such federal securities laws. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words, or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. Such statements include, but are not limited to statements concerning our plans, strategies, initiatives, prospects, objectives, goals, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation:
All forward-looking statements, including without limitation, management’s examination of historical operating trends and estimates of future earnings, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them, but there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the Securities and Exchange Commission (the “SEC”) and are not intended to be a guarantee of our performance in future periods. We cannot guarantee the accuracy of any such forward-looking statements contained in this earnings release, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For further information regarding risks and uncertainties associated with our business, and important factors that could cause our actual results to vary materially from those expressed or implied in such forward-looking statements, please refer to the factors listed and described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Risk Factors” sections of the documents we file from time to time with the SEC, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2024, as supplemented by the risk factors included in Part II, Item 1A of our Form 10-Qs, copies of which may be obtained from our website at investors.smartstopselfstorage.com. View source version on businesswire.com: https://www.businesswire.com/news/home/20250806523148/en/ Contacts
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