SmartStop Self Storage (NYSE: SMA) swings to Q1 2026 profit on higher revenue
SmartStop Self Storage REIT, Inc. reported stronger results for the three months ended March 31, 2026. Total revenues rose to $78.3 million from $65.4 million, driven mainly by higher self storage rental revenue of $61.9 million and Managed Platform revenue of $6.6 million.
Net income attributable to common stockholders improved to $9.6 million, or $0.17 per diluted share, versus a loss of $8.4 million, or $(0.35), a year earlier. Operating cash flow increased to $24.2 million, while debt remained significant at $1.09 billion against total assets of $2.42 billion.
The company owned 177 wholly-owned self storage properties and, through its Managed Platform, managed more than 275 additional properties. It also put in place an at-the-market equity program allowing sales of up to $300 million of common stock, though no shares had been sold as of May 8, 2026.
Positive
- Return to profitability: Net income attributable to common stockholders reached $9.6 million versus an $8.4 million loss a year earlier, with diluted EPS improving from $(0.35) to $0.17.
Negative
- None.
Insights
SmartStop turned a prior-year loss into profit with higher revenues and new equity capacity.
SmartStop Self Storage REIT grew total revenues to $78.3 million, up from $65.4 million, helped by self storage rental revenue of $61.9 million and Managed Platform revenue of $6.6 million. Operating expenses also increased, but income from operations stayed solid at $16.2 million.
Net income attributable to common stockholders swung to $9.6 million from an $8.4 million loss, aided by lower interest expense of $13.1 million versus $22.0 million and foreign currency gains tied to $700.0 million CAD notes. Cash from operating activities rose to $24.2 million.
Leverage remains meaningful, with debt of $1.09 billion against total assets of $2.42 billion. The new at-the-market program permits up to $300 million of common stock issuance, giving optionality for future financing. Subsequent filings may clarify how actively this facility is used.
Key Figures
Key Terms
Managed Platform financial
ATM Agreement financial
automatic shelf registration statement regulatory
Series C Convertible Subordinated Units financial
variable interest entity financial
Real Estate Investment Trust financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
For the transition period from __________ to __________
Commission File Number:
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices)
(
(Registrant’s telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
|
Trading Symbol(s) |
|
Name of Each Exchange on Which Registered |
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ |
|
Accelerated filer |
☐ |
|
Non-accelerated filer |
☐ |
|
Smaller reporting company |
|
|
|
|
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 1, 2026, there were
FORM 10-Q
SMARTSTOP SELF STORAGE REIT, INC.
TABLE OF CONTENTS
|
|
|
Page |
|
Cautionary Note Regarding Forward-Looking Statements |
|
4 |
|
|
|
|
PART I. |
FINANCIAL INFORMATION |
|
6 |
|
|
|
|
Item 1. |
Consolidated Financial Statements (Unaudited): |
|
6 |
|
Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025 |
|
7 |
|
Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (unaudited) |
|
8 |
|
Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2026 and 2025 (unaudited) |
|
9 |
|
Consolidated Statements of Equity and Temporary Equity for the Three Months Ended March 31, 2026 and 2025 (unaudited) |
|
10 |
|
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited) |
|
13 |
|
Notes to Consolidated Financial Statements (unaudited) |
|
14 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
66 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
|
83 |
Item 4. |
Controls and Procedures |
|
84 |
|
|
|
|
PART II. |
OTHER INFORMATION |
|
85 |
|
|
|
|
Item 1. |
Legal Proceedings |
|
85 |
Item 1A. |
Risk Factors |
|
85 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
|
85 |
Item 3. |
Defaults Upon Senior Securities |
|
85 |
Item 4. |
Mine Safety Disclosures |
|
85 |
Item 5. |
Other Information |
|
85 |
Item 6. |
Exhibits |
|
85 |
3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Form 10-Q of SmartStop Self Storage REIT, Inc., other than historical facts, may be considered 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,” “seek,” “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 U.S. 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 Form 10-Q, 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.
4
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, 2025, as supplemented by the risk factors included in Part II, Item 1A of this Form 10-Q, copies of which may be obtained from our website at www.investors.smartstopselfstorage.com.
5
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The information included in the accompanying unaudited consolidated balance sheets and related consolidated statements of operations, comprehensive income (loss), equity and temporary equity, and cash flows reflects all adjustments (consisting of normal and recurring adjustments) that are, in management’s opinion, necessary for a fair and consistent presentation of the aforementioned consolidated financial statements.
The accompanying consolidated financial statements should be read in conjunction with the notes to our consolidated financial statements included in this report on Form 10-Q. The accompanying consolidated financial statements should also be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025. Our results of operations for the three months ended March 31, 2026 are not necessarily indicative of the operating results expected for the full year.
6
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
(unaudited) |
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Real estate facilities: |
|
|
|
|
|
|
||
Land |
|
$ |
|
|
$ |
|
||
Buildings |
|
|
|
|
|
|
||
Site improvements |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Construction in process |
|
|
|
|
|
|
||
Real estate facilities, net |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Restricted cash |
|
|
|
|
|
|
||
Investments in unconsolidated real estate ventures (Note 6) |
|
|
|
|
|
|
||
Investments in and advances to Managed REITs |
|
|
|
|
|
|
||
Deferred tax assets |
|
|
|
|
|
|
||
Other assets, net |
|
|
|
|
|
|
||
Intangible assets, net of accumulated amortization |
|
|
|
|
|
|
||
Trademarks, net of accumulated amortization |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Debt issuance costs, net of accumulated amortization |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
||
Debt, net |
|
$ |
|
|
$ |
|
||
Accounts payable and accrued liabilities |
|
|
|
|
|
|
||
Distributions payable |
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
Commitments and contingencies (Note 14) |
|
|
|
|
|
|
||
Preferred stock, $ |
|
|
|
|
|
|
||
Equity: |
|
|
|
|
|
|
||
SmartStop Self Storage REIT, Inc.: |
|
|
|
|
|
|
||
Common Stock, $ |
|
|
|
|
|
|
||
Class A Common Stock, $ |
|
|
|
|
|
|
||
Class T Common Stock, $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Distributions |
|
|
( |
) |
|
|
( |
) |
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive income |
|
|
|
|
|
|
||
Total SmartStop Self Storage REIT, Inc. equity |
|
|
|
|
|
|
||
Noncontrolling interests in our Operating Partnership |
|
|
|
|
|
|
||
Total noncontrolling interests |
|
|
|
|
|
|
||
Total equity |
|
|
|
|
|
|
||
Total liabilities and equity |
|
$ |
|
|
$ |
|
||
See notes to consolidated financial statements.
7
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except share and per share data)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Revenues: |
|
|
|
|
|
|
||
Self storage rental revenue |
|
$ |
|
|
$ |
|
||
Ancillary operating revenue |
|
|
|
|
|
|
||
Managed Platform revenue |
|
|
|
|
|
|
||
Reimbursable costs from Managed Platform |
|
|
|
|
|
|
||
Total revenues |
|
|
|
|
|
|
||
Operating expenses: |
|
|
|
|
|
|
||
Property operating expenses |
|
|
|
|
|
|
||
Managed Platform expenses |
|
|
|
|
|
|
||
Reimbursable costs from Managed Platform |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Intangible amortization expense |
|
|
|
|
|
|
||
Acquisition expenses |
|
|
|
|
|
|
||
Contingent earnout adjustment |
|
|
|
|
|
|
||
Total operating expenses |
|
|
|
|
|
|
||
Gain on disposition of real estate |
|
|
|
|
|
|
||
Income from operations |
|
|
|
|
|
|
||
Other (expense) income: |
|
|
|
|
|
|
||
Equity in losses from investments in unconsolidated real estate ventures |
|
|
( |
) |
|
|
( |
) |
Equity in losses from investments in Managed REITs |
|
|
( |
) |
|
|
( |
) |
Interest and investment income |
|
|
|
|
|
|
||
Other, net |
|
|
|
|
|
|
||
Interest expense |
|
|
( |
) |
|
|
( |
) |
Loss on debt extinguishment |
|
|
( |
) |
|
|
( |
) |
Income tax expense |
|
|
( |
) |
|
|
( |
) |
Net income (loss) |
|
|
|
|
|
( |
) |
|
Net (income) loss attributable to noncontrolling interests |
|
|
( |
) |
|
|
|
|
Less: Distributions to preferred stockholders |
|
|
|
|
|
( |
) |
|
Net income (loss) attributable to SmartStop Self Storage REIT, Inc. common stockholders |
|
$ |
|
|
$ |
( |
) |
|
Net income (loss) per Common Stock, Class A & Class T share: |
|
|
|
|
|
|
||
Basic |
|
$ |
|
|
$ |
( |
) |
|
Diluted |
|
$ |
|
|
$ |
( |
) |
|
Weighted average Common Stock, Class A & Class T shares outstanding: |
|
|
|
|
|
|
||
Basic |
|
|
|
|
|
|
||
Diluted |
|
|
|
|
|
|
||
See notes to consolidated financial statements.
8
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Amounts in thousands)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
||
Foreign currency translation adjustment |
|
|
( |
) |
|
|
|
|
Foreign currency hedge contract gains |
|
|
|
|
|
|
||
Interest rate swap and cap contract losses |
|
|
|
|
|
( |
) |
|
Other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
Comprehensive (income) loss attributable to noncontrolling interests: |
|
|
|
|
|
|
||
Comprehensive (income) loss attributable to noncontrolling interests |
|
|
( |
) |
|
|
|
|
Comprehensive income (loss) attributable to SmartStop Self Storage REIT, Inc. stockholders |
|
$ |
|
|
$ |
( |
) |
|
See notes to consolidated financial statements.
9
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY AND TEMPORARY EQUITY
For the Three Months Ended March 31, 2026 and 2025
(Unaudited)
(Amounts in thousands, except share and per share data)
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
Common Stock |
|
|
Class A |
|
|
Class T |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Number |
|
|
Common |
|
|
Number |
|
|
Common |
|
|
Number |
|
|
Common |
|
|
Additional |
|
|
Distributions |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|
Noncontrolling |
|
|
Total |
|
|||||||||||||
Balance as of December 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||||
Tax withholding (net settlement redemption) related to vesting of restricted stock |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of restricted stock, net of forfeitures |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Distributions ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Distributions to noncontrolling interests in our Operating Partnership |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to SmartStop Self Storage REIT, Inc. common stockholders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Net income attributable to the noncontrolling interests in our Operating Partnership |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance as of March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||||
See notes to consolidated financial statements.
10
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY AND TEMPORARY EQUITY (CONTINUED)
For the Three Months Ended March 31, 2026 and 2025
(Unaudited)
(Amounts in thousands, except share and per share data)
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
|
|
Common Stock |
|
|
Class A |
|
|
Class T |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
Number |
|
|
Common |
|
|
Number |
|
|
Common |
|
|
Number |
|
|
Common |
|
|
Additional |
|
|
Distributions |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|
Noncontrolling |
|
|
Total |
|
|
Preferred |
|
|
Redeemable |
|
|||||||||||||||
Balance as of December 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||||
Tax withholding (net settlement redemption) related to vesting of restricted stock |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Changes to redeemable common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
Par value adjustment due to Reverse Stock Split |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
Restricted stock forfeitures |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Distributions ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Distributions to noncontrolling interests in our Operating Partnership |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Distributions to other noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Issuance of shares for distribution reinvestment plan |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|||||
Equity-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Net loss attributable to SmartStop Self Storage REIT, Inc. common stockholders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net loss attributable to the noncontrolling interests in our Operating Partnership |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net income attributable to other noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Foreign currency hedge contract gain |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Interest rate hedge contract loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Balance as of March 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||||
11
See notes to consolidated financial statements.
12
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Change in deferred tax assets and liabilities |
|
|
|
|
|
|
||
Accretion of fair market value adjustment of secured debt |
|
|
|
|
|
|
||
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Equity-based compensation expense |
|
|
|
|
|
|
||
Non-cash adjustment - equity method investments in unconsolidated real estate ventures |
|
|
|
|
|
|
||
Non-cash adjustment - equity method investments in Managed REITs |
|
|
|
|
|
|
||
Accretion of financing fee revenues |
|
|
( |
) |
|
|
( |
) |
Contingent earnout adjustment |
|
|
|
|
|
|
||
Unrealized foreign currency and derivative (gains) losses |
|
|
( |
) |
|
|
( |
) |
Loss on debt extinguishment |
|
|
|
|
|
|
||
Sponsor funding reduction |
|
|
|
|
|
|
||
Gain on disposition of real estate |
|
|
( |
) |
|
|
|
|
Increase (decrease) in cash from changes in assets and liabilities: |
|
|
|
|
|
|
||
Other assets, net |
|
|
|
|
|
|
||
Accounts payable and accrued liabilities |
|
|
|
|
|
|
||
Managed REITs receivables and other |
|
|
( |
) |
|
|
( |
) |
Due to affiliates |
|
|
|
|
|
( |
) |
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchase of real estate |
|
|
|
|
|
( |
) |
|
Additions to real estate and construction in process |
|
|
( |
) |
|
|
( |
) |
Deposits on acquisitions |
|
|
|
|
|
( |
) |
|
Insurance proceeds on insured property damage |
|
|
|
|
|
|
||
Capital distributions from unconsolidated real estate ventures |
|
|
|
|
|
|
||
Investments in unconsolidated real estate ventures |
|
|
( |
) |
|
|
( |
) |
Funding of loans - SSGT III and SSGT III sponsored DSTs |
|
|
( |
) |
|
|
|
|
Repayment of loans - SSGT III and SSGT III sponsored DSTs |
|
|
|
|
|
|
||
Purchase of SST VI Subordinated Class C Units |
|
|
|
|
|
( |
) |
|
Purchase of other investments |
|
|
|
|
|
( |
) |
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Scheduled principal payments on non-credit facility debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from issuance of former credit facility debt |
|
|
|
|
|
|
||
Repayment of former credit facility debt |
|
|
( |
) |
|
|
|
|
Proceeds from issuance of current credit facility debt |
|
|
|
|
|
|
||
Repayment of current credit facility debt |
|
|
( |
) |
|
|
|
|
Offering costs |
|
|
|
|
|
( |
) |
|
Gross proceeds - issuance of non-credit facility debt |
|
|
|
|
|
|
||
Repayment - non-credit facility debt |
|
|
|
|
|
( |
) |
|
Debt defeasance costs |
|
|
|
|
|
( |
) |
|
Debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Payment of payroll withholding tax on stock vesting |
|
|
( |
) |
|
|
( |
) |
Distributions paid - preferred stockholders |
|
|
|
|
|
( |
) |
|
Distributions paid - common stockholders |
|
|
( |
) |
|
|
( |
) |
Distributions paid - noncontrolling interests in our OP |
|
|
( |
) |
|
|
( |
) |
Distributions paid - other noncontrolling interests |
|
|
|
|
|
( |
) |
|
Net cash (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
Impact of foreign exchange rate changes on cash and restricted cash |
|
|
( |
) |
|
|
( |
) |
Change in cash, cash equivalents, and restricted cash |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents, and restricted cash beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest, net of capitalized interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of noncash activities: |
|
|
|
|
|
|
||
Issuance of shares pursuant to distribution reinvestment plan |
|
$ |
|
|
$ |
|
||
Distributions payable |
|
$ |
|
|
$ |
|
||
Deferred offering costs included in accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
||
Real estate and construction in process included in accounts payable and accrued liabilities |
|
$ |
|
|
$ |
|
||
Deposit applied to the purchase of real estate |
|
$ |
|
|
$ |
|
||
Earnest deposits on acquisitions assigned to the Managed REITs, amounts reclassified to Managed REITs receivables |
|
$ |
|
|
$ |
|
||
See notes to consolidated financial statements.
13
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Note 1. Organization
SmartStop Self Storage REIT, Inc., a Maryland corporation (the “Company”), is a self-managed and fully-integrated self storage real estate investment trust (“REIT”), formed on
We acquire, own and operate self storage facilities. In addition, through our subsidiaries, we serve as the sponsor of various real estate programs.
As of March 31, 2026, our wholly-owned portfolio consisted of
Additionally, as of March 31, 2026, we owned a
Through our Managed Platform (as defined below), we serve as the sponsor of Strategic Storage Trust VI, Inc., a publicly-registered non-traded REIT (“SST VI”), Strategic Storage Growth Trust III, Inc., a private REIT (“SSGT III”), and Strategic Storage Trust X, a private net asset value REIT, (“SST X” and together with SST VI and SSGT III, the “Managed REITs”). We manage the properties owned by the Managed REITs and the properties owned by the Delaware statutory trusts (“DSTs”) sponsored by one of the Managed REITs. As of March 31, 2026, we managed
On October 1, 2025, we acquired Argus Professional Storage Management, LLC (“Argus”), a third-party manager of self storage properties (the “Third Party Platform Acquisition”). See Note 4 – Third Party Platform Acquisition for additional information. As of March 31, 2026, we managed more than
The Third Party Platform, the Managed REITs, and the other properties operated but not owned by us, as mentioned above, are referred to as the “Managed Platform.” In total, as of March 31, 2026, we managed more than
SmartStop OP, L.P. (the “Operating Partnership”) owns, directly or indirectly through one or more subsidiaries, all of the self storage properties that we own. As of March 31, 2026, we owned approximately
On March 20, 2025, we effected a one-for-four reverse common stock split (the “Reverse Stock Split”) of each issued and outstanding share of Class A common stock (“Class A Common Stock”), $
14
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Immediately after the Reverse Stock Split, we reclassified and designated
On June 12, 2025, we filed Articles of Amendment to our charter to decrease our total number of authorized shares of stock from
On April 1, 2025 we executed our underwriting agreement, and on April 3, 2025, we closed our registered underwritten public offering (the “Underwritten Public Offering”) of
On October 1, 2025, the six-month anniversary of the listing of our Common Stock issued in our Underwritten Public Offering for trading on the NYSE, each share of Class A Common Stock and Class T Common Stock automatically converted into one share of our unclassified listed Common Stock. In preparation for this conversion, on July 30, 2025, we completed a fractional share redemption related to our Class A Common Stock and Class T Common Stock of approximately $
On May 1, 2025, we terminated our distribution reinvestment plan. As of such date, we had sold approximately
On March 19, 2026, we entered into a distribution agreement (the “ATM Agreement”) with each of J.P. Morgan Securities, LLC, BMO Capital Markets Corp., Evercore Group L.L.C., Huntington Securities, Inc., KeyBanc Capital Markets Inc., M&T Securities, Inc., Raymond James & Associates, Inc., RBC Capital Markets, LLC, Robert W. Baird & Co. Incorporated, Scotia Capital (USA) Inc., Truist Securities, Inc., and Wells Fargo Securities, LLC, as sales agents (in such capacity, “Sales Agents”), the Forward Sellers (as defined below and together with the Sales Agents, the “Agents”) and the Forward Purchasers (as defined below). Pursuant to the ATM Agreement, we may issue and sell, from time to time, shares of our Common Stock having an aggregate offering price of up to $
15
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The sales, if any, of the Shares under the ATM Agreement, made to or through the Agents, as our Sales Agents or as Forward Sellers on behalf of the Forward Purchasers, will be made in negotiated transactions, including block trades, or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), by means of ordinary brokers’ transactions at market prices prevailing at the time of sale, including sales made directly on the New York Stock Exchange, sales made to or through a market maker and sales made through other securities exchanges or electronic communications networks.
In the ATM Agreement, we made certain customary representations, warranties and covenants concerning us, the Operating Partnership and the Shelf Registration Statement (as defined below) and also agreed to indemnify the Agents and the Forward Purchasers against certain liabilities, including liabilities under the Securities Act.
The Shares sold in the offering will be issued pursuant to our automatic shelf registration statement on Form S-3 (File No. 333-292583) filed with the SEC on January 5, 2026 (the “Shelf Registration Statement”). On March 19, 2026, we filed with the SEC a prospectus supplement to the prospectus included in the Shelf Registration Statement relating to the offering contemplated by the ATM Agreement. As of May 8, 2026, we have
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC.
The square footage, unit count, and occupancy percentage data and related disclosures included in these notes to the consolidated financial statements are outside the scope of our independent registered accounting firm’s review.
Reverse Equity Splits
As applicable and unless otherwise indicated, the consolidated financial statements and accompanying footnotes for all periods presented give effect to the retrospective effect to the Reverse Equity Splits as described above in Note 1 – Organization.
Underwritten Public Offering Costs
Prior to the consummation of the Underwritten Public Offering, deferred costs pertaining to our Underwritten Public Offering were recorded in other assets, net in our consolidated balance sheets. Such costs were offset against the Underwritten Public Offering proceeds and were all reclassified to additional paid-in capital in our consolidated balance sheets in connection with the consummation of the Underwritten Public Offering. We incurred other transaction costs related to our Underwritten Public Offering activities that were not directly attributable to our equity raise, and therefore were not capitalized; such costs were included within the general and administrative expenses line item in our consolidated statements of operations.
Principles of Consolidation
Our financial statements, and the financial statements of our Operating Partnership, including its wholly-owned subsidiaries, are consolidated in the accompanying consolidated financial statements. The portion of these entities not wholly-owned by us is presented as noncontrolling interests. All intercompany accounts and transactions have been eliminated in consolidation.
16
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Consolidation Considerations
Current accounting guidance provides a framework for identifying a variable interest entity (“VIE”) and determining when a company should include the assets, liabilities, noncontrolling interests, and results of activities of a VIE in its consolidated financial statements. In general, a VIE is an entity or other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. Generally, a VIE should be consolidated if a party with an ownership, contractual, or other financial interest in the VIE (a variable interest holder) has the power to direct the VIE’s most significant activities and the obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and noncontrolling interest at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest.
Our Operating Partnership is deemed to be a VIE and is consolidated by us as we are currently the primary beneficiary. Our sole significant asset is our investment in our Operating Partnership; as a result, substantially all of our assets and liabilities represent those assets and liabilities of our Operating Partnership and its wholly-owned subsidiaries.
As of March 31, 2026 and December 31, 2025, we were not a party to any other material contracts or interests that would be deemed variable interests in VIEs other than our joint ventures with SmartCentres, our Nantucket Joint Venture (as defined below), and our common and in substance common equity investments in the Managed REITs, which are all accounted for under the equity method of accounting as we are not the primary beneficiary thereof and do not consolidate (see Note 6 – Investments in Unconsolidated Real Estate Ventures and Note 12 – Related Party Transactions for additional information). Our joint venture programs through which we offer our tenant insurance, tenant protection plans or similar programs (the “Tenant Protection Programs”) with SST VI, SSGT III and SST X are consolidated.
Equity Investments
Interest and Investment Income
Investments in and Advances to Managed REITs
As of March 31, 2026 and December 31, 2025, we owned equity and debt investments in the Managed REITs; such amounts are included in investments in and advances to Managed REITs in our consolidated balance sheets. We account for the common and in substance common equity investments using the equity method of accounting as we have the ability to exercise significant influence, but not control, over the Managed REITs’ operating and financial policies through our advisory and property management agreements with the respective Managed REITs.
See Note 12 – Related Party Transactions for additional information.
17
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Noncontrolling Interests in Consolidated Entities
We have accounted for the noncontrolling interests in our Operating Partnership, our Tenant Protection Programs joint ventures with SST VI, SSGT III, and SST X and, until June 18, 2025 (i.e. the redemption date of such noncontrolling interests in the SST VI advisor), the noncontrolling interests in the SST VI advisor, in accordance with the related accounting guidance.
Due to our control through our general partnership interest in our Operating Partnership and the limited rights of the limited partners, our Operating Partnership, including its wholly-owned subsidiaries, are consolidated with the Company and the limited partner interests are reflected as noncontrolling interests in the accompanying consolidated balance sheets. We also consolidate our interests in the SST VI, SSGT III, and SST X Tenant Protection Programs and present the minority interests as noncontrolling interests in the accompanying consolidated balance sheets. The noncontrolling interests shall be attributed their share of income and losses.
Use of Estimates
Cash and Cash Equivalents
We consider all short-term, highly liquid investments that are readily convertible to cash with a maturity of three months or less at the time of purchase to be cash equivalents.
We may maintain cash and cash equivalents in financial institutions in excess of insured limits. In an effort to mitigate this risk, we generally invest in or through major financial institutions.
Restricted Cash
Purchase Price Allocation and Treatment of Acquisition Costs
We account for asset acquisitions in accordance with GAAP which requires that we allocate the purchase price of a property to the tangible and intangible assets acquired and the liabilities assumed based on their relative fair values as of the date of acquisition. This guidance requires us to make significant estimates and assumptions, including fair value estimates, which requires the use of significant unobservable inputs as of the acquisition date. We engage independent third-party valuation specialists to assist in the determination of significant estimates and market-based assumptions used in the valuation models.
The value of the tangible assets, consisting of land and buildings, is determined as if vacant. Substantially all of the leases in place at acquired properties are at market rates, as the majority of the leases are month-to-month contracts. We also consider whether in-place, market leases represent an intangible asset. During the three months ended March 31, 2026 and 2025, we recorded approximately
Allocation of purchase price to acquisitions of portfolios of facilities are allocated to the individual facilities based upon an income approach or a cash flow analysis using appropriate risk adjusted capitalization rates which take into account the relative size, age, and location of the individual facility along with current and projected occupancy and rental rate levels or appraised values, if available.
18
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Acquisitions that do not meet the definition of a business, as defined under current GAAP, are accounted for as asset acquisitions. During the three months ended March 31, 2026, we had
Intangible Assets Valuation
In connection with the acquisition of the Third Party Platform, we allocated a portion of the consideration to an intangible asset related to the property management contracts and the related customer relationships. We are amortizing such intangible asset on a straight-line basis over the estimated benefit period of the property management contracts and related customer relationships. We evaluate such intangible asset for impairment when an event occurs or circumstances change that indicate the carrying value may not be recoverable. In such an event, an impairment charge would be recognized and the intangible asset would be marked down to its fair value.
Evaluation of Possible Impairment of Real Property Assets
Management monitors events and changes in circumstances that could indicate that the carrying amounts of our real property assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of the assets may not be recoverable, we will assess the recoverability of the assets by determining whether the carrying value of the real property assets will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying value, we will adjust the value of the real property assets to the fair value and recognize an impairment loss. For the three months ended March 31, 2026 and 2025,
Casualty Insurance Recoveries
In the event of a wind storm, flood, fire or other such event causing property damage, we estimate the carrying value of the damaged property and record a corresponding casualty loss. If we determine that an insurance recovery is probable, we record such estimated recovery as a receivable up to the amount of the casualty loss. Any amount of insurance recovery for such loss in excess of the amount of the casualty loss recorded is considered a gain contingency and is recognized when the claim is fully settled.
Goodwill Valuation
We initially recorded goodwill as a result of the Self Administration Transaction (as defined in Note 12 – Related Party Transactions), which occurred in 2019. Additionally, we recorded goodwill in connection with our Third Party Platform Acquisition (see Note 4 – Third Party Platform Acquisition for additional information). Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible assets and other intangible assets acquired. Goodwill is allocated to various reporting units, as applicable, and is not amortized. We perform an annual qualitative impairment assessment as of December 31 for goodwill; between annual assessments, we evaluate the recoverability of goodwill whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be fully recoverable. If circumstances indicate the carrying amount may not be fully recoverable, we perform a quantitative analysis to compare the fair value of each reporting unit to its respective carrying amount. If the carrying amount of goodwill exceeds its fair value, an impairment charge will be recognized.
19
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Trademarks Valuation
In connection with the Self Administration Transaction (as defined in Note 12 – Related Party Transactions), we recorded the fair value associated with the
Trademarks are based on the value of our brands. Trademarks are valued using the relief from royalty method, which presumes that without ownership of such trademarks, we would have to make a stream of payments to a brand or franchise owner in return for the right to use their name. By virtue of this asset, we avoid any such payments and record the related intangible fair value of our ownership of the brand name.
As of March 31, 2026 and December 31, 2025, $
We qualitatively evaluate whether any triggering events or changes in circumstances have occurred in addition to our annual impairment test that would indicate an impairment condition may exist. If any change in circumstance or triggering event occurs, and results in a significant impact to our revenue and profitability projections, or any significant assumption in our valuation methods is adversely impacted, the impact could result in a material impairment charge in the future.
Revenue Recognition
Self Storage Operations
Management believes that all of our leases are operating leases. Rental income is recognized in accordance with the terms of the leases, which generally are month-to-month. Revenues from any long-term operating leases are recognized on a straight-line basis over the term of the lease. The excess of rents received over amounts contractually due pursuant to the underlying leases is included in accounts payable and accrued liabilities in our consolidated balance sheets, and contractually due but unpaid rent is included in other assets in our consolidated balance sheets.
In accordance with ASC 842, we review the collectability of lease payments on an ongoing basis. We consider collectability indicators when analyzing accounts receivable and historical bad debt levels, including current economic trends, all of which assist in evaluating the probability of outstanding and future rental income collections.
Additionally, we earn ancillary revenue from fees we receive related to providing tenant insurance or tenant protection plans to customers at our properties through our Tenant Protection Programs, and to a lesser extent, through the sale of various moving and packing supplies such as locks and boxes. We recognize such revenue in ancillary operating revenue in our consolidated statements of operations as the services are performed and as the goods or services are delivered.
Managed Platform
As applicable, we earn property management and asset management revenue, pursuant to the respective property management and advisory agreement contracts, in connection with providing services to the Managed REITs and from the owners of the properties we manage on our Third Party Platform. We have determined under ASC 606 – Revenue from Contracts with Customers (“ASC 606”), that the performance obligation for the property management services and asset management services are satisfied as the services are rendered. While we are compensated for our services on a monthly basis, these services represent a series of distinct daily services in accordance with ASC 606. Such revenue is recorded in Managed Platform revenue in our consolidated statements of operations.
The Managed REITs’ advisory agreements also provide for reimbursement to us of certain costs of providing administrative and management services to the Managed REITs. These reimbursements include costs incurred in relation to organization and offering services provided to the Managed REITs and include the reimbursement of salaries, bonuses, and other expenses related to benefits paid to our employees while performing services for the Managed REITs. The Managed REITs’ and the Third Party Platform’s property management agreements also provide reimbursement to us for the property manager’s costs of managing the properties. Reimbursable costs include wages and salaries and other expenses that relate to benefits that arise in operating, managing and maintaining the related properties.
20
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Under ASC 606, direct reimbursement of such costs does not represent a separate performance obligation from our obligation to perform property management and asset management services. The reimbursement income is considered variable consideration, and is recognized as the costs are incurred, subject to limitations on the Managed Platform’s ability to incur offering costs or limitations imposed by the advisory agreements. We have elected to separately record such revenue in reimbursable costs from Managed Platform in our consolidated statements of operations.
Additionally, we earn revenue in connection with our Tenant Protection Programs joint ventures with our Managed REITs. We also earn development and construction management revenue from certain services we provide in connection with the project design, coordination and oversight of development and certain capital improvement projects undertaken by the Managed REITs and certain properties we manage through our Third Party Platform. We recognize such revenue in Managed Platform revenue in our consolidated statements of operations, as the services are performed or delivered. See Note 12 – Related Party Transactions for additional information regarding revenue generated from our Managed Platform.
Sponsor Funding Agreement
On November 1, 2023, SmartStop REIT Advisors, LLC, a subsidiary of our Operating Partnership, entered into a sponsor funding agreement (the “Sponsor Funding Agreement”), with SST VI and Strategic Storage Operating Partnership VI, L.P. (“SST VI OP”) in connection with certain changes to the public offering of SST VI and as of June 30, 2025, such agreement was terminated (see Note 12 – Related Party Transactions for additional information).
Pursuant to the Sponsor Funding Agreement, SmartStop, through a wholly-owned subsidiary, was required to fund the payment of the front-end sales load for the sale of SST VI’s Class Y and Class Z shares sold in its offering. In exchange, SmartStop received a number of Series C Convertible Subordinated Units (“Series C Units”) in SST VI OP calculated as the dollar amount of such funding divided by the then-current offering price, which was $
On August 7, 2024, SST VI declared an estimated net asset value per share of $
As of June 30, 2025, SST VI closed the primary portion of its public offering. The Sponsor Funding Agreement was terminated immediately in connection with the closedown of SST VI’s primary offering. In accordance therewith, we have no further funding obligation in connection with the Sponsor Funding Agreement. We had incurred approximately $
On March 20, 2026, SST VI declared an estimated net asset value per share of $
21
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
In accordance with ASC 606, the amount by which our funding exceeded the fair value of the Series C Units received was accounted for as a payment to a customer and was therefore recorded as a reduction to the transaction price for the services we provide to such customer. Each payment was initially included in other assets, net in our consolidated balance sheets and is subsequently being recorded as a reduction of Managed Platform revenue ratably over the remaining estimated life of our management contracts with SST VI.
Balance as of December 31, 2024 |
|
$ |
|
|
Amounts incurred |
|
|
|
|
Recorded sponsor funding reduction |
|
|
( |
) |
Balance as of December 31, 2025 |
|
$ |
|
|
Recorded sponsor funding reduction |
|
|
( |
) |
Balance as of March 31, 2026 |
|
$ |
|
Allowance for Doubtful Accounts
Tenant accounts receivable is reported net of an allowance for doubtful accounts. Management records this general allowance estimate based upon a review of the current status of accounts receivable. It is reasonably possible that management’s estimate of the allowance will change in the future. As of March 31, 2026 and December 31, 2025, approximately $
Advertising Costs
Advertising costs are expensed in the period in which the cost is incurred and are included in property operating expenses and general and administrative expenses in our consolidated statements of operations, depending on the nature of the expense.
For the three months ended March 31, 2026 and 2025, approximately $
Real Estate Facilities
We capitalize costs incurred to develop, construct, renovate and improve properties, including interest and property taxes incurred during the construction period. The construction period begins when expenditures for the real estate assets have been made and activities that are necessary to prepare the asset for its intended use are in progress. The construction period ends when the asset is substantially complete and ready for its intended use.
Depreciation of Real Property Assets
Our management is required to make subjective assessments as to the useful lives of our depreciable assets. We consider the period of future benefit of the asset to determine the appropriate useful lives.
Depreciation of our real property assets is charged to expense on a straight-line basis over the estimated useful lives
as follows:
Description |
|
Standard Depreciable Life |
Land |
|
Not Depreciated |
Buildings |
|
|
Site Improvements |
|
22
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Depreciation of Personal Property Assets
Intangible Assets
We have allocated a portion of our real estate purchase price to in-place lease intangible assets, which amortize on a straight-line basis over the estimated future benefit period. Additionally, we have other contract related intangible assets. As of March 31, 2026 and December 31, 2025, the gross amount of the intangible assets was approximately $
The total estimated future amortization expense for our real estate related intangible assets for the years ending December 31, 2026, 2027, 2028, 2029, and thereafter is approximately $
In connection with the acquisition of the Third Party Platform, we allocated a portion of the consideration to an intangible asset related to the property management contracts and the related customer relationships. We are amortizing such intangible asset on a straight-line basis over the estimated benefit period of the property management contracts and related customer relationships. As of March 31, 2026 and December 31, 2025, the gross amount of such intangible asset was approximately $
The total estimated future amortization expense for our intangible asset acquired in the Third Party Platform Acquisition for the years ending December 31, 2026, 2027, 2028, 2029, and thereafter is approximately $
We perform an annual qualitative impairment assessment as of December 31 for our intangible assets; between annual assessments we evaluate whether any triggering events or changes in circumstances have occurred that would indicate an impairment condition may exist. If any change in circumstance or triggering event occurs, and results in a significant impact to our revenue and profitability projections, or any significant assumption in our valuations methods is adversely impacted, the impact could result in an impairment charge in the future.
Debt Issuance Costs
The net carrying value of costs incurred in connection with obtaining non-revolving debt are presented in our consolidated balance sheets as a deduction from debt; amounts incurred related to obtaining revolving debt are included in debt issuance costs, net of accumulated amortization in our consolidated balance sheets. See Note 7 – Debt for additional information. Debt issuance costs are amortized using the effective interest method, as applicable.
As of March 31, 2026 and December 31, 2025, the gross amount of debt issuance costs related to our revolving credit facility totaled approximately $
As of March 31, 2026 and December 31, 2025, the gross amount of debt issuance costs related to our non-revolving debt totaled approximately $
23
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Foreign Currency Translation
For non-U.S. functional currency operations, assets and liabilities are translated to U.S. dollars at current exchange rates, as of the reporting date. Revenues and expenses are translated at the average rates for the period. All adjustments related to amounts classified as long term net investments are recorded in accumulated other comprehensive income (loss) as a separate component of equity. Transactions denominated in a currency other than the functional currency of the related operation are recorded at rates of exchange in effect at the date of the transaction. As of March 31, 2026, our Operating Partnership had issued $
Redeemable Common Stock
From our inception until April 29, 2025, we maintained a share redemption program (“SRP”) that enabled stockholders to sell their shares to us in limited circumstances. Upon the termination of our SRP on April 29, 2025, the maximum amount payable related to the SRP was reclassified from redeemable common stock (temporary equity) on our consolidated balance sheet to additional paid-in capital (permanent equity) in our consolidated statements of equity and temporary equity.
We evaluated the terms of our SRP, and we previously classified amounts that were potentially redeemable under the SRP as redeemable common stock in the accompanying consolidated balance sheets while the SRP was in effect. The maximum amount of redeemable shares under our SRP was limited to the net proceeds from the distribution reinvestment plan. However, accounting guidance required that determinable amounts that could become redeemable should be presented as redeemable when such amount is known. Therefore, the net proceeds from the distribution reinvestment plan were considered to be temporary equity and were previously presented as redeemable common stock in the accompanying consolidated balance sheets while the SRP was in effect.
In addition, the accounting guidance required, among other things, that financial instruments that represented a mandatory obligation of us to repurchase shares be classified as liabilities and reported at settlement value. When we determined that we had a mandatory obligation to repurchase shares under the SRP, we reclassified such obligations from temporary equity to a liability based upon their respective settlement values.
Accounting for Equity Awards
We have historically issued equity-based awards in two forms: (1) restricted stock awards consisting of shares of our common stock and (2) long-term incentive plan units of our Operating Partnership (“LTIP Units”), both of which may be issued subject to either time-based vesting criteria or performance-based vesting criteria. Performance-based vesting is based on either operational performance criteria or a market-based criteria. For time-based awards granted which contain a graded vesting schedule, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. For performance-based awards, which were issued prior to our Underwritten Public Offering, compensation cost is recognized over the requisite service period if and when we determine the performance condition is probable of being achieved. For performance-based awards with market-based criteria, which were issued subsequent to our Underwritten Public Offering, compensation is recognized as an expense on a straight-line basis over the requisite service period. We record the cost of such equity-based awards based on the grant date fair value and have elected to record forfeitures as they occur.
Employee Benefit Plan
We maintain a retirement savings plan under Section 401(k) of the Internal Revenue Code, as amended, under which eligible employees can contribute up to
24
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Fair Value Measurements
Under GAAP, we are required to measure certain financial instruments at fair value on a recurring basis. In addition, we are required to measure other financial instruments and balances at fair value on a non-recurring basis. Fair value is defined by the accounting standard for fair value measurements and disclosures as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels. The following summarizes the three levels of inputs and hierarchy of fair value we use when measuring fair value:
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the fair value measurement will fall within the lowest level that is significant to the fair value measurement in its entirety.
The accounting guidance for fair value measurements and disclosures provides a framework for measuring fair value and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In determining fair value, we will utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment will be necessary to interpret Level 2 and 3 inputs in determining fair value of our financial and non-financial assets and liabilities. Accordingly, there can be no assurance that the fair values we will present will be indicative of amounts that may ultimately be realized upon sale or other disposition of these assets.
Financial and non-financial assets and liabilities measured at fair value on a non-recurring basis in our consolidated financial statements consist of real estate and related liabilities assumed related to our acquisitions along with the assets and liabilities described in Note 3 – Real Estate Facilities. The fair values of these assets and liabilities were determined as of the acquisition dates using widely accepted valuation techniques, including (i) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (ii) income capitalization approach, which considers prevailing market capitalization rates, and (iii) market approach, which considers comparable sales activity. Additionally, certain such assets and liabilities are required to be fair valued periodically or valued pursuant to ongoing fair value requirements and impairment analyses and have been valued subsequently utilizing the same techniques noted above. In general, we consider multiple valuation techniques when measuring fair values. However, in certain circumstances, a single valuation technique may be appropriate. All of the fair values of the assets and liabilities as of the acquisition dates were derived using Level 3 inputs.
The Series C Units (categorized within Level 3 of the fair value hierarchy) acquired in connection with the Sponsor Funding Agreement were measured at fair value at the time of acquisition, and are accounted for using the equity method of accounting as described in Note 12 – Related Party Transactions. The fair value of these units was determined upon purchase using a valuation model which considered the following key assumptions: the projected distribution rate of SST VI, implied share price volatility, risk free interest rate, current estimated net asset value, and the estimated effective life of the Series C Units.
The carrying amounts of cash and cash equivalents, restricted cash, receivables, other assets, accounts payable and accrued liabilities, distributions payable and amounts due to affiliates approximate fair value (categorized within Level 1 of the fair value hierarchy).
25
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The estimated fair value of financial instruments is subjective in nature and is dependent on a number of important assumptions, including discount rates and relevant comparable market information associated with each financial instrument. The fair value of our fixed and variable rate debt was estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities (categorized within Level 2 of the fair value hierarchy). The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. As of March 31, 2026 and December 31, 2025, we believe the fair value of our variable rate debt was reasonably estimated at their notional amounts as there have been minimal changes to the fixed spread portion of interest rates for similar loans observed in the market, and as the variable portion of our interest rates fluctuate with the associated market indices.
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
|
||||
Fixed Rate Debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
During the three months ended March 31, 2025, we held interest rate cash flow hedges and foreign currency net investment and cash flow hedges to hedge our interest rate and foreign currency exposure (see Note 7 – Debt and Note 9 – Derivative Instruments). The fair value analyses of these instruments reflect the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities, as applicable. The fair value of interest rate swap and cap agreements are determined using widely accepted valuation techniques, including discounted cash flow analyses on the expected cash flows of the instruments. Our fair values of our net investment hedges are based primarily on the change in the spot rate at the end of the period as compared with the strike price at inception.
To comply with GAAP, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of derivative contracts for the effect of non-performance risk, we consider the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Although we had determined that the majority of the inputs used to value our derivatives were within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilized Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties. However, through the termination date of our derivatives, we had assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we determined that our derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.
As of March 31, 2026 and December 31, 2025, we held
Derivative Instruments and Hedging Activities
We record all derivatives on our balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. We may enter into derivative contracts that are intended to economically hedge certain of our risks, even though hedge accounting does not apply or we elect not to apply hedge accounting.
26
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Income Taxes
We made an election to be taxed as a Real Estate Investment Trust (“REIT”), under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with our taxable year ended December 31, 2014. To qualify as a REIT, we must continue to meet certain organizational and operational requirements, including a requirement to distribute at least
For income tax purposes, distributions to common stockholders are characterized as ordinary dividends, capital gain dividends, or as nontaxable distributions. To the extent that we make a distribution in excess of our current or accumulated earnings and profits, the distribution will be a non-taxable return of capital, reducing the tax basis in each U.S. stockholder’s shares, and the amount of each distribution in excess of a U.S. stockholder’s tax basis in its shares will be taxable as gain realized from the sale of its shares.
As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will then be subject to U.S. federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost unless the IRS grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we are organized and operate in such a manner as to qualify for treatment as a REIT and intend to operate in the foreseeable future in such a manner that we will remain qualified as a REIT for U.S. federal income tax purposes.
Even if we continue to qualify for taxation as a REIT, we may be subject to certain state, local, and foreign taxes on our income and property, and federal income and excise taxes on our undistributed income.
We filed an election to treat our primary taxable REIT subsidiary (“TRS”) as a taxable REIT subsidiary effective January 1, 2014. In general, our TRS performs additional services for our customers and provides the advisory and property management services related to our Managed Platform and otherwise generally engages in non-real estate related business. The TRS is subject to corporate federal and state income tax.
We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes a change in our judgment about expected future tax consequences of events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes a change in our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur.
Uncertain tax positions may arise where tax laws may allow for alternative interpretations or where the timing of recognition of income is subject to judgment. Under ASC Topic 740, tax positions are evaluated for recognition using a more–likely–than–not threshold, and those tax positions requiring recognition are measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Interest and penalties relating to uncertain tax positions will be recognized in income tax expense when incurred. As of March 31, 2026 and December 31, 2025, the Company had
Concentration
27
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Segment Reporting
Our business is composed of
Convertible Preferred Stock
We classified our Series A Convertible Preferred Stock (as defined in Note 8 – Preferred Equity) on our consolidated balance sheets using the guidance in ASC 480-10-S99. Per the original terms of our Series A Convertible Preferred Stock, it could be redeemed by us on or after the fifth anniversary of its issuance (October 29, 2024), or if certain events occur, such as the listing of our common stock on a national securities exchange, a change in control, or if a redemption would be required to maintain our REIT status. Additionally, if we did not maintain our REIT status the holder could require redemption. As the shares were contingently redeemable, and under certain circumstances not solely within our control, we had classified our Series A Convertible Preferred Stock as temporary equity prior to its redemption.
We analyzed whether the conversion features in our Series A Convertible Preferred Stock should be bifurcated under the guidance in ASC 815-10 and determined that bifurcation was not necessary.
Per Share Data
Basic earnings per share attributable to our common stockholders for all periods presented are computed by dividing net income (loss) attributable to our common stockholders for basic computations of earnings per share by the weighted average number of common shares outstanding during the period, excluding unvested restricted stock.
Diluted earnings per share is computed by including the dilutive effect, as applicable of the conversion of all potential common stock equivalents (which includes unvested restricted stock, Series A Convertible Preferred Stock, Class A and Class A-1 OP Units, and unvested LTIP Units) and accordingly, as applicable, adjusting net income to add back any changes in earnings that reduce earnings per common share in the period associated with the potential common stock equivalents.
The computation of earnings per common share is as follows for the periods presented (amounts presented in thousands, except share and per share data):
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net income (loss) |
|
$ |
|
|
$ |
( |
) |
|
Net (income) loss attributable to noncontrolling interests |
|
|
( |
) |
|
|
|
|
Net income (loss) attributable to SmartStop Self Storage REIT, Inc. |
|
|
|
|
|
( |
) |
|
Less: Distributions to preferred stockholders |
|
|
|
|
|
( |
) |
|
Less: Distributions to participating securities |
|
|
( |
) |
|
|
( |
) |
Net income (loss) attributable to common stockholders for basic computations: |
|
$ |
|
|
$ |
( |
) |
|
Net income (loss) attributable to common stockholders for diluted computations: |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
||
Weighted average Common Stock, Class A & Class T shares outstanding - basic |
|
|
|
|
|
|
||
Unvested LTIP Units |
|
|
|
|
|
|
||
Unvested restricted stock awards |
|
|
|
|
|
|
||
Weighted average Common Stock, Class A & Class T shares outstanding - diluted |
|
|
|
|
|
|
||
Net income (loss) per Common Stock, Class A & Class T share: |
|
|
|
|
|
|
||
Basic |
|
$ |
|
|
$ |
( |
) |
|
Diluted |
|
$ |
|
|
$ |
( |
) |
|
28
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The following table presents the weighted average Series A Convertible Preferred Stock, Class A and Class A-1 OP Units, unvested LTIP Units, and unvested restricted stock awards, that were excluded from the computation of diluted earnings per share above as their effect would have been antidilutive for the respective periods, and was calculated using the two-class, treasury stock or if-converted method, as applicable:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
Equivalent Shares (if converted) |
|
|||||
Class A and Class A-1 OP Units |
|
|
|
|
|
|
||
Unvested LTIP Units |
|
|
|
|
|
|
||
Unvested restricted stock awards |
|
|
|
|
|
|
||
Series A Convertible Preferred Stock |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Recently Adopted Accounting Guidance
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740).” The guidance in ASU 2023-09 was issued to provide investors with information to better assess how an entity’s operations and related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The amendment became effective for fiscal years beginning after December 15, 2024. Accordingly, we adopted this amendment during the year ended December 31, 2025 with no material impact on our consolidated financial statements. Such disclosures have been presented prospectively, in accordance with ASU 2023-09.
Recently Issued Accounting Guidance
In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses (Topic 220).” The guidance in ASU 2024-03 was issued to provide investors with more disaggregated information about an entity’s expenses. In January 2025, the FASB issued ASU 2025-01 for the sole purpose of clarifying the effective date of ASU 2024-03. The amendment becomes effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. We are currently evaluating the impact upon adoption of the new standard on our consolidated financial statements or related disclosures.
Note 3. Real Estate Facilities
The following summarizes the activity in real estate facilities during the three months ended March 31, 2026 (in thousands):
Real estate facilities |
|
|
|
|
Balance at December 31, 2025 |
|
$ |
|
|
Impact of foreign exchange rate changes and other |
|
|
( |
) |
Improvements and additions |
|
|
|
|
Balance at March 31, 2026 |
|
$ |
|
|
Accumulated depreciation |
|
|
|
|
Balance at December 31, 2025 |
|
$ |
( |
) |
Depreciation expense |
|
|
( |
) |
Impact of foreign exchange rate changes and other |
|
|
|
|
Balance at March 31, 2026 |
|
$ |
( |
) |
29
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Potential Acquisitions
As of May 8, 2026, we, through our wholly-owned subsidiaries, were party to
We may assign some or all of the above purchase and sale agreements to one or more of our Managed REITs and/or contribute such property to a joint venture.
Eminent Domain Proceedings
Note 4. Third Party Platform Acquisition
Overview
On October 1, 2025, pursuant to a contribution agreement (the “Contribution Agreement”), our Operating Partnership acquired Argus, a third-party property management company that managed more than
Through the Contribution Agreement we assumed various amounts of current assets and liabilities, which are subject to working capital adjustments to the consideration otherwise provided and described above. The principal assets acquired were property management contracts and the related customer relationships, covering the management of approximately
Fair Value of Consideration Transferred
We accounted for the Contribution Agreement discussed above as a business combination under the acquisition method of accounting.
30
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The estimated fair value of the consideration transferred on the date of the acquisition totaled approximately $
Estimated Fair Value of Consideration Transferred |
|
|
|
|
Cash (1) |
|
$ |
|
|
OP Units |
|
|
|
|
Contingent earnout (2) |
|
|
|
|
Working capital adjustment payable |
|
|
|
|
Total Consideration Transferred |
|
$ |
|
|
The estimated fair value of the OP Units issued was determined using the Company’s closing stock price on the date of the transaction and further adjusted for an illiquidity discount of
The estimated fair value of the contingent earnout was estimated based on a risk-adjusted forecast and a closed form Black Scholes call option model under a risk neutral framework that incorporates the payoff based on achievement of the requisite revenue thresholds. The portion of the earnout to be issued in OP Units was further adjusted for an illiquidity discount, as discussed immediately above.
These fair value measurements are based on significant inputs not observable in the market and thus represent a Level 3 measurement as discussed in Note 2 – Summary of Significant Accounting Policies. The key assumptions used in estimating the fair value of the contingent earnout consideration included (i) forecasted annual revenue during 2028, (ii) selection of risk-adjusted discount rates and (iii) a volatility assumption.
31
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Allocation of Consideration
The consideration transferred pursuant to the Contribution Agreement was allocated to the assets acquired and liabilities assumed, based upon their estimated fair values as of the acquisition date.
Identifiable Assets Acquired at Fair Value |
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
Equipment, furniture and fixtures |
|
|
|
|
Accounts receivable and advances |
|
|
|
|
Other assets |
|
|
|
|
Indemnification assets (1) |
|
|
|
|
Intangible asset - customer contracts and related relationships |
|
|
|
|
Total identifiable assets acquired |
|
$ |
|
|
|
|
|
|
|
Identifiable Liabilities Assumed at Fair Value |
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
|
|
Other liabilities |
|
|
|
|
Deferred tax liabilities, net |
|
|
|
|
Total liabilities assumed |
|
$ |
|
|
|
|
|
|
|
Net identifiable assets acquired |
|
$ |
|
|
Goodwill (2) |
|
|
|
|
Net assets acquired |
|
$ |
|
|
The intangible assets acquired primarily consisted of an intangible asset related to the management contracts and customer relationships related to the approximately 220 properties that Argus managed as of October 1, 2025. The value of such was determined based on a discounted cash flow valuation of the projected cash flows of the acquired contracts. The deferred tax liability is the result of differences between the GAAP carrying value of certain amortizing assets and the carrying value for tax purposes.
The goodwill recognized is supported by several factors, including that Argus brings an established management platform and workforce of the more than 400 self storage professionals which provides for numerous benefits and opportunities, including continued organic growth, growth from new income streams and the ability to offer new services.
The results of the acquisition have been included in our consolidated statements of operations since the closing date of the transaction. See Note 11 – Segment Disclosures for more information about the results of operations attributable to the Third Party Platform Acquisition since closing.
32
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Note 5. Pro Forma Financial Information
We acquired our Third Party Platform effective October 1, 2025, which was accounted for as a business combination. The following pro forma information for the three months ended March 31, 2026 and 2025 has been prepared to give effect to the acquisition as if the acquisition occurred on January 1, 2024. Net income was excluded as it was impracticable to report expenses due to the lack of historical accrual basis accounting.
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Pro forma total revenues |
|
$ |
|
|
$ |
|
||
Note 6. Investments in Unconsolidated Real Estate Ventures
Nantucket Joint Venture
On July 18, 2024, we entered into a joint venture arrangement with an unaffiliated third party to develop a self storage property in Nantucket, Massachusetts (the “Nantucket Joint Venture”). On such date we agreed to purchase an indirect minority ownership in the property, and immediately funded approximately $
For the three months ended March 31, 2026 and 2025, we recorded a net loss of approximately $
As of March 31, 2026 and December 31, 2025, the carrying value of this investment was approximately $
SmartCentres Joint Ventures
We are party to joint venture agreements with a subsidiary of SmartCentres, an unaffiliated third party, to acquire, develop, and operate self storage facilities. In connection with such agreements, as
For the three months ended March 31, 2026 and 2025, we recorded net aggregate income of approximately $
33
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The following table summarizes our
|
|
Date Real Estate |
|
Carrying Value of Investment as of |
|
|||||
|
|
Venture Became |
|
March 31, |
|
|
December 31, |
|
||
Canadian JV Property |
|
Operational |
|
2026 |
|
|
2025 |
|
||
Dupont (1) |
|
|
$ |
|
|
$ |
|
|||
East York (1) |
|
|
|
|
|
|
|
|||
Brampton (1) |
|
|
|
|
|
|
|
|||
Vaughan (1) |
|
|
|
|
|
|
|
|||
Oshawa (1) |
|
|
|
|
|
|
|
|||
Scarborough (1) |
|
|
|
|
|
|
|
|||
Aurora (1) |
|
|
|
|
|
|
|
|||
Kingspoint (1) |
|
|
|
|
|
|
|
|||
Whitby (1) |
|
|
|
|
|
|
|
|||
Markham (1) |
|
|
|
|
|
|
|
|||
Regent (2) |
|
|
|
|
|
|
|
|||
Allard (2) |
|
|
|
|
|
|
|
|||
Finch (2) |
|
|
|
|
|
|
|
|||
127 Ave, Edmonton, AB (3) |
|
|
|
|
|
|
|
|||
|
|
|
|
$ |
|
|
$ |
|
||
As of March 31, 2026, we had ownership interests in the Canadian JV Properties and the Nantucket Joint Venture (collectively, the “JV Properties”).
RBC JV Term Loan III
On October 31, 2025, 10 of our joint ventures with SmartCentres closed on a $
As of March 31, 2026 and December 31, 2025, there was approximately $
34
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
RBC JV Term Loan II
On July 17, 2024, three of our joint ventures with SmartCentres closed on a $
As discussed above, the RBC JV Term Loan II was refinanced on October 31, 2025. As such, as of March 31, 2026 and December 31, 2025, there was no balance outstanding on the RBC JV Term Loan II.
RBC JV Term Loan
On November 3, 2023, five of our joint ventures with SmartCentres closed on a $
As discussed above, the RBC JV Term Loan was refinanced on October 31, 2025. As such, as of March 31, 2026 and December 31, 2025, there was no balance outstanding on the RBC JV Term Loan.
SmartCentres Financings
Through a series of prior transactions, we, through joint venture partnerships with SmartCentres, became party to two master mortgage commitment agreements (the “SmartCentres Financings”) with SmartCentres Storage Finance LP (the “SmartCentres Lender”). The SmartCentres Lender is an affiliate of SmartCentres.
As a result of the RBC JV Term Loan and RBC JV Term Loan II refinancings, and the RBC JV Term Loan III financing transaction during the year ended December 31, 2025 discussed above, only one borrower remained on the SmartCentres Financings, the Markham property. Interest on the SmartCentres Financings was incurred at a variable annual rate equal to the aggregate of: (i) the CORRA rate, (ii) an adjustment of approximately
On October 31, 2025, the SmartCentres Financings (the then outstanding balance on the Markham property of approximately $
35
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Note 7. Debt
Our debt is summarized as follows (dollars in thousands):
Loan |
|
March 31, 2026 |
|
|
December 31, 2025 |
|
|
Interest |
|
Maturity |
||
KeyBank CMBS Loan (2) |
|
$ |
|
|
$ |
|
|
|
||||
Ladera Office Loan |
|
|
|
|
|
|
|
|
||||
2027 Ladera Ranch Loan |
|
|
|
|
|
|
|
|
||||
2028 Canadian Notes (3) |
|
|
|
|
|
|
|
|
||||
Kelowna Canadian Property Loan (3) |
|
|
|
|
|
|
|
|
||||
2028 Canadian Term Loan (3) (4) |
|
|
|
|
|
|
|
|
||||
CMBS Loan (5) |
|
|
|
|
|
|
|
|
||||
SST IV CMBS Loan (6) |
|
|
|
|
|
|
|
|
||||
Credit Facility |
|
|
|
|
|
|
|
|
||||
2030 Canadian Notes (3) |
|
|
|
|
|
|
|
|
||||
2032 Private Placement Notes |
|
|
|
|
|
|
|
|
||||
Houston Property Loan |
|
|
|
|
|
|
|
|
||||
2024 Credit Facility |
|
|
|
|
|
|
|
|
|
|
||
Total debt principal outstanding |
|
$ |
|
|
$ |
|
|
|
|
|
||
Discount on secured debt, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Debt issuance costs, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Total debt, net |
|
$ |
|
|
$ |
|
|
|
|
|
||
The weighted average interest rate on our consolidated debt, excluding the impact of our interest rate hedging activities, as applicable, as of March 31, 2026 and December 31, 2025 was approximately
36
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The following is a schedule of maturities, including required principal amortization payments, for debt outstanding as of March 31, 2026 (in thousands):
2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
Credit Facility
On February 18, 2026, we, through our operating partnership (the “Borrower”), entered into a second amended and restated credit agreement with KeyBank, National Association, as administrative agent, certain others listed as joint book runners, joint lead arrangers, syndication agents and documentation agents, and certain other lenders party thereto (the “Credit Agreement”).
The Credit Agreement provides for a senior unsecured revolving credit facility (the “Credit Facility”) in an aggregate principal amount of $
In connection with this amendment, certain lenders under the 2024 Credit Facility exited the arrangement. We recognized approximately $
The maturity date of the Credit Facility is
Amounts borrowed under the Credit Facility bear interest based on the type of borrowing (either Base Rate Loans, SOFR Loans, or CORRA Loans, each as defined in the Credit Agreement) and vary based upon our consolidated leverage ratio or credit rating. Base Rate Loans bear interest at the lesser of (x) the Base Rate (as defined in the Credit Agreement) plus the applicable rate, or (y) the maximum rate. SOFR Loans that are Daily Simple SOFR Loans bear interest at the lesser of (a) Daily Simple SOFR (as defined in the Credit Agreement) plus the applicable rate, or (b) the maximum rate. SOFR Loans that are Term SOFR Loans bear interest at the lesser of (a) Term SOFR (as defined in the Credit Agreement) for the interest period in effect plus the applicable rate, or (b) the maximum rate. CORRA Loans bear interest at the lesser of (a) Daily Simple CORRA (as defined in the Credit Agreement) plus the applicable rate, or (b) the maximum rate. Until we achieve an investment grade credit rating, the corresponding applicable rate varies between
37
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The Credit Facility is fully recourse, jointly and severally, to us, the Borrower, and certain of our subsidiaries (the “Subsidiary Guarantors”). In connection with the Credit Facility, each of us, the Borrower and the Subsidiary Guarantors executed guarantees in favor of the lenders. It is an event of default under the Credit Facility if (a) there is a payment default by us, the Borrower or any Subsidiary Guarantor under any recourse debt for borrowed money of at least $
The Credit Facility is unsecured. The outstanding 2032 Private Placement Notes (as defined below), the outstanding 2028 Canadian Notes (as defined below) and the outstanding 2030 Canadian Notes (as defined below), previously issued by us, remain pari passu with the Credit Facility.
The Credit Facility contains certain customary representations and warranties, affirmative, negative and financial covenants, borrowing conditions, and events of default. In particular, the financial covenants imposed on us include: a maximum leverage ratio, a minimum fixed charge coverage ratio, a minimum tangible net worth, certain limits on both secured debt and secured recourse debt, a ratio of secured recourse debt to total asset value, an unencumbered pool leverage ratio, and an unsecured interest coverage ratio. If an event of default occurs and continues, we are subject to certain actions by the administrative agent, including, without limitation, the acceleration of repayment of all amounts outstanding under the Credit Facility.
As of March 31, 2026, based on the aforementioned information and borrowing base calculations, we had the ability to draw up to an additional approximately $
2030 Canadian Notes
On September 24, 2025, we, as guarantor, and the Operating Partnership, as issuer, sold on a private placement basis in Canada, an aggregate principal amount of $
The 2030 Canadian Notes were offered pursuant to an agency agreement entered into among us, the Operating Partnership, the Subsidiary Guarantors, BMO Nesbitt Burns Inc., National Bank Financial Inc., Scotia Capital Inc. and RBC Dominion Securities Inc. The sale and purchase of the 2030 Canadian Notes occurred on September 24, 2025.
The 2030 Canadian Notes were issued pursuant to the Base Indenture, as amended and supplemented by a second supplemental indenture to the Base Indenture among us, the Operating Partnership and the Subsidiary Guarantors (the “Second Supplemental Indenture” and together with the Base Indenture, the “Second Indenture”).
The 2030 Canadian Notes bear interest at a rate of approximately
The Operating Partnership will be permitted to redeem at any time all, or from time to time any part of, the 2030 Canadian Notes then outstanding at a redemption price equal to the greater of (i) 100% of the principal amount so prepaid and (ii) the Canada Yield Price, together in each case, with accrued and unpaid interest, if any, to the date fixed for redemption. The “Canada Yield Price” means a price equal to the price of a note calculated to provide a yield to the maturity date, compounded semi-annually and calculated in accordance with generally accepted financial practice, equal to the government of Canada yield plus
The Second Indenture contains certain customary representations and warranties, affirmative, negative and financial covenants, and events of default. In addition, if an event of default occurs and is continuing, the trustee may, in its discretion, and will, upon receiving instruction from the holders of
38
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The 2030 Canadian Notes were issued on a pari passu basis with our 2024 Credit Facility (as defined below), our 2028 Canadian Notes and the 2032 Private Placement Notes (as defined below), and as such, we and the Subsidiary Guarantors under such loans have fully and unconditionally guaranteed the Operating Partnership’s obligations under the 2030 Canadian Notes. The Second Indenture requires any of our subsidiaries that incurs or guarantees indebtedness under the other pari passu loans in the future to also provide a note guarantee in favor of the holders of the 2030 Canadian Notes.
2028 Canadian Notes
On June 11, 2025, we, as guarantor, and the Operating Partnership, as issuer, sold on a private placement basis in Canada, an aggregate principal amount of $
The 2028 Canadian Notes were offered pursuant to an agency agreement entered into among us, the Operating Partnership, the Subsidiary Guarantors (defined below), BMO Nesbitt Burns Inc., National Bank Financial Inc., Scotia Capital Inc. and RBC Dominion Securities Inc. The sale and purchase of the 2028 Canadian Notes occurred on June 16, 2025.
The 2028 Canadian Notes were issued pursuant to an indenture (the “Base Indenture”) among us, the Operating Partnership and Computershare Trust Company of Canada (the “Trustee”), as amended and supplemented by a first supplemental indenture to the Base Indenture among us, the Operating Partnership and the Subsidiary Guarantors (the “First Supplemental Indenture” and together with the Base Indenture, the “First Indenture”).
The 2028 Canadian Notes bear interest at a rate of approximately
The Operating Partnership will be permitted to redeem at any time all, or from time to time any part of, the 2028 Canadian Notes then outstanding at a redemption price equal to the greater of (i) 100% of the principal amount so prepaid and (ii) the Canada Yield Price, together in each case, with accrued and unpaid interest, if any, to the date fixed for redemption. The “Canada Yield Price” means a price equal to the price of a note calculated to provide a yield to the maturity date, compounded semi-annually and calculated in accordance with generally accepted financial practice, equal to the government of Canada yield plus
The First Indenture contains certain customary representations and warranties, affirmative, negative and financial covenants, and events of default. In addition, if an event of default occurs and is continuing, the trustee may, in its discretion, and will, upon receiving instruction from the holders of
The 2028 Canadian Notes were issued on a pari passu basis with our 2024 Credit Facility (as defined below) with KeyBank, our 2030 Canadian Notes, the 2032 Private Placement Notes (as defined below), and as such, we and each of our subsidiaries that have incurred or guaranteed indebtedness (the “Subsidiary Guarantors”) under such loans have fully and unconditionally guaranteed the Operating Partnership’s obligations under the 2028 Canadian Notes. The First Indenture requires any of our subsidiaries that incurs or guarantees indebtedness under the other pari passu loans in the future to also provide a note guarantee in favor of the holders of the 2028 Canadian Notes.
39
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Kelowna Property Loan
In connection with the acquisition of the Kelowna Property on April 15, 2025, we assumed a loan from the seller in the amount of approximately $
2027 Ladera Ranch Loan
On December 20, 2024, in connection with our acquisition of the Ladera Ranch Property from Extra Space Storage, we, through a wholly-owned subsidiary, entered into a loan with Extra Space Storage LP, as lender, with a loan amount of $
See Note 8 – Preferred Equity for additional information regarding our other pre-existing relationship with this seller/lender.
Houston Property Loan
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 $
2032 Private Placement Notes
On April 19, 2022, we as guarantor, and our Operating Partnership as issuer, entered into a note purchase agreement (the “Note Purchase Agreement”) which provides for the private placement of $
Interest payable on the 2032 Private Placement Notes were originally subject to a prospective 75 basis points increase, if, as of March 31, 2023, the ratio of total indebtedness to EBITDA (the “Total Leverage Ratio”) of the Company and its subsidiaries, on a consolidated basis, was greater than
As of March 31, 2023, such Total Leverage Ratio Event occurred, and our 2032 Private Placement Notes began accruing interest at a rate of
40
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
We are permitted to prepay at any time all, or from time to time, any part of the 2032 Private Placement Notes in amounts not less than
The Note Purchase Agreement contains certain customary representations and warranties, affirmative, negative and financial covenants, and events of default that were substantially similar to the 2024 Credit Facility (as defined below). The 2032 Private Placement Notes were issued on a pari passu basis with the previously existing Credit Facility, and are pari passu with the Credit Facility. As described above, as a result of the Security Interest Termination Event, on April 17, 2025, KeyBank released the pledges of the Subsidiary Guarantors pursuant to the Debt Agreements, and each of the Credit Facility and the 2032 Private Placement Notes, respectively, became unsecured. Prior to such event, the Company and Subsidiary Guarantors fully and unconditionally guaranteed the Operating Partnership’s obligations under the 2032 Private Placement Notes.
On April 26, 2024, we amended the Note Purchase Agreement dated April 19, 2022 (the “NPA Amendment”). The primary purpose of the NPA Amendment was to make certain conforming changes between the Note Purchase Agreement and our recently amended and restated revolving credit facility, the Credit Facility. In particular, the NPA Amendment conformed certain of the definitions related to the financial tests that we are required to maintain, as well as certain of the property pool covenants we are required to satisfy, in the Note Purchase Agreement during the term thereof to those in the Credit Facility.
Former Credit Facility
On February 22, 2024, we, through the Borrower, entered into an amended and restated revolving credit facility with KeyBank, National Association, as administrative agent and collateral agent, certain others listed as joint book runners, joint lead arrangers, syndication agents and documentation agents, and certain other lenders party thereto, (the “2024 Credit Facility”). The 2024 Credit Facility had a maturity date of February 22, 2027.
The aggregate commitment of the 2024 Credit Facility was originally $
The maturity date of the 2024 Credit Facility was
As of December 31, 2025, borrowings under the 2024 Credit Facility only bore interest based on Daily Simple SOFR. The rate spread above Daily Simple SOFR at which the 2024 Credit Facility incurred interest was subject to increase based on the consolidated leverage ratio. There were six leverage tiers under the 2024 Credit Facility in effect, with the highest tier in effect when leverage is above
The 2024 Credit Facility contained certain customary representations and warranties, affirmative, negative and financial covenants, borrowing conditions, and events of default.
41
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
On April 11, 2025, we reduced the total commitment available to us under the 2024 Credit Facility from $
On February 18, 2026, the 2024 Credit Facility was recast (as discussed above). The Borrower’s outstanding balance under the 2024 Credit Facility of approximately $
Note 8. Preferred Equity
Series A Convertible Preferred Stock
On October 29, 2019 (the “Commitment Date”), we entered into a preferred stock purchase agreement (the “Purchase Agreement”) with Extra Space Storage LP (the “Investor”), a subsidiary of Extra Space Storage Inc. (NYSE: EXR), pursuant to which the Investor committed to purchase up to $
The shares of Series A Convertible Preferred Stock ranked senior to all other shares of our capital stock, including our common stock, with respect to rights to receive dividends and to participate in distributions or payments upon any voluntary or involuntary liquidation, dissolution or winding up of the Company. Dividends payable on each share of Series A Convertible Preferred Stock were initially equal to a rate of
In connection with the Underwritten Public Offering, discussed in Note 1 – Organization, all issued and outstanding shares of our Series A Convertible Preferred Stock were redeemed on April 4, 2025, using net proceeds from our Underwritten Public Offering which closed on April 3, 2025. We paid the Liquidation Amount of approximately $
Note 9. Derivative Instruments
Interest Rate Derivatives
Our objectives in using interest rate derivatives is to add stability to our net income (loss) and to manage our exposure to interest rate movements. To accomplish this objective, we have used interest rate swaps and caps as part of our interest rate risk management strategy.
42
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
For interest rate derivatives designated and qualified as a hedge for GAAP purposes, the change in the fair value of the effective portion of the derivative is recorded in accumulated other comprehensive income (loss) (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in AOCI related to such derivatives will be reclassified to interest expense as interest payments are made on our variable rate debt. In addition, we classify cash flows from qualifying cash flow hedging relationships in the same category as the cash flows from the hedged items in our consolidated statements of cash flows. We do not use interest rate derivatives for trading or speculative purposes.
Interest rate derivatives not designated as hedges for GAAP are not speculative and are used to manage our exposure to interest rate movements and other identified risks but we have elected not to apply hedge accounting. Changes in the fair value of interest rate derivatives not designated in hedging relationships are recorded in other income (expense) in our consolidated statements of operations.
In connection with the 2027 NBC loan borrowing, on March 12, 2024, we entered into a CORRA Swap with NBC with an initial notional amount of CAD $
On May 1, 2024, to hedge our exposure to potentially rising interest rates, we entered into three SOFR interest rate caps for a total of approximately $
On December 30, 2024, in relation to the outstanding balance on a loan with KeyBank (the “2025 KeyBank Acquisition Facility”), we entered into a SOFR interest rate cap, which capped SOFR at
On March 4, 2025, in relation to the outstanding balance on our 2025 KeyBank Acquisition Facility, we entered into a SOFR interest rate cap, which capped SOFR at
On June 16, 2025, we terminated a $
In connection with our 2028 Canadian Notes issuance, on May 29, 2025 we entered into a government of Canada treasury rate forward with a notional amount of $
As of March 31, 2026 and December 31, 2025, we held no interest rate derivatives.
43
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Foreign Currency Hedges
Our objectives in using foreign currency derivatives are to add stability to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar and to manage our exposure to exchange rate movements. To accomplish this objective, we have used foreign currency forwards and foreign currency options as part of our exchange rate risk management strategy. A foreign currency forward contract is a commitment to deliver a certain amount of currency at a certain price on a specific date in the future. By entering into the forward contract and holding it to maturity, we are locked into a future currency exchange rate in an amount equal to and for the term of the forward contract. A foreign currency option contract is a commitment by the seller of the option to deliver, solely at the option of the buyer, a certain amount of currency at a certain price on a specific date.
For derivatives designated as net investment hedges for GAAP purposes, the changes in the fair value of the derivatives are reported in AOCI. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. The change in the value of the designated portion of our settled and unsettled foreign currency hedges is recorded net in foreign currency hedge contract gain (loss) in our consolidated statements of comprehensive income (loss) in the related period.
On December 30, 2024, in an effort to hedge the cash generated at our Canadian properties, we entered into four new foreign currency forwards; (i) one such hedge had a notional amount of $
On February 28, 2025, we entered into a similar hedge with a notional amount of $
On May 29, 2025, we entered into a similar hedge with a notional amount of $
On April 11, 2025, we settled a net investment hedge FX Forward, receiving approximately $
As of March 31, 2026 and December 31, 2025, we held no foreign currency hedges.
The change in the value of the portion of our settled and unsettled foreign currency forwards that are not designated for hedge accounting for GAAP was recorded in other income (expense) in our consolidated statements of operations and represented a gain of approximately $
The following table presents the effect of our derivative financial instruments designated as a hedge for GAAP purposes on our consolidated statements of operations for the periods presented (in thousands):
|
|
(Loss) gain recognized in OCI for the three months ended March 31, |
|
|
Location of amounts |
|
Loss reclassified from OCI for the three months ended March 31, |
|
||||||||||
Type |
|
2026 |
|
|
2025 |
|
|
into income |
|
2026 |
|
|
2025 |
|
||||
Interest Rate Swaps |
|
$ |
— |
|
|
$ |
( |
) |
|
Interest expense |
|
$ |
— |
|
|
$ |
( |
) |
Interest Rate Caps |
|
|
— |
|
|
|
( |
) |
|
Interest expense |
|
|
— |
|
|
|
( |
) |
Foreign Currency Forwards |
|
|
— |
|
|
|
|
|
N/A |
|
|
— |
|
|
|
— |
|
|
|
|
$ |
— |
|
|
$ |
( |
) |
|
|
|
$ |
— |
|
|
$ |
( |
) |
44
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Note 10. Income Taxes
As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. However, certain of our consolidated subsidiaries are taxable REIT subsidiaries, which are subject to federal, state and foreign income taxes. We have filed an election to treat our primary TRS as a taxable REIT subsidiary effective January 1, 2014. In general, our TRS performs additional services for our customers and provides the advisory and property management services to the Managed REITs and otherwise generally engages in non-real estate related business. The TRS is subject to corporate U.S. federal and state income tax. Additionally, we own and operate a number of self storage properties located throughout Canada, the income of which is generally subject to income taxes under the laws of Canada.
The following is a summary of our income tax expense (benefit) for the periods presented (in thousands):
|
|
Three Months Ended March 31, 2026 |
|
|||||||||||||
|
|
Federal |
|
|
State |
|
|
Canadian |
|
|
Total |
|
||||
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended March 31, 2025 |
|
|||||||||||||
|
|
Federal |
|
|
State |
|
|
Canadian |
|
|
Total |
|
||||
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The major sources of temporary differences that give rise to the deferred tax effects are shown below (in thousands):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Intangible contract assets |
|
$ |
( |
) |
|
$ |
( |
) |
Canadian real estate |
|
|
( |
) |
|
|
( |
) |
Total deferred tax liability |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Canadian real estate and non-capital losses (1) |
|
|
|
|
|
|
||
Total deferred tax assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Valuation allowance |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Net deferred tax liabilities |
|
$ |
( |
) |
|
$ |
( |
) |
The Canadian non-capital losses expire between
As of March 31, 2026 and December 31, 2025, we had
45
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Note 11. Segment Disclosures
We operate in
The chief operating decision maker (“CODM”) is our Chief Executive Officer.
46
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The following tables summarize information for the reportable segments for the periods presented (in thousands):
|
|
Three Months Ended March 31, 2026 |
|
|||||||||||||
|
|
|
|
|
Managed |
|
|
Corporate |
|
|
|
|
||||
|
|
Self Storage |
|
|
Platform |
|
|
and Other |
|
|
Total |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Self storage rental revenue |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Ancillary operating revenue |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed Platform revenue (1) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed Platform (2) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total revenues |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property taxes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Payroll |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Advertising |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repairs & Maintenance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Utilities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Property Insurance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Administrative and professional |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total property operating expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed Platform expenses (3) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed Platform (2) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Segment operating income (4) |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Other operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative (5) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Intangible amortization expense |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Acquisition expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Contingent earnout adjustment |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain on disposition of real estate |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Income (loss) from operations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in losses from investments in unconsolidated real estate ventures |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity in losses from investments in Managed REITs |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Interest and investment income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Other, net |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss on debt extinguishment |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Income tax (expense) benefit |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net income (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
47
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
|
|
Three Months Ended March 31, 2025 |
|
|||||||||||||
|
|
|
|
|
Managed |
|
|
Corporate |
|
|
|
|
||||
|
|
Self Storage |
|
|
Platform |
|
|
and Other |
|
|
Total |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Self storage rental revenue |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Ancillary operating revenue |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed Platform revenue |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed Platform |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total revenues |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property taxes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Payroll |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Advertising |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repairs & Maintenance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Utilities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Property Insurance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Administrative and professional |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total property operating expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed Platform expenses |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed Platform |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Segment operating income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Other operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Intangible amortization expense |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Acquisition expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total other operating expenses |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Income (loss) from operations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in losses from investments in unconsolidated real estate ventures |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity in losses from investments in Managed REITs |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other, net |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Interest and investment income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Loss on debt extinguishment |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Income tax expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
48
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The following table summarizes our total assets by segment (in thousands):
Segments |
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||
Self Storage (1) |
|
$ |
|
|
$ |
|
||
Managed Platform (2) |
|
|
|
|
|
|
||
Corporate and Other |
|
|
|
|
|
|
||
Total assets (3) |
|
$ |
|
|
$ |
|
||
As of March 31, 2026 and December 31, 2025, approximately $
As of March 31, 2026 and December 31, 2025, approximately $
Note 12. Related Party Transactions
Self Administration Transaction
On June 28, 2019, we, our Operating Partnership and our TRS entered into a series of transactions, agreements, and amendments to our existing agreements and arrangements with our then-sponsor, SAM, and SmartStop OP Holdings, LLC (“SS OP Holdings”), a subsidiary of SAM, pursuant to which, effective June 28, 2019, we acquired the self storage advisory, asset management and property management businesses and certain joint venture interests of SAM, along with certain other assets of SAM (collectively, the “Self Administration Transaction”).
As a result of the Self Administration Transaction, we became self-managed and succeeded to the advisory, asset management and property management businesses and certain joint ventures previously in place for us, and we acquired the internal capability to originate, structure and manage additional future self storage investment products which would be sponsored by SmartStop REIT Advisors, LLC (“SRA”), our indirect subsidiary.
49
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Our Chief Executive Officer, who is also the Chairman of our board of directors, holds ownership interests in and is an officer of SAM, and other affiliated entities. Previously, certain of our executive officers held ownership interests in and/or were officers of SAM, and other affiliated entities. Accordingly, any agreements or transactions we have entered into with such entities may present a conflict of interest. None of SAM and its affiliates or our directors or executive officers receive any compensation, fees or reimbursements from our Managed REITs, other than with respect to fees and reimbursements in accordance with the Administrative Services Agreement (defined below) and the now-terminated transfer agent agreement, which agreement was terminated effective April 20, 2024, or as otherwise described in this section.
Advisory Agreement Fees
Our Managed REIT advisor subsidiaries are or were entitled to receive various fees and expense reimbursements under the terms of the SST VI, SST X, and SSGT III advisory agreements.
SST VI Advisory Agreement
The SST VI advisor provides acquisition and advisory services to SST VI pursuant to an advisory agreement (the “SST VI Advisory Agreement”).
Pursuant to the SST VI Advisory Agreement, the SST VI advisor receives acquisition fees equal to
A subsidiary of our Operating Partnership may also be potentially entitled to a subordinated distribution through its ownership of a special limited partnership in SST VI OP if SST VI (1) lists its shares of common stock on a national exchange, (2) terminates the SST VI Advisory Agreement, (3) liquidates its portfolio, or (4) merges with another entity or enters into an Extraordinary Transaction, as defined in SST VI OP's limited partnership agreement.
The SST VI Advisory Agreement provides for reimbursement of the SST VI advisor’s direct and indirect costs of providing administrative and management services to SST VI. Beginning four fiscal quarters after commencement of SST VI's public offering, which was declared effective March 17, 2022, the SST VI advisor is required to pay or reimburse SST VI the amount by which SST VI’s aggregate annual operating expenses, as defined, exceed the greater of 2% of SST VI’s average invested assets or 25% of SST VI’s net income, as defined, unless a majority of SST VI’s independent directors determine that such excess expenses were justified based on unusual and non-recurring factors.
In connection with the SST VI’s public offering, SST VI was required to reimburse the SST VI advisor for all expenses incurred by SST VI advisor and its affiliates in connection with SST VI’s public offering and its organization, but in no event were such amounts to exceed
50
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
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
The $
Subsequent to and as a result of the POHG termination, on June 12, 2025, we, through a subsidiary of our TRS, entered into a new retail distribution and other support arrangement with Orchard Securities, LLC (“Orchard”). Through this relationship, Orchard will distribute certain of our Managed REIT investment programs, including DST offerings and other Managed REIT offerings. We pay Orchard certain fees and expenses as part of the engagement. On September 30, 2025, SST VI commenced a private offering of up to $
SSGT III Advisory Agreement
The SSGT III advisor provides acquisition and advisory services to SSGT III pursuant to an advisory agreement (the “SSGT III Advisory Agreement”).
Pursuant to the SSGT III Advisory Agreement, the SSGT III advisor will receive acquisition fees equal to
A subsidiary of SSGT III is the sponsor of DSTs and a wholly-owned SSGT III entity also operates the related properties pursuant to a master lease with the respective DST. For certain of such DSTs, upon the successful syndication of the DST offering we will receive an additional
Pursuant to the Separation Agreement, POHG is no longer entitled to receive
A subsidiary of our Operating Partnership may also be potentially entitled to various subordinated distributions through its ownership of a special limited partnership in SSGT III’s operating partnership agreement if SSGT III (1) lists its shares of common stock on a national exchange, (2) terminates the SSGT III Advisory Agreement, (3) liquidates its portfolio, or (4) merges with another entity or enters into an Extraordinary Transaction, as defined in the SSGT III operating partnership agreement.
51
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
SST X Advisory Agreement
The SST X advisor provides acquisition and advisory services to SST X pursuant to an advisory agreement dated January 31, 2025 (as amended to date, the “SST X Advisory Agreement”). In connection with the SST X private placement offering, which initially commenced on January 31, 2025, the SST X advisor has and will continue to pay for certain organization and offering expenses (other than selling commissions and shareholder servicing fees) and the SST X advisor may pay for certain other operating expenses incurred by SST X through December 31, 2026. SST X is not required to begin to repay such costs until January 2027, at which point SST X must reimburse these costs over 60 months.
Pursuant to the SST X Advisory Agreement, the SST X advisor will not receive acquisition fees, but is entitled to reimbursement of acquisition expenses that the SST X advisor incurs. The SST X advisor is not entitled to receive any disposition fees. The SST X advisor is entitled to a management fee equal to (i)
In addition, a subsidiary of our Operating Partnership holds a special performance participation interest in the SST X Operating Partnership that entitles it to receive an allocation from the SST X Operating Partnership equal to
As of March 31, 2026 and December 31, 2025, SST X had sold approximately $
On January 23, 2026, SST X re-launched a private offering of up to $
Managed REIT Property Management Agreements
Our indirect subsidiaries, SS Growth Property Management III, LLC, Strategic Storage Property Management VI, LLC, and Strategic Storage Property Management X, LLC, (collectively the “Managed REITs’ Property Managers”), are entitled to receive fees for their services in managing the properties wholly or partially owned by the Managed REITs pursuant to property management agreements entered into between the owner of the property and the applicable Managed REIT’s Property Manager.
52
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The Managed REITs’ Property Managers receive a property management fee equal to
The Managed REITs’ Property Managers are entitled to a construction management fee equal to
Summary of Fees and Revenue Related to the Managed REITs
Pursuant to the terms of the various agreements described above for the Managed REITs, the following summarizes the related party fees for the periods presented (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
Managed Platform Revenues |
|
2026 |
|
|
2025 |
|
||
Asset Management Fees: |
|
|
|
|
|
|
||
SST VI |
|
$ |
|
|
$ |
|
||
SSGT III |
|
|
|
|
|
|
||
SST X |
|
|
|
|
|
|
||
Total Asset Management Fees |
|
|
|
|
|
|
||
Property Management Fees: |
|
|
|
|
|
|
||
SST VI |
|
|
|
|
|
|
||
SSGT III |
|
|
|
|
|
|
||
SST X |
|
|
|
|
|
|
||
JV Properties |
|
|
|
|
|
|
||
Third Party Platform |
|
|
|
|
|
|
||
Total Property Management Fees |
|
|
|
|
|
|
||
Tenant Protection Program Fees: |
|
|
|
|
|
|
||
SST VI |
|
|
|
|
|
|
||
SSGT III |
|
|
|
|
|
|
||
SST X |
|
|
|
|
|
|
||
JV Properties |
|
|
|
|
|
|
||
Third Party Platform (1) |
|
|
|
|
|
|
||
Total Tenant Protection Program Fees |
|
|
|
|
|
|
||
Acquisition Fees: |
|
|
|
|
|
|
||
SSGT III |
|
|
|
|
|
|
||
Total Acquisition Fees |
|
|
|
|
|
|
||
Other Managed REIT Fees (2) |
|
|
|
|
|
|
||
Managed Platform Fees |
|
|
|
|
|
|
||
Sponsor funding reduction (3) |
|
|
( |
) |
|
|
( |
) |
Total Managed Platform Revenues |
|
$ |
|
|
$ |
|
||
53
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
We offer tenant insurance or tenant protection programs to customers at our Managed REITs’ properties pursuant to which we, as the property manager and majority owner of the Tenant Protection Program joint ventures, are entitled to substantially all of the net revenue attributable to the sale of such tenant programs.
In order to protect our interest in receiving these revenues in light of the fact that the Managed REITs control the properties, we and the Managed REITs transferred our respective rights in such arrangements to a joint venture entity owned
Reimbursable costs from Managed REITs includes reimbursement of SST VI, SST X and SSGT III’s Advisors’ certain direct and indirect costs of providing administrative and management services to the Managed REITs. Additionally, reimbursable costs includes reimbursement pursuant to the property management agreements for reimbursement of certain costs of managing the Managed REITs’ properties, including wages and salaries and other expenses of employees engaged in operating, managing and maintaining such properties.
As of March 31, 2026 and December 31, 2025, we had receivables due from the Managed REITs totaling approximately $
Investments in and advances to SST VI OP
Equity Investments
On March 10, 2021, SmartStop OP made an investment of $
For the three months ended March 31, 2026 and 2025, we recorded a loss from our equity in earnings related to our common equity interests, excluding our preferred investment discussed below, in SST VI OP of approximately $
On September 4, 2025, we, through one our subsidiaries entered into a preferred unit purchase agreement with SST VI OP (the “Series D Preferred Unit Purchase Agreement”) for up to
As of December 31, 2025, we had purchased an aggregate of
For the three months ended March 31, 2026, we recorded income of approximately $
54
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Sponsor Funding Agreement
On November 1, 2023, SRA, a subsidiary of our Operating Partnership, entered into a Sponsor Funding Agreement with SST VI and SST VI OP, in connection with certain changes to the public offering of SST VI.
Pursuant to the Sponsor Funding Agreement, SRA, as sponsor of the SST VI offering, had agreed to fund the payment of (i) the upfront
In consideration for SRA providing the funding for the front-end sales load and the cash to cover the dilution from the stock dividends described above, SST VI OP issued a number of Series C Units to SRA equal to the dollar amount of such funding divided by the then-current offering price for the Class Y shares and Class Z shares sold in the SST VI offering, which was initially $
On November 1, 2023, SRA entered into Amendment No. 3 to the Second Amended and Restated Limited Partnership Agreement of SST VI OP with SST VI and SST VI OP containing, among other things, the terms of the Series C Units. The Series C Units shall initially have no distribution, liquidation, voting, or other rights to participate in SST VI OP unless and until such Series C Units are converted into Class A units of SST VI OP. The Series C Units shall automatically convert into class A units on a one-to-one basis upon SST VI’s disclosure of an estimated net asset value per share equal to at least $
On August 7, 2024, SST VI declared an estimated net asset value per share of $
As of June 30, 2025, SST VI closed the primary portion of its public offering. The Sponsor Funding Agreement was terminated immediately in connection with the closedown of SST VI’s primary offering. In accordance therewith, we have no further funding obligation in connection with the Sponsor Funding Agreement. We had incurred approximately $
On March 20, 2026, SST VI declared an estimated net asset value per share of $
Debt Investments
On June 13, 2023 SmartStop OP entered into a promissory note agreement with SST VI OP ( the “SST VI Note”), where SST VI OP borrowed $
55
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
On June 28, 2024, the SST VI Note was amended to expand the borrowing capacity up to $
On December 22, 2025, the SST VI Note was further amended whereby the ultimate maturity date was extended to
The following table summarizes the carrying value of our investments in and advances to SST VI for the periods presented (dollars in thousands):
|
|
|
|
|
|
|
|
Contractual |
|
Effective |
|
|
||
|
|
|
|
|
|
|
|
Interest/ |
|
Interest/ |
|
|
||
|
|
March 31, |
|
|
December 31, |
|
|
Preferred |
|
Preferred |
|
Maturity |
||
|
|
2026 |
|
|
2025 |
|
|
Rate (1) |
|
Rate (1) |
|
Date (1) |
||
Receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
||
Receivables and advances due |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
||
Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
||
SST VI Note |
|
|
|
|
|
|
|
SOFR + |
|
|
||||
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
||
Series D Preferred Units |
|
|
|
|
|
|
|
|
|
|
||||
SST VI OP Units, SLP and Series C Units |
|
|
|
|
|
|
|
|
|
|
|
|
||
Total investments in and advances to SST VI |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
||
Investments in and advances to SSGT III OP
Equity Investments
On August 29, 2022, SmartStop OP made an investment of $
For the three months ended March 31, 2026 and 2025, we recorded a loss from our equity in earnings related to our common equity interests in SSGT III OP of approximately $
Debt Investments
On July 31, 2024, our Operating Partnership provided a bridge loan to an indirect wholly-owned subsidiary of SSGT III for $
56
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
On December 16, 2024, a subsidiary of SSGT III entered into a promissory note with our Operating Partnership for a $
On June 3, 2025, a subsidiary of SSGT III entered into a promissory note with our Operating Partnership for a loan of up to $
On June 24, 2025, our Operating Partnership fully funded a secured term loan pursuant to a promissory note entered into by a subsidiary of SSGT III for a $
On November 13, 2025, our Operating Partnership provided a bridge loan to Blue Door AM I, LLC, an indirect wholly-owned subsidiary of SSGT III for $
On December 18, 2025, SSGT III's taxable REIT subsidiary entered into a loan with KeyBank National Association (“KeyBank”) in the amount of $
57
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The following table summarizes the carrying value of our investments in and advances to SSGT III for the periods presented (dollars in thousands):
|
|
|
|
|
|
|
|
Contractual |
|
Effective |
|
|
||
|
|
March 31, |
|
|
December 31, |
|
|
Interest |
|
Interest |
|
Maturity |
||
|
|
2026 |
|
|
2025 |
|
|
Rate (1) |
|
Rate (1) |
|
Date (1) |
||
Receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
||
Receivables and advances due |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
||
Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
||
SSGT III-Blue Door III Bridge Loan |
|
|
|
|
|
|
|
SOFR + |
|
|
||||
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
||
SSGT III OP Units and SSGT III SLP |
|
|
|
|
|
|
|
|
|
|
|
|
||
Total investments in and advances to SSGT III |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
||
Investments in and advances to DSTs Sponsored by SSGT III
On November 13, 2025 a subsidiary of ours funded three non-recourse mortgage loans to indirect DST subsidiaries of SSGT III for approximately $
On January 28, 2026, a subsidiary of ours funded three non-recourse mortgage loans to indirect DST subsidiaries of SSGT III for approximately $
We serve as the property manager for the properties owned by the DSTs that are leased pursuant to a master lease by a SSGT III subsidiary, which pursuant to the lease is required to pay rent to the DST equal to the required debt service. Such requirement is further supported by a minimum capital requirement of the SSGT III lessor entity, initially further supported by a guaranty from the SSGT III operating partnership of such required capital. As of March 31, 2026 and December 31, 2025, SSGT III had sponsored and initiated the syndication of DST interests to retail investors for such DST programs, covering eight properties.
The above SSGT III DST syndicated offerings were in various stages of completion. We serve as the property manager for each property owned by such DSTs.
58
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
The following table summarizes the carrying value of our investments in and advances to DSTs Sponsored by SSGT III for the periods presented (dollars in thousands):
|
|
|
|
|
|
|
|
Contractual |
|
Effective |
|
|
||
|
|
March 31, |
|
|
December 31, |
|
|
Interest |
|
Interest |
|
Maturity |
||
|
|
2026 |
|
|
2025 |
|
|
Rate (1) |
|
Rate (1) |
|
Date (1) |
||
Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
||
BD III DST Mortgage Loans |
|
$ |
|
|
$ |
|
|
|
|
|||||
BD IV DST Mortgage Loans |
|
|
|
|
|
|
|
|
|
|||||
Total investments in and advances to DSTs Sponsored by SSGT III |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
||
Investments in and advances to SST X OP
Equity Investments
SmartStop Storage Advisors, LLC (“SSA”), a subsidiary of SmartStop OP, made two contributions of $
On October 29, 2025, we, through one of our subsidiaries entered into a preferred unit purchase agreement with SST X OP for
For the three months ended March 31, 2026, we recorded approximately $
On October 30, 2025, we sold the Murfreesboro, Tennessee property to SST X for approximately $
The following table summarizes the carrying value of our investments in and advances to SST X for the periods presented (dollars in thousands):
|
|
March 31, |
|
|
December 31, |
|
|
Preferred |
||
|
|
2026 |
|
|
2025 |
|
|
Rate (1) |
||
Receivables: |
|
|
|
|
|
|
|
|
||
Receivables and advances due |
|
$ |
|
|
$ |
|
|
|
||
Equity: |
|
|
|
|
|
|
|
|
||
Series A Preferred Units |
|
|
|
|
|
|
|
|||
SST X OP Units and Common Stock |
|
|
|
|
|
|
|
|
||
Total investments in and advances to SST X |
|
$ |
|
|
$ |
|
|
|
||
59
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Administrative Services Agreement
On June 28, 2019, we along with our Operating Partnership, our TRS and SmartStop Storage Advisors, LLC (collectively, the “Company Parties”) entered into an Administrative Services Agreement with SAM (the “Administrative Services Agreement”), which, as amended, requires that the Company Parties will be reimbursed for providing certain operational and administrative services to SAM which may include, without limitation, accounting and financial support, IT support, HR support, advisory services and operations support, and administrative support and other miscellaneous reimbursements as set forth in the Administrative Services Agreement and SAM will be reimbursed for providing certain operational and administrative services to the Company Parties which may include, without limitation, due diligence support, marketing, fulfillment and offering support, events support, insurance support, and administrative and facilities support. SAM and the Company Parties will reimburse one another based on the actual costs of providing their respective services.
For the three months ended March 31, 2026 and 2025, we incurred reimbursements payable to SAM under the Administrative Services Agreement of approximately $
For the three months ended March 31, 2026 and 2025, we recorded reimbursements from SAM related to services provided to SAM of approximately $
As of March 31, 2026 and December 31, 2025, a receivable of approximately $
See Note 6 – Investments in Unconsolidated Real Estate Ventures for additional information regarding other equity method investees deemed to be a related party, given they are accounted for as equity method investments.
Note 13. Equity-Based Compensation
Prior to June 15, 2022, we issued equity-based compensation pursuant to the Company’s Employee and Director Long-Term Incentive Plan (the “Prior Plan”). On June 15, 2022, our stockholders approved the 2022 Long-Term Incentive Plan (the “Plan”) and we no longer issue equity under the Prior Plan. Pursuant to the Plan, we are able to issue various forms of equity-based compensation. Through March 31, 2026, we have generally issued equity-based awards in two forms: (1) restricted stock awards consisting of shares of our common stock and (2) long-term incentive plan units of our Operating Partnership (“LTIP Units”).
Prior to April 1, 2025, the day we executed our underwriting agreement and sold
Subsequent to our Underwritten Public Offering, the fair value of our restricted stock was determined on the grant date based on the closing market price per share of our common stock. The fair value of LTIP Units was also based on the closing market price per share of our common stock on the date of the grant, but was further adjusted by applying an additional discount as the LTIP Units were not initially economically equivalent to our restricted stock.
60
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Beginning in March 2026, performance-based awards granted to our executives will vest contingent upon the achievement of certain market-based criteria, as described below. For performance-based awards subject to market-based vesting criteria, a fair value was determined at the date of grant and is recognized over the commensurate service period for such grant. The value of such performance-based awards with a market-based criteria will take into account the probability that such award may vest in full, or not at all; therefore, in accordance with GAAP, the amount of expense recorded is not adjusted for actual achievement.
In March 2026, the compensation committee of our board of directors approved the 2026 executive compensation terms for our executives, which included (1) performance-based equity grants in the form of either, at the election of the executive, restricted stock awards or LTIP Units, and (2) time-based equity grants in the form of either, at the election of the executive, restricted stock awards or LTIP Units. There were two performance-based awards granted, (1) an award that is subject to vesting based on exceeding certain thresholds relative to a comparison of the Company’s total shareholder return (“TSR”) to the NAREIT index, and (2) an award that is subject to vesting based on a comparison of the Company’s weighted average TSR relative to a self storage peer group.
In March 2026, an aggregate of
Time-Based Awards
We have granted various time-based awards, which generally vest ratably over either six months, one, three, or
With respect to grants of time-based LTIP Units, distributions accrue based on the effective date of each grant, and are payable as distributions are paid on our Common Stock without regard to whether the underlying awards have vested. With respect to time-based restricted stock, distributions accrue on non-vested shares granted and are paid when the underlying restricted shares vest.
Holders of time-based LTIP Units receive allocations of profits and losses with respect to the LTIP Units as of the effective date, distributions from the effective date in an amount equivalent to the distributions declared and paid on our Common Stock, and the same voting rights as holders of common units, voting as a class with each LTIP Unit holder having one vote per LTIP Unit held. Prior to vesting, time-based LTIP Units generally may not be transferred, other than by laws of descent and distribution.
The following table summarizes the activity related to our time-based awards:
|
|
Restricted Stock |
|
|
LTIP Units |
|
||||||||||
Time-Based Award Grants |
|
Shares |
|
|
Weighted-Average |
|
|
Units |
|
|
Weighted-Average |
|
||||
Unvested at December 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Unvested at December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Unvested at March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
61
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Performance-Based Awards
With respect to performance-based awards, the number of shares of restricted stock granted as of the grant date equaled
Recipients of performance-based restricted stock accrue distributions during the performance period, and such distributions will only be payable on the date that any such shares of restricted stock vest, based upon the performance level attained.
The following table summarizes our activity related to our performance-based awards:
|
|
LTIP Units |
|
|||||
Performance-Based Award Grants |
|
Units |
|
|
Weighted-Average |
|
||
Unvested at December 31, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Unvested at December 31, 2025 |
|
|
|
|
|
|
||
Granted |
|
|
|
|
|
|
||
Vested (1) |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
|
|
|
|
||
Unvested at March 31, 2026 |
|
|
|
|
$ |
|
||
The fair value of the performance-based awards with a market-based TSR condition are estimated on the date of grant using a Monte Carlo simulation model.
|
Three Months Ended |
|
|
Risk-free rate |
|
% |
|
Expected volatility |
|
% |
|
Dividend yield |
|
% |
|
Holders of performance-based restricted stock
62
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Holders of performance-based LTIP Units have the same voting rights as holders of common units, voting as a class with each LTIP Unit holder having
LTIP Units are designed to qualify as “profits interests” in the Operating Partnership for federal income tax purposes. The profits interests’ characteristics of the LTIP Units mean that initially they will not be treated as economically equivalent in value to a common unit and the issuance of LTIP Units will not be a taxable event to the Operating Partnership or the recipient. If and when certain events occur pursuant to applicable tax regulations and in accordance with the Operating Partnership Agreement, LTIP Units may become economically equivalent to common units of limited partnership interest of our Operating Partnership on a one-for-one basis.
As of March 31, 2026 and December 31, 2025,
For the three months ended March 31, 2026 and 2025, we recorded approximately $
For the three months ended March 31, 2026 and 2025, we recorded approximately $
For the three months ended March 31, 2026 and 2025, we recorded approximately $
As of March 31, 2026 and December 31, 2025, there was approximately $
In April 2025, in connection with the Underwritten Public Offering, an aggregate of approximately
63
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
Note 14. Commitments and Contingencies
AXCS Joint Venture
On March 20, 2026, we entered into a joint venture arrangement (the “AXCS Joint Venture”) with AXCS Capital (“AXCS”), a real estate lending joint venture targeting bridge debt and preferred equity financing for self storage owners in the United States. The AXCS Joint Venture intends to potentially deploy capital across the full spectrum of structured capital solutions, including senior loans, mezzanine financing, preferred equity, and hybrid instruments. Target investment scenarios include ground-up development financing, value-add acquisitions and conversions, and recapitalizations of existing assets requiring bridge capital. The AXCS Joint Venture will have an initial target of $
Contingent Earnout
In connection with the Third Party Platform Acquisition, such transaction is subject to a potential earnout of up to an additional $
Operating Partnership Redemption and Extraordinary Matter Voting Rights
Generally, after a one year hold period, the limited partners of our Operating Partnership, have the right to cause our Operating Partnership to redeem their limited partnership units for cash equal to the value of an equivalent number of our shares, or, at our option, we may redeem their limited partnership units by issuing one share of our common stock for each limited partnership unit redeemed.
Additionally, in connection with the Class A-1 Units issued in connection with the Self Administration Transaction, which Class A-1 Units are also subject to the general restrictions on transfer contained in the Operating Partnership Agreement, we have agreed that the consent of our Operating Partnership will be required for certain “Extraordinary Matters” submitted to the vote of our stockholders. Such consent shall be based on the vote of all partners of the Operating Partnership. In addition, we agreed that our vote, of limited interests we hold in the Operating Partnership, will be voted in proportion to the votes cast by our stockholders on such Extraordinary Matter. The term “Extraordinary Matter” for purposes of this consent means any merger, sale of all or substantially all of our assets, share exchange, conversion, dissolution or charter amendment, in each case where the vote of our stockholders is required under Maryland law. The Class A-1 Units are otherwise entitled to all rights and duties of the limited partnership units in the Operating Partnership, including cash distributions and the allocation of any profits or losses in the Operating Partnership.
Other Contingencies and Commitments
We have severance arrangements which cover certain members of our management team; these provide for severance payments upon certain events, including after a change of control.
See Note 12 – Related Party Transactions related to our debt investments in the Managed REITs for more information about our contingent obligations under these agreements.
64
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
(Unaudited)
As of March 31, 2026, pursuant to various contractual relationships, we are required to make other non-cancellable payments in the amounts of approximately $
From time to time, we are party to legal, regulatory and other proceedings that arise in the ordinary course of our business. In accordance with applicable accounting guidance, management accrues an estimated liability when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. For such proceedings, we are not aware of any for which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition.
Note 15. Declaration of Distributions
On February 24, 2026, our board of directors approved a distribution amount for the month of March 2026, such that all holders of our outstanding common stock will receive a distribution equal to $
On March 27, 2026, our board of directors approved a distribution amount for the month of April 2026, such that all holders of our outstanding common stock will receive a distribution equal to $
On May 1, 2026, our board of directors approved a distribution amount for the month of May 2026, such that all holders of our outstanding common stock will receive a distribution equal to $
Note 16. Subsequent Events
There are no significant events which have occurred subsequent to March 31, 2026, other than the subsequent events discussed elsewhere in the notes to the financial statements.
65
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our consolidated financial data contained elsewhere in this report. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should also be read in conjunction with our consolidated financial statements and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025. See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I.
Overview
SmartStop Self Storage REIT, Inc., a Maryland corporation (the “Company”), is a self-managed and fully-integrated self storage real estate investment trust (“REIT”), formed on January 8, 2013 under the Maryland General Corporation Law. Our year-end is December 31. As used in this report, “we,” “us,” “our,” and “Company” refer to SmartStop Self Storage REIT, Inc. and each of our subsidiaries. Our common stock began trading on the New York Stock Exchange (the “NYSE”) under the ticker symbol “SMA” on April 2, 2025.
We focus on the acquisition, ownership, and operation of self storage properties located primarily within the top 100 metropolitan statistical areas, or MSAs, throughout the United States and Canada. Based on the Inside Self Storage Top-Operators List ranking for 2025, and before accounting for the acquisition of Argus (defined below) and recent market transactions, we were the 10th largest owner and operator of self storage properties in the United States based on rentable square footage.
As of March 31, 2026, our wholly-owned portfolio consisted of 177 operating self storage properties diversified across 19 states, the District of Columbia, and Canada, comprising approximately 122,000 units and 13.9 million net rentable square feet.
Additionally, as of March 31, 2026, we owned a 50% equity interest in 14 unconsolidated real estate ventures located in Canada, which consisted of 10 operating self storage properties and four properties which were being developed into self storage properties.
Through our Managed Platform (as defined below), we serve as the sponsor of Strategic Storage Trust VI, Inc., a publicly-registered non-traded REIT (“SST VI”), Strategic Storage Growth Trust III, Inc., a private REIT (“SSGT III”), and Strategic Storage Trust X, a private net asset value REIT, (“SST X” and together with SST VI and SSGT III, the “Managed REITs”). We manage the properties owned by the Managed REITs and the properties owned by the Delaware statutory trusts (“DSTs”) sponsored by one of the Managed REITs. As of March 31, 2026, we managed 53 of such operating self storage properties, consisting of approximately 42,000 units and 4.6 million rentable square feet.
On October 1, 2025, we acquired Argus Professional Storage Management, LLC (“Argus”), a third-party manager of self storage properties (the “Third Party Platform Acquisition”). See Note 4 – Third Party Platform Acquisition of the Notes to the Consolidated Financial Statements for additional information. As of March 31, 2026, we managed more than 225 of such operating self storage properties, consisting of more than approximately 102,000 units and 16.3 million rentable square feet (the “Third Party Platform”).
The Third Party Platform, the Managed REITs, and the other properties operated but not owned by us, as mentioned above, are referred to as the “Managed Platform.” In total, as of March 31, 2026, we managed more than 275 operating self storage properties, which we did not own, consisting of more than approximately 144,000 units and 20.9 million rentable square feet through our Managed Platform.
Our primary business model is focused on owning and operating high quality self storage properties in high growth markets in the United States and Canada. We finance our portfolio through a diverse capital strategy which includes cash generated from operations, borrowings under our syndicated revolving line of credit, secured and unsecured debt financing, equity offerings and joint ventures. Our business model is designed to maximize cash flow available for distribution to our stockholders and to achieve sustainable long-term growth in cash flow in order to maximize long-term stockholder value at acceptable levels of risk. We execute our organic growth strategy by pursuing revenue-optimizing and expense-minimizing opportunities in the operations of our existing portfolio. We execute our external growth strategy by developing, redeveloping, acquiring and managing self storage facilities in the United States and Canada both internally and through our Managed Platform, and we look to acquire properties that are physically stabilized, recently developed, in various stages of lease up or at certificate of occupancy. We seek to acquire undermanaged facilities that are not operated by institutional operators, where we can implement our proprietary management and technology to maximize net operating income.
66
On October 1, 2025, pursuant to a contribution agreement (the “Contribution Agreement”), we acquired Argus. The principal assets acquired were property management contracts covering the management of more than 220 properties and 400 employees (as of October 1, 2025), and an operating lease for Argus' corporate headquarters in Tucson, Arizona and other intellectual and personal property.
Additionally, we plan to continue to expand our third-party management platform in both Canada and the United States by scaling our Third Party Platform or through additional investments in or acquisitions of third-party management firms.
We have provided financing to the Managed REITs in the form of mezzanine loans, bridge loans, promissory notes, and preferred equity as applicable. We intend to continue in this practice going forward, if necessary. We continue to look to expand our lending practice to self storage facilities outside of the Managed REITs, potentially to third party managed properties or joint venture properties. We may enter into joint ventures or other forms of co-investments in order to scale our overall property count and diversify our portfolio of properties. Joint ventures may also allow us to acquire an interest in a property without requiring that we fund the entire purchase price, but for which we would target being the property manager, both in the U.S. and Canada.
As an operating business, self storage requires a much greater focus on strategic planning and tactical operation plans. Our in-house call center allows us to centralize our sales efforts as we capture new business over the phone, email, web-based chat, and text mediums. As we have grown our portfolio of self storage facilities, we have been able to consolidate and streamline a number of aspects of our operations through economies of scale. We also utilize our digital marketing breadth and expertise which allows us to acquire customers efficiently by leveraging our portfolio size and technological proficiency. To the extent we acquired facilities in clusters within geographic regions, we see property management efficiencies resulting in reduction of personnel and other operational costs.
In addition, we have the internal capability to originate, structure and manage additional self storage investment programs or Managed REITs, which would be sponsored by SmartStop REIT Advisors, LLC (“SRA”), our indirect subsidiary. We acquired such capability in 2019 from Strategic Asset Management I, LLC, our former sponsor (“SAM”). We generate asset management fees, property management fees, acquisition fees, and other fees and also receive substantially all of the tenant protection program revenue earned by our Managed REITs, as applicable. For the property management and advisory services that we provide, we are reimbursed for certain expenses that otherwise helps to offset our net operating expense burden. We primarily generate property management fees and receive a portion of the tenant protection program revenue from our third party owners and are reimbursed for certain costs incurred by our Third Party Platform, as applicable.
67
Wholly-Owned Properties
As of March 31, 2026, our wholly-owned operating self storage portfolio was composed as follows:
State |
|
No. of |
|
|
Units (1) |
|
|
Rentable |
|
|
% of Total |
|
|
Physical |
|
|
Rental |
|
||||||
Alabama |
|
|
1 |
|
|
|
1,090 |
|
|
|
163,300 |
|
|
|
1.2 |
% |
|
|
93.3 |
% |
|
|
0.6 |
% |
Arizona |
|
|
4 |
|
|
|
3,130 |
|
|
|
329,100 |
|
|
|
2.4 |
% |
|
|
95.2 |
% |
|
|
2.1 |
% |
California |
|
|
32 |
|
|
|
21,955 |
|
|
|
2,321,300 |
|
|
|
16.7 |
% |
|
|
92.1 |
% |
|
|
20.2 |
% |
Colorado |
|
|
11 |
|
|
|
6,475 |
|
|
|
750,450 |
|
|
|
5.4 |
% |
|
|
91.9 |
% |
|
|
4.6 |
% |
Florida |
|
|
28 |
|
|
|
21,435 |
|
|
|
2,500,250 |
|
|
|
18.0 |
% |
|
|
92.4 |
% |
|
|
19.8 |
% |
Illinois |
|
|
6 |
|
|
|
3,785 |
|
|
|
432,450 |
|
|
|
3.1 |
% |
|
|
92.0 |
% |
|
|
2.8 |
% |
Indiana |
|
|
2 |
|
|
|
1,030 |
|
|
|
112,700 |
|
|
|
0.8 |
% |
|
|
90.5 |
% |
|
|
0.5 |
% |
Massachusetts |
|
|
2 |
|
|
|
1,045 |
|
|
|
111,800 |
|
|
|
0.9 |
% |
|
|
88.7 |
% |
|
|
1.7 |
% |
Maryland |
|
|
2 |
|
|
|
1,610 |
|
|
|
169,500 |
|
|
|
1.2 |
% |
|
|
92.5 |
% |
|
|
1.2 |
% |
Michigan |
|
|
4 |
|
|
|
2,220 |
|
|
|
266,100 |
|
|
|
1.9 |
% |
|
|
92.8 |
% |
|
|
1.5 |
% |
New Jersey |
|
|
5 |
|
|
|
5,395 |
|
|
|
488,300 |
|
|
|
3.5 |
% |
|
|
77.2 |
% |
|
|
3.8 |
% |
Nevada |
|
|
9 |
|
|
|
7,160 |
|
|
|
865,000 |
|
|
|
6.2 |
% |
|
|
92.5 |
% |
|
|
5.5 |
% |
North Carolina |
|
|
18 |
|
|
|
8,670 |
|
|
|
1,138,850 |
|
|
|
8.2 |
% |
|
|
91.3 |
% |
|
|
6.8 |
% |
Ohio |
|
|
5 |
|
|
|
2,830 |
|
|
|
320,050 |
|
|
|
2.3 |
% |
|
|
90.7 |
% |
|
|
1.4 |
% |
South Carolina |
|
|
4 |
|
|
|
2,890 |
|
|
|
355,800 |
|
|
|
2.6 |
% |
|
|
92.5 |
% |
|
|
1.8 |
% |
Texas |
|
|
17 |
|
|
|
10,830 |
|
|
|
1,388,050 |
|
|
|
10.0 |
% |
|
|
92.4 |
% |
|
|
9.3 |
% |
Virginia |
|
|
1 |
|
|
|
830 |
|
|
|
71,100 |
|
|
|
0.5 |
% |
|
|
91.7 |
% |
|
|
0.7 |
% |
Washington |
|
|
5 |
|
|
|
3,430 |
|
|
|
390,550 |
|
|
|
2.8 |
% |
|
|
94.0 |
% |
|
|
3.0 |
% |
Wisconsin |
|
|
1 |
|
|
|
780 |
|
|
|
83,400 |
|
|
|
0.6 |
% |
|
|
88.9 |
% |
|
|
0.5 |
% |
District of Columbia |
|
|
1 |
|
|
|
830 |
|
|
|
72,000 |
|
|
|
0.6 |
% |
|
|
96.0 |
% |
|
|
0.7 |
% |
Alberta, Canada |
|
|
5 |
|
|
|
3,050 |
|
|
|
358,050 |
|
|
|
2.6 |
% |
|
|
80.9 |
% |
|
|
2.1 |
% |
British Columbia, Canada |
|
|
1 |
|
|
|
800 |
|
|
|
74,000 |
|
|
|
0.5 |
% |
|
|
85.1 |
% |
|
|
0.6 |
% |
Ontario, Canada |
|
|
13 |
|
|
|
10,610 |
|
|
|
1,110,700 |
|
|
|
8.0 |
% |
|
|
91.8 |
% |
|
|
8.8 |
% |
Total |
|
|
177 |
|
|
|
121,880 |
|
|
|
13,872,800 |
|
|
|
100.0 |
% |
|
|
91.3 |
% |
|
|
100.0 |
% |
JV Properties
As of March 31, 2026, we had ownership interests in the Canadian JV Properties (defined below) and the Nantucket Joint Venture (defined below and together with the Canadian JV Properties, the “JV Properties”). We account for these investments using the equity method of accounting and they are stated at cost and adjusted for our share of net earnings or losses and reduced by distributions and increased for contributions. Equity in earnings (loss) will generally be recognized based on our ownership interest in the earnings (loss) of each of the unconsolidated investments.
On July 18, 2024, we entered into a joint venture arrangement with an unaffiliated third party to develop a self storage property in Nantucket, Massachusetts (the “Nantucket Joint Venture”). This property became operational in December 2025 and we serve as the property manager of this self storage property.
As of March 31, 2026 and December 31, 2025, the carrying value of this investment was approximately $6.8 million and $7.0 million, respectively, which represented an indirect investment of approximately 42% minority ownership of the property.
We are party to joint venture agreements with a subsidiary of SmartCentres, an unaffiliated third party, to acquire, develop, and operate self storage facilities. In connection with such agreements, as 50% owner and SmartCentres as the other 50% owner of a joint venture subsidiary, we own 14 joint venture properties (the “Canadian JV Properties”), 10 of which were operational and four of which were being developed into self storage properties as of March 31, 2026.
68
The following table summarizes our 50% ownership interests in the Canadian JV Properties (in thousands):
|
|
Date Real Estate |
|
Carrying Value of Investment as of |
|
|||||
|
|
Venture Became |
|
March 31, |
|
|
December 31, |
|
||
Canadian JV Property |
|
Operational |
|
2026 |
|
|
2025 |
|
||
Dupont (1) |
|
October 2019 |
|
$ |
520 |
|
|
$ |
583 |
|
East York (1) |
|
June 2020 |
|
|
5,214 |
|
|
|
5,209 |
|
Brampton (1) |
|
November 2020 |
|
|
1,615 |
|
|
|
1,597 |
|
Vaughan (1) |
|
January 2021 |
|
|
2,055 |
|
|
|
2,064 |
|
Oshawa (1) |
|
August 2021 |
|
|
290 |
|
|
|
285 |
|
Scarborough (1) |
|
November 2021 |
|
|
2,131 |
|
|
|
2,099 |
|
Aurora (1) |
|
December 2022 |
|
|
246 |
|
|
|
256 |
|
Kingspoint (1) |
|
March 2023 |
|
|
2,383 |
|
|
|
2,448 |
|
Whitby (1) |
|
January 2024 |
|
|
3,699 |
|
|
|
3,830 |
|
Markham (1) |
|
May 2024 |
|
|
3,032 |
|
|
|
3,155 |
|
Regent (2) |
|
Under Development |
|
|
4,311 |
|
|
|
3,839 |
|
Allard (2) |
|
Under Development |
|
|
1,320 |
|
|
|
1,270 |
|
Finch (2) |
|
Under Development |
|
|
3,081 |
|
|
|
3,033 |
|
127 Ave, Edmonton, AB (3) |
|
Under Development |
|
|
720 |
|
|
|
— |
|
|
|
|
|
$ |
30,617 |
|
|
$ |
29,668 |
|
Other Properties
We own our office located at 10 Terrace Rd, Ladera Ranch, California, which houses our corporate headquarters.
We have an office lease of approximately 5,000 square feet located in Tucson, Arizona, which is the primary office of our recently acquired Third Party Platform.
Critical Accounting Policies and Estimates
We have established accounting policies which conform to generally accepted accounting principles (“GAAP”). Preparing financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. Following is a discussion of the estimates and assumptions used in setting accounting policies that we consider critical in the presentation of our consolidated financial statements. Many estimates and assumptions involved in the application of GAAP may have a material impact on our financial condition or operating performance, or on the comparability of such information to amounts reported for other periods, because of the subjectivity and judgment required to account for highly uncertain items or the susceptibility of such items to change. These estimates and assumptions affect our reported amounts of assets and liabilities, our disclosure of contingent assets and liabilities at the dates of the financial statements and our reported amounts of revenue and expenses during the period covered by this report. If management’s judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied or different amounts of assets, liabilities, revenues and expenses would have been recorded, thus resulting in a materially different presentation of the financial statements or materially different amounts being reported in the financial statements. Additionally, other companies may use different estimates and assumptions that may impact the comparability of our financial condition and results of operations to those companies.
We believe that our critical accounting policies include the following: real estate acquisition valuation; the evaluation of whether any of our long-lived assets have been impaired; the valuation of goodwill and related impairment considerations, the valuation of our trademarks and related impairment considerations; and the evaluation of the consolidation of our interests in joint ventures. The following discussion of these policies supplements, but does not supplant the description of our significant accounting policies, as contained in Note 2 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements, and is intended to present our analysis of the uncertainties involved in arriving upon and applying each policy.
69
Real Estate Purchase Price Allocation and Treatment of Acquisition Costs
We account for asset acquisitions in accordance with GAAP which requires that we allocate the purchase price of a property to the tangible and intangible assets acquired and the liabilities assumed based on their relative fair values as of the date of acquisition. This guidance requires us to make significant estimates and assumptions, including fair value estimates, which requires the use of significant unobservable inputs as of the acquisition date. We engage independent third-party valuation specialists to assist in the determination of significant estimates and market-based assumptions used in the valuation models. Our allocations of purchase prices are based on certain significant estimates and assumptions, variations in such estimates and assumptions could result in a materially different presentation of the consolidated financial statements or materially different amounts being reported in the consolidated financial statements.
The value of the tangible assets, consisting of land and buildings, is determined as if vacant. Substantially all of the leases in place at acquired properties are at market rates, as the majority of the leases are month-to-month contracts. We also consider whether in-place, market leases represent an intangible asset.
Allocation of purchase price to acquisitions of portfolios of facilities are allocated to the individual facilities based upon an income approach or a cash flow analysis using appropriate risk adjusted capitalization rates which take into account the relative size, age, and location of the individual facility along with current and projected occupancy and rental rate levels or appraised values, if available.
Acquisitions that do not meet the definition of a business, as defined under current GAAP, are accounted for as asset acquisitions. To date, our property acquisitions have generally not met the definition of a business because substantially all of the fair value was concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) and because the acquisitions did not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. As a result, once an acquisition is deemed probable, acquisition costs are capitalized rather than expensed.
Evaluation of Possible Impairment of Real Property Assets
Management monitors events and changes in circumstances that could indicate that the carrying amounts of our real property assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of the assets may not be recoverable, we will assess the recoverability of the assets by determining whether the carrying value of the real property assets will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying value, we will adjust the value of the real property assets to the fair value and recognize an impairment loss. Our evaluation of the impairment of real property assets could result in a materially different presentation of the financial statements or materially different amounts being reported in the financial statements, as the amount of impairment loss, if any, recognized may vary based on the estimates and assumptions we use.
Intangible Assets Valuation
In connection with the acquisition of the Third Party Platform, we allocated a portion of the consideration to an intangible asset related to the property management contracts and the related customer relationships. We are amortizing such intangible asset on a straight-line basis over the estimated benefit period of the property management contracts and related customer relationships. We evaluate such intangible asset for impairment when an event occurs or circumstances change that indicate the carrying value may not be recoverable. In such an event, an impairment charge would be recognized and the intangible asset would be marked down to its fair value.
Goodwill Valuation
Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible assets and other intangible assets acquired. Goodwill is allocated to various reporting units, as applicable, and is not amortized. We perform an annual qualitative impairment assessment as of December 31 for goodwill; between annual assessments, we evaluate the recoverability of goodwill whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be fully recoverable. If circumstances indicate the carrying amount may not be fully recoverable, we perform a quantitative analysis to compare the fair value of each reporting unit to its respective carrying amount. If the carrying amount of goodwill exceeds its fair value, an impairment charge will be recognized.
70
Trademarks Valuation
Trademarks are based on the value of our brands. Trademarks are valued using the relief from royalty method, which presumes that without ownership of such trademarks, we would have to make a stream of payments to a brand or franchise owner in return for the right to use their name. By virtue of this asset, we avoid any such payments and record the related intangible fair value of our ownership of the brand name.
We qualitatively evaluate whether any triggering events or changes in circumstances have occurred in addition to our annual impairment test that would indicate an impairment condition may exist. If any change in circumstance or triggering event occurs, and results in a significant impact to our revenue and profitability projections, or any significant assumption in our valuation methods is adversely impacted, the impact could result in a material impairment charge in the future.
Consolidation Considerations
Current accounting guidance provides a framework for identifying a variable interest entity (“VIE”) and determining when a company should include the assets, liabilities, noncontrolling interests, and results of activities of a VIE in its consolidated financial statements. In general, a VIE is an entity or other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. Generally, a VIE should be consolidated if a party with an ownership, contractual, or other financial interest in the VIE (a variable interest holder) has the power to direct the VIE’s most significant activities and the obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and noncontrolling interest at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest.
We evaluate the consolidation of our investments in VIE’s in accordance with relevant accounting guidance. This evaluation requires us to determine whether we have a controlling interest in a VIE through a means other than voting rights, and, if so, such VIE may be required to be consolidated in our financial statements. Our evaluation of our VIE’s under such accounting guidance could result in a materially different presentation of the financial statements or materially different amounts being reported in the financial statements, as the VIE’s included in our consolidated financial statements may vary based on the estimates and assumptions we use.
REIT Qualification
We made an election under Section 856(c) of the Internal Revenue Code of 1986 (the Code) to be taxed as a REIT under the Code, commencing with the taxable year ended December 31, 2014. By qualifying as a REIT for federal income tax purposes, we generally will not be subject to U.S. federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which our qualification is denied. Such an event could materially and adversely affect our net income and could have a material adverse impact on our financial condition and results of operations. However, we believe that we are organized and operate in a manner that will enable us to continue to qualify for treatment as a REIT for federal income tax purposes, and we intend to continue to operate as to remain qualified as a REIT for federal income tax purposes.
Recent Tax Legislation
Effective July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. Certain provisions of OBBBA modified U.S. tax law and impact us and our stockholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) permanently reinstated 100% bonus depreciation for certain property acquired after January 19, 2025, (iii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31, 2025, and (iv) increased the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of “adjusted taxable income” for taxable years beginning after December 31, 2024. We have evaluated the provisions of OBBBA and do not expect the adoption of OBBBA to have a material impact on our Consolidated Financial Statements.
71
Results of Operations
Overview
We derive revenues principally from: (i) rents received from our self storage tenant leases; (ii) fees generated from our Managed Platform; (iii) our Tenant Protection Programs; and (iv) sales of packing and storage-related supplies at our storage facilities. Therefore, our operating results depend significantly on our ability to retain our existing tenants and lease our available self storage units to new tenants, while maintaining and, where possible, increasing the prices for our self storage units and those that we manage.
Competition in the market areas in which we operate is significant and affects the occupancy levels, rental rates, rental revenues and operating expenses of our facilities. Development of any new self storage facilities would intensify competition of self storage operators in markets in which we operate.
As of March 31, 2026 and 2025, we wholly-owned 177 and 164, respectively, operating self storage facilities.
Our operating results for the three months ended March 31, 2026 included full period results for 177 self storage facilities. Our operating results for the three months ended March 31, 2025 included full period results for 161 self storage facilities and partial period results for three self storage facilities.
Operating results in future periods will depend on the results of operations of these properties and of the real estate properties that we acquire in the future.
Comparison of the Three Months Ended March 31, 2026 and 2025
Total Self Storage Revenues
Total self storage related revenues for the three months ended March 31, 2026 and 2025 were approximately $64.8 million and $59.2 million, respectively. The increase in total self storage revenues of approximately $5.6 million, or approximately 9%, was primarily attributable to an increase in non same-store revenues of approximately $4.5 million, largely related to the net increase of 13 wholly-owned properties acquired after March 31, 2025, the operating results of which were not included during the three months ended March 31, 2025. Additionally, our same-store revenues were up approximately $0.8 million, or approximately 1.5%, and our tenant protection program revenues across all of our stores were up approximately $0.3 million.
We expect self storage revenues to primarily fluctuate based on the performance of our same-store pool, which will be influenced by the overall economic environment and increases in self storage supply, amongst other things. Additionally, we expect our non same-store revenues to grow, commensurate with increases in occupancy and increased rates as such properties stabilize.
Managed Platform Revenues
Managed Platform revenues for the three months ended March 31, 2026 and 2025 were approximately $6.6 million and $4.1 million, respectively. The increase in Managed Platform revenues of approximately $2.5 million was primarily related to our newly acquired Third Party Platform and, to a lesser extent, an increase in the other recurring revenues derived from the Managed REITs, generally commensurate with their growth, as compared to the same period in the prior year, offset by a reduction in acquisition fee revenue of approximately $1.2 million as compared to the same period in the prior year.
We expect Managed Platform revenues to fluctuate the rest of the year commensurate with our Managed Platform’s changes in assets under management.
Reimbursable Costs from Managed Platform
Reimbursable costs from Managed Platform for the three months ended March 31, 2026 and 2025 were approximately $6.9 million and $2.1 million, respectively. Such revenues consisted of costs incurred by us as we provide property management and advisory services to the owners of the properties we manage through our Managed Platform, which are reimbursed by such owners, pursuant to our related contracts with the owners, as applicable. The increase in reimbursable costs from the Managed Platform of approximately $4.8 million was primarily related to our newly acquired Third Party Platform and growth in the Managed REITs’ assets under management.
We expect such reimbursable costs to fluctuate in future periods commensurate with changes in assets under management of our Managed Platform.
72
Property Operating Expenses
Property operating expenses for the three months ended March 31, 2026 and 2025 were approximately $22.2 million (or 34% of self storage revenue) and $20.1 million (or 34% of self storage revenue), respectively. Property operating expenses includes the costs to operate our facilities including compensation related expenses, utilities, insurance, real estate taxes, and property related marketing. The increase in property operating expenses of approximately $2.1 million was largely attributable to increased property operating expenses of approximately $1.9 million related to our non same-store properties and, to a lesser extent, increased payroll costs at our same-store properties.
We expect property operating expenses to fluctuate commensurate with inflationary pressures, along with the timing and nature of any future acquisitions.
Managed Platform Expenses
Managed Platform expenses for the three months ended March 31, 2026 and 2025 were approximately $4.3 million and $1.2 million, respectively. Such expenses primarily consisted of expenses related to non-reimbursable costs associated with the operation of the Managed Platform. The increase in Managed Platform expenses of approximately $3.1 million was primarily attributable to our newly acquired Third Party Platform, some of which were non-recurring in nature.
We expect Managed Platform expenses to fluctuate commensurate with changes in the assets under management of our Managed Platform.
Reimbursable Costs from Managed Platform
Reimbursable costs from Managed Platform for the three months ended March 31, 2026 and 2025 were approximately $6.9 million and $2.1 million, respectively. Such expenses consisted of costs incurred by us as we provide property management and advisory services to the owners of the properties we manage through our Managed Platform, which are reimbursed by such owners, pursuant to our related contracts with the owners, as applicable. The increase in reimbursable costs from the Managed Platform of approximately $4.8 million was primarily related to our newly acquired Third Party Platform and growth in the Managed REITs’ assets under management.
We expect such reimbursable costs to fluctuate in future periods commensurate with changes in assets under management of our Managed Platform.
General and Administrative Expenses
General and administrative expenses for the three months ended March 31, 2026 and 2025 were approximately $9.1 million and $7.9 million, respectively. Such expenses consisted primarily of compensation related costs, equity-based compensation, marketing related costs, legal expenses, accounting expenses, transfer agent fees, directors and officers’ insurance expense and board of directors related costs. The increase in general and administrative expenses of approximately $1.2 million was primarily attributable to increased compensation and stock compensation costs, which in total increased by approximately $1.5 million compared to the prior period, inclusive of approximately $0.7 million related to the IPO Grant. Such increases were in part offset by reduced professional services costs of approximately $0.4 million as compared to the same period in the prior year.
We expect general and administrative expenses to decrease as a percentage of total revenues over time.
Depreciation and Intangible Amortization Expenses
Depreciation and intangible amortization expenses for the three months ended March 31, 2026 and 2025 were approximately $20.0 million and $16.7 million, respectively. Depreciation expense consisted primarily of depreciation on the buildings and site improvements at our properties. Intangible amortization expense primarily consisted of the amortization of our in place lease intangible assets resulting from our self storage acquisitions, and, to a lesser extent, the amortization of the customer contracts and related relationships intangible asset recorded in connection with our acquisition of the Third Party Platform.
The increase in depreciation and intangible amortization expense of approximately $3.3 million was primarily attributable to such increases related to the net increase of 13 wholly-owned properties acquired after March 31, 2025, as well as additional depreciation and intangible amortization expense related to the two properties we acquired during the three months ended March 31, 2025.
73
Acquisition Expenses
Acquisition expenses for the three months ended March 31, 2026 and 2025 were approximately $0.1 million and $0.2 million, respectively. The decrease in acquisition expenses of approximately $0.1 million was due to decreased acquisition volume in the current period.
Contingent Earnout Adjustment
Contingent earnout adjustment for the three months ended March 31, 2026 and 2025 was approximately $0.6 million and none, respectively. Such expense represents the adjustment to fair value of the contingent earnout related to the Third Party Platform Acquisition. See Note 4 – Third Party Platform Acquisition of the Notes to the Consolidated Financial Statements for additional information.
Gain on Disposition of Real Estate
Gain on disposition of real estate for the three months ended March 31, 2026 and 2025 was approximately $1.2 million and none, respectively. One of our wholly-owned properties suffered fire damage in March 2024; the related insurance claim was fully settled during the three months ended March 31, 2026 and we recorded a gain for the amount of the insurance recovery in excess of the insurance recovery originally recorded.
Equity in Earnings (Losses) from Investments in Unconsolidated Real Estate Ventures
Losses from our equity method investments in unconsolidated real estate ventures for the three months ended March 31, 2026 and 2025 were approximately $0.1 million and $0.2 million, respectively. Losses from our equity method investments in unconsolidated real estate ventures primarily consisted of our allocation of earnings and losses from our unconsolidated joint ventures.
Equity in Earnings (Losses) from Investments in Managed REITs
Losses from our equity method investments in the Managed REITs for the three months ended March 31, 2026 and 2025 were approximately $0.2 million and $0.2 million, respectively. Losses from our equity method investments in Managed REITs consisted primarily of our allocation of earnings and losses from our investments in the Managed REITs.
Other, Net
Other, net for the three months ended March 31, 2026 and 2025 was approximately $6.1 million and $0.5 million, respectively, of income. Other, net consisted primarily of certain state tax expenses, foreign currency fluctuations, changes in value related to our foreign currency, other miscellaneous items and, in the previous year, interest rate hedges not designated for hedge accounting. The favorable variance as compared to the prior period was primarily attributable a net favorable foreign currency fluctuation of approximately $5.0 million, largely driven by our Canadian notes, and to a lesser extent, proceeds received from a legal settlement of approximately $0.9 million during the three months ended March 31, 2026.
Interest and Investment Income
Interest and investment income for the three months ended March 31, 2026 and 2025 was approximately $2.0 million and $0.7 million, respectively. Interest and investment income includes interest income on loans to the Managed REITs, accretion of financing fee revenues associated with such loans, interest earned on cash held at financial institutions, as well as income earned on our preferred investments. The increase in interest and investment income of approximately $1.3 million was primarily related to increased lending to the Managed REITs, as well as increases in our preferred investments in SST VI and SST X.
We expect interest and investment income to primarily fluctuate commensurate with the level of outstanding borrowings and preferred investments.
74
Interest Expense
Interest expense for the three months ended March 31, 2026 and 2025 was approximately $13.1 million and $22.0 million, respectively. Interest expense included interest expense on our debt, accretion of fair market value of debt, amortization of debt issuance costs, and, in the prior year, the impact of any interest rate derivatives designated for hedge accounting. The decrease in interest expense of approximately $8.9 million was primarily due to decreased borrowings as a result of certain of our Underwritten Public Offering proceeds being used to reduce our overall borrowings, as well as a lower average effective interest rate due to favorable changes in our outstanding debt.
We expect interest expense to fluctuate in future periods commensurate with our future debt levels and fluctuations in interest rates.
Loss on Debt Extinguishment
Loss on debt extinguishment for the three months ended March 31, 2026 and 2025 was approximately $0.3 million and $0.8 million, respectively. Loss on debt extinguishment for the three months ended March 31, 2026 represented a proportional amount of the unamortized debt issuance costs attributable to certain lenders who were in the lending syndicate under our old credit facility, but not our new credit facility. Loss on debt extinguishment for the three months ended March 31, 2025 was related to the defeasance of our KeyBank Florida CMBS loan.
Please see Note 7 – Debt of the Notes to the Consolidated Financial Statements for additional information.
Income Tax (Expense) Benefit
Income tax expense for the three months ended March 31, 2026 and 2025 was approximately $0.3 million and $0.6 million, respectively. Income tax expense consisted primarily of state, federal, and Canadian income tax. The decrease in income tax expense of approximately $0.3 million was primarily due to a decrease in our deferred tax expense related to our Canadian properties.
We expect our income tax expense to increase in future periods primarily related to our operations in Canada.
75
Same-Store Facility Results - Three Months Ended March 31, 2026 and 2025
The following table sets forth operating data for our same-store facilities (stabilized and comparable properties that have been included in the consolidated results of operations since January 1, 2025, excluding four other properties) for the three months ended March 31, 2026 and 2025. We consider the following data to be meaningful as this allows generally for the comparison of results without the effects of acquisition, dispositions, development activity, properties impacted by casualty events, lease up properties or similar other such factors (dollars in thousands, except per occupied square foot amounts):
|
|
Same-Store Facilities |
|
|
Non Same-Store Facilities |
|
Total |
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
% |
|
2026 |
|
|
2025 |
|
|
% |
|
||||||||
Revenue (1) |
|
$ |
55,009 |
|
|
$ |
54,207 |
|
|
|
1.5 |
% |
|
$ |
7,226 |
|
|
$ |
2,681 |
|
|
N/M |
|
$ |
62,235 |
|
|
$ |
56,888 |
|
|
|
9.4 |
% |
Property operating expenses (2) |
|
|
18,922 |
|
|
|
18,813 |
|
|
|
0.6 |
% |
|
|
3,021 |
|
|
|
1,092 |
|
|
N/M |
|
|
21,943 |
|
|
|
19,905 |
|
|
|
10.2 |
% |
Net operating income |
|
$ |
36,087 |
|
|
$ |
35,394 |
|
|
|
2.0 |
% |
|
$ |
4,205 |
|
|
$ |
1,589 |
|
|
N/M |
|
$ |
40,292 |
|
|
$ |
36,983 |
|
|
|
8.9 |
% |
Number of facilities |
|
|
157 |
|
|
|
157 |
|
|
|
|
|
|
20 |
|
|
|
7 |
|
|
|
|
|
177 |
|
|
|
164 |
|
|
|
|
||
Rentable square feet (3) |
|
|
12,230,850 |
|
|
|
12,188,950 |
|
|
|
|
|
|
1,641,950 |
|
|
|
643,650 |
|
|
|
|
|
13,872,800 |
|
|
|
12,832,600 |
|
|
|
|
||
Average physical occupancy (4) |
|
|
92.5 |
% |
|
|
92.5 |
% |
|
|
0.0 |
% |
|
|
83.0 |
% |
|
N/M |
|
|
N/M |
|
|
91.4 |
% |
|
|
92.3 |
% |
|
|
(0.9 |
)% |
|
Annualized rent per occupied square foot (5) |
|
$ |
20.10 |
|
|
$ |
19.87 |
|
|
|
1.2 |
% |
|
$ |
21.40 |
|
|
N/M |
|
|
N/M |
|
$ |
20.24 |
|
|
$ |
19.94 |
|
|
|
1.5 |
% |
|
N/M Not meaningful
Our same-store revenue increased by approximately $0.8 million, or 1.5%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to an approximately 1.2% increase in annualized rent per occupied square foot and increased administrative and late fees. Our same-store property operating expenses increased by approximately $0.1 million, or 0.6%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to increased payroll costs.
76
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, as applicable. 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.
The following table presents a reconciliation of net income (loss) as presented on our consolidated statements of operations to net operating income, as stated above, for the periods presented (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net income (loss) |
|
$ |
10,216 |
|
|
$ |
(5,456 |
) |
Adjusted to exclude: |
|
|
|
|
|
|
||
Tenant Protection Program revenue (1) |
|
|
(2,582 |
) |
|
|
(2,305 |
) |
Tenant Protection Program related expense |
|
|
266 |
|
|
|
182 |
|
Managed Platform revenue |
|
|
(6,612 |
) |
|
|
(4,113 |
) |
Managed Platform expenses |
|
|
4,338 |
|
|
|
1,234 |
|
General and administrative |
|
|
9,140 |
|
|
|
7,850 |
|
Depreciation |
|
|
16,575 |
|
|
|
15,094 |
|
Intangible amortization expense |
|
|
3,453 |
|
|
|
1,599 |
|
Acquisition expenses |
|
|
80 |
|
|
|
203 |
|
Contingent earnout adjustment |
|
644 |
|
|
|
— |
|
|
Losses from our equity method investments in unconsolidated real estate ventures |
|
|
135 |
|
|
|
242 |
|
Losses from our equity method investments in Managed REITs |
|
|
185 |
|
|
|
215 |
|
Other, net |
|
|
(6,069 |
) |
|
|
(454 |
) |
Interest and investment income |
|
|
(1,970 |
) |
|
|
(725 |
) |
Interest expense |
|
|
13,137 |
|
|
|
22,022 |
|
Loss on debt extinguishment |
|
|
262 |
|
|
|
789 |
|
Gain on disposition of real estate |
|
|
(1,237 |
) |
|
|
— |
|
Income tax expense |
|
|
331 |
|
|
|
606 |
|
Total net operating income |
|
$ |
40,292 |
|
|
$ |
36,983 |
|
Non-GAAP Financial Measures
Funds from Operations
Funds from operations (“FFO”) is a non-GAAP financial metric promulgated by the National Association of Real Estate Investment Trusts (“NAREIT”), that we believe is an appropriate supplemental measure to reflect our operating performance.
We define FFO consistent with the standards established by the White Paper on FFO approved by the board of governors of NAREIT (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. Our FFO calculation complies with NAREIT’s policy described above.
77
FFO, as Adjusted
We use FFO, as adjusted, as an additional non-GAAP financial measure to evaluate our 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 our peer group, which includes publicly traded REITs. Further, we believe FFO, as adjusted, is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies.
In determining FFO, as adjusted, we make 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 we believe are not indicative of our overall long-term operating performance. We exclude these items from GAAP net income (loss) to arrive at FFO, as adjusted, as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our 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. We use FFO, as adjusted, as one measure of our operating performance when we formulate corporate goals and evaluate the effectiveness of our 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 our liquidity or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and FFO, as adjusted, should be reviewed in conjunction with other measurements as an indication of our performance.
78
The following is a reconciliation of net income (loss), which is the most directly comparable GAAP financial measure, to FFO (attributable to common stockholders and OP unit holders) and FFO, as adjusted (attributable to common stockholders and OP unit holders), for each of the periods presented below (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Net income (loss) |
|
$ |
10,216 |
|
|
$ |
(5,456 |
) |
Other noncontrolling interests |
|
|
— |
|
|
|
(181 |
) |
Distributions to preferred stockholders |
|
|
— |
|
|
|
(3,452 |
) |
Adjustments: |
|
|
|
|
|
|
||
Depreciation of real estate |
|
|
16,248 |
|
|
|
14,741 |
|
Gain on disposition of real estate |
|
|
(1,237 |
) |
|
|
— |
|
Amortization of real estate related intangible assets |
|
|
3,142 |
|
|
|
1,576 |
|
Depreciation and amortization of real estate and intangible assets from unconsolidated entities |
|
|
883 |
|
|
|
679 |
|
FFO (attributable to common stockholders and OP unit holders) |
|
|
29,252 |
|
|
|
7,907 |
|
Other Adjustments: |
|
|
|
|
|
|
||
Intangible amortization expense - contracts (1) |
|
|
311 |
|
|
|
23 |
|
Acquisition-related expenses (2) |
|
|
176 |
|
|
|
203 |
|
Acquisition expenses, amortization of debt issuance costs and foreign currency (gains) losses, net from unconsolidated entities |
|
|
1 |
|
|
|
66 |
|
Contingent earnout adjustment (3) |
|
|
644 |
|
|
|
— |
|
Accretion of fair market value of secured debt |
|
|
174 |
|
|
|
204 |
|
Loss on extinguishment of debt (4) |
|
|
262 |
|
|
|
789 |
|
Foreign currency and interest rate derivative gains, net (5) |
|
|
(5,384 |
) |
|
|
(202 |
) |
Transactional expenses (6) |
|
|
486 |
|
|
|
625 |
|
IPO & legacy performance grants (7) |
|
|
1,448 |
|
|
|
— |
|
Adjustment of deferred tax assets and liabilities (1) |
|
|
109 |
|
|
|
263 |
|
Sponsor funding reduction (8) |
|
|
267 |
|
|
|
245 |
|
Amortization of debt issuance costs (1) |
|
|
1,058 |
|
|
|
1,072 |
|
FFO, as adjusted (attributable to common stockholders and OP unit holders) |
|
$ |
28,804 |
|
|
$ |
11,195 |
|
79
FFO, as adjusted increased compared to the same period in the prior year primarily as a result of reduced interest expense of approximately $8.9 million, the elimination of approximately $3.5 million of distributions to preferred stockholders, increased segment operating income from our properties of approximately $3.5 million and increased interest and investment income of approximately $1.2 million.
Cash Flows
A comparison of cash flows for operating, investing and financing activities for the periods presented are as follows (in thousands):
|
|
Three Months Ended March 31, |
|
|
|
|
||||||
|
|
2026 |
|
|
2025 |
|
|
Change |
|
|||
Net cash flow provided by (used in): |
|
|
|
|
|
|
|
|
|
|||
Operating activities |
|
$ |
24,237 |
|
|
$ |
10,550 |
|
|
$ |
13,687 |
|
Investing activities |
|
$ |
(16,020 |
) |
|
$ |
(70,309 |
) |
|
$ |
54,289 |
|
Financing activities |
|
$ |
(23,234 |
) |
|
$ |
70,372 |
|
|
$ |
(93,606 |
) |
Cash flows provided by operating activities for the three months ended March 31, 2026 and 2025 were approximately $24.2 million and $10.6 million, respectively. The increase of approximately $13.7 million in cash provided by our operating activities is primarily the result of an increase of approximately $14.0 million in net income when excluding the impact of non-cash items, largely due to a reduction in interest expense and an increase in net operating income.
Cash flows used in investing activities for the three months ended March 31, 2026 and 2025 were approximately $16.0 million and $70.3 million, respectively. The decrease of approximately $54.3 million in cash used in investing activities is primarily the result of a reduction in the use of cash of approximately $80.0 million as compared to the same period in the prior year for the acquisition or development of real estate. Such net decrease in the use of cash for investing activities was partially offset by a net increase in the use of cash for additional investments in our unconsolidated joint ventures and net debt funding to the Managed REITs and DSTs during the three months ended March 31, 2026, as compared to the same period in the prior year of approximately $25.9 million.
Cash flows used in financing activities were approximately $23.2 million for the three months ended March 31, 2026 and cash flows provided by financing activities were approximately $70.4 million for the three months ended March 31, 2025, a change of approximately $93.6 million. Such net change in cash flows used in financing activities is primarily due to approximately $83.5 million decrease in net debt proceeds received during the three months ended March 31, 2026, as compared to the same period in the prior year. Additionally, net cash flows used for distributions during the three months ended March 31, 2026 increased by approximately $7.9 million as compared to the same period in the prior year primarily as a result of additional shareholders receiving distributions due to the additional shares issued in our underwritten public offering, partially offset by the elimination of approximately $3.4 million of distributions to preferred shareholders paid in the prior year, but not in the current period.
80
Liquidity and Capital Resources
Short-Term Liquidity and Capital Resources
Our liquidity needs consist primarily of our property operating expenses, general and administrative expenses, Managed Platform expenses, working capital, debt service payments, capital expenditures, property acquisitions, bridge capital investments, other strategic acquisitions and investments, property developments and improvements, investments related to our Managed Platform, and distributions to our limited partners in our Operating Partnership and our stockholders, as necessary to maintain our REIT qualification. We generally expect that we will meet our short-term liquidity requirements from the combination of existing cash balances and net cash provided from property operations and the Managed Platform and further supported by our Credit Facility. Alternatively, we may issue additional secured or unsecured financing from banks or other lenders, or we may enter into various other forms of financing.
In April 2022, we received our initial investment grade credit rating of BBB- from Kroll Bond Rating Agency, LLC (“Kroll”). In February 2025, we were put on a ratings watch; subsequent thereto, in July 2025, Kroll upgraded us to a credit rating of BBB/Stable. In addition, we received an initial credit rating from DBRS Morningstar in May 2025 of BBB with stable trends. We intend to maintain a credit rating on an annual basis.
Volatility in the debt and equity markets and continued changes in treasury yields, interest rates, inflation and other economic events will depend on future developments, which are highly uncertain. To the extent that there is uncertainty or deterioration in the debt and equity markets, or continued increases in treasury yields and interest rates, over an extended period of time, it could also potentially impact our liquidity over the long-term. If such events were to occur in the long-term, we would expect to access sources of capital available to us, such as proceeds from secured or unsecured financings from banks or other lenders, issuance of common equity in the public markets, issuance of other equity instruments, or additional public or private offerings. The information in this section should be read in conjunction with Note 7 – Debt and Note 14 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements.
Distribution Policy and Distributions
Preferred Stock Dividends
The Series A Convertible Preferred Stock was redeemed on April 4, 2025. See Note 8 – Preferred Equity of the Notes to the Consolidated Financial Statements for more information.
Common Stock Distributions
On February 24, 2026, our board of directors approved a distribution amount for the month of March 2026, such that all holders of our outstanding common stock will receive a distribution equal to $0.1359 per share, equivalent to an annualized distribution of $1.60 per share. The March 2026 distribution payable to each stockholder of record at the end of March was paid on or about April 15, 2026.
On March 27, 2026, our board of directors approved a distribution amount for the month of April 2026, such that all holders of our outstanding common stock will receive a distribution equal to $0.1315 per share, equivalent to an annualized distribution of $1.60 per share. The April 2026 distribution payable to each stockholder of record at the end of April will be paid on or about May 15, 2026.
On May 1, 2026, our board of directors approved a distribution amount for the month of May 2026, such that all holders of our outstanding common stock will receive a distribution equal to $0.1359 per share, equivalent to an annualized distribution of $1.60 per share. The May 2026 distribution payable to each stockholder of record at the end of May will be paid on or about June 15, 2026.
Indebtedness
As of March 31, 2026, our net debt was approximately $1,093.1 million, which included approximately $1,033.8 million in fixed rate debt and approximately $64.8 million in variable rate debt, less approximately $4.0 million in net debt issuance costs and approximately $1.6 million in net debt discount. As of March 31, 2026, we had outstanding approximately $598.2 million USD equivalent debt denominated in Canadian Dollars. See Note 7 – Debt of the Notes to the Consolidated Financial Statements for more information about our indebtedness.
81
On February 18, 2026, we entered into a second amended and restated credit agreement with KeyBank, National Association, as administrative agent, certain others listed as joint book runners, joint lead arrangers, syndication agents and documentation agents, and certain other lenders party thereto (the “Credit Agreement”). The Credit Agreement provides for a senior unsecured revolving credit facility (the “Credit Facility”) in an aggregate principal amount of $500 million. We have the right to increase the amount available under the Credit Facility by an additional $1.1 billion, for a total potential maximum aggregate amount of $1.6 billion, subject to certain conditions. The Credit Facility also includes sublimits of (a) up to $25 million for letters of credit and (b) up to $50 million for swingline loans; each of these sublimits are part of, and not in addition to, the amounts available under the Credit Facility. Our outstanding balance under the previously existing credit facility of approximately $68.3 million remained unchanged at the closing of the Credit Facility. In connection with this amendment, certain lenders under the 2024 Credit Facility exited the arrangement. We recognized approximately $0.3 million of expense, which was included in loss on debt extinguishment in our consolidated statements of operations, and represented a proportional amount of the unamortized debt issuance costs attributable to these lenders under the previously existing credit facility. As of March 31, 2026, we had the ability to draw up to an additional approximately $352.0 million on the current capacity of the Credit Facility revolver. See Note 7 – Debt of the Notes to the Consolidated Financial Statements for more information.
Additionally, we are party to a $160.0 million CAD term loan (the “RBC JV Term Loan III”) with Royal Bank of Canada (“RBC”) pursuant to which 10 of our joint venture subsidiaries that each own 50% of a Joint Venture property serve as borrowers (the “RBC Borrowers”). We and SmartCentres each serve as a recourse guarantor with respect to approximately $79.5 million CAD, or approximately $57.1 million USD, of the obligations outstanding as of March 31, 2026 under the RBC JV Term Loan III. As of March 31, 2026, there was approximately $159.0 million CAD, or approximately $114.1 million USD, outstanding on the RBC JV Term Loan III. See Note 6 – Investments in Unconsolidated Real Estate Ventures of the Notes to the Consolidated Financial Statements for more information.
Long-Term Liquidity and Capital Resources
On a long-term basis, our principal demands for funds will be for our property operating expenses, general and administrative expenses, Managed Platform expenses, debt service payments, capital expenditures, property acquisitions, bridge capital investments, other strategic acquisitions and investments, investments in our Managed REITs, and distributions to our limited partners in our Operating Partnership, and our stockholders, as necessary to maintain our REIT qualification.
Long-term potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, issuance of common equity in the public markets, issuance of other equity instruments, undistributed funds from operations, and additional public or private offerings. To the extent we are not able to secure requisite financing in the form of a credit facility or other debt, we will be dependent upon proceeds from the issuance of equity securities and cash flows from operating activities in order to meet our long-term liquidity requirements and to fund our distributions.
Our material cash requirements from contractual and other obligations primarily relate to our debt obligations. The expected timing of those outstanding principal payments are shown in the table below. The information in this section should be read in conjunction with Note 7 – Debt and Note 14 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements.
The following table presents the future principal payments required on our outstanding debt as of March 31, 2026 (in thousands):
2026 |
|
$ |
91,991 |
|
2027 |
|
|
44,156 |
|
2028 |
|
|
451,726 |
|
2029 |
|
|
104,289 |
|
2030 |
|
|
249,170 |
|
Thereafter |
|
|
157,339 |
|
Total |
|
$ |
1,098,671 |
|
As of March 31, 2026, pursuant to various contractual relationships, we are required to make other non-cancellable payments in the amounts of approximately $3.7 million and $3.9 million during the years ending December 31, 2026 and 2027, respectively.
For cash requirements related to potential acquisitions currently under contract, see Note 3 – Real Estate Facilities and Note 6 – Investments in Unconsolidated Real Estate Ventures of the Notes to the Consolidated Financial Statements.
82
Subsequent Events
See Note 16 – Subsequent Events of the Notes to the Consolidated Financial Statements.
Seasonality
We believe that we will experience minor seasonal fluctuations in the occupancy levels of our facilities, which we believe will be slightly higher over the summer months due to increased moving activity.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, we expect that the primary market risk to which we will be exposed is foreign currency risk and, to a lesser extent, interest rate risk. We may enter into derivative financial instruments such as foreign currency forward derivatives in order to mitigate foreign currency risks. We have significant exposure related to the $700.0 million CAD, or approximately $502.4 million USD as of March 31, 2026, of Canadian Dollar denominated senior unsecured notes issued by our Operating Partnership. From an economic perspective, we believe the fair value of the net equity in our foreign subsidiaries generally acts as a partial natural hedge. However, from a U.S. GAAP perspective, we will experience foreign currency gains/losses related to changes in the Canadian Dollar related to such exposure. We have not and currently do not plan to enter into derivative or interest rate transactions for speculative purposes. We may be exposed to the effects of interest rate changes primarily as a result of borrowings used to maintain liquidity and fund acquisition, expansion, and financing of our real estate investment portfolio and operations. Our interest rate risk management objectives will be to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve our objectives, we may borrow at fixed rates or variable rates. We may also enter into derivative financial instruments such as interest rate swaps and caps in order to mitigate our interest rate risk on a related financial instrument.
As of March 31, 2026, our net debt was approximately $1,093.1 million, which included approximately $1,033.8 million in fixed rate debt and approximately $64.8 million in variable rate debt, less approximately $4.0 million in net debt issuance costs and approximately $1.6 million in net debt discount. As of March 31, 2026, we had outstanding approximately $598.2 million USD equivalent debt denominated in Canadian Dollars. See Note 7 – Debt of the Notes to the Consolidated Financial Statements for more information about our indebtedness.
As of December 31, 2025, our net debt was approximately $1,098.2 million, which included approximately $1,044.5 million in fixed rate debt and approximately $59.8 million in variable rate debt, less approximately $4.4 million in net debt issuance costs and approximately $1.7 million in net debt discount. As of December 31, 2025, we had outstanding approximately $608.3 million USD equivalent debt denominated in Canadian Dollars.
Changes in interest rates have different impacts on fixed and variable debt. A change in interest rates on fixed rate debt impacts its fair value but has no impact on interest incurred or cash flows. A change in interest rates on variable debt could impact the interest incurred and cash flows and its fair value. If the underlying rate of the related index on our variable rate debt were to increase by 100 basis points, the increase in interest would decrease future earnings and cash flows by approximately $0.6 million annually.
We have significant foreign exchange risk related to our Canadian dollar denominated debt issued by our Operating Partnership. Based on the balances as of March 31, 2026, an assumed 1%, 5% and 10% adverse change to foreign exchange rates on such debt would result in an immediate non-cash translation loss of approximately $5.0 million, $25.1 million and $50.2 million, respectively, recorded to other, net in our consolidated statements of operations.
Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.
83
The following table summarizes annual debt maturities and average interest rates on our outstanding debt as of March 31, 2026 (in thousands):
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
Thereafter |
|
|
Total |
|
|||||||
Fixed rate debt |
|
$ |
91,991 |
|
|
$ |
44,156 |
|
|
$ |
451,726 |
|
|
$ |
104,289 |
|
|
$ |
184,344 |
|
|
$ |
157,339 |
|
|
$ |
1,033,845 |
|
Average interest rate (1) |
|
|
4.35 |
% |
|
|
4.37 |
% |
|
|
4.44 |
% |
|
|
4.18 |
% |
|
|
4.28 |
% |
|
N/A |
|
|
|
|
||
Variable rate debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
64,826 |
|
|
$ |
— |
|
|
$ |
64,826 |
|
Average interest rate (1) |
|
|
4.73 |
% |
|
|
4.73 |
% |
|
|
4.73 |
% |
|
|
4.73 |
% |
|
|
4.73 |
% |
|
N/A |
|
|
|
|
||
As a result of fluctuations in currency exchange, our cash flows and results of operations could be affected.
Currently, our only foreign exchange rate risk comes from the Canadian Dollar (“CAD”) due primarily to our Canadian properties and Canadian denominated debt financing. With respect to the Canadian debt issued and serviced by our Canadian properties, the properties generate all of their revenues and expend essentially all of their operating expenses, including third party CAD-denominated debt service costs as applicable, thus significantly reducing the foreign currency risk.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this report, management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required.
Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
84
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Please refer to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 (our “2025 Annual Report”). There have been no material changes from the risk factors set forth in our 2025 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS
The exhibits required to be filed with this report are set forth on the Exhibit Index hereto and incorporated by reference herein.
85
EXHIBIT INDEX
The following exhibits are included in this report on Form 10-Q for the quarter ended March 31, 2026 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No. |
|
Description |
|
|
|
1.1 |
|
Distribution Agreement, dated March 19, 2026, by and among the Company, the Operating Partnership and Sales Agents, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed on March 19, 2026, Commission File No. 001-42584 |
|
|
|
2.1 |
|
Agreement and Plan of Merger, dated as of February 24, 2022, by and among SmartStop Self Storage REIT, Inc., Strategic Storage Growth Trust II, Inc., and SSGT II Merger Sub, LLC, incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on February 24, 2022, Commission File No. 000-55617 |
|
|
|
3.1 |
|
Second Articles of Amendment and Restatement of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on September 19, 2019, Commission File No. 000-55617 |
|
|
|
3.2 |
|
Articles Supplementary for Series A Convertible Preferred Stock of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on October 30, 2019, Commission File No. 000-55617 |
|
|
|
3.3 |
|
Articles of Amendment to the Second Articles of Amendment and Restatement of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 23, 2021, Commission File No. 000-55617 |
|
|
|
3.4 |
|
Articles of Merger Between SmartStop Self Storage REIT, Inc. and SSGT II Merger Sub, LLC, incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K, filed on March 18, 2024, Commission File No. 000-55617 |
|
|
|
3.5 |
|
Articles of Amendment for Reverse Stock Split to the Second Articles of Amendment and Restatement of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on March 21, 2025, Commission File No. 000-55617 |
|
|
|
3.6 |
|
Articles of Amendment for Par Value Decrease to the Second Articles of Amendment and Restatement of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on March 21, 2025, Commission File No. 000-55617 |
|
|
|
3.7 |
|
Articles Supplementary (Common Stock Reclassification) of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed on March 21, 2025, Commission File No. 000-55617 |
|
|
|
3.8 |
|
Articles Supplementary (Subtitle 8 Opt-Out) of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 3, 2025, Commission File No. 001-42584 |
|
|
|
3.9 |
|
Articles of Amendment to the Second Articles of Amendment and Restatement of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 12, 2025, Commission File No. 001-42584 |
|
|
|
3.10 |
|
Second Amended and Restated Bylaws of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on April 3, 2025, Commission File No. 001-42584 |
|
|
|
10.1 |
|
Second Amended and Restated Credit Agreement, dated February 18, 2026, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on February 18, 2026, Commission File No. 001-42584 |
|
|
|
86
|
|
|
10.2* |
|
Form of Performance-Based (TSR) Restricted Stock Agreement (Executives) |
|
|
|
10.3* |
|
Form of Performance-Based (TSR) LTIP Unit Agreement (Executives) |
|
|
|
31.1* |
|
Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2* |
|
Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.1* |
|
Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.2* |
|
Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
101* |
|
The following SmartStop Self Storage REIT, Inc. financial information for the three months ended March 31, 2026 formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss) (iv) Consolidated Statements of Equity and Temporary Equity, (v) Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
104* |
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 has been formatted in Inline XBRL. |
* Filed herewith.
Certain instruments defining rights of holders of long-term debt of the company and its consolidated subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. Upon request, the company agrees to furnish to the SEC copies of such instruments.
87
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
SMARTSTOP SELF STORAGE REIT, INC. (Registrant) |
|
|
|
|
Dated: May 8, 2026 |
By: |
/s/ James R. Barry |
|
|
James R. Barry |
|
|
Chief Financial Officer and Treasurer (Principal Financial Officer) |
88