[10-Q] SmartStop Self Storage REIT, Inc. Quarterly Earnings Report
SmartStop Self Storage REIT, Inc. (SMA) reported results for the quarter ended June 30, 2025 showing revenue growth but a quarterly net loss. Total revenues for the three months were $66,816,000 (including $58,156,000 in self-storage rental revenue), and for the six months were $132,264,000. Income from operations for the quarter declined to $10,263,000 from $17,677,000 a year earlier, and the company recorded a quarterly net loss of $4,799,000 and a net loss attributable to common stockholders of $8,362,000. Basic and diluted net loss per share was $0.16 for the quarter and $0.43 for the six months.
On the balance sheet, total assets rose to $2,302,670,000 and total equity increased markedly to $1,302,575,000, driven by an underwritten public offering that generated gross proceeds of approximately $931,500,000 and a large increase in additional paid-in capital to $1,836,662,000. Debt, net decreased to $950,009,000 from $1,317,435,000. Operating cash provided was $18,555,000 for the six months, investing activities used $235,452,000 (including property purchases), and financing provided $230,091,000. The company continues to expand its portfolio and Managed REIT platform while managing capital structure changes.
SmartStop Self Storage REIT, Inc. (SMA) ha riportato i risultati del trimestre chiuso il 30 giugno 2025 mostrando una crescita dei ricavi ma una perdita netta trimestrale. I ricavi totali per i tre mesi sono stati $66,816,000 (inclusi $58,156,000 di ricavi da locazione di self-storage), e per i sei mesi $132,264,000. Il risultato operativo per il trimestre 猫 sceso a $10,263,000 rispetto a $17,677,000 dell'anno precedente, e la societ脿 ha registrato una perdita netta trimestrale di $4,799,000 e una perdita netta attribuibile agli azionisti ordinari di $8,362,000. La perdita netta base e diluita per azione 猫 stata di $0.16 per il trimestre e di $0.43 per i sei mesi.
Sul bilancio, gli attivi totali sono saliti a $2,302,670,000 e il patrimonio netto 猫 aumentato significativamente a $1,302,575,000, spinto da un'offerta pubblica sottoscritta che ha generato proventi lordi di circa $931,500,000 e da un forte incremento del capitale versato in eccedenza a $1,836,662,000. Il debito netto 猫 diminuito a $950,009,000 da $1,317,435,000. La liquidit脿 fornita dalle attivit脿 operative 猫 stata di $18,555,000 nei sei mesi, le attivit脿 di investimento hanno assorbito $235,452,000 (inclusi acquisti di propriet脿) e le attivit脿 di finanziamento hanno fornito $230,091,000. La societ脿 continua ad espandere il proprio portafoglio e la piattaforma Managed REIT, gestendo al contempo le variazioni della sua struttura di capitale.
SmartStop Self Storage REIT, Inc. (SMA) inform贸 resultados del trimestre finalizado el 30 de junio de 2025, mostrando crecimiento de ingresos pero una p茅rdida neta trimestral. Los ingresos totales para los tres meses fueron $66,816,000 (incluyendo $58,156,000 por ingresos por alquiler de self-storage), y para los seis meses $132,264,000. El resultado de explotaci贸n para el trimestre cay贸 a $10,263,000 desde $17,677,000 un a帽o antes, y la compa帽铆a registr贸 una p茅rdida neta trimestral de $4,799,000 y una p茅rdida neta atribuible a los accionistas ordinarios de $8,362,000. La p茅rdida neta b谩sica y diluida por acci贸n fue de $0.16 en el trimestre y de $0.43 en los seis meses.
En el balance, los activos totales aumentaron a $2,302,670,000 y el patrimonio neto se increment贸 notablemente a $1,302,575,000, impulsado por una oferta p煤blica suscrita que gener贸 ingresos brutos de aproximadamente $931,500,000 y por un fuerte aumento del capital pagado en exceso a $1,836,662,000. La deuda neta disminuy贸 a $950,009,000 desde $1,317,435,000. El efectivo proporcionado por operaciones fue de $18,555,000 en los seis meses, las actividades de inversi贸n consumieron $235,452,000 (incluidas compras de propiedades) y las actividades de financiaci贸n aportaron $230,091,000. La compa帽铆a contin煤a ampliando su cartera y la plataforma Managed REIT mientras gestiona los cambios en la estructura de capital.
SmartStop Self Storage REIT, Inc. (SMA)電� 2025雲� 6鞗� 30鞚茧 膦呺霅� 攵勱赴 鞁れ爜鞚� 氚滍憸頄堨溂氅�, 靾橃澋鞚� 歃濌皜頄堨溂雮� 攵勱赴 靾滌啇鞁れ潉 旮半頄堨姷雼堧嫟. 3臧滌洈 齑濎垬鞚奠潃 $66,816,000(攴胳 靺�頂勳姢韱犽Μ歆� 鞛勲寑靾橃澋 $58,156,000 韽暔)鞚搓碃, 6臧滌洈 齑濎垬鞚奠潃 $132,264,000鞓赌鞀惦媹雼�. 鞓侅梾鞚挫澋鞚� 鞚挫爠 頃挫潣 $17,677,000鞐愳劀 鞚措矆 攵勱赴 $10,263,000搿� 臧愳唽頄堨溂氅�, 須岇偓電� 攵勱赴 靾滌啇鞁� $4,799,000瓿� 氤错喌欤检＜ 攴�靻� 靾滌啇鞁� $8,362,000鞚� 旮半頄堨姷雼堧嫟. 欤茧嫻 旮半掣 氚� 頋劃 靾滌啇鞁れ潃 攵勱赴 旮办 $0.16, 6臧滌洈 旮办 $0.43鞓赌鞀惦媹雼�.
雽�彀寑臁绊憸靸� 齑濎瀽靷办潃 $2,302,670,000鞙茧 歃濌皜頄堦碃 鞛愲掣齑濌硠電� 鞚胳垬順� 瓿惦毳� 韱淀暣 鞎� $931,500,000鞚� 齑濎垬鞚奠潉 彀届稖頃橂┌ 韥� 韽溂搿� 靸侅姽頃� $1,302,575,000鞐� 雼枅鞀惦媹雼�. 齑堦臣雮╈瀰鞛愲掣霃� $1,836,662,000搿� 韥矊 歃濌皜頄堨姷雼堧嫟. 靾滊秬毂勲姅 $1,317,435,000鞐愳劀 $950,009,000搿� 臧愳唽頄堨姷雼堧嫟. 鞓侅梾頇滊彊鞙茧 鞚疙暅 順勱笀頋愲鞚� 6臧滌洈 霃欖晥 $18,555,000鞚� 鞝滉车頄堦碃, 韴瀽頇滊彊鞚� $235,452,000鞚� 靷毄(攵�霃欖偘 旆摑 韽暔)頄堨溂氅�, 鞛頇滊彊鞚� $230,091,000鞚� 鞝滉车頄堨姷雼堧嫟. 須岇偓電� 韽姼韽措Μ鞓れ檧 Managed REIT 頂岆灚韽检潉 瓿勳啀 頇曥灔頃橂┐靹� 鞛愲掣甑“ 氤�頇旊ゼ 甏�毽晿瓿� 鞛堨姷雼堧嫟.
SmartStop Self Storage REIT, Inc. (SMA) a publi茅 ses r茅sultats pour le trimestre clos le 30 juin 2025, montrant une progression des revenus mais une perte nette trimestrielle. Les revenus totaux pour les trois mois se sont 茅lev茅s 脿 $66,816,000 (dont $58,156,000 de revenus locatifs de self鈥憇torage), et 脿 $132,264,000 pour les six mois. Le r茅sultat d'exploitation pour le trimestre a diminu茅 脿 $10,263,000 contre $17,677,000 un an plus t么t, et la soci茅t茅 a enregistr茅 une perte nette trimestrielle de $4,799,000 ainsi qu'une perte nette attribuable aux actionnaires ordinaires de $8,362,000. La perte nette de base et dilu茅e par action s'est 茅tablie 脿 $0.16 pour le trimestre et 脿 $0.43 pour les six mois.
Au bilan, l'actif total est pass茅 脿 $2,302,670,000 et les capitaux propres ont fortement augment茅 pour atteindre $1,302,575,000, soutenus par une offre publique souscrite ayant g茅n茅r茅 un produit brut d'environ $931,500,000 et par une forte augmentation des primes d'茅mission 脿 $1,836,662,000. La dette nette a diminu茅 脿 $950,009,000 contre $1,317,435,000. Les flux de tr茅sorerie provenant des op茅rations se sont 茅lev茅s 脿 $18,555,000 sur six mois, les activit茅s d'investissement ont utilis茅 $235,452,000 (achats d'immeubles inclus) et les activit茅s de financement ont apport茅 $230,091,000. La soci茅t茅 poursuit l'expansion de son portefeuille et de sa plateforme Managed REIT tout en g茅rant les 茅volutions de sa structure de capital.
SmartStop Self Storage REIT, Inc. (SMA) meldete Ergebnisse f眉r das Quartal zum 30. Juni 2025, die ein Umsatzwachstum, aber einen quartalsweisen Nettoverlust zeigten. Die Gesamterl枚se f眉r die drei Monate betrugen $66,816,000 (darunter $58,156,000 Mieterl枚se aus Self-Storage) und f眉r die sechs Monate $132,264,000. Das Betriebsergebnis f眉r das Quartal fiel auf $10,263,000 驳别驳别苍眉产别谤 $17,677,000 im Vorjahr, und das Unternehmen verzeichnete einen quartalsweisen Nettoverlust von $4,799,000 sowie einen dem Stammaktion盲r zurechenbaren Nettoverlust von $8,362,000. Der grundlegende und verw盲sserte Nettoverlust je Aktie betrug $0.16 f眉r das Quartal und $0.43 f眉r sechs Monate.
In der Bilanz stiegen die Gesamtaktiva auf $2,302,670,000 und das Eigenkapital erh枚hte sich deutlich auf $1,302,575,000, beg眉nstigt durch ein gezeichnetes 枚ffentliches Angebot, das Bruttoerl枚se von etwa $931,500,000 erbrachte, und durch einen starken Anstieg des zus盲tzlichen eingezahlten Kapitals auf $1,836,662,000. Die Nettoverschuldung sank auf $950,009,000 von $1,317,435,000. Der aus laufender Gesch盲ftst盲tigkeit generierte operative Cashflow betrug im sechsmonatigen Zeitraum $18,555,000, die Investitionst盲tigkeiten verwendeten $235,452,000 (einschlie脽lich Immobilienk盲ufe) und die Finanzierungst盲tigkeiten stellten $230,091,000 bereit. Das Unternehmen baut weiterhin sein Portfolio und die Managed-REIT-Plattform aus und steuert gleichzeitig Ver盲nderungen in der Kapitalstruktur.
- Completed large underwritten public offering with gross proceeds of approximately $931.5 million, increasing liquidity and paid-in capital
- Total equity increased to $1,302,575,000, reflecting a strengthened balance sheet
- Revenue growth: total revenues rose to $66,816,000 for the quarter and $132,264,000 for six months
- Debt, net decreased to $950,009,000, improving reported leverage metrics
- Portfolio expansion: real estate facilities, net increased to $2,001,078,000
- Quarterly net loss of $4,799,000 and net loss attributable to common stockholders of $8,362,000
- Operating income declined to $10,263,000 from $17,677,000 year-over-year
- High interest expense: $12,030,000 in the quarter and $34,052,000 for six months
- Large investing cash outflow of $235,452,000 in six months, driven by property purchases
- Operating cash provided fell to $18,555,000 for six months from $31,674,000
Insights
TL;DR: Equity strengthened by the $931.5M offering, but operating income fell and the company reported a quarterly net loss.
Revenue trends are positive with total revenues of $66.8M for the quarter and $132.3M year-to-date, led by self-storage rental revenue of $58.2M for the quarter. However, operating income declined to $10.3M from $17.7M and the company reported a net loss attributable to common stockholders of $8.4M this quarter. The large equity raise (gross proceeds ~$931.5M) materially increased additional paid-in capital to $1.84B and total equity to $1.30B, improving the balance sheet while the firm continues heavy investing activity, including ~$203.2M in property purchases in the six months. Overall, mixed operational results offset by a materially stronger capital position.
TL;DR: Capital transactions materially reshaped the balance sheet鈥攑referred redemption and a major equity raise reduced leverage and altered liquidity dynamics.
The company redeemed Series A preferred stock and recorded a cash redemption of $200.0M, and its reported debt, net fell to $950.0M from $1,317.4M. Cash and restricted cash ended at $43.1M, and financing activities provided $230.1M in the first half, reflecting sizable debt issuance and repayments as well as the equity offering. Investing outflows totaled $235.5M, principally for property acquisitions. These capital moves are material to creditor and stakeholder risk profiles because they increased permanent equity and changed the mix of liabilities, even as operating losses persisted.
SmartStop Self Storage REIT, Inc. (SMA) ha riportato i risultati del trimestre chiuso il 30 giugno 2025 mostrando una crescita dei ricavi ma una perdita netta trimestrale. I ricavi totali per i tre mesi sono stati $66,816,000 (inclusi $58,156,000 di ricavi da locazione di self-storage), e per i sei mesi $132,264,000. Il risultato operativo per il trimestre 猫 sceso a $10,263,000 rispetto a $17,677,000 dell'anno precedente, e la societ脿 ha registrato una perdita netta trimestrale di $4,799,000 e una perdita netta attribuibile agli azionisti ordinari di $8,362,000. La perdita netta base e diluita per azione 猫 stata di $0.16 per il trimestre e di $0.43 per i sei mesi.
Sul bilancio, gli attivi totali sono saliti a $2,302,670,000 e il patrimonio netto 猫 aumentato significativamente a $1,302,575,000, spinto da un'offerta pubblica sottoscritta che ha generato proventi lordi di circa $931,500,000 e da un forte incremento del capitale versato in eccedenza a $1,836,662,000. Il debito netto 猫 diminuito a $950,009,000 da $1,317,435,000. La liquidit脿 fornita dalle attivit脿 operative 猫 stata di $18,555,000 nei sei mesi, le attivit脿 di investimento hanno assorbito $235,452,000 (inclusi acquisti di propriet脿) e le attivit脿 di finanziamento hanno fornito $230,091,000. La societ脿 continua ad espandere il proprio portafoglio e la piattaforma Managed REIT, gestendo al contempo le variazioni della sua struttura di capitale.
SmartStop Self Storage REIT, Inc. (SMA) inform贸 resultados del trimestre finalizado el 30 de junio de 2025, mostrando crecimiento de ingresos pero una p茅rdida neta trimestral. Los ingresos totales para los tres meses fueron $66,816,000 (incluyendo $58,156,000 por ingresos por alquiler de self-storage), y para los seis meses $132,264,000. El resultado de explotaci贸n para el trimestre cay贸 a $10,263,000 desde $17,677,000 un a帽o antes, y la compa帽铆a registr贸 una p茅rdida neta trimestral de $4,799,000 y una p茅rdida neta atribuible a los accionistas ordinarios de $8,362,000. La p茅rdida neta b谩sica y diluida por acci贸n fue de $0.16 en el trimestre y de $0.43 en los seis meses.
En el balance, los activos totales aumentaron a $2,302,670,000 y el patrimonio neto se increment贸 notablemente a $1,302,575,000, impulsado por una oferta p煤blica suscrita que gener贸 ingresos brutos de aproximadamente $931,500,000 y por un fuerte aumento del capital pagado en exceso a $1,836,662,000. La deuda neta disminuy贸 a $950,009,000 desde $1,317,435,000. El efectivo proporcionado por operaciones fue de $18,555,000 en los seis meses, las actividades de inversi贸n consumieron $235,452,000 (incluidas compras de propiedades) y las actividades de financiaci贸n aportaron $230,091,000. La compa帽铆a contin煤a ampliando su cartera y la plataforma Managed REIT mientras gestiona los cambios en la estructura de capital.
SmartStop Self Storage REIT, Inc. (SMA)電� 2025雲� 6鞗� 30鞚茧 膦呺霅� 攵勱赴 鞁れ爜鞚� 氚滍憸頄堨溂氅�, 靾橃澋鞚� 歃濌皜頄堨溂雮� 攵勱赴 靾滌啇鞁れ潉 旮半頄堨姷雼堧嫟. 3臧滌洈 齑濎垬鞚奠潃 $66,816,000(攴胳 靺�頂勳姢韱犽Μ歆� 鞛勲寑靾橃澋 $58,156,000 韽暔)鞚搓碃, 6臧滌洈 齑濎垬鞚奠潃 $132,264,000鞓赌鞀惦媹雼�. 鞓侅梾鞚挫澋鞚� 鞚挫爠 頃挫潣 $17,677,000鞐愳劀 鞚措矆 攵勱赴 $10,263,000搿� 臧愳唽頄堨溂氅�, 須岇偓電� 攵勱赴 靾滌啇鞁� $4,799,000瓿� 氤错喌欤检＜ 攴�靻� 靾滌啇鞁� $8,362,000鞚� 旮半頄堨姷雼堧嫟. 欤茧嫻 旮半掣 氚� 頋劃 靾滌啇鞁れ潃 攵勱赴 旮办 $0.16, 6臧滌洈 旮办 $0.43鞓赌鞀惦媹雼�.
雽�彀寑臁绊憸靸� 齑濎瀽靷办潃 $2,302,670,000鞙茧 歃濌皜頄堦碃 鞛愲掣齑濌硠電� 鞚胳垬順� 瓿惦毳� 韱淀暣 鞎� $931,500,000鞚� 齑濎垬鞚奠潉 彀届稖頃橂┌ 韥� 韽溂搿� 靸侅姽頃� $1,302,575,000鞐� 雼枅鞀惦媹雼�. 齑堦臣雮╈瀰鞛愲掣霃� $1,836,662,000搿� 韥矊 歃濌皜頄堨姷雼堧嫟. 靾滊秬毂勲姅 $1,317,435,000鞐愳劀 $950,009,000搿� 臧愳唽頄堨姷雼堧嫟. 鞓侅梾頇滊彊鞙茧 鞚疙暅 順勱笀頋愲鞚� 6臧滌洈 霃欖晥 $18,555,000鞚� 鞝滉车頄堦碃, 韴瀽頇滊彊鞚� $235,452,000鞚� 靷毄(攵�霃欖偘 旆摑 韽暔)頄堨溂氅�, 鞛頇滊彊鞚� $230,091,000鞚� 鞝滉车頄堨姷雼堧嫟. 須岇偓電� 韽姼韽措Μ鞓れ檧 Managed REIT 頂岆灚韽检潉 瓿勳啀 頇曥灔頃橂┐靹� 鞛愲掣甑“ 氤�頇旊ゼ 甏�毽晿瓿� 鞛堨姷雼堧嫟.
SmartStop Self Storage REIT, Inc. (SMA) a publi茅 ses r茅sultats pour le trimestre clos le 30 juin 2025, montrant une progression des revenus mais une perte nette trimestrielle. Les revenus totaux pour les trois mois se sont 茅lev茅s 脿 $66,816,000 (dont $58,156,000 de revenus locatifs de self鈥憇torage), et 脿 $132,264,000 pour les six mois. Le r茅sultat d'exploitation pour le trimestre a diminu茅 脿 $10,263,000 contre $17,677,000 un an plus t么t, et la soci茅t茅 a enregistr茅 une perte nette trimestrielle de $4,799,000 ainsi qu'une perte nette attribuable aux actionnaires ordinaires de $8,362,000. La perte nette de base et dilu茅e par action s'est 茅tablie 脿 $0.16 pour le trimestre et 脿 $0.43 pour les six mois.
Au bilan, l'actif total est pass茅 脿 $2,302,670,000 et les capitaux propres ont fortement augment茅 pour atteindre $1,302,575,000, soutenus par une offre publique souscrite ayant g茅n茅r茅 un produit brut d'environ $931,500,000 et par une forte augmentation des primes d'茅mission 脿 $1,836,662,000. La dette nette a diminu茅 脿 $950,009,000 contre $1,317,435,000. Les flux de tr茅sorerie provenant des op茅rations se sont 茅lev茅s 脿 $18,555,000 sur six mois, les activit茅s d'investissement ont utilis茅 $235,452,000 (achats d'immeubles inclus) et les activit茅s de financement ont apport茅 $230,091,000. La soci茅t茅 poursuit l'expansion de son portefeuille et de sa plateforme Managed REIT tout en g茅rant les 茅volutions de sa structure de capital.
SmartStop Self Storage REIT, Inc. (SMA) meldete Ergebnisse f眉r das Quartal zum 30. Juni 2025, die ein Umsatzwachstum, aber einen quartalsweisen Nettoverlust zeigten. Die Gesamterl枚se f眉r die drei Monate betrugen $66,816,000 (darunter $58,156,000 Mieterl枚se aus Self-Storage) und f眉r die sechs Monate $132,264,000. Das Betriebsergebnis f眉r das Quartal fiel auf $10,263,000 驳别驳别苍眉产别谤 $17,677,000 im Vorjahr, und das Unternehmen verzeichnete einen quartalsweisen Nettoverlust von $4,799,000 sowie einen dem Stammaktion盲r zurechenbaren Nettoverlust von $8,362,000. Der grundlegende und verw盲sserte Nettoverlust je Aktie betrug $0.16 f眉r das Quartal und $0.43 f眉r sechs Monate.
In der Bilanz stiegen die Gesamtaktiva auf $2,302,670,000 und das Eigenkapital erh枚hte sich deutlich auf $1,302,575,000, beg眉nstigt durch ein gezeichnetes 枚ffentliches Angebot, das Bruttoerl枚se von etwa $931,500,000 erbrachte, und durch einen starken Anstieg des zus盲tzlichen eingezahlten Kapitals auf $1,836,662,000. Die Nettoverschuldung sank auf $950,009,000 von $1,317,435,000. Der aus laufender Gesch盲ftst盲tigkeit generierte operative Cashflow betrug im sechsmonatigen Zeitraum $18,555,000, die Investitionst盲tigkeiten verwendeten $235,452,000 (einschlie脽lich Immobilienk盲ufe) und die Finanzierungst盲tigkeiten stellten $230,091,000 bereit. Das Unternehmen baut weiterhin sein Portfolio und die Managed-REIT-Plattform aus und steuert gleichzeitig Ver盲nderungen in der Kapitalstruktur.
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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, 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.
Large accelerated filer |
☐ |
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Accelerated filer |
☐ |
☒ |
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Smaller reporting company |
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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 August 4, 2025, there were
FORM 10-Q
SMARTSTOP SELF STORAGE REIT, INC.
TABLE OF CONTENTS
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Page |
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Cautionary Note Regarding Forward-Looking Statements |
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3 |
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PART I. |
FINANCIAL INFORMATION |
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4 |
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Item 1. |
Consolidated Financial Statements: |
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4 |
|
Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024 |
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5 |
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Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) |
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6 |
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Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited) |
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7 |
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Consolidated Statements of Equity and Temporary Equity for the Three Months Ended June 30, 2025 and 2024 (unaudited) |
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8 |
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Consolidated Statements of Equity and Temporary Equity for the Six Months Ended June 30, 2025 and 2024 (unaudited) |
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10 |
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Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited) |
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12 |
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Notes to Consolidated Financial Statements (unaudited) |
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14 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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67 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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87 |
Item 4. |
Controls and Procedures |
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88 |
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PART II. |
OTHER INFORMATION |
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89 |
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Item 1. |
Legal Proceedings |
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89 |
Item 1A. |
Risk Factors |
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89 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
|
94 |
Item 3. |
Defaults Upon Senior Securities |
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94 |
Item 4. |
Mine Safety Disclosures |
|
94 |
Item 5. |
Other Information |
|
94 |
Item 6. |
Exhibits |
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94 |
2
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 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.
For further information regarding risks and uncertainties associated with our business, and important factors that could cause our actual results to vary materially from those expressed or implied in such forward-looking statements, please refer to the factors listed and described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Risk Factors” sections of the documents we file from time to time with the SEC, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2024, as supplemented by the risk factors included in Part II, Item 1A of this Form 10-Q, copies of which may be obtained from our website at www.investors.smartstopselfstorage.com.
3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The information furnished in the accompanying unaudited consolidated balance sheets and related consolidated statements of operations, comprehensive 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, 2024. Our results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the operating results expected for the full year.
4
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
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June 30, |
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December 31, |
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ASSETS |
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AG真人官方 estate facilities: |
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Land |
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$ |
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$ |
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Buildings |
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Site improvements |
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Accumulated depreciation |
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( |
) |
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( |
) |
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Construction in process |
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AG真人官方 estate facilities, net |
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Cash and cash equivalents |
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Restricted cash |
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Investments in unconsolidated real estate ventures (Note 4) |
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Investments in and advances to Managed REITs |
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Deferred tax assets |
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Other assets, net |
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Intangible assets, net of accumulated amortization |
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Trademarks, net of accumulated amortization |
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Goodwill |
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Debt issuance costs, net of accumulated amortization |
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Total assets |
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$ |
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$ |
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||
LIABILITIES, TEMPORARY EQUITY, AND EQUITY |
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Debt, net |
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$ |
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$ |
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Accounts payable and accrued liabilities |
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Due to affiliates |
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Distributions payable |
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Deferred tax liabilities |
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Total liabilities |
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Commitments and contingencies (Note 12) |
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Redeemable common stock |
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Preferred stock, $ |
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Series A Convertible Preferred Stock, $ |
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Equity: |
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SmartStop Self Storage REIT, Inc.: |
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Common Stock, $ |
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Class A Common Stock, $ |
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Class T Common Stock, $ |
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Additional paid-in capital |
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Distributions |
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( |
) |
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( |
) |
Accumulated deficit |
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( |
) |
|
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( |
) |
Accumulated other comprehensive income (loss) |
|
|
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( |
) |
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Total SmartStop Self Storage REIT, Inc. equity |
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Noncontrolling interests in our Operating Partnership |
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Other noncontrolling interests |
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Total noncontrolling interests |
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Total equity |
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Total liabilities, temporary equity and equity |
|
$ |
|
|
$ |
|
||
See notes to consolidated financial statements.
5
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except share and per share data)
|
|
Three Months Ended |
|
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Six Months Ended |
|
||||||||||
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2025 |
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2024 |
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2025 |
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2024 |
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||||
Revenues: |
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||||
Self storage rental revenue |
|
$ |
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$ |
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$ |
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$ |
|
||||
Ancillary operating revenue |
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Managed REIT Platform revenues |
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Reimbursable costs from Managed REITs |
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||||
Total revenues |
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Operating expenses: |
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Property operating expenses |
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Managed REIT Platform expenses |
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Reimbursable costs from Managed REITs |
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General and administrative |
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Depreciation |
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Intangible amortization expense |
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Acquisition expenses |
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Total operating expenses |
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||||
Income from operations |
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Other income (expense): |
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||||
Equity in earnings (losses) from |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Equity in earnings (losses) from |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Interest income |
|
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|
||||
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss on debt extinguishment |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Income tax expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss attributable to |
|
|
|
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( |
) |
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|
|
|||
Less: Distributions to preferred stockholders |
|
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( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Less: Accretion - preferred equity costs |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net loss attributable to |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss per Common Stock, Class A & |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted average Common Stock outstanding – |
|
|
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|
||||
Weighted average Class A Common shares |
|
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|
||||
Weighted average Class T Common shares |
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|
|
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|
|
||||
See notes to consolidated financial statements.
6
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(Amounts in thousands)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2025 |
|
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2024 |
|
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2025 |
|
|
2024 |
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive loss: |
|
|
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|
||||
Foreign currency translation adjustment |
|
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|
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( |
) |
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( |
) |
||
Foreign currency hedge contract (losses) gains |
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( |
) |
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( |
) |
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||
Interest rate swap and cap contract gains (losses) |
|
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( |
) |
|
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|
|
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( |
) |
||
Other comprehensive income (loss) |
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( |
) |
|
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( |
) |
||
Comprehensive loss |
|
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( |
) |
|
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( |
) |
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( |
) |
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( |
) |
Comprehensive loss attributable to |
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||||
Comprehensive loss attributable to |
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||||
Comprehensive loss attributable to |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
See notes to consolidated financial statements.
7
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY AND TEMPORARY EQUITY
(Unaudited)
(Amounts in thousands, except share and per share data)
|
|
Common Stock |
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||||||||||||||||||||||||||||||
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Common Stock |
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Class A |
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Class T |
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||||||||||||||||||||||||
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Number |
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Common |
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Number |
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Common |
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Number |
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Common |
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Additional |
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Distributions |
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Accumulated |
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Accumulated |
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Total |
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Noncontrolling |
|
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Total |
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Preferred |
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Redeemable |
|
|||||||||||||||
Balance as of March 31, 2025 |
|
|
— |
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|
$ |
— |
|
|
|
|
|
$ |
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|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
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|
$ |
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|
$ |
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|
$ |
|
||||||||||
Issuance of shares in Underwritten |
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|
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— |
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— |
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— |
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— |
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|
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|
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— |
|
|
|
— |
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— |
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|
|
— |
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|
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|
|
— |
|
|
|
— |
|
|||||
Offering costs of Underwritten |
|
|
— |
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|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Changes to redeemable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
Issuance of restricted stock, |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
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|
|
— |
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|
— |
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— |
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|
|
— |
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|
|
— |
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|
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— |
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|
|
— |
|
|
Distributions ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
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— |
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|
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— |
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— |
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— |
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( |
) |
|
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— |
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— |
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( |
) |
|
|
— |
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|
|
( |
) |
|
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— |
|
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|
— |
|
Distributions to noncontrolling |
|
|
— |
|
|
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— |
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|
|
— |
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|
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
|
|
( |
) |
|
|
— |
|
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— |
|
Distributions to other |
|
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— |
|
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
|
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( |
) |
|
|
— |
|
|
|
— |
|
Repurchase of noncontrolling |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Redemption of Series A Convertible |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Equity based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Net loss attributable to |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net loss attributable to the |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net income attributable to other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Foreign currency hedge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Interest rate hedge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Balance as of June 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|||||||||||
See notes to consolidated financial statements.
8
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Class A |
|
|
Class T |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
Number |
|
|
Common |
|
|
Number |
|
|
Common |
|
|
Additional |
|
|
Distributions |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|
Noncontrolling |
|
|
Total |
|
|
Preferred |
|
|
Redeemable |
|
|||||||||||||
Balance as of March 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||||
Offering costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Changes to redeemable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
Redemptions of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of restricted stock, |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Distributions ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Distributions to noncontrolling |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Distributions to other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Issuance of shares for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Net loss attributable to |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net loss attributable to the |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net income attributable to other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Foreign currency hedge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Interest rate hedge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Balance as of June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
See notes to consolidated financial statements.
9
|
|
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 |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
Issuance of shares in Underwritten |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|||||
Offering costs of Underwritten |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Tax withholding |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Changes to redeemable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
Par value adjustment due to |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
Issuance of restricted stock, |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Distributions ($ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Distributions to noncontrolling |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Distributions to other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Issuance of shares for |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||
Equity based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Repurchase of noncontrolling |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Redemption of Series A Convertible |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Net loss attributable to |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net loss attributable to the |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net income attributable to other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Foreign currency hedge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Interest rate hedge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Balance as of June 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|||||||||||
See notes to consolidated financial statements.
10
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Class A |
|
|
Class T |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
Number |
|
|
Common |
|
|
Number |
|
|
Common |
|
|
Additional |
|
|
Distributions |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total |
|
|
Noncontrolling |
|
|
Total |
|
|
Preferred |
|
|
Redeemable |
|
|||||||||||||
Balance as of December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||||
Offering costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Tax withholding |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Changes to redeemable |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
Redemptions of common stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Issuance of restricted stock, |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Distributions ($ |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
Distributions to noncontrolling |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Distributions to other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Issuance of shares for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|||||||
Equity based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Net income attributable to |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net loss attributable to the |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net income attributable to other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Foreign currency hedge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Interest rate hedge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Balance as of June 30, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||||
See notes to consolidated financial statements.
11
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
|
|
Six Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net income 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 |
|
|
|
|
|
|
||
Loss on extinguishment of debt |
|
|
|
|
|
|
||
Equity based compensation expense |
|
|
|
|
|
|
||
Non-cash adjustment from equity method investments in JV Properties |
|
|
|
|
|
|
||
Non-cash adjustment from equity method investments in Managed REITs |
|
|
|
|
|
|
||
Accretion of financing fee revenues |
|
|
( |
) |
|
|
( |
) |
Unrealized foreign currency and derivative (gains) losses |
|
|
( |
) |
|
|
|
|
Sponsor funding reduction |
|
|
|
|
|
|
||
Increase (decrease) in cash from changes in assets and liabilities: |
|
|
|
|
|
|
||
Other assets, net |
|
|
|
|
|
|
||
Accounts payable and accrued liabilities |
|
|
( |
) |
|
|
|
|
Managed REITs receivables |
|
|
( |
) |
|
|
( |
) |
Due to affiliates |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchase of real estate |
|
|
( |
) |
|
|
( |
) |
Additions to real estate |
|
|
( |
) |
|
|
( |
) |
Deposits on acquisition of real estate |
|
|
( |
) |
|
|
( |
) |
Insurance proceeds on insured property damage |
|
|
|
|
|
|
||
Capital distributions from Managed REITs |
|
|
|
|
|
|
||
Investments in unconsolidated JV Properties |
|
|
( |
) |
|
|
( |
) |
Capital distributions from unconsolidated JV Properties |
|
|
|
|
|
|
||
Repayment of SSGT III loans |
|
|
|
|
|
|
||
Funding of loans to SSGT III |
|
|
( |
) |
|
|
|
|
Purchase of SST VI Subordinated Class C Units |
|
|
( |
) |
|
|
( |
) |
Settlement of foreign currency hedges |
|
|
|
|
|
|
||
Purchase of other assets |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Gross proceeds - Underwritten Public Offering |
|
|
|
|
|
|
||
Offering costs |
|
|
( |
) |
|
|
( |
) |
Gross proceeds from issuance of 2028 Canadian Notes |
|
|
|
|
|
|
||
Gross proceeds from issuance of non-credit facility debt |
|
|
|
|
|
|
||
Repayment of non-credit facility debt |
|
|
( |
) |
|
|
|
|
Scheduled principal payments on non-credit facility debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from issuance of credit facility debt |
|
|
|
|
|
|
||
Repayment of credit facility debt |
|
|
( |
) |
|
|
( |
) |
Debt defeasance costs |
|
|
( |
) |
|
|
|
|
Debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Redemptions of common stock |
|
|
|
|
|
( |
) |
|
Redemption of Series A Convertible Preferred Stock |
|
|
( |
) |
|
|
|
|
Payment of payroll withholding tax on stock vesting |
|
|
( |
) |
|
|
( |
) |
Repurchase of noncontrolling interest in SST VI Advisor |
|
|
( |
) |
|
|
|
|
Distributions paid to preferred stockholders |
|
|
( |
) |
|
|
( |
) |
Distributions paid to common stockholders |
|
|
( |
) |
|
|
( |
) |
Distributions paid to noncontrolling interests in our OP |
|
|
( |
) |
|
|
( |
) |
Distributions paid to other noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) 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 year |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash end of period |
|
$ |
|
|
$ |
|
||
12
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
(Amounts in thousands)
Supplemental disclosures and non-cash transactions: |
|
|
|
|
|
|
||
Cash paid for interest, net of capitalized interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of noncash activities: |
|
|
|
|
|
|
||
Acquisition of real estate with loans payable |
|
$ |
|
|
|
|
||
Distributions payable |
|
$ |
|
|
$ |
|
||
AG真人官方 estate and construction in process included in accounts payable |
|
$ |
|
|
$ |
|
||
Issuance of shares pursuant to distribution reinvestment plan |
|
$ |
|
|
$ |
|
||
Redemption of common stock included in accounts payable |
|
$ |
|
|
$ |
|
||
Deposit applied to the purchase of real estate |
|
$ |
|
|
$ |
|
||
Earnest deposits on acquisitions assigned to the Managed REITs, |
|
$ |
|
|
$ |
|
||
Retirement of assets due to casualty loss |
|
$ |
|
|
$ |
|
||
See notes to consolidated financial statements.
13
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(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 and own self storage facilities; we also operate self storage facilities owned by us as well as those owned by the entities sponsored by us. As of June 30, 2025, we wholly-owned
As discussed herein, we, through our subsidiaries, currently 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 launched in January 2025, ("SST X" and together with SST VI and SSGT III, the “Managed REITs” or, the "Managed REIT Platform").
We manage the properties owned or operated by the Managed REITs, which together with the properties owned by the Delaware statutory trusts (“DSTs”) sponsored and operated pursuant to a lease with the DSTs by one of the Managed REITs and one other self storage property we manage, as of June 30, 2025, represented
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 June 30, 2025, we owned approximately
On March 12, 2025, our board of directors (the “Board”), upon recommendation of our Nominating and Corporate Governance Committee, approved an Estimated Per Share Net Asset Value (“NAV”) of our common stock of $
On March 20, 2025, we effected a one-for-four reverse stock split (the “Reverse Stock Split”) of each issued and outstanding share of Class A common stock (“Class A Common Stock”), $
Immediately after the reverse stock split described above, we reclassified and designated
14
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
as to class or series. As a result, the Company had
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 June 12, 2025, we filed Articles of Amendment to our charter to decrease our total number of authorized shares of stock from
On October 1, 2025, which is the six-month anniversary of the listing of our common stock for trading on the New York Stock Exchange, each share of Class A Common Stock and Class T Common Stock will automatically, and without any stockholder action, convert into one share of listed Common Stock. In preparation for this, on July 30, 2025, we completed a fractional share redemption of approximately $
From January 2014 through January 2017, we conducted multiple offerings for sales of shares to the public through multiple registration statements and sold approximately $
In November 2016, we filed with the SEC a Registration Statement on Form S-3, which registered up to an additional $
On May 1, 2025, we terminated our distribution reinvestment plan. As of such date, we had sold approximately
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.
15
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Reverse Equity Splits
As applicable and unless otherwise indicated, the consolidated financial statements and accompanying footnotes give effect to the retrospective effect to the Reverse Equity Splits as described above in Note 1 to the notes to the consolidated financial statements.
Underwritten Public Offering Costs
Prior to the consummation of the Underwritten Public Offering in April 2025, deferred costs pertaining to the Underwritten Public Offering were recorded in Other assets, net in our consolidated balance sheets. Such costs have been offset against the Underwritten Public Offering proceeds along with other such costs incurred during the three months ended June 30, 2025 and were all reclassified to additional paid-in capital in our consolidated balance sheets in the period ended June 30, 2025. 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.
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 June 30, 2025 and December 31, 2024, 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 equity investments in the Managed REIT's, which are all accounted for under the equity method of accounting (see Note 4 – Investments in Unconsolidated AG真人官方 Estate Ventures and Note 10 – 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 and SSGT III are consolidated.
16
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Equity Investments
Investments in and Advances to Managed REITs
As of June 30, 2025 and December 31, 2024, we owned equity and debt investments in the Managed REITs; such amounts are included in Investments in and advances to Managed REITs within our consolidated balance sheets. We account for the 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.
We record the interest and related financing fees on our debt investments on the accrual basis and such income is included in Interest income within the consolidated statements of operations included herein. While we do make loans periodically, we do not consider that to be part of our primary operating activity, and therefore do not report income from loans as operating income.
See Note 10 – Related Party Transactions for additional information.
Noncontrolling Interests in Consolidated Entities
We account for the noncontrolling interests in our Operating Partnership and the noncontrolling interests in SST VI Advisor and our Tenant Protection Programs joint ventures with SST VI and SSGT III 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 SSGT III and SST VI 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 only invest in or through major financial institutions.
Restricted Cash
17
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
AG真人官方 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.
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. 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.
Acquisitions that do not meet the definition of a business, as defined under current GAAP, are accounted for as asset acquisitions. During the six months ended June 30, 2025 and 2024, our property acquisitions did not meet the definition of a business. To date, our 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 related transaction costs are capitalized rather than expensed.
During the three months ended June 30, 2025 and 2024, we expensed approximately $
During the six months ended June 30, 2025 and 2024, we expensed approximately $
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 six months ended June 30, 2025 and 2024,
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.
18
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Goodwill Valuation
We initially recorded goodwill as a result of the Self Administration Transaction (as defined in Note 10 – Related Party Transactions), which occurred in 2019. 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 tests 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.
Trademarks
In connection with the Self Administration Transaction, 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 June 30, 2025 and December 31, 2024, $
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 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 the Ancillary operating revenue line within our consolidated statements of operations as the services are performed and as the goods or services are delivered.
19
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Managed REIT Platform
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. 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 the Managed REIT Platform revenue line within our consolidated statements of operations.
The Managed REITs’ advisory agreements also provide for reimbursement to us of our direct and indirect 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 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’ 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 arise in operating, managing and maintaining the Managed REITs’ properties.
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 REIT Platform’s ability to incur offering costs or limitations imposed by the advisory agreements. We have elected to separately record such revenue in the Reimbursable costs from Managed REITs line within 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 services we provide in connection with the project design, coordination and oversight of development and certain capital improvement projects undertaken by the Managed REITs. We recognize such revenue in the Managed REIT Platform revenue line within our consolidated statements of operations as the services are performed or delivered. See Note 10 – Related Party Transactions, for additional information regarding revenue generated from our Managed REIT 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 10 – Related Party Transactions for additional information).
Pursuant to the Sponsor Funding Agreement, SmartStop, through a wholly-owned subsidiary, is 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 receives 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 $
In accordance with ASC 606, the amount by which our funding exceeds the fair value of the Series C Units received is accounted for as a payment to a customer and is therefore recorded as a reduction to the transaction price for the services we provide to such customer. Each payment is initially included in the Other assets line-item in our consolidated balance sheet and subsequently recorded as a reduction of Managed REIT Platform revenues ratably over the remaining estimated life of our management contracts with SST VI.
20
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Balance as of December 31, 2023 |
|
$ |
|
|
Amounts incurred |
|
|
|
|
Recorded sponsor funding reduction |
|
|
( |
) |
Balance as of December 31, 2024 |
|
$ |
|
|
Amounts incurred |
|
$ |
|
|
Recorded sponsor funding reduction |
|
|
( |
) |
Balance as of June 30, 2025 |
|
$ |
|
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 June 30, 2025 and December 31, 2024, 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 lines within our consolidated statements of operations, depending on the nature of the expense.
We incurred advertising costs of approximately $
We incurred advertising costs of approximately $
AG真人官方 Estate Facilities
Depreciation of AG真人官方 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 |
|
21
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Depreciation of Personal Property Assets
Intangible Assets
We have allocated a portion of our real estate purchase price to in-place lease intangibles, which amortize on a straight-line basis over the estimated future benefit period. Additionally, we have other contract related intangible assets. As of June 30, 2025, the gross amount of the intangible assets was approximately $
The total estimated future amortization expense related to intangible assets for the years ending December 31, 2025, 2026, 2027, 2028, and thereafter is approximately $
We evaluate whether any triggering events or changes in circumstances have occurred subsequent 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 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 on the balance sheet as a deduction from debt; amounts incurred related to obtaining revolving debt are included in the debt issuance costs line on our consolidated balance sheet. See Note 5 – Debt for additional information. Debt issuance costs are amortized using the effective interest method.
As of June 30, 2025 the gross amount of debt issuance costs related to our revolving credit facility totaled approximately $
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. Changes in investments not classified as long term are recorded in other income (expense) and represented a gain of approximately $
22
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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 redeemable under the SRP as redeemable common stock in the accompanying consolidated balance sheets. The maximum amount of redeemable shares under our SRP was limited to the net proceeds from the distribution reinvestment plan. However, accounting guidance states that determinable amounts that can 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.
In addition, current accounting guidance requires, among other things, that financial instruments that represent 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 issue 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 restrictions. 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, compensation cost is recognized over the requisite service period if and when we determine the performance condition is probable of being achieved. 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
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:
23
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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 – AG真人官方 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 are measured at fair value at the time of acquisition, and are accounted for using the equity method of accounting as described in Note 10 – Related Party Transactions. The fair value of these units were 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, 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).
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 June 30, 2025 and December 31, 2024, 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. The table below summarizes the carrying amounts and fair values of our fixed rate debt which are not carried at fair value as of June 30, 2025 and December 31, 2024 (in thousands):
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June 30, 2025 |
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December 31, 2024 |
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||||||||||
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Fair Value |
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Carrying Value |
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Fair Value |
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Carrying Value |
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||||
Fixed Rate Secured Debt |
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$ |
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$ |
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$ |
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|
$ |
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||||
During the six months ended June 30, 2025 and 2024, 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 Notes 5 – Debt and 7 – 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
24
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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 June 30, 2025, 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.
The tables below present our assets and liabilities measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):
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Fair Value Measurements at June 30, 2025 Using |
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Description |
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Quoted Prices in Active Markets for Identical Assets |
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Significant Other Observable Inputs |
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Significant unobservable Inputs |
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Foreign Currency Hedges |
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Accounts payable and accrued liabilities |
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$ |
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|
$ |
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|
$ |
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|||
|
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Fair Value Measurements at December 31, 2024 Using |
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|||||||||
Description |
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Quoted Prices in Active Markets for Identical Assets |
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Significant Other Observable Inputs |
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Significant unobservable Inputs |
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Interest Rate Derivatives |
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|
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Other assets |
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$ |
|
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$ |
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$ |
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Accounts payable and accrued liabilities |
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$ |
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$ |
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$ |
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Foreign Currency Hedges |
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|
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Other assets |
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$ |
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$ |
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$ |
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Accounts payable and accrued liabilities |
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$ |
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$ |
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$ |
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|||
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.
25
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Income Taxes
We made an election to be taxed as a AG真人官方 Estate Investment Trust (“REIT”), under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), 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 to the Managed REITs 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 June 30, 2025 and December 31, 2024, the Company had no uncertain tax positions. Income taxes payable are classified within accounts payable and accrued liabilities in the consolidated balance sheets.
26
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Concentration
Segment Reporting
Our business is composed of
Convertible Preferred Stock
We classified our Series A Convertible Preferred Stock (as defined in Note 6 – 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 classified our Series A Convertible Preferred Stock as temporary equity.
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.
Our Series A Convertible Preferred Stock was redeemed on April 4, 2025, with proceeds from our Underwritten Public Offering.
Basic earnings per share attributable to our common stockholders for all periods presented are computed by dividing net 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.
27
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
The computation of earnings per common share is as follows for the periods presented (amounts presented in thousands, except share and per share data):
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss attributable to |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Net loss attributable to |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Less: Accretion - preferred equity costs |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Less: Distributions to preferred |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Less: Distributions to participating |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss attributable to |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss attributable to |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted average common shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average number of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average number of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Diluted |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
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:
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
Equivalent Shares |
|
|
Equivalent Shares |
|
|
Equivalent Shares |
|
|
Equivalent Shares |
|
||||
Series A Convertible Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Class A and Class A-1 OP Units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unvested LTIP Units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unvested restricted stock awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
28
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Recently Issued 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 becomes effective for annual periods beginning after December 15, 2024. Upon adoption, we do not anticipate that this ASU will have a material impact on our consolidated financial statements or related disclosures.
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. AG真人官方 Estate
AG真人官方 estate |
|
|
|
|
Balance at December 31, 2024 |
|
$ |
|
|
Impact of foreign exchange rate |
|
|
|
|
Improvements and additions |
|
|
|
|
Acquisitions |
|
|
|
|
Balance at June 30, 2025 |
|
$ |
|
|
Accumulated depreciation |
|
|
|
|
Balance at December 31, 2024 |
|
$ |
( |
) |
Depreciation expense |
|
|
( |
) |
Impact of foreign exchange rate |
|
|
( |
) |
Balance at June 30, 2025 |
|
$ |
( |
) |
Self Storage Facility Acquisitions
On January 7, 2025, we purchased a self storage facility located in Hillside, New Jersey (the "Hillside Property"). The purchase price for the Hillside Property was approximately $
On January 7, 2025, we purchased a self storage facility located in Clifton, New Jersey (the "Clifton Property"). The purchase price for the Clifton Property was approximately $
On February 20, 2025, we purchased a self storage facility located in Murfreesboro, Tennessee (the "Murfreesboro Property"). The purchase price for the Murfreesboro Property was approximately $
On April 15, 2025, we purchased a self storage facility located in Kelowna, British Columbia (the "Kelowna Property"). The purchase price for the Kelowna Property was approximately USD $
29
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
On May 29, 2025, we purchased a self storage facility located in Lakewood, Colorado (the "Lakewood II Property"). The purchase price for the Lakewood II Property was approximately $
On June 17, 2025, we purchased a portfolio of
The following table summarizes the purchase price allocations for the real estate related assets acquired during the six months ended June 30, 2025 (in thousands):
Acquisition |
|
Acquisition |
|
Occupancy Upon Acquisition(1) |
|
AG真人官方 Estate |
|
|
Intangibles |
|
|
Total (2) |
|
|
2025 |
|
|
||||
Hillside |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
Clifton |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Murfreesboro |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Kelowna |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lakewood II |
|
|
|
|
|
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|
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|
|
|
|
|
|
|
||||||
Holzwarth Rd, Houston |
|
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|
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|
||||||
Holcombe Blvd, Houston |
|
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|
|
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|
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|
||||||
Louetta Rd, Houston |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
FM 2978, Houston |
|
|
|
|
|
|
|
|
|
|
|
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|
||||||
Shenandoah, Houston |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
(1)
(2)
(3)
Potential Acquisitions
As of August 8, 2025, 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.
Eminent Domain
In May 2025, we learned that
30
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
31
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Note 4. Investments in Unconsolidated AG真人官方 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 a minority ownership in the property of approximately
On April 11, 2025, we funded an additional approximately $
As of June 30, 2025, and December 31, 2024, 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 June 30, 2025 and 2024, we recorded net aggregate loss of approximately $
For the six months ended June 30, 2025 and 2024, we recorded net aggregate loss of approximately $
The following table summarizes our
Canadian JV Property |
|
Date AG真人官方 Estate Venture Became Operational |
|
Carrying Value |
|
|
Carrying Value |
|
||
Dupont (1)(6) |
|
|
$ |
|
|
$ |
|
|||
East York (2)(6) |
|
|
|
|
|
|
|
|||
Brampton (2)(6) |
|
|
|
|
|
|
|
|||
Vaughan (2)(6) |
|
|
|
|
|
|
|
|||
Oshawa (2)(6) |
|
|
|
|
|
|
|
|||
Scarborough (2)(5) |
|
|
|
|
|
|
|
|||
Aurora (1)(5) |
|
|
|
|
|
|
|
|||
Kingspoint (2)(5) |
|
|
|
|
|
|
|
|||
Whitby (4) |
|
|
|
|
|
|
|
|||
Markham (1)(7) |
|
|
|
|
|
|
|
|||
Regent (3) |
|
|
|
|
|
|
|
|||
|
|
|
|
$ |
|
|
$ |
|
||
32
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
As of June 30, 2025, we had ownership interests in the
RBC JV Term Loan II
On July 17, 2024, three of our joint ventures with SmartCentres closed on a $
We and SmartCentres each serve as a full recourse guarantor with respect to
The net proceeds from the RBC JV Term Loan II, in combination with cash on hand were used to fully repay the allocated loan amounts of approximately $
As of June 30, 2025, there was approximately $
RBC JV Term Loan
On November 3, 2023, five of our joint ventures with SmartCentres closed on a $
We and SmartCentres each serve as a full recourse guarantor with respect to
33
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
which we and SmartCentres have each agreed to indemnify the other party with respect to any claims arising from a breach or default of the other party pursuant to the RBC JV Term Loan or the Separate Credit Facilities.
The majority of net proceeds from the RBC JV Term Loan were used to fully repay the allocated loan amounts of approximately $
As of June 30, 2025, $
SmartCentres Financings
In connection with the SST IV Merger, we, through our acquisition of the Oshawa, East York, Brampton, Vaughan, and Scarborough joint venture partnerships, also became party to a master mortgage commitment agreement (the “MMCA I”) with SmartCentres Storage Finance LP (the “SmartCentres Lender”) (the “SmartCentres Loan I”). The SmartCentres Lender is an affiliate of SmartCentres. On August 18, 2021, the Kingspoint Property was added to the MMCA I, increasing the available capacity.
On June 1, 2022, in connection with the SSGT II Merger, we assumed another loan with the SmartCentres Lender. SSGT II had previously entered into a master mortgage commitment agreement on April 30, 2021, which was subsequently modified on October 22, 2021 (the “MMCA II”), with the SmartCentres Lender in the amount of up to approximately $
The SmartCentres Loan I and SmartCentres Loan II have an accordion feature such that borrowings pursuant thereto may be increased up to approximately $
The SmartCentres Financings were amended on May 13, 2024, extending the maturity date to May 11, 2026, among other changes. Monthly interest payments initially increase the outstanding principal balance. Upon a Canadian JV Property generating sufficient net cash flow, the SmartCentres Financings provide for the commencement of quarterly payments of interest. The borrowings advanced pursuant to the SmartCentres Financings may be prepaid without penalty, subject to certain conditions set forth in the MMCA I and MMCA II.
The SmartCentres Financings contain customary affirmative and negative covenants, agreements, representations, warranties and borrowing conditions (including a loan to value ratio of no greater than
34
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
On July 17, 2024, three of our joint ventures with SmartCentres closed on a $
Interest on the SmartCentres Financings is a variable annual rate equal to the aggregate of: (i) the BA Equivalent Rate, plus: (ii) a margin based on the External Credit Rating, plus (iii) a margin under the Senior Credit Facility, each as defined and described further in the MMCA I and MMCA II. As of June 30, 2025, the total interest rate was approximately
As of June 30, 2025, approximately $
Note 5. Debt
Our debt is summarized as follows (in thousands):
Loan |
|
June 30, |
|
|
December 31, |
|
|
Interest |
|
|
Maturity |
|||
KeyBank CMBS Loan(1) |
|
$ |
|
|
$ |
|
|
|
% |
|
||||
Ladera Office Loan |
|
|
|
|
|
|
|
|
% |
|
||||
Credit Facility |
|
|
|
|
|
|
|
|
% |
|
||||
2027 Ladera Ranch Loan |
|
|
|
|
|
|
|
|
% |
|
||||
2028 Canadian Notes |
|
|
|
|
|
|
|
|
% |
|
||||
Kelowna Property Loan |
|
|
|
|
|
|
|
|
% |
|
||||
2028 Canadian Term Loan (5) (7) |
|
|
|
|
|
|
|
|
% |
|
||||
CMBS Loan(3) |
|
|
|
|
|
|
|
|
% |
|
||||
SST IV CMBS Loan (4) |
|
|
|
|
|
|
|
|
% |
|
||||
2032 Private Placement Notes |
|
|
|
|
|
|
|
|
% |
|
||||
Houston Property Loan |
|
|
|
|
|
|
|
|
% |
|
||||
2027 NBC Loan (5) (6) |
|
|
|
|
|
|
|
|
|
|
|
|||
2025 KeyBank Acquisition Facility |
|
|
|
|
|
|
|
|
|
|
|
|||
KeyBank Florida CMBS Loan(2) |
|
|
|
|
|
|
|
|
|
|
|
|||
Discount on secured debt, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
Debt issuance costs, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
Total debt |
|
$ |
|
|
$ |
|
|
|
|
|
|
|||
35
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
The weighted average interest rate on our consolidated debt, excluding the impact of our interest rate hedging activities, as of June 30, 2025 and December 31, 2024 was approximately
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 $
2028 Canadian Notes
On June 11, 2025, we, as guarantor, and the Operating Partnership, as issuer, sold on a private placement basis in all of the provinces of 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, 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
36
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Supplemental Indenture” and together with the Base Indenture, the “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 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 have been issued on a pari passu basis with our existing Credit Facility (as defined below) with KeyBank and the Operating Partnership’s $
In connection with the closing of the 2028 Canadian Notes offering, we used approximately $
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 $
37
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
date of
See Note 6 – Preferred Equity, for additional information regarding our other then pre-existing relationship with this seller/lender.
2025 KeyBank Acquisition Facility
On November 19, 2024, we entered into a credit agreement with KeyBank with a maximum total commitment of $
In January of 2025, we borrowed an additional approximately $
The 2025 KeyBank Acquisition Facility was originally due on November 19, 2025.
Amounts borrowed under the 2025 KeyBank Acquisition Facility bore interest based on the type of borrowing (either Base Rate Loans, Daily Simple SOFR Loans, or Term SOFR Loans, each as defined in the 2025 KeyBank Acquisition Facility). The initial advance under the 2025 KeyBank Acquisition Facility was a Daily Simple SOFR Loan that bore interest at
On April 4, 2025, we fully repaid the 2025 KeyBank Acquisition Facility, including accrued interest, using proceeds from the Underwritten Public Offering which closed on April 3, 2025.
Credit Facility
On February 22, 2024, we through our Operating Partnership (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 "Credit Facility"). The Credit Facility replaced the Former Credit Facility (defined below) the Company entered into on March 17, 2021, and has a maturity date of February 22, 2027.
The aggregate commitment of the Credit Facility was originally $
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, Daily Simple SOFR Loans, Term SOFR Loans or CORRA Loans, each as defined in the Credit Facility). Base Rate Loans bear interest at the lesser of (x) the Base Rate (as defined in the Credit Facility) plus the applicable rate, or (y) the maximum rate. Daily Simple SOFR Loans bear interest at the lesser of (a) Adjusted Daily Simple SOFR (as defined in the Credit Facility) plus the applicable rate, or (b) the maximum rate. Term SOFR Loans bear interest at the lesser of (a) Term SOFR (as defined in the Credit Facility) for the interest period in effect plus the applicable rate, or (b) the maximum rate. CORRA
38
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Loans bear interest at the lesser of (a) Adjusted Daily Simple CORRA (as defined in the Credit Facility) plus the applicable rate, or (b) the maximum rate. The corresponding applicable rate varies between (i) prior to a Security Interest Termination Event (defined below),
As of June 30, 2025, borrowings under the Credit Facility only bore interest based on Daily Simple SOFR. The rate spread above Daily Simple SOFR at which the Credit Facility incurs interest is subject to increase based on the consolidated leverage ratio. There are six leverage tiers under the Credit Facility following a Security Interest Termination Event, with the highest tier in effect when leverage is above
The Credit Facility was fully recourse, jointly and severally, to us, the Borrower, and certain of our subsidiaries (the “Subsidiary Guarantors”). The Credit Facility was initially secured by a pledge of equity interests in the Subsidiary Guarantors. However, upon the achievement of certain security interest termination conditions, the pledges were released and the Credit Facility became unsecured (the “Security Interest Termination Event”). The Security Interest Termination Event occurs at the Borrower’s election, once the Borrower satisfies all of the following security interest termination conditions: (i) a fixed charge coverage ratio of no less than
In early April 2025, we notified KeyBank and the holders of our 2032 Private Placement Notes that we had achieved the Security Interest Termination Conditions set forth in the credit agreement and the Note Purchase Agreement, as amended, respectively (collectively, the “Debt Agreements”). The Credit Facility and the 2032 Private Placement Notes were initially secured by a pledge of equity interests in the Subsidiary Guarantors. However, as a result of the foregoing notification, 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 (the “Security Interest Termination Event”). As a result of the occurrence of the Security Interest Termination Event, certain terms and conditions of the Credit Facility and the 2032 Private Placement Notes took immediate effect, including, but not limited to: (i) in certain circumstances, a reduction in the applicable rate under the Credit Facility, (ii) the adjustment or addition of certain financial covenants, (iii) the addition of a floor of at least $
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, certain payout ratios of dividends paid to adjusted funds from operations, limits on unhedged variable rate debt, and minimum liquidity. If an event of default occurs and continues, the Borrower is subject to certain actions by the administrative agent, including, without limitation, the acceleration of repayment of all amounts outstanding under the Credit Facility.
On April 11, 2025, we reduced the total commitment available to us under the Credit Facility from $
39
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
During the six months ended June 30, 2025, we made various draws on the Credit Facility, totaling an additional $
On April 4, 2025, we paid down approximately $
On June 16, 2025, we paid down an additional $
2027 NBC Loan
On March 7, 2024, we, through five of our wholly-owned Canadian subsidiaries (the “2027 NBC Loan Borrowers”), entered into a loan with National Bank of Canada (“NBC”) as administrative agent, National Bank Financial as lead arranger and sole bookrunner, and certain other lenders party thereto (the “2027 NBC Loan”). On such date, we drew the maximum aggregate borrowing of $
Previously, four of the Secured NBC Properties were included in the borrowing base of the Credit Facility, and the other property was unencumbered. The net proceeds from the 2027 NBC Loan were used to pay down the Credit Facility by approximately $
The 2027 NBC Loan initially had a maturity date of March 7, 2027. The 2027 NBC Loan carried a variable interest rate based on either the Canadian Overnight Repo Rate Average (“CORRA”) or the Canadian Prime Rate. Borrowings under the 2027 NBC Loan were subject to interest at the CORRA rate, plus a CORRA adjustment of approximately
On March 12, 2024, we entered into an interest rate swap agreement based on CORRA with NBC whereby, inclusive of the swap we fixed the interest rate on the NBC loan at
The balance of the 2027 NBC Loan 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 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
June 30, 2025
(Unaudited)
5.28% until such time as the Total Leverage Ratio is less than or equal to
We are permitted to prepay at any time all, or from time to time, any part of the 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 Former Credit Facility (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 March 17, 2021, we, through our Operating Partnership (the “Borrower”), entered into a credit facility with KeyBank, National Association, as administrative agent, KeyBanc Capital Markets, Inc., Wells Fargo Securities, Citibank, N.A., and BMO Capital Markets, Corp., as joint book runners and joint lead arrangers, and certain other lenders party thereto (the “Former Credit Facility”).
The initial aggregate amount of the Former Credit Facility was $
On October 7, 2021, the Borrower and lenders who were party to the Former Credit Facility amended the Former Credit Facility to increase the commitment on the Former Credit Facility by $
The Former Credit Facility was repaid in full on February 22, 2024 in connection with the establishment of the Credit Facility.
41
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
The following table presents the future principal payments required on outstanding debt as of June 30, 2025 (in thousands):
2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 and thereafter |
|
|
|
|
Total payments |
|
|
|
|
Discount on secured debt |
|
|
( |
) |
Debt issuance costs, net |
|
|
( |
) |
Total |
|
$ |
|
Note 6. 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
42
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
holders into common stock at a rate per share equal to the quotient obtained by dividing the Liquidation Amount by the conversion price. The conversion price was $
As of December 31, 2024, there were
In connection with the Underwritten Public Offering, discussed in Note 1, 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 7. Derivative Instruments
Interest Rate Derivatives
Our objectives in using interest rate derivatives is to add stability to our earnings (losses) 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.
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) within 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 our 2025 KeyBank Acquisition Facility, we entered into a SOFR interest rate cap, which capped SOFR at
43
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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 $
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.
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 is recorded in other income (expense) within our consolidated statements of operations and represented a loss of approximately $
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 April 11, 2025, we settled a net investment hedge FX Forward, receiving approximately $
44
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
The following table summarizes the terms of our derivative financial instruments as of June 30, 2025 (dollars in thousands):
|
|
Notional |
|
|
Strike |
|
|
Effective Date or |
|
Maturity Date |
||
Foreign Currency Forwards: |
|
|
|
|
|
|
|
|
|
|
||
CAD Forward (1) |
|
$ |
|
|
|
|
|
|
||||
CAD Forward (1) |
|
$ |
|
|
|
|
|
|
||||
CAD Forward (1) |
|
$ |
|
|
|
|
|
|
||||
CAD Forward (1) |
|
$ |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
The following table summarizes the terms of our derivative financial instruments as of December 31, 2024 (dollars in thousands):
|
|
Notional |
|
|
Strike |
|
|
Effective Date or |
|
Maturity Date |
||
Interest Rate Derivatives: |
|
|
|
|
|
|
|
|
|
|
||
SOFR Cap (1) |
|
$ |
|
|
|
% |
|
|
||||
SOFR Cap (1) |
|
$ |
|
|
|
% |
|
|
||||
SOFR Cap |
|
$ |
|
|
|
% |
|
|
||||
SOFR Cap |
|
$ |
|
|
|
% |
|
|
||||
SOFR Cap (2) |
|
$ |
|
|
|
% |
|
|
||||
CORRA Swap (3) |
|
$ |
|
|
|
% |
|
|
||||
Foreign Currency Forwards: |
|
|
|
|
|
|
|
|
|
|
||
CAD Forward (3) |
|
$ |
|
|
|
|
|
|
||||
CAD Forward (3) |
|
$ |
|
|
|
|
|
|
||||
CAD Forward (3) |
|
$ |
|
|
|
|
|
|
||||
CAD Forward (3) |
|
$ |
|
|
|
|
|
|
||||
CAD Forward (3) |
|
$ |
|
|
|
|
|
|
||||
The following table presents a gross presentation of the fair value of our derivative financial instruments as well as their classification on our consolidated balance sheets as of June 30, 2025 and December 31, 2024 (in thousands):
|
|
Asset/Liability Derivatives |
|
|||||
|
|
Fair Value |
|
|||||
Balance Sheet Location |
|
June 30, |
|
|
December 31, |
|
||
Interest Rate Derivatives |
|
|
|
|
|
|
||
Other assets |
|
$ |
|
|
$ |
|
||
Accounts payable and accrued liabilities (1) |
|
$ |
|
|
$ |
|
||
Foreign Currency Hedges |
|
|
|
|
|
|
||
Other assets |
|
$ |
|
|
$ |
|
||
Accounts payable and accrued liabilities (2) |
|
$ |
|
|
$ |
|
||
45
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
(1)
(2)
The following tables present the effect of our derivative financial instruments on our consolidated statements of operations for the periods presented (in thousands):
|
Gain (loss) recognized in OCI |
|
|
Location of amounts |
|
Gain (loss) reclassified from |
|
|
Location of gain/(loss) associated with missed forecast transaction |
|
Amount of Gain or (Loss) Recognized in Income on Derivative (Reclassifications of Missed Forecasted Transactions) for the three months ended June 30, |
|
|||||||||||||||
Type |
2025 |
|
|
2024 |
|
|
|
|
2025 |
|
|
2024 |
|
|
|
|
2025 |
|
|
2024 |
|
||||||
Interest Rate Swaps |
$ |
|
|
$ |
|
|
Interest expense |
|
$ |
( |
) |
|
$ |
|
|
Other income/ |
|
$ |
( |
) |
|
$ |
— |
|
|||
Interest Rate Caps |
|
( |
) |
|
|
|
|
Interest expense |
|
|
( |
) |
|
|
|
|
Other income/ |
|
|
( |
) |
|
|
— |
|
||
Foreign Currency Forwards |
|
( |
) |
|
|
|
|
N/A |
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
— |
|
|
|
— |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
$ |
( |
) |
|
$ |
— |
|
||
|
Gain (loss) recognized in OCI |
|
|
Location of amounts |
|
Gain (loss) reclassified from |
|
|
Location of gain/(loss) associated with missed forecast transaction |
|
Amount of Gain or (Loss) Recognized in Income on Derivative (Reclassifications of Missed Forecasted Transactions) for the six months ended June 30, |
|
|||||||||||||||
Type |
2025 |
|
|
2024 |
|
|
|
|
2025 |
|
|
2024 |
|
|
|
|
2025 |
|
|
2024 |
|
||||||
Interest Rate Swaps |
$ |
( |
) |
|
$ |
( |
) |
|
Interest expense |
|
$ |
( |
) |
|
$ |
|
|
Other income/ |
|
$ |
( |
) |
|
$ |
— |
|
|
Interest Rate Caps |
|
( |
) |
|
|
|
|
Interest expense |
|
|
( |
) |
|
|
|
|
Other income/ |
|
|
( |
) |
|
|
— |
|
||
Foreign Currency Forwards |
|
( |
) |
|
|
|
|
N/A |
|
|
— |
|
|
|
— |
|
|
N/A |
|
|
— |
|
|
|
— |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
$ |
( |
) |
|
$ |
— |
|
||
Note 8. 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
46
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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 three months ended June 30, 2025 and 2024 (in thousands):
|
|
For the three months ended June 30, 2025 |
|
|||||||||||||
|
|
Federal |
|
|
State |
|
|
Canadian |
|
|
Total |
|
||||
Current |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Deferred |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
For the three months ended June 30, 2024 |
|
|||||||||||||
|
|
Federal |
|
|
State |
|
|
Canadian |
|
|
Total |
|
||||
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
For the six months ended June 30, 2025 |
|
|||||||||||||
|
|
Federal |
|
|
State |
|
|
Canadian |
|
|
Total |
|
||||
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
For the six months ended June 30, 2024 |
|
|||||||||||||
|
|
Federal |
|
|
State |
|
|
Canadian |
|
|
Total |
|
||||
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
47
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
The major sources of temporary differences that give rise to the deferred tax effects are shown below (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Intangible contract assets |
|
$ |
|
|
$ |
( |
) |
|
Canadian real estate |
|
|
( |
) |
|
|
( |
) |
Total deferred tax liability |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Canadian real estate and non-capital losses |
|
|
|
|
|
|
||
Total deferred tax assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Valuation allowance |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Net deferred tax liabilities |
|
$ |
( |
) |
|
$ |
( |
) |
The Canadian non-capital losses expire between
As of June 30, 2025, we had no interest or penalties related to uncertain tax positions. In the United States, the tax years 2021-2023 remain open to examination, and in Canada, the tax years 2021-2024 remain open to examination, with possible extensions under certain conditions that would allow the years 2018-2024 to be open to examination.
Note 9. Segment Disclosures
We operate in
The chief operating decision maker (“CODM”) is our Chief Executive Officer.
48
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
The following tables summarize information for the reportable segments for the periods presented (in thousands):
|
|
Three Months Ended June 30, 2025 |
|
|||||||||||||
|
|
|
|
|
Managed REIT |
|
|
Corporate |
|
|
|
|
||||
|
|
Self Storage |
|
|
Platform |
|
|
and Other |
|
|
Total |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Self storage rental revenue |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Ancillary operating revenue |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed REIT Platform revenue |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed REITs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total revenues |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property taxes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Payroll (1) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Advertising |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repairs & maintenance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Utilities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Property insurance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Administrative and professional |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total property operating expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed REIT Platform expense (1) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed REITs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Segment operating income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Other operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative (1) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Intangible amortization expense |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Acquisition expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total other operating expenses |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Income (loss) from operations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in earnings (losses) from |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity in earnings (losses) from |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Interest income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Loss on debt extinguishment |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Income tax (expense) benefit |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net income (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
(1) Included within Payroll, Managed REIT Platform expense, and General and administrative expense was approximately $
49
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
|
|
Three Months Ended June 30, 2024 |
|
|||||||||||||
|
|
|
|
|
Managed REIT |
|
|
Corporate |
|
|
|
|
||||
|
|
Self Storage |
|
|
Platform |
|
|
and Other |
|
|
Total |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Self storage rental revenue |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Ancillary operating revenue |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed REIT Platform revenue |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed REITs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total revenues |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property taxes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Payroll |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Advertising |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repairs & Maintenance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Utilities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Property Insurance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Administrative and professional |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total property operating expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed REIT Platform expense |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed REITs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
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 earnings (losses) from |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity in earnings (losses) from |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Interest income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Income tax (expense) benefit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
50
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
|
|
Six Months Ended June 30, 2025 |
|
|||||||||||||
|
|
|
|
|
Managed REIT |
|
|
Corporate |
|
|
|
|
||||
|
|
Self Storage |
|
|
Platform |
|
|
and Other |
|
|
Total |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Self storage rental revenue |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Ancillary operating revenue |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed REIT Platform revenue |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed REITs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total revenues |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property taxes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Payroll (1) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Advertising |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repairs & maintenance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Utilities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Property insurance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Administrative and professional |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total property operating expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed REIT Platform expense (1) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed REITs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Segment operating income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Other operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative (1) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Intangible amortization expense |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Acquisition expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total other operating expenses |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Income (loss) from operations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity in earnings (losses) from |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity in earnings (losses) from |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Interest income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Loss on debt extinguishment |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Income tax (expense) benefit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
(1) Included within Payroll, Managed REIT Platform expense, and General and administrative expense was approximately $
51
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
|
|
Six Months Ended June 30, 2024 |
|
|||||||||||||
|
|
|
|
|
Managed REIT |
|
|
Corporate |
|
|
|
|
||||
|
|
Self Storage |
|
|
Platform |
|
|
and Other |
|
|
Total |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Self storage rental revenue |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Ancillary operating revenue |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed REIT Platform revenue |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed REITs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total revenues |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property taxes |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Payroll |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Advertising |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Repairs & maintenance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Utilities |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Property insurance |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Administrative and professional |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total property operating expenses |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Managed REIT Platform expense |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Reimbursable costs from Managed REITs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
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 earnings (losses) from |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity in earnings (losses) from |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Interest income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Interest expense |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Loss on debt extinguishment |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Income tax (expense) benefit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income (loss) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
The following table summarizes our total assets by segment (in thousands):
Segments |
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Self Storage(1) |
|
$ |
|
|
$ |
|
||
Managed REIT Platform(2) |
|
|
|
|
|
|
||
Corporate and Other |
|
|
|
|
|
|
||
Total assets(3) |
|
$ |
|
|
$ |
|
||
(1)
(2)
52
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
REIT Platform segment of approximately $
(3)
As of June 30, 2025 and December 31, 2024, approximately $
As of June 30, 2025 and December 31, 2024, approximately $
Note 10. 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. The transfer agent agreement described below was not impacted by the Self Administration Transaction.
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. Our Chief Executive Officer also previously indirectly held an ownership interest in our former dealer manager. Previously, certain of our executive officers and another member of our board of directors 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 and the transfer agent agreement, or as otherwise described in this section.
Former Transfer Agent Agreement
SAM owns
53
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Fees paid to our Former Transfer Agent included a fixed quarterly fee, one-time account setup fees, monthly open account fees and fees for investor inquiries. In addition, we reimbursed our Former Transfer Agent for all reasonable expenses or other charges incurred by it in connection with the provision of its services to us, and we paid our Former Transfer Agent fees for any additional services that we requested from time to time, in accordance with its rates then in effect.
Effective as of April 29, 2024, we transitioned to a new transfer agent, SS&C GIDS, Inc. In connection with such transfer, we simultaneously terminated the transfer agent agreement with Strategic Transfer Agent Services, LLC. In lieu of a termination fee and in recognition of the additional cost and expenses incurred by our Former Transfer Agent in connection with the transition, we paid a transition fee of $
Pursuant to the terms of the agreements described above, the following table summarizes such related party costs incurred and paid by us for the year ended December 31, 2024 and the six months ended June 30, 2025, as well as any related amounts payable as of December 31, 2024 and June 30, 2025 (in thousands):
|
|
Year Ended December 31, 2024 |
|
|
Six Months Ended June 30, 2025 |
|
||||||||||||||||||
|
|
Incurred |
|
|
Settled |
|
|
Payable |
|
|
Incurred |
|
|
Settled |
|
|
Payable |
|
||||||
Expensed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transfer Agent fees |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Advisory Agreement Fees
Our indirect subsidiaries, the SST VI Advisor, SST X Advisor, and the SSGT III Advisor 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”). In connection with the SST VI private placement offering, SST VI was required to reimburse the SST VI Advisor for organization and offering costs from the SST VI private offering pursuant to the SST VI private offering 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 was 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.
54
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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
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 $
In connection with the POHG termination, on June 12, 2025, we, through a subsidiary of our TRS, entered into a new retail distribution relationship with Orchard Securities, LLC (“Orchard”). Through this relationship, Orchard will distribute certain of our Managed REIT investment programs, including DST offerings and potentially other Managed REIT offerings. We will pay Orchard certain fees and expenses as part of the engagement.
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”). In connection with the SSGT III private placement offering, which became effective on May 18, 2022, SSGT III is required to reimburse the SSGT III Advisor for organization and offering costs from the SSGT III private offering pursuant to the SSGT III Advisory Agreement.
Pursuant to the SSGT III Advisory Agreement, the SSGT III Advisor will receive acquisition fees equal to
Pursuant to the Separation Agreement, POHG is no longer entitled to receive
55
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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.
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 (the “SST X Advisory Agreement”). In connection with the SST X private placement offering, which commenced on January 31, 2025, SST X Advisor may pay for certain organization and offering expenses (other than selling commissions and shareholder servicing fees) and other operating expenses incurred.
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 June 30, 2025, SST X had sold approximately $
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 or were 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.
The Managed REITs’ Property Managers receive a property management fee equal to
The SST VI, SSGT III, and SST X property managers are or will be entitled to a construction management fee equal to
56
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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 three months ended June 30, 2025 and 2024 (in thousands):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
Managed REIT Platform Revenues |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Asset Management Fees: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SST VI |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SSGT III |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property Management Fees: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SST VI |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SSGT III |
|
|
|
|
|
|
|
|
|
|
|
|
||||
JV Properties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tenant Protection Program Fees: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SST VI |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SSGT III |
|
|
|
|
|
|
|
|
|
|
|
|
||||
JV Properties |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition Fees: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SST VI |
|
|
|
|
|
|
|
|
|
|
|
|
||||
SSGT III |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other Managed REIT Fees(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Managed REIT Platform Fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sponsor funding reduction (2) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total Managed REIT Platform Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
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
57
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Reimbursable costs from Managed REITs includes reimbursement of SST VI 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 June 30, 2025 and December 31, 2024 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 and six months ended June 30, 2025 we recorded a loss related to our equity interest in SST VI OP of approximately $
For the three and six months ended June 30, 2024 we recorded a loss related to our equity interest in SST VI OP of approximately $
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, has 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 will issue 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 August 7, 2024, SST VI declared an estimated net asset value per share of $
58
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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 $
Through June 30, 2025, we had incurred approximately $
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, however, the SST VI Advisor or its affiliates are still obligated to provide additional funding, as set forth in the Sponsor Funding Agreement and entitled to receive Series C Units until the final sales of SST VI's stock are completed. As of June 30, 2025, the remaining maximum amount we may be required to fund was approximately $
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 $
The following table summarizes the carrying value of our investments in and advances to SST VI as of June 30, 2025 and December 31, 2024 (in thousands):
|
|
|
|
|
|
|
||
Receivables: |
|
As of |
|
|
As of |
|
||
Receivables and advances due |
|
$ |
|
|
$ |
|
||
Debt: |
|
|
|
|
|
|
||
SST VI Note (1) |
|
|
|
|
|
|
||
Equity: |
|
|
|
|
|
|
||
SST VI OP Units and |
|
|
|
|
|
|
||
SST VI Series C Units |
|
|
|
|
|
|
||
Total investments in and advances |
|
$ |
|
|
$ |
|
||
(1)
59
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Investments in and advances to SSGT III OP
Equity Investments
On August 29, 2022, SmartStop OP made an investment of $
For the three and six months ended June 30, 2025 we recorded a loss related to our equity interest in SSGT III OP of approximately $
For the three and six months ended June 30, 2024 we recorded a loss related to our equity interest 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 $
On December 16, 2024, our Operating Partnership provided a promissory note to a subsidiary of SSGT III for $
On June 3, 2025, our Operating Partnership provided a promissory note to a subsidiary of SSGT III for up to $
On June 24, 2025, our Operating Partnership issued and fully funded a secured term loan promissory note to a subsidiary of SSGT III for $
The following table summarizes the carrying value of our investments in and advances to SSGT III as of June 30, 2025 and December 31, 2024 (in thousands):
60
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
|
|
|
|
|
|
|
||
Receivables: |
|
As of |
|
|
As of |
|
||
Receivables and advances due |
|
$ |
|
|
$ |
|
||
Debt: |
|
|
|
|
|
|
||
SSGT III Secured Note |
|
|
|
|
|
|
||
SSGT III Promissory Note II (2) |
|
|
|
|
|
|
||
SSGT III Bridge Loan(1) |
|
|
|
|
|
|
||
SSGT III Promissory Note(1) |
|
|
|
|
|
|
||
Equity: |
|
|
|
|
|
|
||
SSGT III OP Units and |
|
|
|
|
|
|
||
Total investments in and advances |
|
$ |
|
|
$ |
|
||
(1)
(1)
Investments in and advances to SST X OP
Equity Investments
SmartStop Storage Advisors, LLC (“SSA”), a subsidiary of SmartStop OP, made two contributions of $
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 and six months ended June 30, 2025, we incurred reimbursements payable to SAM under the Administrative Services Agreement of approximately $
For the three and six months ended June 30, 2024, we incurred reimbursements payable to SAM under the Administrative Services Agreement of approximately $
We recorded reimbursements from SAM of approximately $
We recorded reimbursements from SAM of approximately $
61
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
As of June 30, 2025 and December 31, 2024, a receivable of approximately $
Note 11. 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 June 30, 2025, 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”).
The fair value of restricted stock is determined on the grant date based on an estimated value per share. The estimated fair value of our restricted stock was determined with the assistance of third party valuation specialists primarily based on an income approach to value our properties as well as the Managed REIT Platform, less the estimated fair value of our debt and other liabilities. The key assumptions used in estimating the fair value of our restricted stock were projected annual net operating income, projected growth rates, discount rates, capitalization rates and an illiquidity discount, if applicable. The fair value of LTIP Units were further adjusted by applying an additional discount as the LTIP Units are not initially economically equivalent to our restricted stock. For performance based awards, a fair value was determined for each performance ranking scenario, with stock compensation expense recorded using the fair value of the scenario determined to be probable of achievement as of the end of the respective period.
Time Based Awards
We have granted various time based awards, which generally vest ratably over either 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 Class A Shares without regard to whether the underlying awards have vested. With respect to time based restricted stock issued to our board of directors, distributions accrue as of the effective date of each grant and are payable as distributions are paid on our Class A Shares without regard to whether the underlying awards have vested. With respect to all other existing 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 Class A Shares, 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.
62
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
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, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Unvested at December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested (1) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Unvested at June 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
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.
63
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
The following table summarizes our activity related to our performance based awards:
|
|
Restricted Stock |
|
|
LTIP Units |
|
||||||||||
Performance Based Award Grants |
|
Shares |
|
|
Weighted-Average |
|
|
Units |
|
|
Weighted-Average |
|
||||
Unvested at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Forfeited |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
Unvested at December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Vested (1) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
Unvested at June 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
(1)
Holders of performance based restricted stock
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 June 30, 2025,
We recorded approximately $
We recorded approximately $
As of June 30, 2025, there was approximately $
As of December 31, 2024, there was approximately $
In March 2025, the compensation committee of our board of directors approved the 2025 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.
64
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
In March 2025, an aggregate of
In April 2025, in connection with the Underwritten Public Offering, an aggregate of approximately
Note 12. Commitments and Contingencies
Distribution Reinvestment Plan
We had adopted an amended and restated distribution reinvestment plan (our “DRP”) that allowed both our Class A and Class T stockholders to have distributions otherwise distributable to them invested in additional Class A Shares and Class T Shares, respectively. The purchase price per share pursuant to our DRP was equivalent to the estimated value per share approved by our board of directors and in effect on the date of purchase of shares under the plan. Any shares sold pursuant to our distribution reinvestment plan were sold at our then current estimated value per share.
On May 1, 2025, our board of directors approved the termination of our DRP, which termination became effective on May 11, 2025. As of such date, we had sold approximately
Share Redemption Program
As described in “Note 2 – Summary of Significant Accounting Policies – Redeemable Common Stock,” we had an SRP. Please refer to that section for additional details.
Pursuant to the SRP, we were able to redeem the shares of stock presented for redemption for cash to the extent that such requests complied with the terms of our SRP and we had sufficient funds available to fund such redemption. Our board of directors could amend, suspend or terminate the SRP with
During the year ended December 31, 2024, approximately
Operating Partnership Redemption Rights
Generally, 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 purchase their limited partnership units by issuing
65
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2025
(Unaudited)
Additionally, the Class A-1 Units issued in connection with the Self Administration Transaction are subject to the general restrictions on transfer contained in the Operating Partnership Agreement. The Class A-1 Units are otherwise entitled to all rights and duties of the Class A 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 10 – Related Party Transactions related to our debt investments in the Managed REITs and our Sponsor Funding Agreement with SST VI for more information about our contingent obligations under these agreements.
As of June 30, 2025, pursuant to various contractual relationships, we were 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 13. Declaration of Distributions
On May 30, 2025, our board of directors approved a distribution amount for the month of June 2025 such that all holders of our outstanding common stock for the month of June, inclusive of our Class A, Class T and unclassified shares of Common Stock, received a distribution equal to $
On June 27, 2025, our board of directors approved a distribution amount for the month of July 2025 such that all holders of our outstanding common stock for the month of July, inclusive of our Class A, Class T and unclassified shares of Common Stock, will receive a distribution equal to $
Note 14. Subsequent Events
There are no significant events which have occurred subsequent to June 30, 2025, other than the subsequent events discussed elsewhere in the notes to the financial statements.
66
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, 2024. See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I.
Overview
We are a self-managed and fully-integrated self storage real estate investment trust (“REIT”). 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.
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 2024, and after accounting for recent market transactions, we are the 10th largest owner and operator of self storage properties in the United States based on number of properties, units, and rentable square footage. As of June 30, 2025, our wholly-owned portfolio consisted of 171 operating self storage properties diversified across 20 states, the District of Columbia, and Canada comprising approximately 118,000 units and 13.5 million net rentable square feet. Additionally, we owned a 50% equity interest in eleven unconsolidated real estate ventures located in Canada, which included ten operating self storage properties, and one other property, which is being developed into a self storage property. Further, through our Managed REIT 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 launched in January 2025, ("SST X" and together with SST VI and SSGT III, the “Managed REITs”), additionally, we manage one other self storage property for an affiliated entity, which pays us fees, as applicable, to manage such property. Inclusive of this aforementioned property and the Managed REIT's, in total, as of June 30, 2025, we managed 49 operating self storage properties which we did not directly own.
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 REITs, 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.
Additionally, we may look to establish our third-party management platform in both Canada and the United States, either through the development of our own third-party management platform or an investment in an existing third-party management platform.
We have provided financing to the Managed REITs in the form of mezzanine loans, bridge loans and promissory notes, as applicable. We intend to continue in this practice going forward, if necessary. We may 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.
67
To the extent we acquire facilities in clusters within geographic regions, we generally see property management efficiencies resulting in reduction of personnel and other administrative costs.
As discussed herein, we, through our subsidiaries, currently serve as the sponsor of SST VI, SSGT III, and SST X. We operate the properties owned by the Managed REITs, which together with one other self storage property we manage consist of, as of June 30, 2025, 49 operating properties and approximately 39,500 units and approximately 4.3 million rentable square feet. In addition, we have the internal capability to originate, structure and manage additional self storage investment programs (the “Managed REIT Platform”) which would be sponsored by SmartStop REIT Advisors, LLC (“SRA”), our indirect subsidiary. We acquired the Managed REIT Platform in 2019 from Strategic Asset Management I, LLC (f/k/a SmartStop Asset Management, 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. 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.
As of June 30, 2025, our wholly-owned operating self storage portfolio was comprised as follows:
State |
|
No. of |
|
|
Units(1) |
|
|
Sq. Ft. |
|
|
% of Total |
|
|
Physical |
|
|
Rental |
|
||||||
Alabama |
|
|
1 |
|
|
|
1,090 |
|
|
|
163,300 |
|
|
|
1.2 |
% |
|
|
90.5 |
% |
|
|
0.6 |
% |
Arizona |
|
|
4 |
|
|
|
3,130 |
|
|
|
329,100 |
|
|
|
2.4 |
% |
|
|
93.8 |
% |
|
|
2.3 |
% |
California |
|
|
32 |
|
|
|
21,955 |
|
|
|
2,313,400 |
|
|
|
17.2 |
% |
|
|
92.9 |
% |
|
|
21.5 |
% |
Colorado |
|
|
11 |
|
|
|
6,475 |
|
|
|
750,450 |
|
|
|
5.6 |
% |
|
|
91.5 |
% |
|
|
4.4 |
% |
Florida |
|
|
27 |
|
|
|
20,920 |
|
|
|
2,454,450 |
|
|
|
18.2 |
% |
|
|
92.9 |
% |
|
|
21.1 |
% |
Illinois |
|
|
6 |
|
|
|
3,785 |
|
|
|
432,450 |
|
|
|
3.2 |
% |
|
|
93.4 |
% |
|
|
2.8 |
% |
Indiana |
|
|
2 |
|
|
|
1,030 |
|
|
|
112,700 |
|
|
|
0.8 |
% |
|
|
93.9 |
% |
|
|
0.6 |
% |
Massachusetts |
|
|
2 |
|
|
|
1,045 |
|
|
|
111,800 |
|
|
|
0.9 |
% |
|
|
92.5 |
% |
|
|
2.0 |
% |
Maryland |
|
|
2 |
|
|
|
1,610 |
|
|
|
169,500 |
|
|
|
1.3 |
% |
|
|
93.2 |
% |
|
|
1.2 |
% |
Michigan |
|
|
4 |
|
|
|
2,220 |
|
|
|
266,100 |
|
|
|
2.0 |
% |
|
|
94.0 |
% |
|
|
1.6 |
% |
New Jersey |
|
|
4 |
|
|
|
4,835 |
|
|
|
433,100 |
|
|
|
3.2 |
% |
|
|
88.8 |
% |
|
|
3.7 |
% |
Nevada |
|
|
9 |
|
|
|
7,160 |
|
|
|
865,000 |
|
|
|
6.4 |
% |
|
|
93.0 |
% |
|
|
5.9 |
% |
North Carolina |
|
|
18 |
|
|
|
8,670 |
|
|
|
1,132,950 |
|
|
|
8.3 |
% |
|
|
94.0 |
% |
|
|
7.5 |
% |
Ohio |
|
|
5 |
|
|
|
2,830 |
|
|
|
320,050 |
|
|
|
2.4 |
% |
|
|
85.2 |
% |
|
|
1.4 |
% |
South Carolina |
|
|
4 |
|
|
|
2,890 |
|
|
|
355,800 |
|
|
|
2.6 |
% |
|
|
92.8 |
% |
|
|
1.8 |
% |
Tennessee |
|
|
1 |
|
|
|
470 |
|
|
|
62,100 |
|
|
|
0.6 |
% |
|
|
89.5 |
% |
|
|
0.2 |
% |
Texas |
|
|
17 |
|
|
|
10,830 |
|
|
|
1,388,050 |
|
|
|
10.3 |
% |
|
|
91.6 |
% |
|
|
6.8 |
% |
Virginia |
|
|
1 |
|
|
|
830 |
|
|
|
71,100 |
|
|
|
0.5 |
% |
|
|
95.0 |
% |
|
|
0.9 |
% |
Washington |
|
|
5 |
|
|
|
3,430 |
|
|
|
390,550 |
|
|
|
2.9 |
% |
|
|
94.6 |
% |
|
|
3.2 |
% |
Wisconsin |
|
|
1 |
|
|
|
780 |
|
|
|
83,400 |
|
|
|
0.7 |
% |
|
|
92.1 |
% |
|
|
0.4 |
% |
District of Columbia |
|
|
1 |
|
|
|
830 |
|
|
|
72,000 |
|
|
|
0.6 |
% |
|
|
92.3 |
% |
|
|
0.6 |
% |
British Columbia, Canada |
|
|
1 |
|
|
|
800 |
|
|
|
74,000 |
|
|
|
0.5 |
% |
|
|
92.0 |
% |
|
|
0.3 |
% |
Ontario, Canada |
|
|
13 |
|
|
|
10,610 |
|
|
|
1,110,700 |
|
|
|
8.2 |
% |
|
|
93.1 |
% |
|
|
9.2 |
% |
Total |
|
|
171 |
|
|
|
118,225 |
|
|
|
13,462,050 |
|
|
|
100 |
% |
|
|
92.6 |
% |
|
|
100 |
% |
Additionally, we own our office located at 10 Terrace Rd, Ladera Ranch, California (the “Ladera Office”) which houses our corporate headquarters.
68
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, the determination of the useful lives of our long-lived assets; 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 contained in this report, and is intended to present our analysis of the uncertainties involved in arriving upon and applying each policy.
AG真人官方 Estate Acquisition Valuation
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. 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.
The value of the tangible assets, consisting of land and buildings is determined as if vacant. Because we believe that substantially all of the leases in place at properties we will acquire will be at market rates, as the majority of the leases are month-to-month contracts, we do not expect to allocate any portion of the purchase prices to above or below market leases. We also consider whether in-place, market leases represent an intangible asset. 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.
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.
AG真人官方 Property Assets Valuation
We evaluate our real property assets for impairment based on events and changes in circumstances that may arise in the future and that may impact the carrying amounts of such assets. When indicators of potential impairment are present, we have and will assess the recoverability of the particular asset by determining whether the carrying value of the asset will be recovered, through an evaluation of the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. This evaluation is based on a number of estimates and assumptions, such as, but not limited to, comparative sales, estimated cash flow, and other similar valuation techniques. Based on this evaluation, if the expected undiscounted future cash flows do not exceed the carrying value, we will adjust the value of the real property asset 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.
69
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 tests 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 impairment test of goodwill 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. No impairment charges to goodwill were recognized during the six months ended June 30, 2025 and 2024.
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 value of our ownership of the brand name.
We qualitatively evaluate whether any triggering events or changes in circumstances have occurred subsequent 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.
Estimated Useful Lives of AG真人官方 Property Assets
We assess the useful lives of the assets underlying our properties based upon a subjective determination of the period of future benefit for each asset. We record depreciation expense with respect to these assets based upon the estimated useful lives we determine. Our determinations of the useful lives of the assets could result in a materially different presentation of the consolidated financial statements or materially different amounts being reported in the financial statements, as such determinations, and the corresponding amount of depreciation expense, may vary dramatically based on the estimates and assumptions we use.
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
70
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.
Industry Outlook, Market and Economic Conditions
Our rental revenue and operating results depend significantly on the demand for self storage space. Demand for self storage tends to be needs-based, with numerous factors that lead customers to renting and maintaining storage units. These demand drivers function in a multitude of economic environments, both cyclically and counter-cyclically.
The broader economy has been experiencing elevated levels of inflation, higher interest rates (including higher mortgage rates), tightening monetary and fiscal policies and a slowdown in home sales and population mobility. These dynamics resulted in a reduction in pricing power for self storage operators, leading to a deceleration in revenue growth in 2023 and once again in 2024. Without a near term change in monetary policy and subsequent reduction in mortgage rates, we expect self storage demand to remain reduced relative to COVID-19 era demand and more comparable to historical averages. While the broader interest rate and inflationary environment has moderated since the beginning of 2024, broader demand for self storage has not returned to pre-COVID-19 era levels thus far in 2025. Continued improvements in such factors could lead to increasing levels of population mobility, specifically amongst single family home buyers and sellers, which could increase demand for self storage. Based on these dynamics, we believe that disciplined self storage operators will generate revenue growth in the near term and will continue to drive revenue through various economic cycles.
From a supply perspective, the top 50 MSA’s in the United States saw a historically elevated amount of new self storage supply come online from 2018 to 2023, both on an absolute and relative basis. This new supply outpaced population growth in the same markets by nearly five times during that period. We believe the broader shift of people working from home related to the COVID-19 pandemic, elevated migration patterns and strength in the housing market helped drive revenue growth in self storage demand and absorb this supply. These demand drivers produced a 36-month period in which self storage industry fundamentals were very strong relative to historical operating levels, including all-time high occupancy and revenue growth. However, as COVID-related demand waned in 2023, many of the tenants that rented due to the COVID-19 pandemic vacated. We expect the new supply delivered in the recent past to continue to be absorbed and we expect only moderate growth in new supply through 2026.
We believe that overhead costs and maintenance capital expenditures are considerably lower in the self storage industry as compared to other real estate sectors, and as a result of strong operating leverage, self storage companies are able to achieve comparatively higher operating and cash flow margins. Although property taxes were moderated through assessment challenges over the past two years, we expect elevated property tax increases in our sector in the coming years. Other property operating expenses have experienced elevated pressures as well in the past few years, namely property insurance and payroll, primarily due to inflation and natural disasters. As a result, we have experienced a year-over-year decrease in gross margins for the quarter ended June 30, 2025. We expect same-store expense growth resulting from increases in employee costs, property insurance and property taxes in 2025, to be partially offset by operating efficiencies gained from leveraging our technology and solar initiatives.
Results of Operations
Overview
We derive revenues principally from: (i) rents received from our self storage tenant leases; (ii) fees generated from our Managed REITs; (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.
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 June 30, 2025 and 2024, we wholly-owned 171 and 155 operating self storage facilities, respectively.
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Our operating results for the three months ended June 30, 2025 included full quarter results for 164 self storage facilities, and partial period results for seven self storage facilities. Our operating results for the three months ended June 30, 2024 included full quarter results for 154 self storage facilities, and partial period results for one self storage facility.
Our operating results for the six months ended June 30, 2025 included full period results for 161 self storage facilities, and partial period results for ten self storage facilities. Our operating results for the six months ended June 30, 2024 included full period results for 154 self storage facilities, and partial period results for one self storage facility.
Operating results in future periods will depend on the results of operations of these properties and of the real estate properties that we may acquire in the future.
In addition to the above noted substantial acquisition activity, which occurred during the twelve months ended June 30, 2025, during the three months ended June 30, 2025, we also completed our Underwritten Public Offering, generating net proceeds of approximately $875.6 million. We utilized such proceeds to fund certain acquisitions, fully redeem $200 million of Series A Convertible Preferred Stock, and pay off approximately $647.1 million in previously outstanding debt. In connection with the foregoing, we also issued the IPO Grant. Furthermore, on June 16, 2025, we issued $500 million CAD indebtedness in our 2028 Canadian Notes Offering, which has a fixed interest rate of approximately 3.91% and paid down approximately $255.4 million of debt and a related interest rate swap, which at the time of the paydown had a weighted average interest rate of approximately 5.9%. Such transactions have had a significant impact on our operating results for the three and six months ended June 30, 2025, and will further impact our operating results in the future.
Comparison of the three months ended June 30, 2025 and 2024
Total Self Storage Revenues
Total self storage related revenues for the three months ended June 30, 2025 and 2024 were approximately $60.9 million and $55.0 million, respectively. The increase in total self storage revenues of approximately $5.9 million, or approximately 11%, is primarily attributable to an increase in non same-store revenues of approximately $5.3 million, largely as a result of 17 property acquisitions after June 30, 2024, the operating results of which were not included during the three months ended June 30, 2024. Additionally, our same-store revenues were up approximately $0.2 million, or approximately 0.4%.
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.
Managed REIT Platform Revenues
Managed REIT Platform revenues for the three months ended June 30, 2025 and 2024 were approximately $4.0 million and $2.7 million, respectively. The increase in Managed REIT Platform revenues of approximately $1.4 million is primarily attributable to increased acquisition fees of approximately $0.5 million and an increase in the other recurring revenues derived from the Managed REIT's, generally commensurate with their growth, as compared to the same period in the prior year.
We expect Managed REIT Platform Revenue to fluctuate commensurate with our Managed REITs' increase in operations and assets under management, as well as additional reductions recorded to such revenue in connection with the Sponsor Funding Agreement.
Reimbursable Costs from Managed REITs
Reimbursable costs from Managed REITs for the three months ended June 30, 2025 and 2024 were approximately $1.9 million and $1.5 million, respectively. Such revenues consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by the Managed REITs, pursuant to our related contracts with the Managed REITs. The increase in reimbursable costs from Managed REITs is primarily related to the growth in the Managed REITs' assets under management. We expect reimbursable costs from Managed REITs to increase in future periods as a result of additional acquisitions by our Managed REITs. We further expect reimbursable costs from Managed REITs to generally fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.
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Property Operating Expenses
Property operating expenses for the three months ended June 30, 2025 and 2024 were approximately $22.1 million (or 36% of self storage revenue) and $17.7 million (or 32% of self storage revenue), respectively. Property operating expenses include 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 $4.4 million is largely attributable to increased property operating expenses of approximately $2.1 million related to our non same-store properties and an additional $1.7 million of stock based compensation due to the IPO Grant to store level employees, and to a lesser extent increased property insurance costs, property taxes, payroll costs, and repairs and maintenance expenses at our same-store properties. Generally, we expect the IPO Grant expense included in property operating expenses to significantly decrease after October 1, 2025 when the majority of such awards become fully vested. We expect property operating expenses to fluctuate commensurate with inflationary pressures and any future acquisitions.
Managed REIT Platform Expenses
Managed REIT Platform expenses for the three months ended June 30, 2025 and 2024 were approximately $3.3 million and $0.6 million, respectively. Such expenses primarily consisted of expenses related to non-reimbursable costs associated with the operation of the Managed REIT Platform. Included in the three months ended June 30, 2025 was approximately $1.2 million of contract termination costs related to the termination of the Former Dealer Manager for our Managed REIT's and approximately $1.0 million of stock compensation costs related to our IPO Grant related to the management of the Managed REITs. We expect Managed REIT Platform expenses to fluctuate in future periods commensurate with our level of activity related to the Managed REITs.
Reimbursable Costs from Managed REITs
Reimbursable costs from Managed REITs for the three months ended June 30, 2025 and 2024 were approximately $1.9 million and $1.5 million, respectively. Such expenses consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by the Managed REITs, pursuant to our related contracts with the Managed REITs. The increase in reimbursable costs from Managed REITs is primarily related to the growth in the Managed REITs' assets under management. We expect reimbursable costs from the Managed REITs to fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.
General and Administrative Expenses
General and administrative expenses for the three months ended June 30, 2025 and 2024 were approximately $11.7 million and $7.8 million, respectively. Such expenses consist 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.
During the three months ended June 30, 2025, we incurred approximately $0.7 million incidental to our Underwritten Public Offering which was included in general and administrative expenses but were not capitalized as they were not directly attributable thereto, and were therefore included in general and administrative expense.
The increase in general and administrative expenses as compared to the prior period was primarily attributable to increased stock compensation costs, which was approximately $2.5 million more compared to the prior year period, inclusive of the IPO Grant, as well as the above mentioned expenses related to our Underwritten Public Offering. The change was to a lesser extent also attributable to increased compensation costs and professional expenses. We expect general and administrative expenses to decrease as a percentage of total revenues over time.
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Depreciation and Amortization Expenses
Depreciation and amortization expenses for the three months ended June 30, 2025 and 2024 were approximately $17.3 million and $13.8 million, respectively. Depreciation expense consists primarily of depreciation on the buildings and site improvements at our properties. Amortization expense primarily consists of the amortization of our in place lease intangible assets resulting from our self storage acquisitions. The increase in depreciation and amortization expense is primarily attributable to the depreciation and intangible amortization expense related to 17 properties which were acquired after June 30, 2024.
Acquisition Expenses
Acquisition expenses for the three months ended June 30, 2025 and 2024 were approximately $0.4 million and $0.1 million, respectively. These acquisition expenses were incurred prior to acquisitions becoming probable in accordance with our capitalization policy, and such costs increased over the prior period given our increase in acquisition volume in the current period.
Equity in earnings (losses) from investments in JV Properties
Losses from our equity method investments in the JV Properties for the three months ended June 30, 2025 and 2024 were approximately $0.1 million and $0.4 million, respectively. Losses from our equity method investments in the JV Properties consists 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 June 30, 2025 and 2024 were approximately $0.2 million and $0.3 million, respectively. Losses from our equity method investments in the Managed REITs consists primarily of our allocation of earnings and losses from our investments in SST VI and SSGT III.
Other, Net
Other, net for the three months ended June 30, 2025 and 2024 was approximately $1.4 million and $0.8 million of expense, respectively. Other, net consists primarily of certain state tax expenses, foreign currency fluctuations, changes in value related to our foreign currency and interest rate hedges not designated for hedge accounting, and other miscellaneous items. The unfavorable variance is primarily attributable to the termination of certain of our SOFR interest rate caps and the interest rate swap related to our 2027 NBC Loan, which was paid off in June 2025. Please see Note 7 – Derivative Instruments, of the notes to consolidated financial statements contained in this report for additional information.
Interest Income
Interest Income for the three months ended June 30, 2025 and 2024 was approximately $0.7 million and $0.7 million, respectively. Interest income includes interest income on loans to the Managed REITs, accretion of financing fee revenues associated with such loans, and interest earned on cash held at financial institutions. We expect interest income from the Managed REITs to fluctuate commensurate with their borrowings, as well as changes to benchmark interest rates on such borrowings.
Interest Expense
Interest expense for the three months ended June 30, 2025 and 2024 was approximately $12.0 million and $17.3 million, respectively. Interest expense includes interest expense on our debt, accretion of fair market value of debt, amortization of debt issuance costs, and the impact of our interest rate derivatives designated for hedge accounting. The decrease of approximately $5.3 million as compared to the same period in the prior year is primarily attributable to decreased borrowings, as well as a lower average effective interest rate. 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 June 30, 2025 and 2024 was approximately $1.7 million and none, respectively. Loss on debt extinguishment for the three months ended June 30, 2025 was primarily related to debt issuance costs written off in connection with a reduction in the total commitment on our Credit Facility from $700 million to $600 million, the pay-off of the 2027 NBC loan and the full repayment of the 2025 KeyBank Acquisition Facility which were all completed during the three months ended June 30, 2025.
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Income Tax Expense
Income tax expense for the three months ended June 30, 2025 and 2024 was approximately $0.3 million and $0.3 million of expense, respectively. Income tax expense consists primarily of state, federal, and Canadian income tax. We expect our income tax expense to increase in future periods primarily related to our operations in Canada.
Same-Store Facility Results - three months ended June 30, 2025 and 2024
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, 2024, excluding four other properties) for the three months ended June 30, 2025 and 2024. 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 (in thousands unless otherwise noted).
|
|
Same-Store Facilities |
|
|
Non Same-Store Facilities |
|
Total |
|
||||||||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
% |
|
|
2025 |
|
|
2024 |
|
|
% |
|
2025 |
|
|
2024 |
|
|
% |
|
||||||||
Revenue (1) |
|
$ |
51,637 |
|
|
$ |
51,437 |
|
|
|
0.4 |
% |
|
$ |
6,837 |
|
|
$ |
1,515 |
|
|
N/M |
|
$ |
58,474 |
|
|
$ |
52,952 |
|
|
|
10.4 |
% |
Property |
|
|
17,327 |
|
|
|
16,744 |
|
|
|
3.5 |
% |
|
|
2,908 |
|
|
|
795 |
|
|
N/M |
|
|
20,235 |
|
|
|
17,539 |
|
|
|
15.4 |
% |
Net operating |
|
$ |
34,310 |
|
|
$ |
34,693 |
|
|
|
(1.1 |
)% |
|
$ |
3,929 |
|
|
$ |
720 |
|
|
N/M |
|
$ |
38,239 |
|
|
$ |
35,413 |
|
|
|
8.0 |
% |
Number of |
|
|
149 |
|
|
|
149 |
|
|
|
|
|
|
22 |
|
|
|
6 |
|
|
|
|
|
171 |
|
|
|
155 |
|
|
|
|
||
Rentable |
|
|
11,549,600 |
|
|
|
11,526,700 |
|
|
|
|
|
|
1,912,450 |
|
|
|
502,100 |
|
|
|
|
|
13,462,050 |
|
|
|
12,028,800 |
|
|
|
|
||
Average |
|
|
93.1 |
% |
|
|
92.2 |
% |
|
|
0.9 |
% |
|
|
90.7 |
% |
|
N/M |
|
|
N/M |
|
|
92.8 |
% |
|
|
91.8 |
% |
|
|
1.0 |
% |
|
Annualized |
|
$ |
19.89 |
|
|
$ |
20.10 |
|
|
|
(1.0 |
)% |
|
$ |
20.79 |
|
|
N/M |
|
|
N/M |
|
$ |
19.99 |
|
|
$ |
20.01 |
|
|
|
(0.1 |
)% |
|
N/M Not meaningful
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Our same-store revenue increased by approximately $0.2 million, or approximately 0.4%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due to an approximately 0.9% increase in average occupancy, an increase in late and administrative fees of approximately $0.2 million, slightly offset by an approximately 1.0% decrease in annualized rent per occupied square foot. Property operating expenses increased by approximately 3.5%, primarily attributable to increased property taxes and payroll costs.
Net operating income, or NOI, is a non-GAAP measure that we define as net income (loss), computed in accordance with GAAP, generated from properties before corporate general and administrative expenses, asset management fees, interest expense, depreciation, amortization, acquisition expenses, tenant protection economics, stock compensation related to our IPO Grant and other non-property related income and expense. We believe that NOI is useful for investors as it provides a measure of the operating performance of our operating assets because NOI excludes certain items that are not associated with the ongoing operation of the properties. Additionally, we believe that NOI (sometimes referred to as property operating income) is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount. In addition, NOI is not a substitute for net income (loss), cash flows from operations, or other related financial measures, in evaluating our operating performance.
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 indicated (in thousands):
|
|
For the Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net loss |
|
$ |
(4,799 |
) |
|
$ |
(705 |
) |
Adjusted to exclude: |
|
|
|
|
|
|
||
Tenant Protection Program revenue(1) |
|
|
(2,410 |
) |
|
|
(2,032 |
) |
Tenant Protection Program |
|
|
110 |
|
|
|
156 |
|
IPO Grant (2) |
|
|
1,705 |
|
|
|
— |
|
Managed REIT Platform revenues |
|
|
(4,036 |
) |
|
|
(2,670 |
) |
Managed REIT Platform expenses |
|
|
3,250 |
|
|
|
648 |
|
General and administrative |
|
|
11,695 |
|
|
|
7,813 |
|
Depreciation |
|
|
15,374 |
|
|
|
13,636 |
|
Intangible amortization expense |
|
|
1,929 |
|
|
|
173 |
|
Acquisition expenses |
|
|
359 |
|
|
|
12 |
|
Interest expense |
|
|
12,030 |
|
|
|
17,294 |
|
Interest income |
|
|
(723 |
) |
|
|
(667 |
) |
Other, net |
|
|
1,416 |
|
|
|
792 |
|
Earnings from our equity method |
|
|
119 |
|
|
|
359 |
|
Earnings from our equity method |
|
|
157 |
|
|
|
257 |
|
Loss on debt extinguishment |
|
|
1,745 |
|
|
|
— |
|
Income tax expense |
|
|
318 |
|
|
|
347 |
|
Total net operating income |
|
$ |
38,239 |
|
|
$ |
35,413 |
|
(1) Included within ancillary operating revenue within our consolidated statements of operations, approximately $2.1 million and $1.9 million of Tenant Protection Program revenue was earned at same-store facilities during the three months ended June 30, 2025 and 2024, respectively, with the remaining approximately $0.3 million and
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$0.1 million earned at non same-store facilities during the three months ended June 30, 2025 and 2024, respectively.
(2) Stock compensation expense herein only includes such expense related to the Underwritten Public Offering (the "IPO Grant") which is included in property operating expense.
Comparison of the six months ended June 30, 2025 and 2024
Total Self Storage Revenues
Total self storage related revenues for the six months ended June 30, 2025 and 2024 were approximately $120.1 million and $107.6 million, respectively. The increase in total self storage revenues of approximately $12.4 million, or approximately 11.5%, is primarily attributable to an increase in non same-store revenues of approximately $9.9 million, largely as a result of 17 property acquisitions after June 30, 2024, the operating results of which were not included during the six months ended June 30, 2024. Additionally, our same-store revenues were up approximately $1.8 million, or approximately 1.8%.
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.
Managed REIT Platform Revenues
Managed REIT Platform revenues for the six months ended June 30, 2025 and 2024 were approximately $8.1 million and $5.4 million, respectively. The increase in Managed REIT Platform revenues of approximately $2.7 million is primarily attributable to increased acquisition fees of approximately $1.7 million and an increase in the other recurring revenues derived from the Managed REIT's, generally commensurate with their growth, as compared to the same period in the prior year.
We expect Managed REIT Platform Revenue to fluctuate commensurate with our Managed REITs' increase in operations and assets under management, as well as additional reductions recorded to such revenue in connection with the Sponsor Funding Agreement.
Reimbursable Costs from Managed REITs
Reimbursable costs from Managed REITs for the six months ended June 30, 2025 and 2024 were approximately $4.0 million and $3.2 million, respectively. Such revenues consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by the Managed REITs, pursuant to our related contracts with the Managed REITs. The increase in reimbursable costs from Managed REITs is primarily related to the growth in the Managed REITs' assets under management. We expect reimbursable costs from Managed REITs to increase in future periods as a result of additional acquisitions by our Managed REITs. We further expect reimbursable costs from Managed REITs to generally fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.
Property Operating Expenses
Property operating expenses for the six months ended June 30, 2025 and 2024 were approximately $42.1 million (or 35% of self storage revenue) and $35.1 million (or 33% of self storage revenue), respectively. Property operating expenses include 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 $7.1 million is largely attributable to increased property operating expenses of approximately $3.9 million related to our non same-store properties and an additional $1.7 million of stock based compensation due to the IPO Grant to store level employees, and to a lesser extent increased property insurance costs, property taxes, payroll costs, and repairs and maintenance expenses at our same-store properties. Generally, we expect the IPO Grant expense included in property operating expenses to significantly decrease after October 1, 2025 when the majority of such awards become fully vested. We expect property operating expenses to fluctuate commensurate with inflationary pressures and any future acquisitions.
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Managed REIT Platform Expenses
Managed REIT Platform expenses for the six months ended June 30, 2025 and 2024 were approximately $4.5 million and $1.5 million, respectively. Such expenses primarily consisted of expenses related to non-reimbursable costs associated with the operation of the Managed REIT Platform. Included in the six months ended June 30, 2025 was approximately $1.2 million of contract termination costs related to the termination of the Former Dealer Manager for our Managed REIT's and approximately $1.0 million of stock compensation costs related to our IPO Grant related to the management of the Managed REIT's. We expect Managed REIT Platform expenses to fluctuate in future periods commensurate with our level of activity related to the Managed REITs.
Reimbursable Costs from Managed REITs
Reimbursable costs from Managed REITs for the six months ended June 30, 2025 and 2024 were approximately $4.0 million and $3.2 million, respectively. Such expenses consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by the Managed REITs, pursuant to our related contracts with the Managed REITs. The increase in reimbursable costs from Managed REITs is primarily related to the growth in the Managed REITs' assets under management. We expect reimbursable costs from the Managed REITs to fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.
General and Administrative Expenses
General and administrative expenses for the six months ended June 30, 2025 and 2024 were approximately $19.5 million and $15.2 million, respectively. Such expenses consist 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.
During the six months ended June 30, 2025, we incurred approximately $0.8 million related to our Underwritten Public Offering which was included in general and administrative expenses but were not capitalized as they were not directly attributable thereto, and were therefore included in general and administrative expense. Additionally, the 2025 costs also included approximately $0.6 million of professional fees related to the calculation of our estimated net asset value, which we will no longer incur, given the listing of our common stock. Certain of the general and administrative expenses incurred during the six months ended June 30, 2024 relate to our filing of a registration statement on Form S-11 and our pursuit of a potential offering of our common stock, such amounts were expensed given the delay in our offering until 2025.
The increase in general and administrative expenses as compared to the prior period was primarily attributable to increased stock compensation costs, which was approximately $2.7 million more compared to the prior period, inclusive of the IPO Grant, as well as the above mentioned expenses related to our Underwritten Public Offering and our net asset value calculation. The change was to a lesser extent also attributable to increased compensation costs and professional expenses. We expect general and administrative expenses to decrease as a percentage of total revenues over time.
Depreciation and Amortization Expenses
Depreciation and amortization expenses for the six months ended June 30, 2025 and 2024 were approximately $34.0 million and $27.5 million, respectively. Depreciation expense consists primarily of depreciation on the buildings and site improvements at our properties. Amortization expense primarily consists of the amortization of our in place lease intangible assets resulting from our self storage acquisitions. The increase in depreciation and amortization expense is primarily attributable to the depreciation and intangible amortization expense related to 17 properties which were acquired after June 30, 2024.
Acquisition Expenses
Acquisition expenses for the six months ended June 30, 2025 and 2024 were approximately $0.6 million and $0.1 million, respectively. These acquisition expenses were incurred prior to acquisitions becoming probable in accordance with our capitalization policy, and such costs increased over the prior period given our increase in acquisition volume in the current period.
Equity in earnings (losses) from investments in JV Properties
Losses from our equity method investments in the JV Properties for the six months ended June 30, 2025 and 2024 were approximately $0.4 million and $0.7 million, respectively. Losses from our equity method investments in the JV Properties consists of our allocation of earnings and losses from our unconsolidated joint ventures.
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Equity in earnings (losses) from investments in Managed REITs
Losses from our equity method investments in the Managed REITs for the six months ended June 30, 2025 and 2024 were approximately $0.4 million and $0.7 million, respectively. Losses from our equity method investments in the Managed REITs consists primarily of our allocation of earnings and losses from our investments in SST VI and SSGT III.
Other, Net
Other, net for the six months ended June 30, 2025 and 2024 was approximately $1.0 million and $1.0 million of expense, respectively. Other, net consists primarily of certain state tax expenses, foreign currency fluctuations, changes in value related to our foreign currency and interest rate hedges not designated for hedge accounting, and other miscellaneous items. Included in the current period was the termination of certain of our SOFR interest rate caps and the interest rate swap related to our 2027 NBC Loan, which was paid off in June 2025. Please see Note 7 – Derivative Instruments, of the notes to consolidated financial statements contained in this report for additional information.
Interest Income
Interest Income for the six months ended June 30, 2025 and 2024 was approximately $1.4 million and $1.4 million, respectively. Interest income includes interest income on loans to the Managed REITs, accretion of financing fee revenues associated with such loans, and interest earned on cash held at financial institutions. We expect interest income from the Managed REITs to fluctuate commensurate with their borrowings, as well as changes to benchmark interest rates on such borrowings.
Interest Expense
Interest expense for the six months ended June 30, 2025 and 2024 was approximately $34.1 million and $33.8 million, respectively. Interest expense includes interest expense on our debt, accretion of fair market value of debt, amortization of debt issuance costs, and the impact of our interest rate derivatives designated for hedge accounting. Such net change of approximately $0.3 million as compared to the same period in the prior year was primarily due to initially higher outstanding borrowings at the beginning of the year, offset by substantial principal paydowns during the six months ended June 30, 2025 as a result of the use of proceeds from the Underwritten Public Offering. 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 six months ended June 30, 2025 and 2024 was approximately $2.5 million, and $0.5 million, respectively. Loss on debt extinguishment for the six months ended June 30, 2025 was primarily related to debt issuance costs written off in connection with a reduction in the total commitment on our Credit Facility from $700 million to $600 million, the pay-off of the 2027 NBC loan, the full repayment of the 2025 KeyBank Acquisition Facility, and the defeasance of our KeyBank Florida CMBS Loan, which were all completed during the six months ended June 30, 2025.
Loss on debt extinguishment for the six months ended June 30, 2024 was related to unamortized debt issuance costs associated with our Former Credit Facility which were expensed in connection with its termination and the execution of the current Credit Facility, during the six months ended June 30, 2024.
Income Tax Expense
Income tax expense benefit for the six months ended June 30, 2025 and 2024 was approximately $0.9 million and $0.7 million of expense, respectively. Income tax expense consists primarily of state, federal, and Canadian income tax. The increase is primarily due to increasing operations at our Canadian properties. We expect our income tax expense to increase in future periods primarily related to our operations in Canada.
79
Same-Store Facility Results - six months ended June 30, 2025 and 2024
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, 2024, excluding four other properties) for the six months ended June 30, 2025 and 2024. 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 (in thousands unless otherwise noted).
|
|
Same-Store Facilities |
|
|
Non Same-Store Facilities |
|
Total |
|
||||||||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
% |
|
|
2025 |
|
|
2024 |
|
|
% |
|
2025 |
|
|
2024 |
|
|
% |
|
||||||||
Revenue (1) |
|
$ |
102,754 |
|
|
$ |
100,946 |
|
|
|
1.8 |
% |
|
$ |
12,609 |
|
|
$ |
2,723 |
|
|
N/M |
|
$ |
115,363 |
|
|
$ |
103,669 |
|
|
|
11.3 |
% |
Property operating |
|
|
34,709 |
|
|
|
33,265 |
|
|
|
4.3 |
% |
|
|
5,433 |
|
|
|
1,564 |
|
|
N/M |
|
|
40,142 |
|
|
|
34,829 |
|
|
|
15.3 |
% |
Net operating |
|
$ |
68,045 |
|
|
$ |
67,681 |
|
|
|
0.5 |
% |
|
$ |
7,176 |
|
|
$ |
1,159 |
|
|
N/M |
|
$ |
75,221 |
|
|
$ |
68,840 |
|
|
|
9.3 |
% |
Number of |
|
|
149 |
|
|
|
149 |
|
|
|
|
|
|
22 |
|
|
|
6 |
|
|
|
|
|
171 |
|
|
|
155 |
|
|
|
|
||
Rentable square |
|
|
11,549,600 |
|
|
|
11,526,700 |
|
|
|
|
|
|
1,912,450 |
|
|
|
502,100 |
|
|
|
|
|
13,462,050 |
|
|
|
12,028,800 |
|
|
|
|
||
Average physical |
|
|
92.7 |
% |
|
|
92.2 |
% |
|
|
0.5 |
% |
|
|
90.1 |
% |
|
N/M |
|
|
N/M |
|
|
92.5 |
% |
|
|
91.7 |
% |
|
|
0.8 |
% |
|
Annualized rent |
|
$ |
19.87 |
|
|
$ |
19.77 |
|
|
|
0.5 |
% |
|
$ |
20.86 |
|
|
N/M |
|
|
N/M |
|
$ |
19.97 |
|
|
$ |
19.70 |
|
|
|
1.4 |
% |
|
N/M Not meaningful
Our same-store revenue increased by approximately $1.8 million, or approximately 1.8%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due to an approximately 0.5% increase in average occupancy, an approximately 0.5% increase in annualized rent per occupied square foot, and an increase in late and administrative fees of approximately $0.5 million. Property operating expenses increased by approximately 4.3%, primarily attributable to increased property taxes and payroll costs.
80
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 indicated (in thousands):
|
|
For the Six Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net loss |
|
$ |
(10,255 |
) |
|
$ |
(2,344 |
) |
Adjusted to exclude: |
|
|
|
|
|
|
||
Tenant Protection Program revenue(1) |
|
|
(4,714 |
) |
|
|
(3,976 |
) |
Tenant Protection Program |
|
|
291 |
|
|
|
256 |
|
IPO Grant (2) |
|
|
1,705 |
|
|
|
— |
|
Managed REIT Platform revenues |
|
|
(8,149 |
) |
|
|
(5,405 |
) |
Managed REIT Platform expenses |
|
|
4,484 |
|
|
|
1,500 |
|
General and administrative |
|
|
19,545 |
|
|
|
15,240 |
|
Depreciation |
|
|
30,468 |
|
|
|
27,221 |
|
Intangible amortization expense |
|
|
3,527 |
|
|
|
245 |
|
Acquisition expenses |
|
|
561 |
|
|
|
82 |
|
Interest expense |
|
|
34,052 |
|
|
|
33,848 |
|
Interest income |
|
|
(1,448 |
) |
|
|
(1,352 |
) |
Other, net |
|
|
964 |
|
|
|
968 |
|
Earnings from our equity method |
|
|
361 |
|
|
|
688 |
|
Earnings from our equity method |
|
|
372 |
|
|
|
709 |
|
Loss on debt extinguishment |
|
|
2,533 |
|
|
|
471 |
|
Income tax expense |
|
|
924 |
|
|
|
689 |
|
Total net operating income |
|
$ |
75,221 |
|
|
$ |
68,840 |
|
(1) Included within ancillary operating revenue within our consolidated statements of operations, approximately $4.1 million and $3.8 million of Tenant Protection Program revenue was earned at same-store facilities during the six months ended June 30, 2025 and 2024, respectively, with the remaining approximately $0.6 million and $0.2 million earned at non same-store facilities during the six months ended June 30, 2025 and 2024, respectively.
(2) Stock compensation expense herein only includes such expense related to the Underwritten Public Offering (the "IPO Grant") which is included in property operating expense.
81
FFO and FFO, as Adjusted
Funds from Operations
Funds from operations (“FFO”), is a non-GAAP financial metric promulgated by the National Association of AG真人官方 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, or the White Paper. The White Paper defines FFO as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of property and real estate related asset impairment write downs, plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Additionally, gains and losses from change in control are excluded from the determination of FFO. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. Our FFO calculation complies with NAREIT’s policy described above.
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.
82
The following is a reconciliation of net income (loss) (attributable to common stockholders), which is the most directly comparable GAAP financial measure, to FFO and FFO, as adjusted (attributable to common stockholders), and FFO and FFO, as adjusted (attributable to common stockholders and OP unit holders) for each of the periods presented below (in thousands):
|
|
Three Months |
|
|
Three Months |
|
|
Six Months |
|
|
Six Months |
|
||||
Net loss |
|
$ |
(8,362 |
) |
|
$ |
(3,821 |
) |
|
$ |
(16,767 |
) |
|
$ |
(8,469 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation of real estate |
|
|
14,992 |
|
|
|
13,354 |
|
|
|
29,733 |
|
|
|
26,663 |
|
Amortization of real estate related intangible assets |
|
|
1,905 |
|
|
|
100 |
|
|
|
3,481 |
|
|
|
100 |
|
Depreciation and amortization of real estate and |
|
|
758 |
|
|
|
657 |
|
|
|
1,437 |
|
|
|
1,195 |
|
Deduct: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustment for noncontrolling interests |
|
|
(1,023 |
) |
|
|
(1,695 |
) |
|
|
(3,084 |
) |
|
|
(3,347 |
) |
FFO (attributable to common stockholders) |
|
$ |
8,270 |
|
|
$ |
8,595 |
|
|
|
14,800 |
|
|
|
16,142 |
|
Other Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Intangible amortization expense - contracts (2) |
|
|
24 |
|
|
|
73 |
|
|
|
46 |
|
|
|
146 |
|
Acquisition expenses (3) |
|
|
359 |
|
|
|
12 |
|
|
|
561 |
|
|
|
82 |
|
Acquisition expenses, amortization of debt |
|
|
8 |
|
|
|
(10 |
) |
|
|
74 |
|
|
|
69 |
|
Accretion of fair market value of secured debt |
|
|
163 |
|
|
|
77 |
|
|
|
368 |
|
|
|
80 |
|
Foreign currency and interest rate derivative |
|
|
1,986 |
|
|
|
749 |
|
|
|
1,784 |
|
|
|
638 |
|
Transactional expenses (5) |
|
|
1,797 |
|
|
|
3 |
|
|
|
2,422 |
|
|
|
330 |
|
IPO Grant (6) |
|
|
4,305 |
|
|
|
— |
|
|
|
4,305 |
|
|
|
— |
|
Adjustment of deferred tax assets and liabilities (2) |
|
|
178 |
|
|
|
102 |
|
|
|
442 |
|
|
|
320 |
|
Sponsor funding reduction (7) |
|
|
262 |
|
|
|
199 |
|
|
|
507 |
|
|
|
380 |
|
Amortization of debt issuance costs (2) |
|
|
916 |
|
|
|
972 |
|
|
|
1,989 |
|
|
|
1,774 |
|
Net loss on extinguishment of debt (8) |
|
|
1,745 |
|
|
|
— |
|
|
|
2,533 |
|
|
|
471 |
|
Accretion - preferred equity costs |
|
|
3,644 |
|
|
|
— |
|
|
|
3,644 |
|
|
|
— |
|
Adjustment for noncontrolling interests |
|
|
(892 |
) |
|
|
(261 |
) |
|
|
(1,291 |
) |
|
|
(514 |
) |
FFO, as adjusted (attributable to common |
|
$ |
22,765 |
|
|
$ |
10,511 |
|
|
$ |
32,184 |
|
|
$ |
19,918 |
|
FFO (attributable to common stockholders) |
|
$ |
8,270 |
|
|
$ |
8,595 |
|
|
|
14,800 |
|
|
|
16,142 |
|
Net loss attributable to the noncontrolling |
|
|
(320 |
) |
|
|
(98 |
) |
|
|
(1,003 |
) |
|
|
(307 |
) |
Adjustment for noncontrolling interests |
|
|
1,023 |
|
|
|
1,695 |
|
|
|
3,084 |
|
|
|
3,347 |
|
FFO (attributable to common stockholders and |
|
$ |
8,973 |
|
|
$ |
10,192 |
|
|
$ |
16,881 |
|
|
$ |
19,182 |
|
FFO, as adjusted (attributable to common stockholders) |
|
$ |
22,765 |
|
|
$ |
10,511 |
|
|
$ |
32,184 |
|
|
$ |
19,918 |
|
Net loss attributable to the noncontrolling |
|
|
(320 |
) |
|
|
(98 |
) |
|
|
(1,003 |
) |
|
|
(307 |
) |
Adjustment for noncontrolling interests |
|
|
1,915 |
|
|
|
1,956 |
|
|
|
4,375 |
|
|
|
3,861 |
|
FFO, as adjusted (attributable to common |
|
$ |
24,360 |
|
|
$ |
12,369 |
|
|
$ |
35,556 |
|
|
$ |
23,472 |
|
83
(1) This represents the portion of the above stated adjustments in the calculations of FFO and FFO, as adjusted, that are attributable to our noncontrolling interests in our Operating Partnership.
(2) These items represent the amortization, accretion, or adjustment of intangible assets, debt issuance costs, or deferred tax assets and liabilities.
(3) This represents acquisition expenses associated with investments in real estate that were incurred prior to the acquisitions becoming probable and therefore not capitalized in accordance with our capitalization policy.
(4) This represents the mark-to-market adjustment for certain of our derivative instruments not designated for hedge accounting and the ineffective portion of the change in fair value of derivatives recognized in earnings. Changes in foreign currency related to our foreign equity investments not classified as long term under GAAP are also included in this adjustment. There was no adjustment during the three months ended June 30, 2025 for the approximately $0.5 million of income received during the period related to the short term forward entered into and settled in the period to hedge interest rate movements related to the 2028 Canadian Notes. Changes in foreign currency related to our foreign equity investments not classified as long term are included in this adjustment.
(5) Such costs incurred for the three and six months ended June 30, 2025, respectively, primarily included: i) approximately $1.0 million and $1.0 million related to our Underwritten Public Offering, but were not directly attributable thereto, and were therefore included in general and administrative expenses in our consolidated statements of operations; ii) approximately $1.2 million and $1.2 million of termination costs related to our Former Dealer Manager; and iii) none and approximately $0.6 million of professional fees related to the calculation of our estimated net asset value, which we will no longer incur, given the listing of our common stock and other similar minor amounts. Such costs in 2024 relate to our filing of a registration statement on Form S-11 and our pursuit of a potential offering of our common stock. As these items are non-recurring and not a primary driver in our decision-making process, FFO is adjusted for its effect to arrive at FFO, as adjusted, as a means of determining a comparable sustainable operating performance metric.
(6) The amounts adjusted for in the table above relate to the stock compensation expense recorded related to the equity grants issued in connection with the Underwritten Public Offering. FFO is adjusted for its effect to arrive at FFO, as adjusted, as a means of determining a comparable sustainable operating performance metric.
(7) Pursuant to the Sponsor Funding Agreement, SmartStop funds certain costs of SST VI's share sales, and in return
receives Series C Units in Strategic Storage Operating Partnership VI, L.P. The excess of the funding over the value of the Series C Units received is accounted for as a reduction of Managed REIT Platform revenues from SST VI over the remaining estimated term of the management contracts with SST VI. See Note 2 – Summary of Significant Accounting Policies to the Consolidated Financial Statements. FFO is adjusted for its effect to arrive at FFO, as adjusted, as a means of determining a comparable sustainable operating performance metric.
(8) The net loss associated with the extinguishment of debt includes prepayment penalties, defeasance costs, the write-off of unamortized deferred financing fees, and other fees incurred.
FFO, as adjusted for the three and six months ended June 30, 2025 increased compared to the three and six months ended June 30, 2024 primarily as a result of increased segment operating income from our self storage business and from our Managed REIT business, as well as reductions to our distributions to preferred stockholders.
Cash Flows
A comparison of cash flows for operating, investing and financing activities for the six months ended June 30, 2025 and 2024 are as follows (in thousands):
|
|
Six Months Ended |
|
|
|
|
||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
Change |
|
|||
Net cash flow provided by (used in): |
|
|
|
|
|
|
|
|
|
|||
Operating activities |
|
$ |
18,555 |
|
|
$ |
31,674 |
|
|
$ |
(13,119 |
) |
Investing activities |
|
$ |
(235,452 |
) |
|
$ |
(13,179 |
) |
|
$ |
(222,273 |
) |
Financing activities |
|
$ |
230,091 |
|
|
$ |
(29,125 |
) |
|
$ |
259,216 |
|
84
Cash flows provided by operating activities for the six months ended June 30, 2025 and 2024 were approximately $18.6 million and $31.7 million, respectively, a decrease of approximately $13.1 million. The decrease in cash provided by our operating activities is primarily the result of unfavorable changes in working capital in the current year as compared to the same period in the prior year.
Cash flows used in investing activities for the six months ended June 30, 2025 and June 30, 2024 were approximately $235.5 million and $13.2 million, respectively, a change of approximately $222.3 million. The net increase in cash used in investing activities primarily relates to a net change of approximately $192.7 million in cash flows related to acquisitions and an increase in net debt funding to the Managed REITs of $35.1 million during the six months ended June 30, 2025 as compared to the same period in the prior year.
Cash flows provided by financing activities for the six months ended June 30, 2025 were approximately $230.1 million, and cash flows used by financing activities for the six months ended June 30, 2024 were approximately $29.1 million, respectively, a change of approximately $259.2 million. The increase in cash provided by financing activities is primarily due to the net proceeds received on the 2028 Canadian Notes of approximately $111.4 million and from the Credit Facility in the amount of approximately $65.0 million, which were utilized to fund acquisitions and for general corporate purposes and was not used to pay-down other pre-existing debt. The net IPO proceeds were nearly fully utilized to pay down debt and redeem in full our Series A Convertible Preferred Stock; we otherwise retained approximately $24.8 million thereof. Other more minor favorable improvements which served to increase the improvement in net cash provided by financing activities during the six months ended June 30, 2025, as compared to June 30, 2024 include reductions in debt issuance costs and cash utilized for redemptions of common stock.
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 REIT Platform expenses, debt service payments, capital expenditures, property acquisitions, property developments and improvements, 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. 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 REIT 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 accordance with the Note Purchase Agreement, we intend to maintain a credit rating on an annual basis. In February 2025 we were put on a ratings watch; subsequent to June 30, 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 and in connection with our 2028 Canadian Notes offering, of BBB with stable trends.
Volatility in the debt and equity markets and continued and/or further impact of rising treasury yields, interest rates, inflation and other economic events will depend on future developments, which are highly uncertain. To the extent that there is continued 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 5 – Debt, and Note 12 – Commitments and Contingencies, of the Notes to the Consolidated Financial Statements contained within this report.
Distribution Policy and Distributions
Preferred Stock Dividends
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 accrued daily but were payable quarterly in arrears. Such dividends accrued at a rate equal to 6.25% per annum until October 29, 2024, and accrued at a rate of 7.0% per annum thereafter.
The Series A Convertible Preferred Stock was redeemed on April 4, 2025. See Note 6 – Preferred Equity, of the Notes to the Consolidated Financial Statements for more information.
85
Common Stock Distributions
On May 30, 2025, our board of directors approved a distribution amount for the month of June 2025 such that all holders of our outstanding common stock for the month of June, inclusive of our Class A, Class T and unclassified shares of Common Stock, received a distribution equal to $0.1315 per share. The June 2025 distribution payable to each stockholder of record at the end of June was paid on July 15, 2025.
On June 27, 2025, our board of directors approved a distribution amount for the month of July 2025 such that all holders of our outstanding common stock for the month of July, inclusive of our Class A, Class T and unclassified shares of Common Stock, will receive a distribution equal to $0.1359 per share. The July 2025 distribution payable to each stockholder of record at the end of July will be paid on or about August 15, 2025.
Indebtedness
As of June 30, 2025, our net debt was approximately $950.0 million, which included approximately $901.9 million in fixed rate debt and approximately $54.3 million in variable rate debt, less approximately $4.1 million in net debt issuance costs and approximately $2.1 million in net debt discount.
Additionally, we are party to a $70 million CAD term loan (the “RBC JV Term Loan”) with Royal Bank of Canada (“RBC”) pursuant to which five of our joint venture subsidiaries that each own 50% of a Joint Venture property serve as borrowers (the “RBC Borrowers”). We are also party to a $46.0 million CAD term loan (the “RBC JV Term Loan II”) with RBC pursuant to which three of our joint venture subsidiaries that each own 50% of a Canadian JV Property serve as borrowers (the “RBC Borrowers II”). We and SmartCentres each serve as a full recourse guarantor with respect to 50% of the secured obligations under the RBC JV Term Loan and RBC JV Term Loan II.
We are also party to a master mortgage commitment agreement (the "SmartCentres Financing") with SmartCentres Storage Finance LP (the "SmartCentres Lender"). The SmartCentres Lender is an affiliate of SmartCentres AG真人官方 Estate Investment Trust, an unaffiliated third party ("SmartCentres"), that owns the other 50% of our unconsolidated real estate joint ventures located in the Greater Toronto Area of Canada. The proceeds of the SmartCentres Financing have been and will be used to finance the development and construction of the SmartCentres joint venture properties. We serve as a full recourse guarantor with respect to 50% of the SmartCentres Financings.
As of June 30, 2025, approximately $70.0 million CAD or approximately $51.3 million in USD, was outstanding on the RBC JV Term Loan, approximately $46.0 million CAD or approximately $33.7 million in USD, was outstanding on the RBC JV Term Loan II, and approximately $18.5 million CAD or approximately $13.6 million in USD was outstanding on the SmartCentres Financing. See Note 4 – Investments in Unconsolidated AG真人官方 Estate Ventures, of the Notes to the Consolidated Financial Statements contained in this report for additional 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 REIT Platform expenses, debt service payments, capital expenditures, property acquisitions, investments in our Managed REITs, required payments pursuant to the Sponsor Funding Agreement, 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 5 – Debt, and Note 12 – Commitments and Contingencies, of the Notes to the Consolidated Financial Statements contained within this report.
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The following table presents the future principal payments required on outstanding debt as of June 30, 2025 (in thousands):
2025 |
|
$ |
1,460 |
|
2026 |
|
|
93,064 |
|
2027 |
|
|
98,468 |
|
2028 |
|
|
460,761 |
|
2029 |
|
|
104,289 |
|
2030 and thereafter |
|
|
198,144 |
|
Total payments |
|
$ |
956,186 |
|
As of June 30, 2025, pursuant to various contractual relationships, we were required to make other non-cancellable payments in the amounts of approximately $3.5 million, $3.7 million, and $3.9 million during the years ending December 31, 2025, 2026, and 2027, respectively.
Through June 30, 2025, we had incurred approximately $10.2 million in connection with the Sponsor Funding Agreement, representing approximately 1.1 million Series C Units issued by SST VI OP. During the six months ended June 30, 2025 we incurred approximately $0.9 million, of which approximately $0.1 million was accrued as a payable pursuant to the Sponsor Funding Agreement.
As of June 30, 2025, the maximum remaining commitment of SRA pursuant to the Sponsor Funding Agreement was approximately $0.2 million.
See Note 10 – Related Party Transactions, of the Notes to the Consolidated Financial Statements for more information about our obligations under these agreements.
For cash requirements related to potential acquisitions currently under contract, please see Note 3 – AG真人官方 Estate Facilities and Note 4 – Investments in Unconsolidated AG真人官方 Estate Ventures of the Notes to the Consolidated Financial Statements.
Subsequent Events
Please see Note 14 – Subsequent Events of the Notes to the Consolidated Financial Statements contained in this report.
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 interest rate risk and to a lesser extent, foreign currency risk. 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. We may also enter into derivative financial instruments such as foreign currency forward derivatives in order to mitigate foreign currency risks. We will not enter into derivative or interest rate transactions for speculative purposes.
As of June 30, 2025, our net debt was approximately $950.0 million, which included approximately $901.9 million in fixed rate debt and approximately $54.3 million in variable rate debt, less approximately $4.1 million in net debt issuance costs and approximately $2.1 million in net debt discount. See Note 5 – Debt, of the Notes to the Consolidated Financial Statements for more information about our indebtedness.
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As of December 31, 2024, our net debt was approximately $1,317 million, which included approximately $556 million in fixed rate debt, and $766 million in variable rate debt, less approximately $3.4 million in net debt discount, and approximately $1.6 million in net debt issuance costs. Our debt instruments were entered into for other than trading purposes.
Changes in interest rates have different impacts on the 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 as of June 30, 2025, net of our interest rate derivatives, would decrease future earnings and cash flows by approximately $0.5 million annually.
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.
The following table summarizes annual debt maturities and average interest rates on our outstanding debt as of June 30, 2025 (in thousands):
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
Thereafter |
|
|
Total |
|
|||||||
Fixed rate debt |
|
$ |
1,460 |
|
|
$ |
93,064 |
|
|
$ |
44,193 |
|
|
$ |
460,761 |
|
|
$ |
104,289 |
|
|
$ |
198,144 |
|
|
$ |
901,911 |
|
Average interest |
|
|
4.52 |
% |
|
|
4.55 |
% |
|
|
4.59 |
% |
|
|
4.79 |
% |
|
|
4.93 |
% |
|
|
5.25 |
% |
|
|
|
|
Variable rate debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
54,275 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
54,275 |
|
Average interest |
|
|
5.95 |
% |
|
|
5.95 |
% |
|
|
5.95 |
% |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
|
|
||||
(1) The interest rates for fixed rate debt was calculated based upon the contractual rate and the interest rates on variable rate debt was calculated based on the rate in effect on June 30, 2025, excluding the impact of interest rate derivatives. Debt denominated in a foreign currency has been converted based on the rate in effect as of June 30, 2025.
Currently, our only foreign exchange rate risk comes from the Canadian Dollar ("CAD") due primarily to our Canadian properties and Canadian denominated debt financing. Our existing foreign currency hedges serve to mitigate some of our foreign currency exposure of our net CAD denominated investments; however, we generate all of our revenues and expend essentially all of our operating expenses and third party CAD-denominated debt service costs related to our Canadian Properties in CAD. As a result of fluctuations in currency exchange, our cash flows and results of operations could be affected.
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 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. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
The following should be read in conjunction with the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 (our “2024 Annual Report”). With the exception of the risk factors set forth below, there have been no material changes from the risk factors set forth in our 2024 Annual Report.
An active trading market for our common stock may not be maintained.
Our common stock only recently began trading on the NYSE, and we cannot assure our stockholders that an active trading market will be sustained. Whether an active public market for shares of our common stock will be maintained depends on a number of factors, including the extent of institutional investor interest in us, the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate-based companies), our financial performance and general stock and bond market conditions. If an active trading market for shares of our common stock does not develop or is not maintained, our stockholders may have difficulty selling shares of our common stock, which could adversely affect the price that our stockholders receive for such shares.
We have opted out of provisions of the MGCL relating to deterring or defending hostile takeovers.
Under Maryland law, “business combinations” between a Maryland corporation and an interested stockholder (as defined in the statute) or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:
These prohibitions are intended to prevent a change of control by interested stockholders who do not have the support of our Board. Pursuant to the statute, our Board has by resolution exempted business combinations between us and any person, provided that the business combination is first approved by our Board.
Also, under Maryland law, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of stockholders entitled to cast two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation, or an employee of the corporation who is also a director of the corporation, are excluded from the vote on whether to accord voting rights to the control shares. As permitted by the MGCL, our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our stock.
Similarly, Title 3, Subtitle 8 of the MGCL provides certain other anti-takeover protections, including permitting a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to have a classified board of directors. Our Board is not currently classified, and we have not elected to be subject to any of the provision of Subtitle 8 of the MGCL that would permit us to classify our Board without stockholder approval. Moreover, we filed Articles Supplementary to our charter to provide that, without the affirmative vote of a majority of the votes cast on the matter by stockholders entitled to vote generally in the election of directors, we may not elect to be subject to the provision of Subtitle 8 that would permit us to classify our Board without stockholder approval.
Our decision to opt out of the above provisions of the MGCL removes certain protections of the MGCL that may otherwise deter a hostile takeover or assist us in defending against a hostile takeover. There is no guarantee that the
89
ownership limitations in our charter would provide the same measure of protection as the above provisions of the MGCL and prevent an undesired change of control by an interested stockholder.
Significant tariffs or other restrictions imposed on imports by the U.S. and related countermeasures taken by impacted foreign countries could have a material adverse effect on our business.
The U.S. government recently announced tariffs on products manufactured in several jurisdictions outside the United States, including China, Canada, and Mexico, and has made announcements regarding the potential imposition of tariffs on other jurisdictions. While certain of these announced tariffs have been delayed, the U.S. government may in the future impose, reimpose, increase, or pause tariffs, and countries subject to such tariffs have and, in the future may, impose reciprocal tariffs or impose other protectionist or retaliatory trade measures in response. Any of these actions could increase uncertainties and risks relating to our operating platform in Canada.
The market price and trading volume of shares of our common stock may be volatile.
The U.S. stock markets, including the NYSE, on which we have listed our common stock have experienced significant price and volume fluctuations. As a result, the market price of shares of our common stock is likely to be similarly volatile, and investors in shares of our common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. We cannot assure you that the market price of shares of our common stock will not fluctuate or decline significantly in the future.
In addition to the risks listed in this “Risk Factors” section, as well as the risks set forth in our 2024 Annual Report, a number of factors could negatively affect the share price of our common stock or result in fluctuations in the price or trading volume of shares of our common stock, including:
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In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on our cash flows, our ability to execute our business strategy and our ability to make distributions to our stockholders.
Broad market fluctuations could negatively impact the market price of shares of our common stock.
The stock market has recently experienced and may continue to experience extreme price and volume fluctuations that have affected the market price of many companies in industries similar or related to ours and that have been unrelated to these companies’ operating performances. The changes frequently appear to occur without regard to the operating performance of the affected companies. Hence, the price of our common stock could fluctuate based upon factors that have little or nothing to do with us in particular. These broad market fluctuations could reduce the market price of shares of our common stock. Furthermore, our operating results and prospects may be below the expectations of public market analysts and investors or may be lower than those of companies with comparable market capitalizations. Either of these factors could lead to a material decline in the per share trading price of our common stock.
Continued increases in market interest rates may result in a decrease in the value of shares of our common stock.
One of the factors that will influence the price of shares of our common stock will be the distribution yield on shares of our common stock (as a percentage of the price of shares of our common stock) relative to market interest rates. Market interest rates have recently increased, which may lead prospective purchasers of shares of our common stock to expect a higher distribution yield and higher interest rates have increased our borrowing costs and decreased funds available for distribution. Thus, continuing higher market interest rates could cause the per share trading price of our common stock to decrease.
Because we have a large number of stockholders and, prior to our recent listing on the New York Stock Exchange, shares of our common stock had not been listed on a national securities exchange and publicly tradable, there may be significant pent-up demand to sell shares of our common stock. Significant sales of shares of our common stock, or the perception that significant sales of such shares could occur, may cause the price of shares of our common stock to decline significantly.
As of the date of this quarterly report, we had an aggregate of approximately 24.4 million shares of our Class A common stock and Class T common stock issued and outstanding. Until we completed our recent listing on the New York Stock Exchange (the “NYSE”) on April 3, 2025, we did not have any class of common stock listed on any national securities exchange and the ability of stockholders to liquidate their investments was limited. Additionally, our share redemption program, which, in any event, only allowed us to repurchase up to 5% of the weighted average number of shares of our common stock outstanding during the prior calendar year in any 12-month period, has been terminated. Further, our Class A common stock and Class T common stock will not convert into shares of our listed common stock until October 1, 2025, which is the six-month anniversary of the listing of shares of our common stock for trading on a national securities exchange and will remain subject to certain ownership and transfer restrictions contained in our charter until such conversion. As a result, there may be significant pent-up demand to sell shares of our common stock. A large volume of sales of shares of our common stock could decrease the prevailing market price of shares of our common stock and could impair our ability to raise additional capital through the sale of equity securities in the future. Even if a substantial number of sales of shares of our common stock are not effected, the mere perception of the possibility of these sales could depress the market price of shares of our common stock and have a negative effect on our ability to raise capital in the future.
Although shares of our Class A common stock and Class T common stock are not, and will not be, listed on a national securities exchange, sales of such shares or the perception that such sales could occur could have a material adverse effect on the per share trading price of shares of our common stock.
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As of the date of this quarterly report, we had an aggregate of approximately 24.4 million shares of our Class A common stock and Class T common stock issued and outstanding. Although shares of our Class A common stock and Class T common stock are not, and will not be, listed on a national securities exchange, these shares are not subject to transfer restrictions (other than the six-month lock-up described below and the restrictions on ownership and transfer of stock set forth in our charter); therefore, such stock will be freely tradable, to extent that a market exists for such stock. As a result, it is possible that a market may develop for shares of our Class A common stock and Class T common stock, and sales of such shares, or the perception that such sales could occur, could have a material adverse effect on the per share trading price of shares of our common stock.
Additionally, all of the shares of our Class A common stock and Class T common stock will convert automatically into common stock on October 1, 2025, which is the six-month anniversary of the listing of shares of our common stock for trading on a national securities exchange. As a result, holders of shares of our Class A common stock and Class T common stock seeking to immediately liquidate their investment in our common stock could engage in immediate short sales of shares of our common stock prior to the date on which the shares of our Class A common stock and Class T common stock convert into shares of our common stock and use the shares of our common stock that they receive upon conversion of their Class A common stock and Class T common stock to cover these short sales in the future. Such short sales could depress the market price of shares of our common stock and limit the effectiveness of the six-month lock-up strategy for limiting the number of shares of our common stock held by our stockholders that may be sold in the near-term.
We may be unable to raise additional capital needed to grow our business.
We may not be able to increase our capital resources by engaging in additional debt or equity financings. Even if we complete such financings, they may not be on favorable terms, which could impair our growth and adversely affect our existing operations. Additionally, we may be required to accept terms that restrict our ability to incur additional indebtedness, take other actions including terms that require us to maintain specified liquidity, or other ratios that could otherwise not be in the best interests of our stockholders. Further, we and our directors and officers have agreed with the underwriters of our recently completed public offering that, subject to limited exceptions, we and our directors and officers may not, directly or indirectly, without the prior written consent of the representatives on behalf of the underwriters, offer to sell, sell, contract to sell, pledge or otherwise dispose of any shares of our common stock or any securities convertible into, or exercisable or exchangeable for such common stock, or publicly announce an intention to effect any such transaction, for a period from the date hereof until October 1, 2025.
Future offerings of debt securities, which would be senior to our common stock, or equity securities, which would dilute our existing stockholders and may be senior to our common stock, may adversely affect our stockholders, and our stockholders’ interests in us will be diluted as we issue additional shares.
We may in the future attempt to increase our capital resources by offering debt or equity securities, including notes and classes of preferred or common stock. Debt securities or shares of preferred stock will generally be entitled to receive interest payments or distributions, both current and in connection with any liquidation or sale, prior to the holders of our common stock. We are not required to offer any such additional debt or equity securities to existing common stockholders on a preemptive basis. Therefore, offerings of common stock or other equity securities may dilute the holdings of our existing stockholders. Because we may generally issue any such debt or equity securities in the future without obtaining the consent of our stockholders, our stockholders will bear the risk of our future offerings reducing the market price of our common stock and diluting their proportionate ownership.
In addition, subject to any limitations set forth under Maryland law, our Board may amend our charter to increase or decrease the number of authorized shares of stock (currently 225,000,000 shares), or the number of shares of any class or series of stock designated, or reclassify any unissued shares into other classes or series of stock without the necessity of obtaining stockholder approval. All such shares may be issued in the discretion of our Board. In addition, we have granted, and expect to grant in the future, equity awards to our independent directors and certain of our employees, including our executive officers, which to date consist of shares of our restricted stock and LTIP units, which are exchangeable into shares of our common stock subject to satisfaction of certain conditions. Finally, we have OP units outstanding which are exchangeable into shares of our Class A common stock under certain circumstances.
Therefore, existing stockholders will experience dilution of their equity investment in us as we (1) sell additional shares in the future, (2) sell securities that are convertible into shares of our common stock, (3) issue shares of our common stock in a private offering of securities, (4) issue restricted shares of our common stock, LTIP units or other equity-based securities to our independent directors and executive officers, or (5) issue shares of our common stock in a merger or to sellers of properties acquired by us in connection with an exchange of OP units.
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Because the OP units may, in the discretion of our Board, be exchanged for shares of our common stock, any merger, exchange or conversion between our operating partnership and another entity ultimately could result in the issuance of a substantial number of shares of our common stock, thereby diluting the percentage ownership interest of other stockholders. Because of these and other reasons, our stockholders may experience substantial dilution in their percentage ownership of our stock.
We have paid, and may continue to pay, distributions from sources other than cash flow from operations; therefore, we will have fewer funds available for the acquisition of properties, and our stockholders’ overall return may be reduced.
We have paid all or a portion of distributions from sources other than cash flow from operations in the past and are not prohibited from doing so again in the future. In the future we may borrow funds, issue additional securities, or sell assets in order to fund our distributions. We are not prohibited from undertaking such activities by our charter, bylaws or investment policies, and we may use an unlimited amount from any source to pay our distributions. If we fund distributions from financings, then such financings will need to be repaid, and if we fund distributions from sources other than cash flow from operations, then we will have fewer funds available for acquisition of properties or working capital, which may affect our ability to generate future cash flows from operations and may reduce our stockholders’ overall returns. Additionally, to the extent distributions exceed cash flow from operations, a stockholder’s basis in our stock may be reduced and, to the extent distributions exceed a stockholder’s basis, the stockholder may recognize a capital gain.
Our distributions to stockholders may change, which could adversely affect the market price of shares of our common stock.
All distributions will be at the sole discretion of our Board and will depend upon our actual and projected financial condition, results of operations, cash flows, liquidity and FFO, as adjusted, maintenance of our REIT qualification and such other matters as our Board may deem relevant from time to time. We intend to evaluate distributions on a regular basis, and it is possible that stockholders may not receive distributions equivalent to those previously paid by us for various reasons, including the following: we may not have enough cash to pay such distributions due to changes in our cash requirements, indebtedness, capital spending plans, operating cash flows, or financial position; decisions on whether, when, and in what amounts to make any future distributions will remain at all times entirely at the discretion of the Board, which reserves the right to change our distribution practices at any time and for any reason; our Board may elect to retain cash for investment purposes, working capital reserves or other purposes, or to maintain or improve our credit ratings; and the amount of distributions that our subsidiaries may distribute to us may be subject to restrictions imposed by state law, state regulators, and/or the terms of any current or future indebtedness that these subsidiaries may incur. Stockholders have no contractual or other legal right to distributions that have not been authorized by the Board and declared by us. We cannot assure our stockholders that we will be able to pay or maintain distributions or that distributions will increase over time, nor can we give any assurance that rents from the properties will increase, that the properties we buy will increase in value or provide constant or increased distributions over time, or that future acquisitions of real properties will increase our cash available for distribution to stockholders. We may need to fund such distributions from external sources, as to which no assurances can be given. In addition, as noted above, we may choose to retain operating cash flow, and these retained funds, although increasing the value of our underlying assets, may not correspondingly increase the market price of shares of our common stock. Our failure to meet the market’s expectations with regard to future cash distributions likely would adversely affect the market price of shares of our common stock.
The underwriters of our recently completed public offering may waive or release parties to the lock-up agreements entered into in connection with such offering, which could adversely affect the market price of our common stock.
We, all of our directors that will own equity in us following the completion of our recent public offering, and all of our executive officers have entered into lock-up agreements pursuant to which we and they will be subject to certain restrictions with respect to the sale or other disposition of shares of our common stock until October 1, 2025. The underwriters, at any time and without notice, may release all or any portion of the shares of common stock subject to the foregoing lock-up agreements. If the restrictions under the lock-up agreements are waived, then the shares of common stock, subject to compliance with the Securities Act or exceptions therefrom, will be available for sale into the public markets, which could cause the market price of shares of our common stock to decline and impair our ability to raise capital.
Prior to our recent listing on the NYSE, we had no operating history as a publicly traded company and may not be able to successfully operate as a publicly traded company.
Prior to our recent listing on the NYSE, we had no operating history as a publicly traded company. We cannot assure you that the past experience of our senior management team will be sufficient for us to successfully operate as a publicly traded company. In addition, we are now required to comply with NYSE listing standards, and this transition could place a
93
significant strain on our management systems, infrastructure and other resources. Failure to operate successfully as a publicly traded company would have an adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common stock.
If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if our operating results do not meet the expectations of the investor community, one or more of the analysts who cover our company may change their recommendations regarding our company, and our stock price could decline.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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.
94
EXHIBIT INDEX
The following exhibits are included in this report on Form 10-Q for the period ended June 30, 2025 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No. |
|
Description |
|
|
|
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 |
|
|
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3.2 |
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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 |
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3.3 |
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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
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3.4 |
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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 |
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3.5 |
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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 |
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3.6 |
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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 |
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3.7 |
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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 |
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3.8 |
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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 |
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3.9 |
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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 |
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3.10 |
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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 |
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10.1 |
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Form of Restricted Stock Award, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on April 3, 2025, Commission File No. 001-42584 |
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10.2 |
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Form of LTIP Unit Agreement, incorporated by reference to Exhibit 10.17 to Pre-Effective Amendment No. 4 to the Company’s Registration Statement on Form S-11, filed on March 24, 2025, Commission File No. 333-264449 |
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10.3 |
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Amended and Restated Executive Severance and Change of Control Plan of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on April 3, 2025, Commission File No. 001-42584 |
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10.4 |
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Base Indenture, dated June 16, 2026, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on June 16, 2025, Commission File No. 001-42584 |
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10.5 |
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First Supplemental Indenture, dated June 16, 2026, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on June 16, 2025, Commission File No. 001-42584 |
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10.6* |
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Form of Restricted Stock Unit Award |
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31.1* |
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Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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31.2* |
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Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1* |
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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 |
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32.2* |
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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 |
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101* |
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The following SmartStop Self Storage REIT, Inc. financial information for the three and six months ended June 30, 2025 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. |
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104* |
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The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 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.
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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.
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SMARTSTOP SELF STORAGE REIT, INC. (Registrant) |
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Dated: August 8, 2025 |
By: |
/s/ James R. Barry |
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James R. Barry |
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Chief Financial Officer and Treasurer (Principal Financial Officer) |
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Source:
FAQ
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