SmartStop Self Storage REIT, Inc. Reports Third Quarter 2023 Results

LADERA RANCH, Calif.–(BUSINESS WIRE)–SmartStop Self Storage REIT, Inc. (“SmartStop” or “the Company”), a self-managed and fully-integrated self storage company, announced its overall results for the three months and nine months ended September 30, 2023.

“Our third quarter results reflect the geographic and demographic quality of our diversified North American portfolio, which produced sector leading same-store revenue and NOI growth,” said H. Michael Schwartz, Chairman and Chief Executive Officer of SmartStop. “While the U.S. self storage industry is experiencing the most competitive environment since the beginning of the pandemic, our portfolio of 33 owned or managed assets in Canada is not facing the same pressures. In fact, of all of our major markets, Toronto was our best performing market. With the normalization of pandemic-related demand drivers, a continued slowdown in the housing market and volatile macro-economic conditions, SmartStop is focused on maximizing net operating income, controlling costs, and providing best-in-class customer service. Notably, during the quarter we received the top score among self-storage centers in Newsweek’s America’s Best Customer Service 2024. This marks the third time SmartStop has earned the top spot among self-storage providers and reflects our unwavering commitment to customer service. With our resilient performance, best-in-class operating platform and the experienced SmartStop team, we are confident in our ability to deliver for our stockholders in 2024 and beyond.”

Three Months Ended September 30, 2023 Financial Highlights:

Net loss attributable to common stockholders was approximately $0.6 million. This represents an increase in the Company’s earnings of approximately $0.6 million when compared to the same period in 2022. Net loss per Class A and Class T shares (diluted) was $0.01, equivalent to the same period in 2022.
Total self storage-related revenues were approximately $54.8 million, an increase of approximately $1.5 million when compared to the same period in 2022.
FFO, as adjusted (attributable to common stockholders and Operating Partnership (“OP”) unit holders), was approximately $14.1 million, a decrease of approximately $2.9 million when compared to the same period in 2022.
FFO, as adjusted per share and OP unit outstanding – diluted was $0.13, a decrease of $0.02 when compared to the same period in 2022.
Same-store revenues, expenses and net operating income (“NOI”) increased by 3.0%, 1.2% and 3.8%, respectively, compared to the same period in 2022.
Same-store average physical occupancy decreased by 1.4% to 93.2% compared to the same period in 2022.
Same-store annualized rent per occupied square foot was approximately $20.37, an increase of approximately $0.98 when compared to the same period in 2022.

Nine Months Ended September 30, 2023 Financial Highlights:

Net loss attributable to common stockholders was approximately $1.6 million. This represents a decrease in the Company’s earnings of approximately $9.3 million when compared to the same period in 2022. Net loss per Class A and Class T shares (diluted) was $0.02, a decrease in per share earnings of $0.10 when compared to the same period in 2022.
Total self storage-related revenues were approximately $162.1 million, an increase of approximately $15.2 million when compared to the same period in 2022.
FFO, as adjusted (attributable to common stockholders and Operating Partnership (“OP”) unit holders), was approximately $44.5 million, a decrease of approximately $6.1 million when compared to the same period in 2022.
Same-store revenues, expenses and net operating income (“NOI”) increased by 5.6%, 9.1% and 4.1%, respectively, compared to the same period in 2022.
Same-store average physical occupancy decreased by 1.8% to 93.2% compared to the same period in 2022.
Same-store annualized rent per occupied square foot was approximately $20.07, an increase of approximately $1.52 when compared to the same period in 2022.

Facility Opening

Subsequent to quarter end, the Company opened a 78,000 square foot storage facility in San Gabriel, California. The newly converted industrial property is a three-story building with approximately 790 units, drive-up access, climate control, and video surveillance.

Managed REIT Platform Update

SmartStop, through an indirect subsidiary, serves as the sponsor of Strategic Storage Growth Trust III, Inc. (“SSGT III”) and Strategic Storage Trust VI, Inc. (“SST VI” and together with SSGT III, the “Managed REITs”). SmartStop receives asset management fees, property management fees, acquisition fees, and other fees and also receives substantially all of the tenant protection program revenue earned by the Managed REITs, which had a combined portfolio of 30 operating properties and approximately 23,710 units and 2.7 million rentable square feet at quarter end. During the quarter, assets under management for the Managed REITs increased by $2.1 million to approximately $700.7 million. SmartStop also manages one additional property, not owned by the Managed REITs.

Additionally, SmartStop has made investments in the Managed REITs in the form of mezzanine loans, notes and preferred limited partnership interests in the operating partnerships of the respective Managed REITs. During the quarter end, SSGT III paid down $3.0 million on the SSGT III Mezzanine Loan.

Declared Distributions

On August 22, 2023, our board of directors declared a distribution rate for the month of September 2023 of approximately $0.04932 per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on September 30, 2023. Such distributions payable to each stockholder of record will be paid the following month. On September 27, 2023, our board of directors declared a distribution rate for the month of October 2023 of approximately $0.05096 per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on October 31, 2023. Such distributions payable to each stockholder of record will be paid the following month.

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

	September 30, 2023 (Unaudited)			December 31, 2022
ASSETS
Real estate facilities:
Land	$	429,877,760		$	420,522,591
Buildings		1,397,377,122			1,377,311,421
Site improvements		91,426,610			89,371,633
		1,918,681,492			1,887,205,645
Accumulated depreciation		(241,916,459	)		(202,682,688	)
		1,676,765,033			1,684,522,957
Construction in process		6,085,298			4,490,926
Real estate facilities, net		1,682,850,331			1,689,013,883
Cash and cash equivalents		34,239,378			39,486,588
Restricted cash		9,572,290			6,551,803
Investments in unconsolidated real estate ventures		34,669,282			28,522,082
Investments in and advances to Managed REITs		34,331,729			62,371,167
Other assets, net		23,146,451			34,131,543
Intangible assets, net of accumulated amortization		2,214,891			15,553,303
Trademarks, net of accumulated amortization		15,805,882			15,911,765
Goodwill		53,643,331			53,643,331
Debt issuance costs, net of accumulated amortization		776,911			2,031,922
Total assets	$	1,891,250,476		$	1,947,217,387
LIABILITIES, TEMPORARY EQUITY, AND EQUITY
Debt, net	$	1,055,195,878		$	1,068,371,956
Accounts payable and accrued liabilities		40,711,052			28,151,741
Due to affiliates		424,980			409,730
Distributions payable		8,927,504			9,324,453
Deferred tax liabilities		6,067,296			6,205,620
Total liabilities		1,111,326,710			1,112,463,500
Commitments and contingencies
Redeemable common stock		69,461,463			76,578,073
Preferred stock, $0.001 par value; 200,000,000 shares authorized:
Series A Convertible Preferred Stock, $0.001 par value; 200,000 shares authorized; 200,000 and 200,000 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively, with aggregate liquidation preferences of $203,150,685 and $203,150,685 at September 30, 2023 and December 31, 2022, respectively		196,356,107			196,356,107
Equity:
SmartStop Self Storage REIT, Inc.:
Class A common stock, $0.001 par value; 350,000,000 shares authorized; 88,835,383 and 88,853,454 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		88,836			88,853
Class T common stock, $0.001 par value; 350,000,000 shares authorized; 8,121,031 and 8,085,550 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		8,120			8,085
Additional paid-in capital		894,718,919			894,283,954
Distributions		(309,558,673	)		(266,151,517	)
Accumulated deficit		(166,156,957	)		(164,524,595	)
Accumulated other comprehensive income		2,446,687			3,654,682
Total SmartStop Self Storage REIT, Inc. equity		421,546,932			467,359,462
Noncontrolling interests in our Operating Partnership		92,524,234			94,405,766
Other noncontrolling interests		35,030			54,479
Total noncontrolling interests		92,559,264			94,460,245
Total equity		514,106,196			561,819,707
Total liabilities, temporary equity and equity	$	1,891,250,476		$	1,947,217,387

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Self storage rental revenue	$	52,502,410		$	51,022,976		$	155,457,123		$	140,551,208
Ancillary operating revenue		2,255,170			2,209,695			6,625,943			6,282,850
Managed REIT Platform revenue		2,517,853			2,055,224			9,115,093			5,877,454
Reimbursable costs from Managed REITs		1,429,527			1,165,994			4,232,436			3,514,486
Total revenues		58,704,960			56,453,889			175,430,595			156,225,998
Operating expenses:
Property operating expenses		16,316,563			15,984,019			49,332,858			42,726,575
Managed REIT Platform expenses		1,307,006			725,599			2,538,073			1,732,710
Reimbursable costs from Managed REITs		1,429,527			1,165,994			4,232,436			3,514,486
General and administrative		6,277,252			7,330,245			19,995,770			21,114,475
Depreciation		13,427,138			13,220,916			40,075,331			36,155,008
Intangible amortization expense		1,731,791			4,849,934			5,487,187			13,222,791
Acquisition expenses		75,933			77,813			118,229			780,684
Contingent earnout adjustment		—			200,626			—			1,514,447
Write-off of equity interest and preexisting relationships upon acquisition of control		—			—			—			2,049,682
Total operating expenses		40,565,210			43,555,146			121,779,884			122,810,858
Gain on equity interests upon acquisition		—			—			—			16,101,237
Income from operations		18,139,750			12,898,743			53,650,711			49,516,377
Other income (expense):
Equity in earnings (losses) from investments in JV Properties		(274,236	)		(187,123	)		(1,215,114	)		(611,526	)
Equity in earnings (losses) from investments in Managed REITs		(444,043	)		(340,164	)		(893,793	)		(647,548	)
Other, net		432,645			1,729,957			2,376,138			1,444,061
Interest expense		(15,925,440	)		(11,752,656	)		(45,533,886	)		(28,181,026	)
Net loss on extinguishment of debt		—			—			—			(2,393,475	)
Income tax benefit (expense)		1,050,050			(102,233	)		906,624			402,242
Net income		2,978,726			2,246,524			9,290,680			19,529,105
Net (income) attributable to noncontrolling interests		(463,844	)		(366,047	)		(1,573,727	)		(2,528,010	)
Less: Distributions to preferred stockholders		(3,150,685	)		(3,150,684	)		(9,349,315	)		(9,349,315	)
Net income (loss) attributable to SmartStop Self Storage REIT, Inc. common stockholders	$	(635,803	)	$	(1,270,207	)	$	(1,632,362	)	$	7,651,780
Net income (loss) per Class A & Class T share – basic	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	0.08
Net income (loss) per Class A & Class T share – diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	0.08
Weighted average Class A shares outstanding – basic		88,725,350			88,701,119			88,725,831			82,224,600
Weighted average Class A shares outstanding – diluted		88,725,350			88,701,119			88,725,831			82,344,928
Weighted average Class T shares outstanding – basic		8,112,234			8,085,550			8,098,669			8,080,737
Weighted average Class T shares outstanding – diluted		8,112,234			8,085,550			8,098,669			8,080,737

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES NON-GAAP MEASURE – COMPUTATION OF FUNDS FROM OPERATIONS, AS ADJUSTED

	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022			Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
Net income (loss) (attributable to common stockholders)	$	(635,803	)	$	(1,270,207	)	$	(1,632,362	)	$	7,651,780
Add:
Depreciation of real estate		13,164,070			12,938,956			39,331,373			35,420,113
Amortization of real estate related intangible assets		1,658,610			4,776,068			5,267,854			12,722,904
Depreciation and amortization of real estate and intangible assets from unconsolidated entities		648,974			411,257			1,748,233			1,069,986
Deduct:
Gain on equity interests upon acquisition ⁽¹⁾		—			—			—			(16,101,237	)
Adjustment for noncontrolling interests ⁽²⁾		(1,812,157	)		(1,973,133	)		(5,411,372	)		(3,514,091	)
FFO (attributable to common stockholders)	$	13,023,694		$	14,882,941		$	39,303,726		$	37,249,455
Other Adjustments:
Intangible amortization expense – contracts ⁽³⁾		73,181			73,866			219,333			499,887
Acquisition expenses ⁽⁴⁾		75,933			77,813			118,229			780,684
Acquisition expenses and foreign currency losses, net from unconsolidated entities		(26,568	)		70,634			93,606			122,590
Casualty loss due to hurricane		—			350,000			—			350,000
Contingent earnout adjustment ⁽⁵⁾		—			200,626			—			1,514,447
Write-off of equity interest and preexisting relationships upon acquisition of control		—			—			—			2,049,682
Accretion of fair market value of secured debt		3,230			3,230			9,689			(38,968	)
Net loss on extinguishment of debt ⁽⁶⁾		—			—			—			2,393,475
Foreign currency and interest rate derivative (gains) losses, net ⁽⁷⁾		95,852			(808,077	)		(226,507	)		(731,805	)
Adjustment to deferred tax assets and liabilities ⁽³⁾		(1,342,137	)		(116,213	)		(1,527,275	)		(915,336	)
Offering related expenses ⁽⁸⁾		—			95,243			—			1,483,003
Adjustment for noncontrolling interests in our Operating Partnership ⁽²⁾		131,366			30,953			154,553			(845,727	)
FFO, as adjusted (attributable to common stockholders)	$	12,034,551		$	14,861,016		$	38,145,354		$	43,911,387
FFO (attributable to common stockholders)	$	13,023,694		$	14,882,941		$	39,303,726		$	37,249,455
Net income attributable to the noncontrolling interests in our Operating Partnership		359,862			128,223			1,097,021			2,290,186
Adjustment for noncontrolling interests in our Operating Partnership⁽²⁾		1,812,157			1,973,133			5,411,372			3,514,091
FFO (attributable to common stockholders and OP unit holders)	$	15,195,713		$	16,984,297		$	45,812,119		$	43,053,732
FFO, as adjusted (attributable to common stockholders)	$	12,034,551		$	14,861,016		$	38,145,354		$	43,911,387
Net income attributable to the noncontrolling interests in our Operating Partnership		359,862			128,223			1,097,021			2,290,186
Adjustment for noncontrolling interests in our Operating Partnership⁽²⁾		1,680,791			1,942,180			5,256,819			4,359,818
FFO, as adjusted (attributable to common stockholders and OP unit holders)	$	14,075,204		$	16,931,419		$	44,499,194		$	50,561,391

⁽¹⁾		This gain relates to the mark up in fair value of our preexisting equity interests in SSGT II as a result of our acquisition of control in the SSGT II Merger.
⁽²⁾		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.
⁽³⁾		These items represent the amortization, accretion, or adjustment of intangible assets or deferred tax assets and liabilities.
⁽⁴⁾		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.
⁽⁵⁾		The contingent earnout adjustment represents the adjustment to the fair value during the period of the Class A-2 Units issued in connection with the self administration transaction.
⁽⁶⁾		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.
⁽⁷⁾		This represents the mark-to-market adjustment for our derivative instruments not designated for hedge accounting and the ineffective portion of the change in fair value of derivatives recognized in earnings, as well as changes in foreign currency related to our foreign equity investments not classified as long term.
⁽⁸⁾		Such costs relate to our filing of an S-11 registration statement and our pursuit of a potential offering of our common stock. As this item is 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.

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES NON-GAAP MEASURE – COMPUTATION OF FUNDS FROM OPERATIONS, AS ADJUSTED ATTRIBUTABLE TO COMMON STOCKHOLDERS AND OP UNITS OUTSTANDING – DILUTED

The following is a reconciliation of FFO and FFO, as adjusted (attributable to common stockholders), to FFO and FFO, as adjusted (attributable to common stockholders and OP Unit holders), for each of the periods presented below:

	Three Months Ended September 30, (Unaudited)				Nine Months Ended September 30, (Unaudited)
	2023		2022		2023		2022
FFO (attributable to common stockholders and OP unit holders) Calculation:
FFO (attributable to common stockholders)	$	13,023,694	$	14,882,941	$	39,303,726	$	37,249,455
Net income attributable to the noncontrolling interests in our Operating Partnership		359,862		128,223		1,097,021		2,290,186
Adjustment for noncontrolling interests in our Operating Partnership ⁽¹⁾		1,812,157		1,973,133		5,411,372		3,514,091
FFO (attributable to common stockholders and OP unit holders)	$	15,195,713	$	16,984,297	$	45,812,119	$	43,053,732
FFO, as adjusted (attributable to common stockholders and OP unit holders) Calculation:
FFO, as adjusted (attributable to common stockholders)	$	12,034,551	$	14,861,016	$	38,145,354	$	43,911,387
Net income attributable to the noncontrolling interests in our Operating Partnership		359,862		128,223		1,097,021		2,290,186
Adjustment for noncontrolling interests in our Operating Partnership ⁽¹⁾		1,680,791		1,942,180		5,256,819		4,359,818
FFO, as adjusted (attributable to common stockholders and OP unit holders)	$	14,075,204	$	16,931,419	$	44,499,194	$	50,561,391

Weighted average Class A & T shares outstanding – basic		96,837,584		96,786,669		96,824,500		90,305,337
Weighted average OP units outstanding		12,864,174		12,131,585		12,831,077		11,354,513
Weighted average other dilutive securities		479,855		514,316		443,786		490,646
Weighted average shares & OP units outstanding – diluted⁽²⁾		110,181,613		109,432,570		110,099,363		102,150,496
FFO, as adjusted per share & OP unit outstanding – diluted	$	0.13	$	0.15	$	0.40	$	0.49

⁽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.
⁽²⁾		Includes all Class A Shares, Class T Shares and OP Units, as well as the dilutive effect on FFO and FFO, as adjusted of both unvested restricted stock and long term incentive plan units (both time-based units and performance based-units), and is calculated using the two-class, treasury stock or if-converted method, as applicable. The outstanding convertible preferred stock was excluded as the conversion of such shares was antidilutive to FFO and FFO, as adjusted. This excludes Class A-2 OP Units for the period prior to their conversion into Class A-1 OP Units, which was contingent on growth in assets under management or other contingent events.

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES COMPUTATION OF SAME-STORE OPERATING RESULTS (Unaudited)

*Same-Store Facility Results – three months ended September 30, 2023 and 2022*

The following table sets forth operating data for SmartStop’s same-store facilities (stabilized and comparable properties that have been included in the consolidated results of operations since January 1, 2022, excluding two other properties) for the three months ended September 30, 2023 and 2022. SmartStop considers the following data to be meaningful as this allows for the comparison of results without the effects of acquisition, lease up, or development activity.

	Same-Store Facilities							Non Same-Store Facilities					Total
	2023			2022			% Change	2023		2022		% Change	2023				2022			% Change
Revenue ⁽¹⁾	$	46,997,969		$	45,635,691		3.0%	$	5,773,069	$	5,654,518	N/M	$	52,771,038			$	51,290,209		2.9%
Property operating expenses ⁽²⁾		14,055,977			13,889,686		1.2%		2,260,586		2,094,333	N/M		16,316,563				15,984,019		2.1%
Net operating income	$	32,941,992		$	31,746,005		3.8%	$	3,512,483	$	3,560,185	N/M	$	36,454,475			$	35,306,190		3.3%
Number of facilities		137			137				16		16			153				153
Rentable square feet ⁽³⁾		10,384,940			10,366,585				1,428,145		1,428,145			11,813,085		⁽⁶⁾		11,794,730
Average physical occupancy ⁽⁴⁾		93.2	%		94.6	%	-1.4%	N/M		N/M		N/M		92.9	%			94.2	%	-1.3%
Annualized rent per occupied square foot ⁽⁵⁾	$	20.37		$	19.39		5.1%	N/M		N/M		N/M	$	20.08			$	19.22		4.5%

N/M Not meaningful
⁽¹⁾		Revenue includes rental revenue, certain ancillary revenue, administrative and late fees, and excludes Tenant Protection Program revenue.
⁽²⁾		Property operating expenses excludes corporate general and administrative expenses, interest expense, depreciation, amortization expense, and acquisition expenses.
⁽³⁾		Of the total rentable square feet, parking represented approximately 1,017,000 square feet as of September 30, 2023 and 2022. On a same-store basis, for the same periods, parking represented approximately 940,000 square feet.
⁽⁴⁾		Determined by dividing the sum of the month-end occupied square feet for the applicable group of facilities for each applicable period by the sum of their month-end rentable square feet for the period.
⁽⁵⁾		Determined by dividing the aggregate realized rental income for each applicable period by the aggregate of the month-end occupied square feet for the period. Properties are included in the respective calculations in their first full month of operations, as appropriate. SmartStop has excluded the realized rental revenue and occupied square feet related to parking herein for the purpose of calculating annualized rent per occupied square foot.
⁽⁶⁾		The San Gabriel Property was excluded from these statistics, as it only began formal operations in October of 2023.

Contacts

David Corak
VP of Corporate Finance

SmartStop Self Storage REIT, Inc.

investors.smartstopselfstorage.com
[email protected]

Read full story here

One United Properties posts a consolidated turnover of 285.5 million euros and a gross profit of 88.6 million euros in 2024

QNB Group Strengthens Innovation and Fintech Ecosystem with Strategic MoUs at Web Summit Qatar 2025

Calderys invests in a state-of-the-art Innovation Center in Neuwied, Germany

MEXC Launches Campaign for ENA & USDe with $1,000,000 Rewards

Esker (Market Dojo) Recognised in the 2025 Gartner® Market Guide for Sourcing Applications

Whatfix Unveils ScreenSense: An AI Technology to Shape the Next Frontier of Digital Adoption

Veeva Direct Data API Now Included with Vault Platform to Enable AI Innovation

Consensus concludes sold-out debut event in Hong Kong and announces return to Asia in 2026

Bybit Takes Aim at Crypto Crime with Launch of Industry-first LazarusBounty.com Platform