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☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30,
2025
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number:
001-42584
SmartStop Self Storage REIT, Inc.
(Exact name of Registrant as specified in its charter)
Maryland
46-1722812
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
10 Terrace Road
Ladera Ranch
,
California
92694
(Address of principal executive offices)
(
866
)
418-5144
(Registrant’s telephone number)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $0.001 par value
SMA
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
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).
Yes
☒ No ☐
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
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
As of November 3, 2025, there were
55,363,743
outstanding shares of Common Stock of the registrant.
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:
•
disruptions in the economy, including debt and banking markets and foreign currency, including changes in the Canadian Dollar ("CAD")/U.S. Dollar ("USD") exchange rate;
•
significant transaction costs, including financing costs, and unknown liabilities;
•
whether we will be successful in the pursuit of our business plan and investment objectives;
•
changes in the political and economic climate, economic conditions and fiscal imbalances in the United States, and other major developments, including tariffs, wars, natural disasters, epidemics and pandemics, military actions, and terrorist attacks;
•
changes in tax and other laws and regulations, including tenant protection programs and other aspects of our business;
•
difficulties in our ability to attract and retain qualified personnel and management;
•
the effect of competition at our self-storage properties or from other storage alternatives, which could cause rents and occupancy rates to decline;
•
our ability to identify and complete acquisitions on favorable terms or at all;
•
our ability to successfully integrate businesses and opportunities that we acquire, including but not limited to, the potential failure to fully realize expected cost savings and synergies from transactions or the risk that those expected cost savings and synergies may take longer than anticipated to be realized;
•
the outcome of any pending or later instituted legal or regulatory proceedings or governmental inquiries or investigations;
•
general competitive, economic, political and market conditions and other factors that may affect our future results;
•
our reliance on information technologies, which are vulnerable to, among other things, attack from computer viruses and malware, hacking, cyberattacks and other unauthorized access or misuse;
•
increases in interest rates; and
•
failure to maintain our REIT status.
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
3
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.
4
PART I. FINANCI
AL INFORMATION
ITEM 1. CONSOLIDATED FINANCI
AL 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 nine months ended September 30, 2025 are not necessarily indicative of the operating results expected for the full year.
5
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED BA
LANCE SHEETS
(Amounts in thousands, except share and per share data)
September 30,
2025
(Unaudited)
December 31,
2024
ASSETS
Real estate facilities:
Land
$
538,799
$
480,539
Buildings
1,769,744
1,516,095
Site improvements
101,637
94,562
2,410,180
2,091,196
Accumulated depreciation
(
349,789
)
(
305,132
)
2,060,391
1,786,064
Construction in process
7,747
9,503
Real estate facilities, net
2,068,138
1,795,567
Cash and cash equivalents
47,806
23,112
Restricted cash
6,406
6,189
Investments in unconsolidated real estate ventures (Note 4)
41,896
38,797
Investments in and advances to Managed REITs
110,624
57,722
Deferred tax assets
4,437
4,310
Other assets, net
25,263
33,538
Intangible assets, net of accumulated amortization
13,340
6,766
Trademarks, net of accumulated amortization
15,700
15,700
Goodwill
53,643
53,643
Debt issuance costs, net of accumulated amortization
4,026
6,723
Total assets
$
2,391,279
$
2,042,067
LIABILITIES, TEMPORARY EQUITY, AND EQUITY
Debt, net
$
1,041,661
$
1,317,435
Accounts payable and accrued liabilities
45,325
38,113
Due to affiliates
12
362
Distributions payable
8,559
9,257
Deferred tax liabilities
6,492
5,954
Total liabilities
1,102,049
1,371,121
Commitments and contingencies
(Note 12)
Redeemable common stock
—
62,042
Preferred stock, $
0.001
par value;
50,000,000
and
200,000,000
shares authorized
at September 30, 2025 and December 31, 2024, respectively:
Series A Convertible Preferred Stock, $
0.001
par value;
0
and
200,000
shares authorized at
September 30, 2025 and December 31, 2024, respectively;
0
and
200,000
shares issued and outstanding
at September 30, 2025 and December 31, 2024, respectively, with aggregate liquidation preferences of
$
0
and $
203,400
at September 30, 2025 and December 31, 2024, respectively
—
196,356
Equity:
SmartStop Self Storage REIT, Inc.:
Common Stock, $
0.001
par value;
141,250,000
shares and
0
shares authorized at September 30, 2025
and December 31, 2024, respectively;
31,050,000
shares and
0
shares issued and outstanding at
September 30, 2025 and December 31, 2024, respectively
31
—
Class A Common Stock, $
0.001
par value;
31,250,000
shares and
350,000,000
shares authorized
at September 30, 2025 and December 31, 2024, respectively;
22,342,584
and
21,970,817
shares
issued and outstanding at September 30, 2025 and December 31, 2024, respectively
22
89
Class T Common Stock, $
0.001
par value;
2,500,000
shares and
350,000,000
shares authorized
at September 30, 2025 and December 31, 2024, respectively;
2,043,173
and
2,038,466
shares issued
and outstanding at September 30, 2025 and December 31, 2024, respectively
2
8
Additional paid-in capital
1,839,823
895,118
Distributions
(
440,850
)
(
382,160
)
Accumulated deficit
(
197,189
)
(
185,649
)
Accumulated other comprehensive income (loss)
268
(
1,708
)
Total SmartStop Self Storage REIT, Inc. equity
1,202,107
325,698
Noncontrolling interests in our Operating Partnership
87,123
86,470
Other noncontrolling interests
—
380
Total noncontrolling interests
87,123
86,850
Total equity
1,289,230
412,548
Total liabilities, temporary equity and equity
$
2,391,279
$
2,042,067
See notes to consolidated financial statements.
6
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEM
ENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except share and per share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
2025
2024
Revenues:
Self storage rental revenue
$
61,768
$
52,921
$
176,509
$
156,050
Ancillary operating revenue
2,825
2,457
8,161
6,973
Managed REIT Platform revenues
3,841
2,923
11,990
8,328
Reimbursable costs from Managed REITs
1,995
1,856
6,035
5,011
Total revenues
70,429
60,157
202,695
176,362
Operating expenses:
Property operating expenses
23,491
18,249
65,628
53,334
Managed REIT Platform expenses
2,074
1,053
6,559
2,552
Reimbursable costs from Managed REITs
1,995
1,856
6,035
5,011
General and administrative
10,435
7,210
29,980
22,449
Depreciation
16,274
13,836
46,741
41,057
Intangible amortization expense
2,904
215
6,431
461
Acquisition expenses
480
38
1,042
121
Total operating expenses
57,653
42,457
162,416
124,985
Income from operations
12,776
17,700
40,279
51,377
Other income (expense):
Equity in earnings (losses) from
investments in JV Properties
(
47
)
(
380
)
(
408
)
(
1,068
)
Equity in earnings (losses) from
investments in Managed REITs
(
248
)
(
248
)
(
620
)
(
957
)
Other, net
4,667
(
1,981
)
3,703
(
2,949
)
Interest income
1,536
1,023
2,984
2,375
Interest expense
(
12,521
)
(
19,102
)
(
46,573
)
(
52,949
)
Loss on debt extinguishment
—
—
(
2,533
)
(
471
)
Income tax expense
(
615
)
(
404
)
(
1,538
)
(
1,093
)
Net income (loss)
5,548
(
3,392
)
(
4,706
)
(
5,735
)
Net (income) loss attributable to
noncontrolling interests
(
321
)
314
377
405
Less: Distributions to preferred stockholders
—
(
3,142
)
(
3,567
)
(
9,358
)
Less: Accretion - preferred equity costs
—
—
(
3,644
)
—
Net income (loss) attributable to
SmartStop Self Storage REIT, Inc.
common stockholders
$
5,227
$
(
6,220
)
$
(
11,540
)
$
(
14,688
)
Net income (loss) per Common Stock,
Class A & Class T share:
Basic
$
0.09
$
(
0.26
)
$
(
0.27
)
$
(
0.62
)
Diluted
$
0.09
$
(
0.26
)
$
(
0.27
)
$
(
0.62
)
Weighted average Common Stock outstanding:
Basic
31,050,000
—
20,586,264
—
Diluted
31,050,000
—
20,586,264
—
Weighted average Class A Common shares outstanding:
Basic
22,004,477
22,086,796
21,996,871
22,142,691
Diluted
22,252,179
22,086,796
21,996,871
22,142,691
Weighted average Class T Common shares outstanding:
Basic
2,043,484
2,032,451
2,042,815
2,030,828
Diluted
2,043,484
2,032,451
2,042,815
2,030,828
See notes to consolidated financial statements.
7
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Amounts in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2025
2024
2025
2024
Net income (loss)
$
5,548
$
(
3,392
)
$
(
4,706
)
$
(
5,735
)
Other comprehensive income (loss):
Foreign currency translation adjustment
(
608
)
774
989
(
1,144
)
Foreign currency hedge contract (losses) gains
—
(
538
)
(
498
)
1,322
Interest rate swap and cap contract gains (losses)
—
(
1,626
)
1,606
(
2,940
)
Other comprehensive income (loss)
(
608
)
(
1,390
)
2,097
(
2,762
)
Comprehensive income (loss)
4,940
(
4,782
)
(
2,609
)
(
8,497
)
Comprehensive income (loss) attributable to
noncontrolling interests:
Comprehensive (income) loss attributable to
noncontrolling interests
(
285
)
482
256
737
Comprehensive income (loss) attributable to
SmartStop Self Storage REIT, Inc.
stockholders
$
4,655
$
(
4,300
)
$
(
2,353
)
$
(
7,760
)
See notes to consolidated financial statements.
8
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY AND TEMPORARY EQUITY
For the Three Months Ended September 30, 2025 and 2024
(Unaudited)
(Amounts in thousands, except share and per share data)
Common Stock
Common Stock
Class A
Class T
Number
of Shares
Common
Stock
Par Value
Number
of Shares
Common
Stock
Par Value
Number
of Shares
Common
Stock
Par Value
Additional
Paid-in
Capital
Distributions
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
SmartStop Self Storage REIT,
Inc. Equity
Noncontrolling
Interests
Total
Equity
Balance as of June 30, 2025
31,050,000
$
31
22,350,411
$
22
2,044,146
$
2
$
1,836,662
$
(
418,557
)
$
(
202,416
)
$
840
$
1,216,584
$
85,991
$
1,302,575
Offering costs of Underwritten
Public Offering
—
—
—
—
—
—
(
42
)
—
—
—
(
42
)
—
(
42
)
Issuance of restricted stock,
net of forfeitures
—
—
(
669
)
—
—
—
—
—
—
—
—
—
—
Distributions ($
0.40
per share)
—
—
—
—
—
—
—
(
22,293
)
—
—
(
22,293
)
—
(
22,293
)
Distributions to noncontrolling
interests in our Operating
Partnership
—
—
—
—
—
—
—
—
—
—
—
(
1,693
)
(
1,693
)
Repurchase of noncontrolling
interest in our Operating Partnership
—
—
—
—
—
—
67
—
—
—
67
(
297
)
(
230
)
Fractional share redemption
—
—
(
7,158
)
—
(
973
)
—
(
291
)
—
—
—
(
291
)
—
(
291
)
Equity based compensation
expense
—
—
—
—
—
—
3,427
—
—
—
3,427
2,837
6,264
Net income attributable to
SmartStop Self Storage
REIT, Inc. common
stockholders
—
—
—
—
—
—
—
—
5,227
—
5,227
—
5,227
Net income attributable to the
noncontrolling interests in our
Operating Partnership
—
—
—
—
—
—
—
—
—
—
—
321
321
Foreign currency translation
adjustment
—
—
—
—
—
—
—
—
—
(
572
)
(
572
)
(
36
)
(
608
)
Balance as of September 30, 2025
31,050,000
$
31
22,342,584
$
22
2,043,173
$
2
$
1,839,823
$
(
440,850
)
$
(
197,189
)
$
268
$
1,202,107
$
87,123
$
1,289,230
9
Common Stock
Class A
Class T
Number
of Shares
Common
Stock
Par Value
Number
of Shares
Common
Stock
Par Value
Additional
Paid-in
Capital
Distributions
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
SmartStop Self Storage REIT,
Inc. Equity
Noncontrolling
Interests
Total
Equity
Preferred
Stock
Redeemable
Common
Stock
Balance as of June 30, 2024
22,174,115
$
89
2,031,155
$
8
$
894,870
$
(
353,086
)
$
(
175,738
)
$
(
361
)
$
365,782
$
89,036
$
454,818
$
196,356
$
65,371
Offering costs
—
—
—
—
(
64
)
—
—
—
(
64
)
—
(
64
)
—
—
Changes to redeemable
common stock
—
—
—
—
(
5,602
)
—
—
—
(
5,602
)
—
(
5,602
)
—
5,602
Issuance of noncontrolling interest
in SST VI Advisor
—
—
—
—
—
—
—
—
—
330
330
—
—
Redemptions of common stock
(
137,511
)
(
1
)
(
4,527
)
—
—
—
—
—
(
1
)
—
(
1
)
—
(
12,617
)
Issuance of restricted stock,
net of forfeitures
262
—
—
—
—
—
—
—
—
—
—
—
—
Distributions ($
0.60
per share)
—
—
—
—
—
(
14,554
)
—
—
(
14,554
)
—
(
14,554
)
—
—
Distributions to noncontrolling
interests in our Operating
Partnership
—
—
—
—
—
—
—
—
—
(
2,142
)
(
2,142
)
—
—
Distributions to other
noncontrolling interests
—
—
—
—
—
—
—
—
—
(
107
)
(
107
)
—
—
Issuance of shares for
distribution reinvestment plan
82,556
1
9,468
—
5,602
—
—
—
5,603
—
5,603
—
—
Equity based compensation
expense
—
—
—
—
154
—
—
—
154
1,153
1,307
—
—
Net loss attributable to
SmartStop Self Storage
REIT, Inc. common
stockholders
—
—
—
—
—
—
(
6,220
)
—
(
6,220
)
—
(
6,220
)
—
—
Net loss attributable to the
noncontrolling interests in our
Operating Partnership
—
—
—
—
—
—
—
—
—
(
422
)
(
422
)
—
—
Net income attributable to other
noncontrolling interests
—
—
—
—
—
—
—
—
—
108
108
—
—
Foreign currency translation
adjustment
—
—
—
—
—
—
—
681
681
93
774
—
—
Foreign currency hedge
contract loss
—
—
—
—
—
—
—
(
473
)
(
473
)
(
65
)
(
538
)
—
—
Interest rate hedge
contract loss
—
—
—
—
—
—
—
(
1,430
)
(
1,430
)
(
196
)
(
1,626
)
—
—
Balance as of September 30, 2024
22,119,422
$
89
2,036,096
$
8
$
894,960
$
(
367,640
)
$
(
181,958
)
$
(
1,583
)
$
343,876
$
87,788
$
431,664
$
196,356
$
58,356
See notes to consolidated financial statements.
10
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY AN
D TEMPORARY EQUITY
For the Nine Months Ended September 30, 2025 and 2024
(Unaudited)
(Amounts in thousands, except share and per share data)
Common Stock
Common Stock
Class A
Class T
Number
of Shares
Common
Stock
Par Value
Number
of Shares
Common
Stock
Par Value
Number
of Shares
Common
Stock
Par Value
Additional
Paid-in
Capital
Distributions
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
SmartStop Self Storage REIT,
Inc. Equity
Noncontrolling
Interests
Total
Equity
Preferred
Stock
Redeemable
Common
Stock
Balance as of December 31, 2024
—
$
—
21,970,817
$
89
2,038,466
$
8
$
895,118
$
(
382,160
)
$
(
185,649
)
$
(
1,708
)
$
325,698
$
86,850
$
412,548
$
196,356
$
62,042
Issuance of shares in Underwritten
Public Offering
31,050,000
31
—
—
—
—
931,469
—
—
—
931,500
—
931,500
—
—
Offering costs of Underwritten
Public Offering
—
—
—
—
—
—
(
57,535
)
—
—
—
(
57,535
)
—
(
57,535
)
—
—
Tax withholding
(net settlement redemption) related
to vesting of restricted stock
—
—
(
3,362
)
—
—
—
(
192
)
—
—
—
(
192
)
—
(
192
)
—
—
Changes to redeemable
common stock
—
—
—
—
—
—
62,042
—
—
—
62,042
—
62,042
—
(
62,042
)
Par value adjustment due to
Reverse Stock Split
—
—
(
67
)
—
(
6
)
73
—
—
—
—
—
—
—
—
Issuance of restricted stock,
net of forfeitures
—
—
331,376
—
—
—
—
—
—
—
—
—
—
—
—
Distributions ($
1.40
per share)
—
—
—
—
—
—
—
(
58,690
)
—
—
(
58,690
)
—
(
58,690
)
—
—
Distributions to noncontrolling
interests in our Operating
Partnership
—
—
—
—
—
—
—
—
—
—
—
(
5,587
)
(
5,587
)
—
—
Distributions to other
noncontrolling interests
—
—
—
—
—
—
—
—
—
—
—
(
365
)
(
365
)
—
—
Issuance of shares for
distribution reinvestment plan
—
—
50,911
—
5,680
—
3,452
—
—
—
3,452
—
3,452
Equity based compensation
expense
—
—
—
—
—
—
7,150
—
—
—
7,150
7,098
14,248
—
—
Repurchase of noncontrolling
interest in SST VI Advisor
—
—
—
—
—
—
(
1,530
)
—
—
—
(
1,530
)
(
320
)
(
1,850
)
—
—
Repurchase of noncontrolling
interest in our Operating Partnership
—
—
—
—
—
—
67
—
—
—
67
(
297
)
(
230
)
—
—
Fractional share redemption
—
—
(
7,158
)
—
(
973
)
—
(
291
)
—
—
—
(
291
)
—
(
291
)
—
—
Redemption of Series A Convertible
Preferred Stock
—
—
—
—
—
—
—
—
—
—
—
—
—
(
196,356
)
—
Net loss attributable to
SmartStop Self Storage
REIT, Inc. common
stockholders
—
—
—
—
—
—
—
—
(
11,540
)
—
(
11,540
)
—
(
11,540
)
—
—
Net loss attributable to the
noncontrolling interests in our
Operating Partnership
—
—
—
—
—
—
—
—
—
—
—
(
682
)
(
682
)
—
—
Net income attributable to other
noncontrolling interests
—
—
—
—
—
—
—
—
—
—
—
305
305
—
—
Foreign currency translation
adjustment
—
—
—
—
—
—
—
—
—
929
929
60
989
—
—
Foreign currency hedge
contract loss
—
—
—
—
—
—
—
—
—
(
476
)
(
476
)
(
22
)
(
498
)
—
—
Interest rate hedge
contract gain
—
—
—
—
—
—
—
—
—
1,523
1,523
83
1,606
—
—
Balance as of September 30, 2025
31,050,000
$
31
22,342,584
$
22
2,043,173
$
2
$
1,839,823
$
(
440,850
)
$
(
197,189
)
$
268
$
1,202,107
$
87,123
$
1,289,230
$
—
$
—
11
Common Stock
Class A
Class T
Number
of Shares
Common
Stock
Par Value
Number
of Shares
Common
Stock
Par Value
Additional
Paid-in
Capital
Distributions
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
SmartStop Self Storage REIT,
Inc. Equity
Noncontrolling
Interests
Total
Equity
Preferred
Stock
Redeemable
Common
Stock
Balance as of December 31, 2023
22,190,284
$
89
2,028,457
$
8
$
894,857
$
(
324,191
)
$
(
167,270
)
$
847
$
404,340
$
91,523
$
495,863
$
196,356
$
71,277
Offering costs
—
—
—
—
(
145
)
—
—
—
(
145
)
—
(
145
)
—
—
Tax withholding
(net settlement redemption) related
to vesting of restricted stock
(
3,829
)
(
1
)
—
—
(
219
)
—
—
—
(
220
)
—
(
220
)
—
—
Issuance of noncontrolling interest
in SST VI Advisor
—
—
—
—
—
—
—
—
330
330
—
—
Changes to redeemable
common stock
—
—
—
—
(
16,979
)
—
—
—
(
16,979
)
—
(
16,979
)
—
16,979
Redemptions of common stock
(
327,122
)
(
1
)
(
21,034
)
—
—
—
—
—
(
1
)
—
(
1
)
—
(
29,900
)
Issuance of restricted stock,
net of forfeitures
10,163
1
—
—
—
—
—
—
1
—
1
—
—
Distributions ($
1.80
per share)
—
—
—
—
—
(
43,449
)
—
—
(
43,449
)
—
(
43,449
)
—
—
Distributions to noncontrolling
interests in our Operating
Partnership
—
—
—
—
—
—
—
—
—
(
6,389
)
(
6,389
)
—
—
Distributions to other
noncontrolling interests
—
—
—
—
—
—
—
—
—
(
334
)
(
334
)
—
—
Issuance of shares for
distribution reinvestment plan
249,926
1
28,673
—
16,978
—
—
—
16,979
16,979
—
—
Equity based compensation
expense
—
—
—
—
468
—
—
—
468
3,395
3,863
—
—
Net loss attributable to
SmartStop Self Storage
REIT, Inc. common
stockholders
—
—
—
—
—
—
(
14,688
)
—
(
14,688
)
(
14,688
)
—
—
Net loss attributable to the
noncontrolling interests in our
Operating Partnership
—
—
—
—
—
—
—
—
—
(
729
)
(
729
)
—
—
Net income attributable to other
noncontrolling interests
—
—
—
—
—
—
—
—
—
324
324
—
—
Foreign currency translation
adjustment
—
—
—
—
—
—
—
(
1,008
)
(
1,008
)
(
136
)
(
1,144
)
—
—
Foreign currency hedge
contract gain
—
—
—
—
—
—
—
1,165
1,165
157
1,322
—
—
Interest rate hedge
contract loss
—
—
—
—
—
—
—
(
2,587
)
(
2,587
)
(
353
)
(
2,940
)
—
—
Balance as of September 30, 2024
22,119,422
$
89
2,036,096
$
8
$
894,960
$
(
367,640
)
$
(
181,958
)
$
(
1,583
)
$
343,876
$
87,788
$
431,664
$
196,356
$
58,356
See notes to consolidated financial statements.
12
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
Nine Months Ended
September 30,
2025
2024
Cash flows from operating activities:
Net loss
$
(
4,706
)
$
(
5,735
)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
53,172
41,518
Change in deferred tax assets and liabilities
883
602
Accretion of fair market value adjustment of secured debt
544
80
Amortization of debt issuance costs
2,912
2,975
Loss on extinguishment of debt
2,533
471
Equity based compensation expense
14,248
3,863
Non-cash adjustment from equity method investments in JV Properties
408
1,068
Non-cash adjustment from equity method investments in Managed REITs
620
957
Accretion of financing fee revenues
(
252
)
(
114
)
Unrealized foreign currency and derivative (gains) losses
(
7,543
)
4,215
Sponsor funding reduction
779
598
Issuance of noncontrolling interest SST VI Advisor
—
330
Increase (decrease) in cash from changes in assets and liabilities:
Other assets, net
2,275
2,684
Accounts payable and accrued liabilities
6,289
12,288
Managed REITs receivables and other
(
1,199
)
(
12,333
)
Due to affiliates
(
350
)
(
45
)
Net cash provided by operating activities
70,613
53,422
Cash flows from investing activities:
Purchase of real estate
(
288,876
)
(
54,90
9
)
Additions to real estate
(
7,770
)
(
8,565
)
Deposits on acquisitions
(
5,552
)
(
474
)
Insurance proceeds on insured property damage
3,618
—
Capital distributions from Managed REITs
462
463
Investments in unconsolidated JV Properties
(
3,490
)
(
8,759
)
Capital distributions from unconsolidated JV Properties
1,050
—
Investment in SST VI Series D Preferred Units
(
24,750
)
—
Repayment of SSGT III loans
21,919
19,000
Funding of loans to SSGT III
(
46,000
)
(
20,000
)
Funding of loans to SST VI
(
2,000
)
(
8,000
)
Purchase of SST VI Subordinated Class C Units
(
658
)
(
926
)
Settlement of foreign currency hedges
1,065
1,939
Purchase of other assets
(
63
)
(
70
)
Net cash used in investing activities
(
351,045
)
(
80,301
)
Cash flows from financing activities:
Gross proceeds - Underwritten Public Offering
931,500
—
Offering costs
(
57,281
)
(
88
)
Gross proceeds from issuance of Canadian Notes
511,462
—
Gross proceeds from issuance of non-credit facility debt
74,800
75,590
Repayment of non-credit facility debt
(
278,880
)
(
15,000
)
Scheduled principal payments on non-credit facility debt
(
2,221
)
(
2,617
)
Proceeds from issuance of credit facility debt
222,000
659,000
Repayment of credit facility debt
(
825,005
)
(
623,808
)
Debt defeasance costs
(
754
)
—
Debt issuance costs
(
2,727
)
(
9,614
)
Payment of payroll withholding tax on stock vesting
(
192
)
(
218
)
Redemptions of noncontrolling interests in our OP
(
230
)
—
Redemption of Series A Convertible Preferred Stock
(
200,000
)
—
Redemption of fractional common shares
(
290
)
—
Repurchase of noncontrolling interest in SST VI Advisor
(
1,850
)
—
Redemption of common stock
—
(
21,228
)
Distributions paid to preferred stockholders
(
6,967
)
(
9,367
)
Distributions paid to common stockholders
(
52,646
)
(
26,684
)
Distributions paid to noncontrolling interests in our OP
(
5,475
)
(
6,521
)
Distributions paid to other noncontrolling interests
(
365
)
(
333
)
Net cash provided by (used in) financing activities
304,879
19,112
Impact of foreign exchange rate changes on cash and restricted cash
464
(
622
)
Change in cash, cash equivalents, and restricted cash
24,911
(
8,389
)
Cash, cash equivalents, and restricted cash beginning of year
29,301
53,427
Cash, cash equivalents, and restricted cash end of period
$
54,212
$
45,038
13
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
$
39,999
$
46,311
Cash paid for income taxes
$
294
$
53
Supplemental disclosure of noncash activities:
Acquisition of real estate with loans payable
$
25,236
$
—
Distributions payable
$
8,559
$
8,803
Real estate and construction in process included in accounts payable
and accrued liabilities
$
1,941
$
623
Issuance of shares pursuant to distribution reinvestment plan
$
3,452
$
16,979
Redemption of common stock included in accounts payable
and accrued liabilities
$
—
$
12,617
Deposit applied to the purchase of real estate
$
2,745
$
—
Earnest deposits on acquisitions assigned to the Managed REITs,
amounts reclassified to Managed REITs receivables
$
1,098
$
—
See notes to consolidated financial statements.
14
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Note 1. Or
ganization
SmartStop Self Storage REIT, Inc., a Maryland corporation (the “Company”), is a self-managed and fully-integrated self storage real estate investment trust (“REIT”), formed on
January 8, 2013
under the Maryland General Corporation Law. Our year-end is December 31. As used in this report, “we,” “us,” “our,” and “Company” refer to SmartStop Self Storage REIT, Inc. and each of our subsidiaries. Our Common Stock began trading on the New York Stock Exchange under the ticker symbol "SMA" on April 2, 2025.
We acquire and own self storage facilities; we operate the self storage facilities owned by us, we also operate the properties owned by the entities sponsored by us and, as of October 1, 2025, owned by third parties. As of September 30, 2025, we wholly-owned
177
operating self storage facilities located in
20
states (Alabama, Arizona, California, Colorado, Florida, Illinois, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Nevada, North Carolina, Ohio, South Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin), the District of Columbia, and Canada.
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 September 30, 2025, represented
49
operating properties consisting of approximately
40,000
units and
4.4
million rentable square feet. Through our Managed REIT Platform and the DSTs, we originate, structure, and manage additional self storage investment products. Effective October 1, 2025, we now manage more than an additional
225
operating properties owned by third parties consisting of more than approximately
100,000
units and
16.6
million rentable square feet through our transaction with Argus Professional Storage Management, LLC ("Argus").
Please see Note 14 – Subsequent Events, for additional information.
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 September 30, 2025, we owned approximately
94
% of the common units of limited partnership interests of our Operating Partnership. The remaining approximately
6
% of the common units are owned by current and former employees, members of our executive management team, board members, or indirectly by Strategic Asset Management I, LLC (f/k/a SmartStop Asset Management, LLC), our former sponsor (“SAM”), its affiliates, and unaffiliated third parties. As the sole general partner of our Operating Partnership, we have the exclusive power to manage and conduct the business of our Operating Partnership.
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 $
58.00
for our Class A Common Stock and Class T Common Stock (defined below) based on the estimated value of our assets less the estimated value of our liabilities, or net asset value, divided by the number of shares outstanding on a fully diluted basis, calculated as of June 30, 2024.
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”), $
0.001
par value per share, and Class T Common Stock (“Class T Common Stock”), $
0.001
par value per share. Concurrently with the Reverse Stock Split, we also effected a corresponding one-for-four reverse unit split (together with the Reverse Stock Split, the “Reverse Equity Splits”) of units of our Operating Partnership. As a result of the Reverse Equity Splits, every four shares of our common stock and every four Operating Partnership units that were issued and outstanding as of the date of the Reverse Equity Splits were automatically changed into one issued and outstanding share of common stock or one issued and outstanding Operating Partnership unit, as applicable, rounded to the nearest 1/1000th share or Operating Partnership unit. The reverse stock and unit splits impacted all classes of common stock and common operating partnership units proportionately and resulted in no impact on any stockholder's or limited partner's percentage ownership of all issued and outstanding common stock or common Operating Partnership units. In connection with the reverse equity splits, the number of shares of common stock and Operating Partnership units underlying the outstanding share-based awards were also proportionally reduced.
15
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Immediately after the reverse stock split described above, we reclassified and designated
225,000,000
authorized but unissued shares of Class A Common Stock and
340,000,000
authorized but unissued shares of Class T Common Stock as authorized but unissued shares of common stock, $
0.001
par value per share (the “Reclassification”), without any designation as to class or series. As a result, the Company had
565,000,000
shares of unclassified common stock, $
0.001
par value per share, authorized but unissued.
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
27,000,000
shares of common stock, $
0.001
par value per share (the “Common Stock”), at an initial price of $
30.00
per share, pursuant to a registration statement filed with the U.S. Securities and Exchange Commission ("SEC") on Form S-11 (File No. 333-264449) (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”). The underwriters also exercised an overallotment option to purchase
4,050,000
additional shares of Common Stock on April 3, 2025. Certain of our directors, officers, and employees, and friends and family members of certain of our directors, officers, and employees were able to and did purchase shares through us or our underwriters at the public offering price of $
30.00
per share. Under this program, officers and directors purchased
31,500
shares. All of these shares purchased in the Underwritten Public Offering are listed on the New York Stock Exchange ("NYSE") under the ticker symbol "SMA". The gross and net proceeds received on April 3, 2025 were approximately $
931.5
million and $
875.6
million, respectively.
On June 12, 2025, we filed Articles of Amendment to our charter to decrease our total number of authorized shares of stock from
900,000,000
to
225,000,000
. As a result of such decrease through September 30, 2025, our authorized shares of stock consisted of: (i)
175,000,000
shares of common stock, $
0.001
par value per share, of which
31,250,000
shares were designated as Class A Common Stock,
2,500,000
shares were designated as Class T Common Stock, and
141,250,000
were common stock without designation as to class or series; and (ii)
50,000,000
shares of preferred stock, $
0.001
par value per share.
On October 1, 2025, the six-month anniversary of the listing of our Common Stock issued in our Underwritten Public Offering for trading on the NYSE, each share of Class A Common Stock and Class T Common Stock automatically converted into one share of our undesignated listed Common Stock. In preparation for this conversion, on July 30, 2025, we completed a fractional share redemption related to our Class A Common Stock and Class T Common Stock of approximately $
0.3
million, such that a total of approximately
8,000
shares were redeemed at a purchase price of $
35.63
per share, which was the closing price of the Company’s Common Stock as of the end of that day. Each stockholder that held any fractional shares received a cash payment for such shares, and as a result, thereafter no stockholder of the Company owned any fractional shares.
From January 2014 through January 2017, we conducted multiple offerings for sales of shares to the public through multiple registration statements and sold approximately $
493
million in Class A Common Stock and $
73
million of Class T Common Stock, excluding shares sold pursuant to our distribution reinvestment plan, as described below.
In November 2016, we filed with the SEC a Registration Statement on Form S-3, which registered up to an additional $
100.9
million in shares under our distribution reinvestment plan. On May 14, 2024, we filed a new Registration Statement on Form S-3 with the SEC which registered up to an additional
1,125,000
Class A Shares and
125,000
Class T Shares under our distribution reinvestment plan (our “DRP Offering”).
On May 1, 2025, we terminated our distribution reinvestment plan. As of such date, we had sold approximately
2.7
million shares of Class A Common Stock and approximately
0.3
million shares of Class T Common Stock through our distribution reinvestment plan. See Note 12 – Commitments and Contingencies for additional information on our distribution reinvestment plan.
16
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC.
The square footage, unit count, and occupancy percentage data and related disclosures included in these notes to the consolidated financial statements are outside the scope of our independent registered accounting firm's review.
Reverse Equity Splits
As applicable and unless otherwise indicated, the consolidated financial statements and accompanying footnotes 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 were 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 incurre
d 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 September 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 REITs, which are all accounted for under the equity method of accounting (see Note 4 – Investments in Unconsolidated Real 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.
17
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Equity Investments
Under the equity method, our investments are stated at cost and adjusted for our share of net earnings or losses and reduced by distributions and impairments, as applicable. Equity in earnings will generally be recognized based on our ownership interest in the earnings of each of the unconsolidated investments and recorded within our consolidated statements of operations.
Investments in and Advances to Managed REITs
As of September 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 have accounted for the noncontrolling interests in our Operating Partnership, our Tenant Protection Programs joint ventures with SST VI and SSGT III, and, until June 18, 2025 (i.e. the redemption date of such noncontrolling interests in the SST VI Advisor), the noncontrolling interests in the SST VI Advisor, in accordance with the related accounting guidance.
Due to our control through our general partnership interest in our Operating Partnership and the limited rights of the limited partners, our Operating Partnership, including its wholly-owned subsidiaries, are consolidated with the Company and the limited partner interests are reflected as noncontrolling interests in the accompanying consolidated balance sheets. We also consolidate our interests in the 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
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. Management will adjust such estimates when facts and circumstances dictate. Actual results could materially differ from those estimates. The most significant estimates made include that of real estate acquisition valuation and the allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed at relative fair value, the evaluation of potential impairment of indefinite and long-lived assets and goodwill, and the estimated useful lives of real estate assets and intangibles.
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
Restricted cash consists primarily of impound reserve accounts for property taxes, insurance and capital improvements in connection with the requirements of certain of our loan agreements.
18
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Real Estate Purchase Price Allocation and Treatment of Acquisition Costs
We account for asset acquisitions in accordance with GAAP which requires that we allocate the purchase price of a property to the tangible and intangible assets acquired and the liabilities assumed based on their relative fair values as of the date of acquisition. This guidance requires us to make significant estimates and assumptions, including fair value estimates, which requires the use of significant unobservable inputs as of the acquisition date. We engage independent third-party valuation specialists to assist in the determination of significant estimates and market-based assumptions used in the valuation models.
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 $
13.0
million and $
1.8
million in intangible assets to recognize the value of in-place leases related to our acquisitions during the nine months ended September 30, 2025 and 2024, respectively. We do not expect, nor to date have we recorded, intangible assets for the value of customer relationships because we expect we will not have concentrations of significant customers and the average customer turnover will be fairly frequent.
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 nine months ended September 30, 2025 and 2024, our property acquisitions did not meet the definition of a business. To date, our property acquisitions have generally not met the definition of a business because substantially all of the fair value was concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) and because the acquisitions did not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. As a result, once an acquisition is deemed probable, acquisition related transaction costs are capitalized rather than expensed.
During the three months ended September 30, 2025 and 2024, we expensed approximately $
0.4
million and approximately $
0.1
million, respectively, of asset acquisition-related transaction costs that did not meet our capitalization policy during the respective periods.
During the nine months ended September 30, 2025 and 2024, we expensed approximately $
0.8
million and approximately $
0.1
million, respectively, of asset acquisition-related transaction costs that did not meet our capitalization policy during the respective periods.
During the three and nine months ended Septem
ber 30, 2025, we expensed approximately $
0.1
million and $
0.2
million, respectively, in transaction costs related to the acquisition of Argus, which closed on October 1, 2025. Please see Note 14 – Subsequent Events, for additional information.
Evaluation of Possible Impairment of Real Property Assets
Management monitors events and changes in circumstances that could indicate that the carrying amounts of our real property assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of the assets may not be recoverable, we will assess the recoverability of the assets by determining whether the carrying value of the real property assets will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying value, we will adjust the value of the real property assets to the fair value and recognize an impairment loss. For the nine months ended September 30, 2025,
no
real property asset impairment losses were recognized. For the nine months ended September 30, 2024, we recorded a casualty loss in connection with damage to one of our wholly-owned properties caused by Hurricane Helene.
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
19
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
such loss in excess of the amount of the casualty loss recorded is considered a gain contingency and is recognized when the claim is fully settled.
Goodwill Valuation
We initially recorded goodwill as a result of the Self Administration Transaction (as defined in Note 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
two
primary trademarks acquired therein.
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 September 30, 2025 and December 31, 2024, $
15.7
million was recorded related to the SmartStop® Self Storage trademark, which is an indefinite lived trademark. During the year ended December 31, 2024, the “Strategic Storage
®
” trademark, a definite lived trademark, became fully amortized.
We qualitatively evaluate whether any triggering events or changes in circumstances have occurred in addition to our annual impairment test that would indicate an impairment condition may exist. If any change in circumstance or triggering event occurs, and results in a significant impact to our revenue and profitability projections, or any significant assumption in our valuation methods is adversely impacted, the impact could result in a material impairment charge in the future.
Revenue Recognition
Self Storage Operations
Management believes that all of our leases are operating leases. Rental income is recognized in accordance with the terms of the leases, which generally are month-to-month. Revenues from any long-term operating leases are recognized on a straight-line basis over the term of the lease. The excess of rents received over amounts contractually due pursuant to the underlying leases is included in accounts payable and accrued liabilities in our consolidated balance sheets, and contractually due but unpaid rent is included in other assets.
In 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.
20
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 certain costs of providing administrative and management services to the Managed REITs. These reimbursements include costs incurred in relation to organization and offering services provided to the Managed REITs and include the reimbursement of salaries, bonuses, and other expenses related to benefits paid to our employees while performing services for the Managed REITs. The Managed REITs’ property management agreements also provide reimbursement to us for the property manager’s costs of managing the properties. Reimbursable costs include wages and salaries and other expenses that relate to benefits that arise in operating, managing and maintaining the 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, was required to fund the payment of the front-end sales load for the sale of SST VI’s Class Y and Class Z shares sold in its offering. In exchange, SmartStop received a number of Series C Convertible Subordinated Units (“Series C Units”) in SST VI OP calculated as the dollar amount of such funding divided by the then-current offering price, which was $
9.30
through August 6, 2024 for such Class Y and Z shares.
The Series C Units shall automatically convert into Class A units of SST VI OP on a one-to-one basis upon SST VI’s disclosure of an estimated net asset value per share equal to at least $
10.00
per share for each class of SST VI shares of common stock, including the Class Y shares and Class Z shares, calculated net of the Series C Units to be converted. On August 7, 2024, SST VI declared an estimated net asset value per share of $
10.00
. Since the Series C Units that could be converted would result in the net asset value falling below $
10.00
per share, none of the Series C Units we own were converted into Class A units of SST VI OP, and our future purchases will be determined based on the current estimated net asset value at such time.
Subsequent to SST VI declaring an estimated net asset value of $
10.00
per share, the number of Series C Units SmartStop receives in exchange for funding the front-end sales load of the sale of SST VI's Class Y and Class Z shares is calculated as the dollar amount of such sponsor funding divided by the current offering price of $
10.00
per share for such Class Y and Z shares.
In accordance with ASC 606, the amount by which our funding exceeded the fair value of the Series C Units received was accounted for as a payment to a customer and was therefore recorded as a reduction to the transaction price for the
21
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
services we provide to such customer. Each payment was initially included in the Other assets line-item in our consolidated balance sheet and is subsequently being recorded as a reduction of Managed REIT Platform revenues ratably over the remaining estimated life of our management contracts with SST VI.
Below is a summary of the portion of sponsorship funding payments which exceeds the fair value of the Series C Units received, and is recorded pursuant to ASC 606 as described above (in thousands):
Balance as of December 31, 2023
$
3,493
Amounts incurred
1,210
Recorded sponsor funding reduction
(
844
)
Balance as of December 31, 2024
$
3,859
Amounts incurred
$
384
Recorded sponsor funding reduction
(
779
)
Balance as of September 30, 2025
$
3,464
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 September 30, 2025 and December 31, 2024, approximately $
0.7
million and $
0.8
million, respectively, were recorded to allowance for doubtful accounts and are included within other assets in the accompanying consolidated balance sheets.
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 $
1.5
m
illion and $
1.3
million for the three months ended September 30, 2025 and 2024, respectively, within property operating expenses, and approximately $
0.5
million and $
0.7
million for the three months ended September 30, 2025 and 2024, respectively, within general and administrative.
We incurred advertising costs of approximately $
4.3
m
illion and $
4.0
million for the nine months ended September 30, 2025 and 2024, respectively, within property operating expenses, and approximately $
1.6
million and $
1.7
million for the nine months ended September 30, 2025 and 2024, respectively, within general and administrative.
Real Estate Facilities
We capitalize costs incurred to develop, construct, renovate and improve properties, including interest and property taxes incurred during the construction period. The construction period begins when expenditures for the real estate assets have been made and activities that are necessary to prepare the asset for its intended use are in progress. The construction period ends when the asset is substantially complete and ready for its intended use.
Depreciation of Real Property Assets
Our management is required to make subjective assessments as to the useful lives of our depreciable assets. We consider the period of future benefit of the asset to determine the appropriate useful lives.
22
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
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
30
-
40 years
Site Improvements
7
-
10 years
Depreciation of Personal Property Assets
Personal property assets consist primarily of furniture, fixtures and equipment and are depreciated on a straight-line basis over the estimated useful lives, generally ranging from
3
to
5 years
, and are included in other assets on our consolidated balance sheets.
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 September 30, 2025, the gross amount of the intangible assets was approximately $
99.6
million, and accumulated amortization was approximately $
86.2
million. As of December 31, 2024, the gross amount of the intangible assets was approximately $
86.4
million, and accumulated amortization was approximately $
79.6
million.
The total estimated future amortization expense related to intangible assets for the years ending December 31, 2025, 2026, 2027, 2028, and thereafter is approximately $
3.2
million, $
9.0
million, $
0.5
million, $
0.1
million, and $
0.6
million thereafter, respectively. The weighted-average amortization period on our remaining intangible assets with a net book value of approximately $
13.4
million was approximately
10.5
months as of September 30, 2025.
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 September 30, 2025 the gross amount of debt issuance costs related to our revolving credit facility totaled
approximately $
8.3
million and accumulated amortization
of debt issuance costs related to our revolving credit facility totaled approximately $
4.3
million. As of December 31, 2024, the gross amount of debt issuance costs related to our revolving credit facility
totaled approximately $
9.4
million
, and accumulated amortization
of debt issuance costs related to our revolving credit facility totaled approximately $
2.6
million.
As of September 30, 2025, the gross amount allocated to debt issuance costs related to non-revolving debt totaled approximately
$
7.4
million and accumulated amortization of debt issuance costs related to non-revolving debt totaled approximately
$
3.0
million. As of December 31, 2024, the gross amount allocated to debt issuance costs related to non-revolving debt totaled approximately $
6.4
million and accumulated amortization of debt issuance costs related to non-revolving debt totaled approximately $
3.0
million.
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) along with transactions denominated in a currency other than the functional
23
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
currency
and represented a gain of approximately $
4.4
million and $
0.2
million for the three months ended September 30, 2025 and 2024, respectively, and represented a gain of approximately $
8.0
million and a loss of approximately $
1.5
million for the nine months ended September 30, 2025 and 2024, respectively.
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 could become redeemable should be presented as redeemable when such amount is known. Therefore, the net proceeds from the distribution reinvestment plan were considered to be temporary equity and were previously presented as redeemable common stock in the accompanying consolidated balance sheets.
In addition, the accounting guidance required, among other things, that financial instruments that represented a mandatory obligation of us to repurchase shares be classified as liabilities and reported at settlement value. When we determined that we had a mandatory obligation to repurchase shares under the SRP, we reclassified such obligations from temporary equity to a liability based upon their respective settlement values.
See Note 12 – Commitments and Contingencies for additional information on our SRP.
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
The Company maintains its own retirement savings plan under Section 401(k) of the Internal Revenue Code, as amended (the "Code"), under which eligible employees can contribute up to
100
% of their annual salary, subject to a statutory prescribed annual limit. The Company matches
100
% on contributions up to the first
4
% of an employee’s compensation.
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:
•
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access;
24
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
•
Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as interest rates and yield curves that are observable at commonly quoted intervals; and
•
Level 3 inputs are unobservable inputs for the assets or liabilities that are typically based on an entity’s own assumptions as there is little, if any, related market activity.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the fair value measurement will fall within the lowest level that is significant to the fair value measurement in its entirety.
The accounting guidance for fair value measurements and disclosures provides a framework for measuring fair value and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In determining fair value, we will utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment will be necessary to interpret Level 2 and 3 inputs in determining fair value of our financial and non-financial assets and liabilities. Accordingly, there can be no assurance that the fair values we will present will be indicative of amounts that may ultimately be realized upon sale or other disposition of these assets.
Financial and non-financial assets and liabilities measured at fair value on a non-recurring basis in our consolidated financial statements consist of real estate and related liabilities assumed related to our acquisitions along with the assets and liabilities described in Note 3 – Real Estate. 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 September 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 September 30, 2025 and December 31, 2024 (in thousands):
September 30, 2025
December 31, 2024
Fair Value
Carrying Value
Fair Value
Carrying Value
Fixed Rate Secured Debt
$
1,034,100
$
1,034,219
$
531,400
$
554,348
25
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
During the nine months ended September 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 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 September 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 September 30, 2025 and December 31, 2024, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):
Fair Value Measurements at September 30, 2025 Using
Description
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant unobservable Inputs
(Level 3)
Foreign Currency Hedges
Other assets
$
—
$
32
$
—
Accounts payable and accrued liabilities
$
—
$
123
$
—
Fair Value Measurements at December 31, 2024 Using
Description
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant unobservable Inputs
(Level 3)
Interest Rate Derivatives
Other assets
$
—
$
1,523
$
—
Accounts payable and accrued liabilities
$
—
$
6,591
$
—
Foreign Currency Hedges
Other assets
$
—
$
4,667
$
—
Accounts payable and accrued liabilities
$
—
$
39
$
—
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.
26
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
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.
For derivatives designated as net investment hedges, the effective portion of changes in the fair value of the derivatives are reported in accumulated other comprehensive loss. The ineffective portion of the change in fair value of the derivatives is recognized in Other, net, within our consolidated statements of operations. Amounts are reclassified out of other comprehensive income (loss) (“
OCI”) into earnings (loss) when the hedged net investment is either sold or substantially liquidated.
Income Taxes
We made an election to be taxed as a Real Estate Investment Trust (“REIT”), under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (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
90
% of the REIT’s taxable income to stockholders (which is computed without regard to the dividends paid deduction or net capital gains and which does not equal net income as calculated in accordance with GAAP).
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.
27
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
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 September 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.
Concentration
No single self storage customer represents a significant concentration of our revenues. For the nine months ended September 30, 2025, approximately
21
%,
21
%, and
9
% of our rental income was concentrated in California, Florida, and the Greater Toronto Area of Canada, respectively. Our properties within the aforementioned geographic areas are dispersed therein, operating in multiple different regions and sub-markets.
Segment Reporting
Our business is composed of
two
reportable segments: (i) self storage operations and (ii) the Managed REIT Platform business. Please see Note 9 – Segment Disclosures for additional detail.
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.
Per Share Data
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.
28
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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
September 30,
For the Nine Months Ended
September 30,
2025
2024
2025
2024
Net income (loss)
$
5,548
$
(
3,392
)
$
(
4,706
)
$
(
5,735
)
Net (income) loss attributable to
noncontrolling interests
(
321
)
314
377
405
Net income (loss) attributable to
SmartStop Self Storage REIT, Inc.
5,227
(
3,078
)
(
4,329
)
(
5,330
)
Less: Accretion - preferred equity costs
—
—
(
3,644
)
—
Less: Distributions to preferred
stockholders
—
(
3,142
)
(
3,567
)
(
9,358
)
Less: Distributions to participating
securities
(
171
)
(
113
)
(
458
)
(
340
)
Net income (loss) attributable to
common stockholders - basic:
5,056
(
6,333
)
(
11,998
)
(
15,028
)
Net income (loss) attributable to
common stockholders - diluted:
$
5,056
$
(
6,333
)
$
(
11,998
)
$
(
15,028
)
Weighted average common shares
outstanding:
Average number of common
shares outstanding- basic
55,097,961
24,119,247
44,625,950
24,173,519
Unvested LTIP Units
—
—
—
—
Unvested restricted stock awards
247,702
—
—
—
Average number of common
shares outstanding - diluted
55,345,663
24,119,247
44,625,950
24,173,519
Earnings per common share:
Basic
$
0.09
$
(
0.26
)
$
(
0.27
)
$
(
0.62
)
Diluted
$
0.09
$
(
0.26
)
$
(
0.27
)
$
(
0.62
)
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
September 30,
For the Nine Months Ended
September 30,
2025
2024
2025
2024
Equivalent Shares
(if converted)
Equivalent Shares
(if converted)
Equivalent Shares
(if converted)
Equivalent Shares
(if converted)
Class A and Class A-1 OP Units
3,407,954
3,311,340
3,391,728
3,300,315
Unvested LTIP Units
153,087
100,891
109,612
89,150
Unvested restricted stock awards
—
7,569
135,503
5,603
Series A Convertible Preferred Stock
—
4,690,432
1,597,839
4,690,432
3,561,041
8,110,232
5,234,682
8,085,500
29
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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. Real Estate
The following summarizes the activity in real estate facilities during the nine months ended September 30, 2025 (in thousands):
Real estate
Balance at December 31, 2024
$
2,091,196
Impact of foreign exchange rate
changes and other
3,381
Improvements and additions
11,611
Acquisitions
303,992
Balance at September 30, 2025
$
2,410,180
Accumulated depreciation
Balance at December 31, 2024
$
(
305,132
)
Depreciation expense
(
45,712
)
Impact of foreign exchange rate
changes and other
1,055
Balance at September 30, 2025
$
(
349,789
)
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 $
35.9
million, plus closing costs. This acquisition was funded with proceeds drawn from the 2025 KeyBank Acquisition Facility.
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 $
38.6
million, plus closing costs. This acquisition was funded with proceeds drawn from the 2025 KeyBank Acquisition Facility.
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 $
7.9
million, plus closing costs. This acquisition was funded with proceeds drawn from the Credit Facility.
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 $
29.1
million,
plus closing costs. This acquisition was partially funded with proceeds drawn from the Credit Facility. In connection with this acquisition, we
30
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
assumed
a loan from the seller in the amount of approximately $
24.5
million CAD or approximately $
17.7
million USD on the date of close, (the "Kelowna Canadian Property Loan"). Please see Note 5 – Debt for additional information.
On May 29, 2025, we purchased a self storage facility located in Lakewood, Colorado (the "Lakewood II Property"). The purchase price for the Lakewood II Property was approximately $
12.7
million, plus closing costs. This acquisition was funded with proceeds drawn from the Credit Facility.
On June 17, 2025, we purchased a portfolio of
five
self storage facilities located in Houston, Texas. The combined purchase price for these five properties was approximately $
108.1
million, plus closing costs. This acquisition was funded with proceeds from the 2028 Canadian Notes. In connection with the acquisition of this portfolio, we assumed a mortgage loan on
one
of the properties from the seller in the amount of approximately $
8.8
million, (the "Houston Property Loan"). Please see Note 5 – Debt for additional information.
On August 26, 2025, we purchased a portfolio of
five
self storage facilities located in Alberta, Canada. The combined purchase price for these five properties was approximately $
97.4
million CAD or approximately $
70.3
million USD on the date of close, plus closing costs. This acquisition was funded with proceeds drawn from the Credit Facility.
On September 3, 2025, we purchased a self storage facility located in Rahway, New Jersey (the "Rahway Property"). The purchase price for the Rahway Property was approximately $
15.3
million, plus closing costs. This acquisition was funded with proceeds drawn from the Credit Facility.
The following table summarizes the purchase price allocations for the real estate related assets acquired during the nine months ended September 30, 2025 (in thousands):
Acquisition
Acquisition
Date
Occupancy Upon Acquisition
(1)
Real Estate
Assets
Intangibles
Total
(2)
2025
Revenue
(3)
Hillside
1/7/2025
89
%
$
34,556
$
1,388
$
35,944
$
1,824
Clifton
1/7/2025
93
%
37,072
1,575
38,647
2,152
Murfreesboro
(4)
2/20/2025
89
%
7,578
329
7,907
451
Kelowna
4/15/2025
88
%
27,445
762
28,207
707
Lakewood II
5/29/2025
87
%
12,242
507
12,749
401
Holzwarth Rd, Houston
6/17/2025
82
%
14,525
744
15,269
431
Holcombe Blvd, Houston
6/17/2025
92
%
35,835
1,686
37,521
884
Louetta Rd, Houston
6/17/2025
88
%
19,141
872
20,013
507
FM 2978, Houston
6/17/2025
83
%
13,867
643
14,510
381
Shenandoah, Houston
6/17/2025
88
%
19,603
910
20,513
504
Edmonton, Alberta
8/26/2025
68
%
9,373
346
9,719
71
Sherwood Park, Alberta
8/26/2025
72
%
11,349
455
11,804
87
Red Deer, Alberta
8/26/2025
72
%
13,232
550
13,782
100
Canmore, Alberta
8/26/2025
86
%
20,202
859
21,061
169
Cochrane, Alberta
8/26/2025
69
%
13,372
632
14,004
117
Rahway
9/3/2025
94
%
14,600
728
15,328
104
$
303,992
$
12,986
$
316,978
$
8,890
(1)
Represents the approximate occupancy percentage of the property at the time of acquisition.
(2)
The allocation noted above is based on a determination of the relative fair value of the total consideration and represents the amount paid including capitalized acquisition costs, as applicable.
(3)
The operating results of the self storage properties acquired have been included in our consolidated statements of operations since their acquisition dates.
(4)
T
his property was sold to SST X on October 30, 2025 for approximately $
7.9
million. Please see Note 14 – Subsequent Events for additional detail.
31
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Potential Acquisitions
As of November 7, 2025, we, through our wholly-owned subsidiaries, were party to
five
purchase and sale agreements with unaffiliated third parties for the acquisition of
three
self storage facilities and
four
development sites located in the United States and Canada. The total purchase price for these properties and parcels of land is approximately $
43.4
million, plus closing costs. If we fail to acquire these properties or parcels of land, in addition to the incurred acquisition costs, we may also forfeit earnest money of approximately $
0.7
million as a result.
We may assign some or all of the above purchase and sale agreements to one or more of our Managed REITs and/or contribute such property to a joint venture.
Eminent Domain
In May 2025, we learned that
two
of our self storage properties in Asheville, North Carolina, the Asheville III and Asheville IV properties, may be impacted by the current plan for an extensive and prolonged highway expansion project. We are in the preliminary stages of evaluating the impact that this project may have on these two properties, including how much of each property may be taken.
The aggregate rentable square feet and carrying value of these properties as of September 30, 2025, was approximately
115,000
square feet and $
15.9
million, respectively. We will continue to work with the authorities and their representatives to further understand the impact to our properties, attempt to mitigate the impact to us and our tenants, and as needed, negotiate the fair value of any property that may ultimately be taken. We do not expect the taking to have a material impact on our results of operations and we evaluated these properties for impairment, concluding that as of September 30, 2025 there continues to be
no
impairment. The total revenue for the Asheville III and Asheville IV properties for the nine months ended September 30, 2025 was approximately $
0.8
million and $
0.7
million, respectively.
32
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Note 4. Investments in Unconsolidated Real Estate Ventures
Nantucket Joint Venture
On July 18, 2024, we entered into a joint venture arrangement with an unaffiliated third party to develop a self storage property in Nantucket, Massachusetts (the "Nantucket Joint Venture"). On such date we agreed to purchase an indirect minority ownership in the property, and immediately funded approximately $
4.9
million. We will be the property manager of the self storage property when it opens. This investment is accounted for pursuant to the equity method of accounting as we have the ability to exercise influence but not control.
On April 11, 2025, we funded an additional approximately $
0.3
million, which represented the remaining unfunded capital commitment in connection with this joint venture arrangement.
On September 2, 2025, we executed an addendum to our subscription agreement related to the Nantucket Joint Venture to increase our ownership in the property. In connection therewith, we made an additional capital contribution of approximately $
0.6
million.
As of September 30, 2025, and December 31, 2024, the carrying value of this investment was approximately $
7.0
million and $
6.0
million, respectively. As of September 30, 2025, such investment represented an approximately
42
% minority ownership of the property.
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
50
% owner and SmartCentres as the other
50
% owner of a joint venture subsidiary,
we own 12 joint venture properties, ten of which were operational as of September 30, 2025.
For the three months ended September 30, 2025 and 2024, we recorded net aggregate loss of approximately $
0.1
million and $
0.4
million respectively, from our equity in earnings related to our unconsolidated real estate ventures in Canada.
For the nine months ended September 30, 2025 and 2024, we recorded net aggregate loss of approximately $
0.4
million and $
1.1
million respectively, from our equity in earnings related to our unconsolidated real estate ventures in Canada.
The following table summarizes our
50
% ownership interests in investments in unconsolidated real estate ventures in Canada (the “Canadian JV Properties”) (in thousands):
Canadian JV Property
Date Real Estate Venture Became Operational
Carrying Value
of Investment as of
September 30, 2025
Carrying Value
of Investment as of
December 31, 2024
Dupont
(1)(6)
October 2019
$
3,305
$
3,358
East York
(2)(6)
June 2020
5,025
4,945
Brampton
(2)(6)
November 2020
1,507
1,533
Vaughan
(2)(6)
January 2021
1,980
2,019
Oshawa
(2)(6)
August 2021
835
938
Scarborough
(2)(5)
November 2021
1,981
1,969
Aurora
(1)(5)
December 2022
1,768
1,935
Kingspoint
(2)(5)
March 2023
3,247
3,299
Whitby
(4)
January 2024
7,896
7,661
Markham
(1)(7)
May 2024
2,493
2,470
Regent
(3)
Under Development
3,675
2,655
Allard
(8)
Under Development
1,187
—
$
34,899
$
32,782
33
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
(1)
These joint venture properties were acquired through our merger with Strategic Storage Growth Trust II, Inc., which closed on June 1, 2022.
(2)
These joint venture properties were acquired through our merger with Strategic Storage Trust IV, Inc., which closed on March 17, 2021.
(3)
This property was occupied pursuant to a single tenant industrial lease until October 2024. The property is under development to become a self storage facility.
(4)
This property was acquired on January 12, 2023 in connection with a purchase agreement assumed in our merger with
Strategic Storage Growth Trust II, Inc., which closed on June 1, 2022.
(5)
These properties are encumbered by first mortgages pursuant to the RBC JV Term Loan II (defined below).
(6)
These properties are encumbered by first mortgages pursuant to the RBC JV Term Loan (defined below).
(7)
This property is encumbered by a first mortgage pursuant to the SmartCentres Financings (defined below).
(8)
On August 12, 2025, we acquired this joint venture parcel of land in Edmonton, Alberta, Canada, with SmartCentres, and intend to develop it into a self storage property.
As of September 30, 2025, we had ownership interests in the 12 Canadian JV Properties, and
one
unconsolidated real estate development project in Nantucket, Massachusetts, the Nantucket Joint Venture (collectively, the "JV Properties").
RBC JV Term Loan II
On July 17, 2024, three of our joint ventures with SmartCentres closed on a $
46.0
million CAD term loan (the “RBC JV Term Loan II”) with Royal Bank Canada ("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”). The RBC JV Term Loan II was secured by first mortgages on three of the Canadian JV Properties which were previously encumbered by the SmartCentres Financings. The maturity date of the RBC JV Term Loan II was
November 3, 2025
. Interest on the RBC JV Term Loan was a fixed annual rate of
4.97
%, and payments were interest only during the term of the loan.
We and SmartCentres each served as a full recourse guarantor with respect to
50
% of the secured obligations under the RBC JV Term Loan II. The RBC JV Term Loan II contained certain customary representations and warranties, affirmative, negative and financial covenants, and events of default. Pursuant to the terms of the RBC JV Term Loan II, a failure by either us or SmartCentres to observe any negative covenant under each of our respective (and separate) credit facilities (“Separate Credit Facilities”) would be an event of default under the RBC JV Term Loan II. We and SmartCentres entered into a separate Cross-Indemnity Agreement pursuant to 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 II or the Separate Credit Facilities.
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 $
46.4
million CAD or approximately $
34.1
million USD under the SmartCentres Financings for each of the three Canadian JV Properties.
As of September 30, 2025, there was approximately $
46.0
million CAD or approximately $
33.1
million USD outstanding on the RBC JV Term Loan II.
The RBC JV Term Loan II was refinanced on October 31, 2025. See Note 14 – Subsequent Events, of the Notes to the Consolidated Financial Statements contained in this report for additional information.
RBC JV Term Loan
On November 3, 2023, five of our joint ventures with SmartCentres closed on a $
70
million CAD term loan (the “RBC JV Term Loan”) with 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”). The RBC JV Term Loan was secured by first mortgages on five of the Canadian JV Properties which were previously encumbered by the SmartCentres Financings (as defined below). The maturity date of the RBC JV Term Loan was
November 2, 2025
. Interest on the RBC JV Term Loan was a fixed annual rate of
6.21
%, and payments were interest only during the term of the loan.
34
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
We and SmartCentres each served as a full recourse guarantor with respect to
50
% of the secured obligations under the RBC JV Term Loan. The RBC JV Term Loan contains certain customary representations and warranties, affirmative, negative and financial covenants, and events of default. Pursuant to the terms of the RBC JV Term Loan, a failure by either us or SmartCentres to observe any negative covenant under each of our Separate Credit Facilities would be an event of default under the RBC JV Term Loan; in addition, certain actions by either us or SmartCentres may trigger an event of default under the RBC JV Term Loan. We and SmartCentres entered into a separate Cross-Indemnity Agreement pursuant to 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 $
68.9
million CAD under the SmartCentres Financings (as defined below) for each of the five Canadian JV Properties.
As of September 30, 2025, $
70.0
million CAD or approximately $
50.3
million in USD, was outstanding on the RBC JV Term Loan.
The RBC JV Term Loan was refinanced on October 31, 2025. See Note 14 – Subsequent Events, of the Notes to the Consolidated Financial Statements contained in this report for additional information.
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 p
reviously 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 $
34.3
million CAD (the “SmartCentres Loan II”) (collectively with SmartCentres Loan I, the “SmartCentres Financings”). The borrowers under the SmartCentres Loan II are the joint venture entities in which we (SSGT II prior to June 1, 2022), and SmartCentres each hold a
50
% limited partnership interest with respect to the Dupont and Aurora joint venture properties. In connection with the SmartCentres Loan II assumption, we became a recourse guarantor for
50
% of the SmartCentres Financings.
On September 13, 2022, the Markham Property was added to the MMCA II, increasing the available capacity.
The SmartCentres Loan I and SmartCentres Loan II have an accordion feature such that borrowings pursuant thereto may be increased up to approximately $
120
million CAD each, subject to certain conditions set forth in the MMCA I and MMCA II agreements. Additionally, pursuant to the MMCA I and MMCA II agreements, the collective borrowings between all SmartCentres Financings, and loans made by the SmartCentres Lender to our affiliates, are limited to an overall combined capacity of $
120
million CAD.
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
70
% with respect to each Canadian JV Property) and events of default, all as set forth in the MMCA I and MMCA II. We serve as a full recourse guarantor with respect to
50
% of the SmartCentres Financings. As of September 30, 2025, the joint ventures were in compliance with all such covenants.
35
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
On July 17, 2024, three of our joint ventures with SmartCentres closed on a $
46.0
million CAD term loan 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 JV Term Loan II is secured by first mortgages on three of the Canadian JV Properties which were previously encumbered by the SmartCentres Financings. The net proceeds from such loan were used to fully repay the allocated loan amounts of approximately $
46.4
million CAD or approximately $
34.1
million USD under the SmartCentres Financings for each of the three Canadian JV Properties.
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 September 30, 2025, the total interest rate was approximately
5.6
%.
As of September 30, 2025, approximately $
18.8
million CAD or approximately $
13.5
million in USD, was outstanding on the SmartCentres Financings. As of December 31, 2024, approximately $
18.7
million CAD or approximately $
13.0
million USD was outstanding on the SmartCentres Financings. The proceeds of the SmartCentres Financings have been and will generally be used to finance the acquisition, development, and construction of the Canadian JV Properties.
On October 31, 2025, we fully paid down the outstanding principal and interest due on the SmartCentres Financings. See Note 14 – Subsequent Events, of the Notes to the Consolidated Financial Statements contained in this report for additional information.
Note 5. Debt
Our debt is summarized as follows (in thousands):
Loan
September 30,
2025
December
31,
2024
Interest
Rate
Maturity
Date
KeyBank CMBS Loan
(1)
$
87,835
$
89,240
3.89
%
8/1/2026
Ladera Office Loan
3,661
3,736
4.29
%
11/1/2026
Credit Facility
11,826
614,831
5.74
%
2/22/2027
2027 Ladera Ranch Loan
42,000
42,000
5.00
%
12/5/2027
2028 Canadian Notes
(5)
359,250
—
3.91
%
6/16/2028
Kelowna Canadian Property Loan
17,376
—
3.45
%
9/30/2028
2028 Canadian Term Loan
(5) (7)
79,035
76,527
6.41
%
12/1/2028
CMBS Loan
(3)
104,000
104,000
5.00
%
2/1/2029
SST IV CMBS Loan
(4)
40,500
40,500
3.56
%
2/1/2030
2030 Canadian Notes
(5)
143,700
—
3.89
%
9/24/2030
2032 Private Placement Notes
(8)
150,000
150,000
5.28
%
4/19/2032
Houston Property Loan
8,774
—
5.15
%
5/1/2034
2027 NBC Loan
(5)
(6)
—
51,425
2025 KeyBank Acquisition Facility
—
100,200
KeyBank Florida CMBS Loan
(2)
—
49,915
Discount on secured debt, net
(
1,912
)
(
1,570
)
Debt issuance costs, net
(
4,384
)
(
3,369
)
Total debt
$
1,041,661
$
1,317,435
(1)
This fixed rate loan encumbers
29
properties
(Whittier, La Verne, Santa Ana, Upland, La Habra, Monterey Park, Huntington Beach, Chico, Lancaster I, Riverside, Fairfield, Lompoc, Santa Rosa, Federal Heights, Aurora, Littleton, Bloomingdale, Crestwood, Forestville, Warren I, Sterling Heights, Troy, Warren II, Beverly, Everett, Foley, Tampa, Boynton Beach, and Lancaster II) with monthly interest only payments until September 2021, at
36
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
which
time both interest and principal payments became due monthly. The separate assets of these encumbered properties are not available to pay our other debts, and we serve as a non-recourse guarantor under this loan.
(2)
On February 4, 2025, we completed a series of transactions whereby we (i) defeased this loan (the “Defeasance”), and (ii) exercised the accordion rights under the Credit Facility to increase commitments by $
50
million to a total of $
700
million and simultaneously drew approximately $
51
million.
(3)
This fixed rate, interest only loan encumbers
10
properties (Myrtle Beach I, Myrtle Beach II, Port St. Lucie, Plantation, Sonoma, Las Vegas I, Las Vegas II, Las Vegas III, Ft Pierce, and Nantucket Island). The separate assets of these encumbered properties are not available to pay our other debts, and we serve as a non-recourse guarantor under this loan.
(4)
On March 17, 2021, in connection with the SST IV Merger, we assumed a $
40.5
million fixed rate CMBS financing with KeyBank as the initial lender pursuant to a mortgage loan (the “SST IV CMBS Loan”). This fixed rate loan encumbers
seven
properties owned by us (Jensen Beach, Texas City, Riverside, Las Vegas IV, Puyallup, Las Vegas V, and Plant City). The separate assets of these encumbered properties are not available to pay our other debts,
and we serve as a non-recourse guarantor under this loan
. The loan has a maturity date of
February 1, 2030
. Monthly payments due under the loan agreement (the “SST IV CMBS Loan Agreement”) are interest only, with the full principal amount becoming due and payable on the maturity date.
(5)
The amounts shown above are in USD based on the foreign exchange rate in effect as of the date presented.
(6)
This loan incurred interest at an all in rate of CORRA (as defined further below under the section entitled "2027 NBC Loan"), plus a CORRA adjustment of approximately
0.30
%, plus a spread of
2.20
%. The effective interest rate on this loan was
6.42
% when factoring the effects of a CORRA Swap which we entered into with the National Bank of Canada for the initial term of the loan. The Dufferin, Oakville II, Burlington II, Iroquois Shore Rd, and Stoney Creek I properties were encumbered by this loan. See Note 7
– Derivative Instruments for additional informati
on.
This loan was fully paid off on June 16, 2025 with proceeds from the 2028 Canadian Notes offering, as described below.
(7)
On November 16, 2023, we, through eight of our wholly-owned Canadian subsidiaries entered into a term loan (the "2028 Canadian Term Loan") with affiliates of QuadReal Finance LP, receiving net proceeds of $
110.0
million CAD on such date. The 2028 Canadian Term Loan is secured by eight Canadian properties, has a maturity date of
December 1, 2028
, and carries a fixed interest rate for the term of the loan of
6.41
%. The first two years of the Canadian Term Loan are interest only, after which it requires monthly amortizing payments based on a
25-year
amortization schedule.
(8)
Subsequent to September 30, 2025, the Total Leverage Ratio Event had ended, and the interest rate reverted to
4.53
% as of October 1, 2025.
The weighted average interest rate on our consolidated debt, excluding the impact of our interest rate hedging activities, as of September 30, 2025 and December 31, 2024 was approximately
4.5
% and
5.9
%, respectively. We are subject to certain restrictive covenants, relating to the outstanding debt, and as of September 30, 2025, we were in compliance with all such covenants.
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 $
8.8
million, (the "Houston Property Loan"). The Houston Property Loan incurs interest at a fixed rate of
5.15
% and principal payments are required
on a
25 year
amortization schedule. The loan is due in full on
May 1, 2034
. We provided a full recourse guaranty to N
ational Western Life Insurance Company, the lender, in connection with this loan, until certain physical occupancy and rental revenue thresholds are met for three consecutive months, after which time the guaranty will become a limited-recourse guaranty.
2028 Canadian Notes
On June 11, 2025, we, as guarantor, and the Operating Partnership, as issuer, sold on a private placement basis in Canada, an aggregate principal amount of $
500
million
CAD senior unsecured notes which incur interest only at a fixed rate
37
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
of
3.91
%, and becomes due on
June 16, 2028
(the “2028 Canadian Notes”).
The 2028 Canadian Notes were offered pursuant to an agency agreement entered into among us, the Operating Partnership, the Subsidiary Guarantors (defined below), BMO Nesbitt Burns Inc., National Bank Financial Inc., Scotia Capital Inc. and RBC Dominion Securities Inc. The sale and purchase of the 2028 Canadian Notes occurred on June 16, 2025.
The 2028 Canadian Notes were issued pursuant to an indenture (the “Base Indenture”) among us, the Operating Partnership and Computershare Trust Company of Canada (the “Trustee”), as amended and supplemented by a first supplemental indenture to the Base Indenture among us, the Operating Partnership and the Subsidiary Guarantors (the “First Supplemental Indenture” and together with the Base Indenture, the “First Indenture”).
The 2028 Canadian Notes bear interest at a rate of approximately
3.91
% per annum, payable semiannually on June 16 and December 16 in each year, beginning on December 16, 2025, until maturity.
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
0.28
%, on the business day prior to the date on which the Operating Partnership gives notice of redemption. In addition, upon a change of control triggering event, the Operating Partnership is required to offer to prepay the 2028 Canadian Notes at a repurchase price in cash equal to
101
% of the principal amount of the 2028 Canadian Notes plus accrued and unpaid interest thereon. For clarity, holders who accept an offer to repurchase their notes upon a change of control triggering event shall not be entitled to the Canada Yield Price or any other amount in excess of the repurchase price.
The First Indenture contains certain customary representations and warranties, affirmative, negative and financial covenants, and events of default. In addition, if an event of default occurs and is continuing, the trustee may, in its discretion, and will, upon receiving instruction from the holders of
25
% in aggregate principal amount of the outstanding 2028 Canadian Notes, accelerate the maturity of the 2028 Canadian Notes, including any accrued and unpaid interest, provided that holders of more than
50
% of the principal amount of the 2028 Canadian Notes will have the right to waive certain of the events of default and/or annul the declaration made by the Trustee to accelerate the maturity of the 2028 Canadian Notes.
The 2028 Canadian Notes were issued on a
pari passu
basis with our existing Credit Facility (as defined below) with KeyBank, our 2030 Canadian Notes (as defined below), the 2032 Private Placement Notes (as defined below), and as such, we and each of our subsidiaries that have incurred or guaranteed indebtedness (the “Subsidiary Guarantors”) under such loans have fully and unconditionally guaranteed the Operating Partnership’s obligations under the 2028 Canadian Notes. The First Indenture requires any of our subsidiaries that incurs or guarantees indebtedness under the other
pari passu
loans in the future to also provide a note guarantee in favor of the holders of the 2028 Canadian Notes.
In connection with the closing of the 2028 Canadian Notes offering, we used approximately $
1.7
million CAD of the net proceeds to pay for transaction costs related to the 2028 Canadian Notes, $
73.5
million CAD of the net proceeds to fully repay the principal and accrued interest outstanding on the 2027 NBC Loan (as defined below), and approximately $
1.7
million CAD of the net proceeds for the early termination of a CORRA Swap. We converted the balance of the approximately $
423.1
million CAD of the net proceeds through an FX spot trade on June 16, 2025 and received approximately $
311.4
million USD. We paid down $
200.0
million on the Credit Facility, used approximately $
97.2
million to fund the acquisition of a portfolio of
five
self storage facilities in Houston, Texas on June 17, 2025, and retained approximately $
14.2
million for general working capital purposes.
2030 Canadian Notes
On September 24, 2025, we, as guarantor, and the Operating Partnership, as issuer, sold on a private placement basis in Canada, an aggregate principal amount of $
200
million CAD senior unsecured notes which become due on
September 24, 2030
(the “2030 Canadian Notes”).
The 2030 Canadian Notes were offered pursuant to an agency agreement entered into among us, the Operating Partnership, the Subsidiary Guarantors, BMO Nesbitt Burns Inc., National Bank Financial Inc., Scotia Capital Inc. and RBC Dominion Securities Inc. The sale and purchase of the 2030 Canadian Notes occurred on September 24, 2025.
38
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
The 2030 Canadian Notes were issued pursuant to the Base Indenture, as amended and supplemented by a second supplemental indenture to the Base Indenture among us, the Operating Partnership and the Subsidiary Guarantors (the “Second Supplemental Indenture” and together with the Base Indenture, the “Second Indenture”).
The 2030 Canadian Notes bear interest at a rate of approximately
3.89
% per annum, payable semiannually on September 24 and March 24 in each year, beginning on March 24, 2026, until maturity.
The Operating Partnership will be permitted to redeem at any time all, or from time to time any part of, the 2030 Canadian Notes then outstanding at a redemption price equal to the greater of (i) 100% of the principal amount so prepaid and (ii) the Canada Yield Price, together in each case, with accrued and unpaid interest, if any, to the date fixed for redemption. The “Canada Yield Price” means a price equal to the price of a note calculated to provide a yield to the maturity date, compounded semi-annually and calculated in accordance with generally accepted financial practice, equal to the government of Canada yield plus
0.28
%, on the business day prior to the date on which the Operating Partnership gives notice of redemption. In addition, upon a change of control triggering event, the Operating Partnership is required to offer to prepay the 2030 Canadian Notes at a repurchase price in cash equal to
101
% of the principal amount of the 2030 Canadian Notes plus accrued and unpaid interest thereon. For clarity, holders who accept an offer to repurchase their notes upon a change of control triggering event shall not be entitled to the Canada Yield Price or any other amount in excess of the repurchase price.
The Second Indenture contains certain customary representations and warranties, affirmative, negative and financial covenants, and events of default. In addition, if an event of default occurs and is continuing, the trustee may, in its discretion, and will, upon receiving instruction from the holders of
25
% in aggregate principal amount of the outstanding 2030 Canadian Notes, accelerate the maturity of the 2030 Canadian Notes, including any accrued and unpaid interest, provided that holders of more than
50
% of the principal amount of the 2030 Canadian Notes will have the right to waive certain of the events of default and/or annul the declaration made by the Trustee to accelerate the maturity of the 2030 Canadian Notes.
The 2030 Canadian Notes were issued on a
pari passu
basis with our existing Credit Facility (as defined below) with KeyBank, our 2028 Canadian Notes, the 2032 Private Placement Notes (as defined below), and as such, we and the Subsidiary Guarantors under such loans have fully and unconditionally guaranteed the Operating Partnership’s obligations under the 2030 Canadian Notes. The Second Indenture requires any of our subsidiaries that incurs or guarantees indebtedness under the other
pari passu
loans in the future to also provide a note guarantee in favor of the holders of the 2030 Canadian Notes.
In connection with the closing of the 2030 Canadian Notes offering, we used approximately $
199.2
million CAD or approximately $
143.4
million USD of net proceeds after fees and other costs to pay down our Credit Facility.
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 $
24.5
million CAD or approximately $
17.7
million USD, (the "Kelowna Canadian Property Loan"). The Kelowna Canadian Property Loan incurs interest at a fixed rate of
3.45
% with amortizing principal payments based on a
25 year
amortization schedule, with a maturity of
September 30, 2028
. We provided a full recourse guaranty to National Bank of Canada, the lender, in connection with this loan.
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 $
42.0
million (the "2027 Ladera Ranch Loan"). The loan is interest only with a fixed rate of
5.0
% per annum, has a maturity date of
December 5, 2027
, and is secured by the Ladera Ranch Property. We also provided a non-recourse guaranty to Extra Space Storage LP in connection with this loan.
See Note 6 – Preferred Equity, for additional information regarding our other then pre-existing relationship with this seller/lender.
39
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
2025 KeyBank Acquisition Facility
On November 19, 2024, we entered into a credit agreement with KeyBank with a maximum total commitment of $
175
million (the "2025 KeyBank Acquisition Facility"). Upon the closing of the 2025 KeyBank Acquisition Facility, we immediately borrowed approximately $
15
million, which was used to fund the acquisition of
a
self storage facility. In December 2024, we borrowed an additional approximately $
85.2
million, which was used to fund the acquisition of
three
self storage facilities.
In January of 2025, we borrowed an additional approximately $
74.8
million, which was used to fund the acquisition of
two
self storage facilities. As such, the maximum commitment of $
175
million was borrowed, and no further draws could be made in connection with the credit agreement.
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
275
basis points over Adjusted Daily Simple SOFR.
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 $
650
million. The Borrower may increase the commitment amount available under the Credit Facility by an additional $
850
million, for a total potential maximum aggregate amount of $
1.5
billion, subject to certain conditions. On February 4, 2025, we exercised the accordion rights under the Credit Facility to increase commitments by $
50
million to a total of $
700
million. The Credit Facility also includes sublimits of (a) up to $
25
million for letters of credit and (b) up to $
25
million for swingline loans; each of these sublimits are part of, and not in addition to, the amounts available under the Credit Facility. Borrowings under the Credit Facility may be in either USD or CAD. Upon the closing of the Credit Facility, we immediately drew down an aggregate amount of $
576
million, which was used primarily to pay off the amounts outstanding under the Credit Facility.
The maturity date of the Credit Facility is
February 22, 2027
, subject to a
one-year
extension option, subject to the payment of an extension fee of
0.20
% on the aggregate amount of the then-outstanding revolving commitments for such extension, and it may be prepaid or terminated at any time without penalty; provided, however, that the lenders shall be indemnified for certain breakage costs.
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 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),
165
basis points to
230
basis points for Daily Simple SOFR Loans, Term SOFR Loans and CORRA Loans and between
65
basis points and
130
basis points for Base Rate Loans, in each case of this clause (i), depending on the consolidated leverage ratio of the Company and (ii) following a Security Interest Termination Event,
140
basis points to
225
basis points for Daily Simple SOFR Loans, Term SOFR Loans and CORRA Loans and between
40
basis points and
125
basis
points for Base Rate Loans, in each case of this clause (ii), depending on the consolidated capitalization rate leverage
40
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
ratio
of the Company. The Credit Facility is also subject to an annual unused fee based upon the average amount of the unused portion of the Credit Facility, which varies from
15
bps to
25
bps, depending on the size of the unused amount, as well as whether a Security Interest Termination Event has occurred.
As of September 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
60
% and a maximum spread of
225
basis points on the Credit Facility. The change in our pricing grid as a result of the Security Interest Termination Event took effect as of May 1, 2025, and continued through September 30, 2025. As of September 30, 2025, our consolidated leverage ratio was within the lowest leverage tier, and this loan incurred interest at daily simple SOFR plus a spread of
1.40
% and the SOFR Index Adjustment of
0.10
%.
The Credit Facility was fully recourse, jointly and severally, to us, the Borrower, and our 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
1.50
:1.00; (ii) an unsecured interest coverage ratio of not less than
2.00
:1.00; (iii) a consolidated capitalization rate leverage ratio of not greater than
60
%; and (iv) a secured debt ratio of no greater than
40
%. Following the occurrence of the Security Interest Termination Event, certain terms and conditions of the Credit Facility are modified, including, but not limited to: (i) in certain circumstances, a reduction in the applicable rate under the Credit Facility, (ii) the modification or addition of certain financial covenants, (iii) the addition of a floor of at least $
25
million for any cross-defaulted recourse debt of us, Borrower or any Subsidiary Guarantor, and (iv) in certain circumstances, a reduction in the annual unused fee for the Credit Facility. The 2030 Canadian Notes, 2028 Canadian Notes and the 2032 Private Placement Notes are
pari passu
with the Credit Facility.
In early April 2025, we notified KeyBank and the holders of our 2032 Private Placement Notes (as defined below) 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”). 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 $
25
million for any cross-defaulted recourse debt of the Company, Borrower or any Subsidiary Guarantor, and (iv) in certain circumstances, a reduction in the annual unused fee for the Credit Facility.
The Credit Facility contains certain customary representations and warranties, affirmative, negative and financial covenants, borrowing conditions, and events of default. In particular, the financial covenants imposed on us include: a maximum leverage ratio, a minimum fixed charge coverage ratio, a minimum tangible net worth, certain limits on both secured debt and secured recourse debt, 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 $
700
million to $
600
million
. In connection with the reduction of the borrowing capacity, we recognized approximately $
0.9
million of expense. Such amount is included within Loss on debt extinguishment, and represents a proportional amount of the unamortized debt issuance costs attributable to the Credit Facility calculated based on the proportion of the reduced commitments available under the Credit Facility.
During the nine months ended September 30, 2025, we made various draws on the Credit Facility, totaling an additional $
116.0
million in order to defease the KeyBank Florida CMBS Loan, to fund the acquisition of three self storage properties, to fund loans to the Managed REIT's, and to fund other general corporate activities.
On April 4, 2025, we paid down approximately $
472.1
million on the Credit Facility, using proceeds from the Underwritten Public Offering which closed on April 3, 2025.
41
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
On June 16, 2025, we paid down an additional $
200
million on the Credit Facility, using proceeds from the issuance of the 2028 Canadian Notes offering. On June 30, 2025, we paid down an additional $
4.5
million on the Credit Facility.
During the three months ended September 30, 2025, through several draws, we borrowed an additional $
106.0
million to fund various acquisitions and make investments in our Managed REITs, and to a lesser extent, to fund other working capital requirements. On September 19, 2025, we paid down $
5.0
million on the Credit Facility. On September 26, 2025, we paid down approximately $
143.4
million on the Credit Facility, using proceeds from the issuance of the 2030 Canadian Notes offering.
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 $
75
million CAD pursuant to the 2027 NBC Loan. This loan was secured by the five properties owned by the 2027 NBC Loan Borrowers (the “Secured NBC Properties”).
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 $
55.1
million USD, and accordingly, the respective four properties were released as collateral from the Credit Facility.
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
0.30
%, plus a spread of
2.20
%.
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
6.42
% for the initial three year term of the loan. The 2027 NBC Loan required monthly amortizing principal and interest payments, which were based on a
25-year
amortization schedule. The 2027 NBC Loan could be prepaid, in whole or in part, at any time upon prior written notice to the lenders, subject to interest rate swap breakage costs. SmartStop and the 2027 NBC Loan Borrowers provided an ordinary course environmental indemnity in favor of NBC and the lenders. SmartStop served as a non-recourse guarantor, and each borrower provided a
limited recourse guaranty up to the amount of the collateral pledged by it, under the 2027 NBC Loan.
The balance of the 2027 NBC Loan of approximately $
73.3
CAD million was paid off on June 16, 2025 and the associated interest rate swap was terminated and settled with the proceeds received from the 2028 Canadian Notes. In connection with the early payoff of the 2027 NBC Loan, we recorded approximately $
0.4
million USD of net deferred debt issuance costs to loss on debt extinguishment in our consolidated statements of operations during the three months ended June 30, 2025.
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 $
150
million of
4.53
% Senior Notes due
April 19, 2032
(the “2032 Private Placement Notes”). The sale and purchase of the 2032 Private Placement Notes occurred in two closings, with the first of such closings having occurred on April 19, 2022 with $
75
million aggregate principal amount of the 2032 Private Placement Notes having been issued on such date (the “First Closing”) and the second of such closings having occurred on May 25, 2022 with $
75
million aggregate principal amount of the 2032 Private Placement Notes having been issued on such date (the “Second Closing”). Interest on each series of the 2032 Private Placement Notes is payable semiannually on the nineteenth day of April and October in each year.
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
7.00
to
1.00
(a “Total Leverage Ratio Event”).
As of March 31, 2023, such Total Leverage Ratio Event occurred, and our 2032 Private Placement Notes began accruing interest at a rate of
5.28
%. The interest accruing on the 2032 Private Placement Notes continued to accrue at 5.28% until such time as the Total Leverage Ratio is less than or equal to
7.00
to
1.00
for
two consecutive fiscal quarters, upon such
42
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
achievement,
the applicable fixed interest rate reverted to
4.53
% and will remain at that interest rate through maturity, regardless of our future Total Leverage Ratio. As of September 30, 2025 our Total Leverage Ratio was less than
7.00
to
1.00
. In accordance with the terms of the 2032 private Placement Notes, as we have maintained this ratio for a second consecutive fiscal quarter through September 30, 2025, the fixed interest rate reverted back to
4.53
% effective October 1, 2025.
We are permitted to prepay at any time all, or from time to time, any part of the Notes in amounts not less than
5
% of the 2032 Private Placement Notes then outstanding at (i) 100% of the principal amount so prepaid and (ii) the make-whole amount (as defined in the Note Purchase Agreement). The “Make-Whole Amount” is equal to the excess, if any, of the discounted value of the remaining scheduled payments with respect to the 2032 Private Placement Notes being prepaid over the amount of such 2032 Private Placement Notes. In addition, in connection with a change of control (as defined in the Note Purchase Agreement), the Operating Partnership is required to offer to prepay the 2032 Private Placement Notes at
100
% of the principal amount plus accrued and unpaid interest thereon, but without the Make Whole Amount or any other prepayment premium or penalty of any kind. The Company must also maintain a debt rating of the 2032 Private Placement Notes by a rating agency.
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 $
500
million, which consisted of a $
250
million revolving credit facility (the “Credit Facility Revolver”) and a $
250
million term loan (the “Former Credit Facility Term Loan”).
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 $
200
million. In connection with the increased commitment, additional lenders were added to the Former Credit Facility. As a result of this amendment, the aggregate commitment on the Former Credit Facility was $
700
million.
The Former Credit Facility was repaid in full on February 22, 2024 in connection with the establishment of the Credit Facility.
43
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
The following table presents the future principal payments required on outstanding debt as of September 30, 2025 (in thousands):
2025
$
792
2026
93,030
2027
55,982
2028
452,021
2029
104,289
2030 and thereafter
341,843
Total payments
1,047,957
Discount on secured debt
(
1,912
)
Debt issuance costs, net
(
4,384
)
Total
$
1,041,661
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 $
200
million in preferred shares (the aggregate shares to be purchased, the “Preferred Shares”) of our new Series A Convertible Preferred Stock (the “Series A Convertible Preferred Stock”), in one or more closings (each, a “Closing,” and collectively, the “Closings”). The initial closing (the “Initial Closing”) in the amount of $
150
million occurred on the Commitment Date, and the second and final closing in the amount of $
50
million occurred on October 26, 2020. We incurred approximately $
3.6
million in issuance costs related to the Series A Convertible Preferred Stock, which were recorded as a reduction to Series A Convertible Preferred stock on our consolidated balance sheets.
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
6.25
% per annum. The dividend rate increased by an additional
0.75
% per annum to an aggregate of
7.0
% per annum on October 29, 2024. The dividends were payable in arrears for the prior calendar quarter on or before the 15
th
day of March, June, September and December of each year.
Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of Series A Convertible Preferred Stock were entitled to receive a payment equal to the greater of (i) aggregate purchase price of all outstanding Preferred Shares, plus any accrued and unpaid dividends (the “Liquidation Amount”) and (ii) the amount that would have been payable had the Preferred Shares been converted into common stock pursuant to the terms of the Purchase Agreement immediately prior to such liquidation.
Subject to certain additional redemption rights, as described herein, we had the right to redeem the Series A Convertible Preferred Stock for cash. The amount of such redemption will be equal to the Liquidation Amount. Upon the listing of our common stock on a national securities exchange (the “Listing”), we had the right to redeem any or all outstanding Series A Convertible Preferred Stock at an amount equal to the greater of (i) the amount that would have been payable had such Preferred Shares been converted into common stock pursuant to the terms of the Purchase Agreement immediately prior to the Listing, and then all of such Preferred Shares were sold in the Listing, or (ii) the Liquidation Amount. In addition, subject to certain cure provisions, if we failed to maintain our status as a real estate investment trust, the holders of Series A Convertible Preferred Stock had the right to require us to repurchase the Series A Convertible Preferred Stock at an amount equal to the Liquidation Amount with
no
Premium Amount.
Subject
to our redemption rights in the event of a listing or change of control described above, the holders of Series A Convertible Preferred Stock had the right to convert any or all of the Series A Convertible Preferred Stock held by such
44
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 $
42.64
, and as applicable would have been adjusted in connection with stock splits, stock dividends and other similar transactions.
As of December 31, 2024, there were
200,000
Preferred Shares outstanding with an aggregate liquidation preference of approximately $
203.4
million, which consisted of $
150
million from the Initial Closing, $
50
million from a closing on October 26, 2020 and approximately $
3.4
million of accumulated and unpaid distributions.
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 $
203.6
million, which included approximately $
3.6
million of accumulated and unpaid distributions. Additionally, in accordance with GAAP, upon redemption, we accreted the approximately $
3.6
million of issuance costs which had previously been recorded as a reduction to the carrying value, such amount was included in the accretion - preferred equity costs line item in our consolidated statements of operations.
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 $
75,000,000
at a rate of
3.926
% for the initial duration of the 2027 NBC Loan, maturing on
March 7, 2027
. The amortization of this swap corresponded with the amortizing principal payments on the related loan.
This CORRA Swap was terminated on June 16, 2025 in connection with the full repayment of the 2027 NBC Loan on
June 16, 2025
. In connection with the termination of the CORRA Swap, we paid National Bank of Canada approximately $
1.7
million 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 $
8.2
million, which hedged approximately $
400
million of notional exposure. We initially deferred payment for these SOFR interest rate caps, and recorded these interest rate caps net of the remaining amount of such deferred payment liability on our balance sheet.
On
April 8, 2025
, in connection with our principal paydown on the Credit Facility, we terminated two of these three SOFR interest rate caps, and paid approximately $
3.5
milli
on. On May 1, 2025, the third of these three SOFR interest rate caps matured, whereby we owed and paid approximately $
3.7
million, representing $
3.9
million of deferred payment, less $
0.2
million related to the prior month's settlement.
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
1.25
% until maturity on
July 1, 2025
for a notional amount of $
100.2
million. The total cost for this interest rate cap was approximately $
1.5
million, which was due and paid on January 2, 2025. In connection with our full repayment of the 2025 KeyBank Acquisition Facility, we terminated this cap on
April 7, 2025
, receiving a termination payment of approximately $
0.7
million.
45
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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
1.25
% until maturity on
September 1, 2025
for a notional amount of $
74.8
million. The total cost for this interest rate cap was approximately $
1.2
million, which was due and paid on March 6, 2025. In connection with our full repayment of the 2025 KeyBank Acquisition Facility, we terminated this cap on
April 7, 2025
, receiving a termination payment of approximately $
0.9
million.
On June 16, 2025, we terminated a $
100
million SOFR interest rate cap with no remuneration; such cap was set to mature on
December 1, 2025
.
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 $
400
million CAD, with a rate locked at
2.6730
%, and an expiration date of
June 18, 2025
. On
June 11, 2025
we terminated this forward early, and received approximately $
0.5
million USD in connection with such transaction.
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 gain of approximately $
0.2
million and a loss of approximately $
0.4
million for the three months ended September 30, 2025 and 2024, respectively, and loss of approximately $
3.6
million and a gain of approximately $
1.3
million for the nine months ended September 30, 2025 and 2024, respectively.
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 $
2.8
million CAD at a strike rate of
1.4412
, and matured on February 27, 2025, (ii) the second hedge had a notional amount of $
3.3
million CAD at a strike rate of
1.4363
, and matured on May 27, 2025, (iii) the third hedge had a notional amount of $
3.5
million CAD at a strike rate of
1.4312
, and matured on August 27, 2025, whereby we paid approximately $
0.1
million CAD (iv) the fourth hedge has a notional amount of $
3.3
million CAD at a strike rate of
1.4261
, maturing on November 28, 2025.
On February 28, 2025, we entered into a similar hedge with a notional amount of $
3.2
million CAD at a strike rate of
1.4217
, maturing on
February 27, 202
6
. On May 29, 2025, we entered into a similar hedge with a notional amount of $
3.3
million CAD at a strike rate of
1.3600
, maturing on
May 27, 2026
.
On April 11, 2025, we settl
ed a net investment hedge FX Forward, receiving approximately $
2.6
million USD, and simultaneously entered into a new net investment hedge FX Forward for the same notional amount of approximately $
136.5
million CAD, maturing on
July 11, 2025
. On June 23, 2025, we entered into a net investment hedge FX Forward to directly offset the pre-existing $
136.5
million CAD FX Forward. This hedge negated the impact of the previously existing hedge. On June 29, 2025, we were able to terminate both hedges, and we paid approximately $
1.8
million on July 1, 2025 in connection with settling both of these derivatives.
46
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
The following table summarizes the terms of our derivative financial instruments as of September 30, 2025 (dollars in thousands):
Notional
Amount
Strike
Effective
Date or
Date Assumed
Maturity
Date
Foreign Currency Forwards:
CAD Forward
(1)
$
3,300
1.4261
December 30, 2024
November 28, 2025
CAD Forward
(1)
$
3,200
1.4217
February 28, 2025
February 27, 2026
CAD Forward
(1)
$
3,300
1.3600
May 29, 2025
May 27, 2026
(1)
Notional amounts shown are denominated in CAD.
The following table summarizes the terms of our derivative financial instruments as of December 31, 2024 (dollars in thousands):
Notional
Amount
Strike
Effective
Date or
Date Assumed
Maturity
Date
Interest Rate Derivatives:
SOFR Cap
(1)
$
100,000
1.50
%
May 1, 2024
May 1, 2025
SOFR Cap
(1)
$
100,000
2.00
%
July 1, 2024
July 1, 2025
SOFR Cap
$
100,200
1.25
%
December 30, 2024
July 1, 2025
SOFR Cap
$
100,000
4.75
%
December 1, 2022
December 1, 2025
SOFR Cap
(2)
$
200,000
5.50
%
December 2, 2024
December 1, 2026
CORRA Swap
(3)
$
73,918
3.93
%
March 7, 2024
March 7, 2027
Foreign Currency Forwards:
CAD Forward
(3)
$
2,800
1.4412
December 30, 2024
February 27, 2025
CAD Forward
(3)
$
136,746
1.3648
April 12, 2024
April 11, 2025
CAD Forward
(3)
$
3,300
1.4363
December 30, 2024
May 27, 2025
CAD Forward
(3)
$
3,500
1.4312
December 30, 2024
August 27, 2025
CAD Forward
(3)
$
3,300
1.4261
December 30, 2024
November 28, 2025
(1)
We initially deferred payment on this SOFR cap until its maturity.
(2)
We deferred payment on this SOFR cap until January 2, 2025, at which point, monthly payments became due on the first of each month until the date of its maturity.
(3)
Notional amounts shown are denominated in CAD.
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 September 30, 2025 and December 31, 2024 (in thousands):
Asset/Liability Derivatives
Fair Value
Balance Sheet Location
September 30,
2025
December 31,
2024
Interest Rate Derivatives
Other assets
$
—
$
1,523
Accounts payable and accrued liabilities
$
—
$
6,591
(1)
Foreign Currency Hedges
Other assets
$
32
$
4,667
Accounts payable and accrued liabilities
$
123
$
39
47
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
(1)
Included herein is approximately $
8.2
million in deferred payments on certain of our SOFR interest rate caps as of December 31, 2024, as well as the fair value of the related SOFR interest rate caps, along with the value of our CORRA swap.
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
for the three months
ended September 30,
Location of amounts
reclassified from OCI
into income
Gain (loss) reclassified from
OCI for the three months
ended September 30,
Type
2025
2024
2025
2024
Interest Rate Swaps
$
—
$
(
1,133
)
Interest expense
$
—
$
87
Interest Rate Caps
—
(
322
)
Interest expense
—
81
Foreign Currency Forwards
—
(
538
)
N/A
—
—
$
—
$
(
1,993
)
$
—
$
168
Gain (loss) recognized in OCI
for the nine months
ended September 30,
Location of amounts
reclassified from OCI
into income
Gain (loss) reclassified from
OCI for the nine months
ended September 30,
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 nine months ended September 30,
Type
2025
2024
2025
2024
2025
2024
Interest Rate Swaps
$
(
148
)
$
(
1,181
)
Interest expense
$
(
226
)
$
273
Other income/
(expense)
$
(
1,192
)
$
—
Interest Rate Caps
(
35
)
313
Interest expense
(
185
)
1,799
Other income/
(expense)
(
186
)
—
Foreign Currency Forwards
(
498
)
1,322
N/A
—
—
N/A
—
—
$
(
681
)
$
454
$
(
411
)
$
2,072
$
(
1,378
)
$
—
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 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.
48
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
The following is a summary of our income tax expense (benefit) for the periods presented (in thousands):
For the three months ended September 30, 2025
Federal
State
Canadian
Total
Current
$
—
$
23
$
149
$
172
Deferred
131
—
312
443
Total
$
131
$
23
$
461
$
615
For the three months ended September 30, 2024
Federal
State
Canadian
Total
Current
$
17
$
12
$
144
$
173
Deferred
68
1
162
231
Total
$
85
$
13
$
306
$
404
For the nine months ended September 30, 2025
Federal
State
Canadian
Total
Current
$
—
$
26
$
629
$
655
Deferred
272
—
611
883
Total
$
272
$
26
$
1,240
$
1,538
For the nine months ended September 30, 2024
Federal
State
Canadian
Total
Current
$
17
$
30
$
444
$
491
Deferred
192
4
406
602
Total
$
209
$
34
$
850
$
1,093
49
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
The major sources of temporary differences that give rise to the deferred tax effects are shown below (in thousands):
September 30,
2025
December 31,
2024
Deferred tax liabilities:
Intangible contract assets
$
—
$
(
6
)
Canadian real estate
(
9,488
)
(
9,163
)
Total deferred tax liability
(
9,488
)
(
9,169
)
Deferred tax assets:
Other
1,964
1,687
Canadian real estate and non-capital losses
8,119
7,729
Total deferred tax assets
10,083
9,416
Valuation allowance
(
2,650
)
(
1,891
)
Net deferred tax liabilities
$
(
2,055
)
$
(
1,644
)
The Canadian non-capital losses expire between
2032
and
2044
. As of September 30, 2025 and December 31, 2024, the Company had Canadian non-capital loss carry forwards of approximately $
18.7
million and $
20.8
million, respectively. As of September 30, 2025 and December 31, 2024, we had a valuation allowance of approximately $
2.7
million and $
1.9
million, respectively, related to non-capital loss carry-forwards, non deductible interest expense carry forwards, and basis differences at certain of our Canadian properties.
As of September 30, 2025, we had no interest or penalties related to uncertain tax positions. In the United States, the tax years 2021-2024 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
two
reportable business segments: (i) self storage operations and (ii) our Managed REIT Platform business. Our self storage operations consist of our wholly-owned self storage facilities, primarily consisting of month-to month rental revenue and related ancillary revenue that these self storage facilities produce. Our Managed REIT Platform business consists of the various management services we perform for the Managed REITs, including the services performed related to our property management, asset management, and construction and development management contracts. The reportable segments offer different products and services to different customers and are therefore managed separately.
The chief operating decision maker (“CODM”) is our
Chief Executive Officer
.
Our CODM and other management regularly evaluate performance based upon segment operating income (“SOI”).
For our self storage operations, SOI is defined as leasing and related revenues, less property level operating expenses. SOI for the Company’s Managed REIT Platform business represents Managed REIT Platform revenues less Managed REIT Platform expenses. Our CODM uses SOI when making decisions about allocating capital and personnel to the various segments. Property operating expenses represents a significant segment expense for purposes of evaluating performance of our self storage operations. Managed REIT Platform expense represents a significant segment expense for purposes of evaluating performance of the Company's Managed REIT Platform. Such income statement amounts are reflected below in the calculation of SOI.
On a quarterly basis, our CODM considers budget-to-actual and period-to-period variances when evaluating company and segment performance in addition to other interim reviews.
50
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
The following tables summarize information for the reportable segments for the periods presented (in thousands):
Three Months Ended September 30, 2025
Managed REIT
Corporate
Self Storage
Platform
and Other
Total
Revenues:
Self storage rental revenue
$
61,768
$
—
$
—
$
61,768
Ancillary operating revenue
2,825
—
—
2,825
Managed REIT Platform revenue
—
3,841
—
3,841
Reimbursable costs from Managed REITs
—
1,995
—
1,995
Total revenues
64,593
5,836
—
70,429
Operating expenses:
Property operating expenses
Property taxes
6,859
—
—
6,859
Payroll
(1)
6,691
—
—
6,691
Advertising
1,604
—
—
1,604
Repairs & maintenance
2,005
—
—
2,005
Utilities
1,691
—
—
1,691
Property insurance
1,556
—
—
1,556
Administrative and professional
3,085
—
—
3,085
Total property operating expenses
23,491
—
—
23,491
Managed REIT Platform expense
(1)
—
2,074
—
2,074
Reimbursable costs from Managed REITs
—
1,995
—
1,995
Segment operating income
41,102
1,767
—
42,869
Other operating expenses:
General and administrative
(1)
—
—
10,435
10,435
Depreciation
16,064
—
210
16,274
Intangible amortization expense
2,904
—
—
2,904
Acquisition expenses
408
—
72
480
Total other operating expenses
19,376
—
10,717
30,093
Income (loss) from operations
21,726
1,767
(
10,717
)
12,776
Other income (expense):
Equity in earnings (losses) from
investments in JV Properties
—
—
(
47
)
(
47
)
Equity in earnings (losses) from
investments in Managed REITs
—
(
248
)
—
(
248
)
Other, net
4,649
—
18
4,667
Interest income
139
1,397
—
1,536
Interest expense
(
12,480
)
—
(
41
)
(
12,521
)
Income tax (expense) benefit
(
497
)
(
118
)
—
(
615
)
Net income (loss)
$
13,537
$
2,798
$
(
10,787
)
$
5,548
(1)
Included within Payroll, Managed REIT Platform expense, and General and administrative expense was approximately $
1.9
million, $
1.1
million, and $
1.5
million of stock and related compensation expense related to our IPO Grant for the three months ended September 30, 2025, respectively.
51
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Three Months Ended September 30, 2024
Managed REIT
Corporate
Self Storage
Platform
and Other
Total
Revenues:
Self storage rental revenue
$
52,921
$
—
$
—
$
52,921
Ancillary operating revenue
2,457
—
—
2,457
Managed REIT Platform revenue
—
2,923
—
2,923
Reimbursable costs from Managed REITs
—
1,856
—
1,856
Total revenues
55,378
4,779
—
60,157
Operating expenses:
Property operating expenses
Property taxes
5,305
—
—
5,305
Payroll
4,223
—
—
4,223
Advertising
1,393
—
—
1,393
Repairs & Maintenance
1,387
—
—
1,387
Utilities
1,440
—
—
1,440
Property Insurance
1,473
—
—
1,473
Administrative and professional
3,028
—
—
3,028
Total property operating expenses
18,249
—
—
18,249
Managed REIT Platform expense
—
1,053
—
1,053
Reimbursable costs from Managed REITs
—
1,856
—
1,856
Segment operating income
37,129
1,870
—
38,999
Other operating expenses:
General and administrative
—
—
7,210
7,210
Depreciation
13,592
—
244
13,836
Intangible amortization expense
202
13
—
215
Acquisition expenses
38
—
—
38
Total other operating expenses
13,832
13
7,454
21,299
Income (loss) from operations
23,297
1,857
(
7,454
)
17,700
Other income (expense):
Equity in earnings (losses) from
investments in JV Properties
—
—
(
380
)
(
380
)
Equity in earnings (losses) from
investments in Managed REITs
—
(
248
)
—
(
248
)
Other, net
(
1,976
)
—
(
5
)
(
1,981
)
Interest income
263
760
—
1,023
Interest expense
(
19,061
)
—
(
41
)
(
19,102
)
Income tax (expense) benefit
(
333
)
(
75
)
4
(
404
)
Net income (loss)
$
2,190
$
2,294
$
(
7,876
)
$
(
3,392
)
52
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Nine Months Ended September 30, 2025
Managed REIT
Corporate
Self Storage
Platform
and Other
Total
Revenues:
Self storage rental revenue
$
176,509
$
—
$
—
$
176,509
Ancillary operating revenue
8,161
—
—
8,161
Managed REIT Platform revenue
—
11,990
—
11,990
Reimbursable costs from Managed REITs
—
6,035
—
6,035
Total revenues
184,670
18,025
—
202,695
Operating expenses:
Property operating expenses
Property taxes
19,966
—
—
19,966
Payroll
(1)
17,892
—
—
17,892
Advertising
4,650
—
—
4,650
Repairs & maintenance
5,050
—
—
5,050
Utilities
4,458
—
—
4,458
Property insurance
4,738
—
—
4,738
Administrative and professional
8,874
—
—
8,874
Total property operating expenses
65,628
—
—
65,628
Managed REIT Platform expense
(1)
—
6,559
—
6,559
Reimbursable costs from Managed REITs
—
6,035
—
6,035
Segment operating income
119,042
5,431
—
124,473
Other operating expenses:
General and administrative
(1)
—
—
29,980
29,980
Depreciation
45,974
—
767
46,741
Intangible amortization expense
6,431
—
—
6,431
Acquisition expenses
853
—
189
1,042
Total other operating expenses
53,258
—
30,936
84,194
Income (loss) from operations
65,784
5,431
(
30,936
)
40,279
Other income (expense):
Equity in earnings (losses) from
investments in JV Properties
—
—
(
408
)
(
408
)
Equity in earnings (losses) from
investments in Managed REITs
—
(
620
)
—
(
620
)
Other, net
3,369
—
334
3,703
Interest income
390
2,594
—
2,984
Interest expense
(
46,453
)
—
(
120
)
(
46,573
)
Loss on debt extinguishment
(
2,533
)
—
—
(
2,533
)
Income tax (expense) benefit
(
1,200
)
(
258
)
(
80
)
(
1,538
)
Net income (loss)
$
19,357
$
7,147
$
(
31,210
)
$
(
4,706
)
(1)
Included within Payroll, Managed REIT Platform expense, and General and administrative expense was approximately $
3.6
million, $
2.0
million, and $
3.1
million of stock and related compensation expense related to our IPO Grant for the nine months ended September 30, 2025, respectively.
53
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Nine Months Ended September 30, 2024
Managed REIT
Corporate
Self Storage
Platform
and Other
Total
Revenues:
Self storage rental revenue
$
156,050
$
—
$
—
$
156,050
Ancillary operating revenue
6,973
—
—
6,973
Managed REIT Platform revenue
—
8,328
—
8,328
Reimbursable costs from Managed REITs
—
5,011
—
5,011
Total revenues
163,023
13,339
—
176,362
Operating expenses:
Property operating expenses
Property taxes
15,817
—
—
15,817
Payroll
12,629
—
—
12,629
Advertising
4,295
—
—
4,295
Repairs & maintenance
4,197
—
—
4,197
Utilities
3,846
—
—
3,846
Property insurance
4,070
—
—
4,070
Administrative and professional
8,480
—
—
8,480
Total property operating expenses
53,334
—
—
53,334
Managed REIT Platform expense
—
2,552
—
2,552
Reimbursable costs from Managed REITs
—
5,011
—
5,011
Segment operating income
109,689
5,776
—
115,465
Other operating expenses:
General and administrative
—
—
22,449
22,449
Depreciation
40,348
—
709
41,057
Intangible amortization expense
350
111
—
461
Acquisition expenses
121
—
—
121
Total other operating expenses
40,819
111
23,158
64,088
Income (loss) from operations
68,870
5,665
(
23,158
)
51,377
Other income (expense):
Equity in earnings (losses) from
investments in JV Properties
—
—
(
1,068
)
(
1,068
)
Equity in earnings (losses) from
investments in Managed REITs
—
(
957
)
—
(
957
)
Other, net
(
2,891
)
—
(
58
)
(
2,949
)
Interest income
758
1,617
—
2,375
Interest expense
(
52,826
)
—
(
123
)
(
52,949
)
Loss on debt extinguishment
(
471
)
—
—
(
471
)
Income tax (expense) benefit
(
862
)
(
210
)
(
21
)
(
1,093
)
Net income (loss)
$
12,578
$
6,115
$
(
24,428
)
$
(
5,735
)
The following table summarizes our total assets by segment (in thousands):
Segments
September 30, 2025
December 31, 2024
Self Storage
(1)
$
2,206,364
$
1,915,303
Managed REIT Platform
(2)
118,034
63,700
Corporate and Other
66,881
63,064
Total assets
(3)
$
2,391,279
$
2,042,067
(1)
Included in the assets of the Self Storage segment as of September 30, 2025 and December 31, 2024 was approximately $
52.2
million of goodwill. Additionally, as of September 30, 2025 and December 31, 2024, there were
no
accumulated impairment charges to goodwill within the Self Storage segment.
(2)
Included in the assets of the Managed REIT Platform segment as of September 30, 2025 and December 31, 2024 was approximately $
1.4
million
of goodwill. Such goodwill is net of accumulated impairment charges in the
54
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Managed
REIT Platform segment of approximately $
24.7
million, which relates to the impairment charge recorded during the quarter ended March 31, 2020.
(3)
Other than our investments in and advances to Managed REITs and our investments in JV Properties, substantially all of our investments in real estate facilities and intangible assets as well as our capital expenditures for the nine months and year ended September 30, 2025 and December 31, 2024, respectively, were associated with our self storage platform.
Please see Note 3 – Real Estate of the Notes to the Consolidated Financial Statements for additional detail.
As of September 30, 2025 and December 31, 2024, approximately $
254
million, and $
155
million, respectively, of our assets in the self storage segment related to our operations in Canada. For the three and nine months ended September 30, 2025, approximately $
6.8
million, and $
18.3
million, respectively, of our revenues in the self storage segment related to our operations in Canada. For the three and nine months ended September 30, 2024, approximately $
5.8
million, and $
16.9
million, respectively, of our revenues in the self storage segment related to our operations in Canada. Substantially all of our operations related to the management fees we generate through our management contracts with the Managed REITs are performed in the U.S.; accordingly substantially all of our assets and revenues related to our Managed REIT segment are based in the U.S. as well.
As of September 30, 2025 and December 31, 2024, approximately $
34.9
million and $
32.8
million, respectively, of our assets in the Corporate and Other segment in the table above relate to our JV Properties which operate in Canada. For the nine months ended September 30, 2025 and 2024, approximately $
0.4
million and $
1.1
million of losses, respectively, relate to these JV Properties' operations in Canada.
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 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
100
% of the membership interests of Strategic Transfer Agent Services, LLC, our former transfer agent (“Former Transfer Agent”), which is a registered transfer agent with the SEC. Pursuant to our transfer agent agreement, our Former Transfer Agent provided transfer agent and registrar services to us. These services were substantially similar to what a third party transfer agent would provide in the ordinary course of performing its functions as a transfer agent, including, but not limited to: providing customer service to our stockholders, processing the distributions and any servicing fees with respect to our shares and issuing regular reports to our stockholder.
55
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 $
150,000
to Strategic Transfer Agent Services, LLC in May 2024.
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 nine months ended September 30, 2025, as well as any related amounts payable as of December 31, 2024 and September 30, 2025 (in thousands):
Year Ended December 31, 2024
Nine Months Ended September 30, 2025
Incurred
Settled
Payable
Incurred
Settled
Payable
Expensed
Transfer Agent fees
$
661
$
715
$
21
$
—
$
9
$
12
Other
Other
—
—
341
—
341
—
Total
$
661
$
715
$
362
$
—
$
350
$
12
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
1.00
% of the contract purchase price of each property SST VI acquires plus reimbursement of any acquisition expenses that SST VI Advisor incurs.
The SST VI Advisor also receives a monthly asset management fee equal to
0.0625
%, which is
one-twelfth of 0.75%
, of SST VI’s aggregate asset value, as defined. The SST VI Advisor is also potentially entitled to receive a disposition fee if a substantial amount of services are performed by the SST VI Advisor, as determined by a majority of SST VI’s independent directors, equal to the lesser of
1
% of the contract sales price for any properties sold or
50
% of the competitive real estate commission; however in no event shall the total real estate commissions paid exceed
6
% of the contract sales price.
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.
56
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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
15
% of the gross offering proceeds raised by SST VI in the terminated or completed offering (including sales commissions, dealer manager fees, stockholder servicing fees and dealer manager servicing fees). If the organization and offering expenses exceeded such limit, within
60
days after the end of the month in which the offering terminated or was completed, pursuant to the terms of the SST VI Advisory Agreement, the SST VI Advisor would have had to reimburse SST VI for any excess amounts. SST VI's public offering was closed as
of June 30, 2025. In connection therewith, SST VI determined that the organization and offering expenses it incurred did not exceed the limit as described above.
On June 18, 2025, we and various affiliated entities, entered into a Separation and Settlement Agreement (the “Separation Agreement”) with Pacific Oak Holding Group, LLC (“POHG”) and its subsidiary Pacific Oak Capital Markets, LLC, the former dealer manager for SST VI, SSGT III and other affiliated programs (the “Former Dealer Manager”), resulting in (1) the repurchase of the
17.5
% non-voting membership interest in the SST VI Advisor previously held by POHG, and (2) the termination of a contract whereby services were provided to our programs on our behalf, including the distribution relationship for SST VI, SSGT III and other affiliated programs. In connection with the Separation Agreement, we made a payment to POHG of $
3,000,000
, which represented full settlement and termination of the various agreements and relationships. Such amount included (i) $
650,000
for the termination of the distribution support agreement between SRA and POHG, (ii) $
1,850,000
for the repurchase of any and all interests that POHG had in the SST VI Advisor, and (iii) $
500,000
for severance payments to be made to employees of the Former Dealer Manager. Accordingly, we now own
100
% of the SST VI Advisor.
The $
1,850,000
paid for the repurchase of membership interests in the SST VI Advisor was determined based on a pre-existing formula based on distributions over the prior year. This payment was treated as a repurchase of equity and no gain or loss was recognized. The difference between the $
1,850,000
paid and the carrying value of the previously existing non-controlling interest was recorded to additional paid-in capital. The separate contract termination costs related to the distribution support agreement and the severance payments were immediately recorded in full to Managed REIT Platform expenses during the three months ended June 30, 2025. Excluding the amounts we paid for severance payments, the amounts otherwise paid were based on pre-existing terms included in the underlying agreements.
Subsequent to and as a result of the POHG termination, on June 12, 2025, we, through a subsidiary of our TRS, entered into a new retail distribution and other support arrangement with Orchard Securities, LLC (“Orchard”). Through this relationship, Orchard will distribute certain of our Managed REIT investment programs, including DST offerings and other Managed REIT offerings. We pay Orchard certain fees and expenses as part of the engagement
. On September 30, 2025, SST VI commenced a private offering of up to $
75.0
million in shares of its Series E Redeemable
8
% Preferred Stock, (the “SST VI Preferred Offering”). Pursuant to a managing dealer agreement, Orchard will serve as the managing dealer for the SST VI Preferred Offering and, as part of its compensation under the managing dealer agreement, will be entitled to receive certain fees and expenses in connection with the SST VI Preferred Offering, some of which may be paid by one of our affiliates.
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.
57
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Pursuant to the SSGT III Advisory Agreement, the SSGT III Advisor will receive acquisition fees equal to
1.00
% of the contract purchase price of each property SSGT III acquires plus reimbursement of acquisition expenses that SSGT III Advisor incurs, provided, however, that no reimbursement shall be made for costs of personnel to the extent that such personnel perform services in transactions for which the Ad
visor receives the Acquisition Fee. The SSGT III Advisor also receives a monthly asset management fee equal to
0.0625
%, which is
one-twelfth of 0.75%
, of SSGT III’s aggregate asset value, as set forth in the underlying agreements. SSGT III is the sponsor of DSTs and also operates the related properties pursuant to a lease with the respective DST. For certain of such DSTs, upon the successful syndication of the DST offering we will receive an additional
0.60
% of the acquisition price. The SSGT III Advisor is also entitled to receive a disposition fee equal to
1.5
% of the contract sale price for any properties sold inclusive of any real estate commissions paid to third party real estate brokers.
Pursuant to the Separation Agreement, POHG is no longer entitled to receive
17.5
% of the acquisition fees, asset management fees and disposition fees that the SSGT III Advisor earns pursuant to the SSGT III Advisory Agreement.
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)
1.00
% of NAV for the Class F-T Common Shares, Class F-D Common Shares, and Class F-I Common Shares, and (ii)
1.25
% of NAV for the Class T Common Shares, Class D Common Shares, and Class I Common Shares, in each case, per annum and payable monthly, before giving effect to any accruals by SST X for the management fee, any applicable servicing fees, the performance participation allocation, or any distributions. SST X is currently only offering the Class F-T Common Shares, Class F-D Common Shares and Class F-I Common Shares. The management fee may be paid, at the SST X Advisor’s election, in cash or cash equivalent aggregate NAV amounts of Class E Common Sh
ares or Class E OP Units in Strategic Storage Operating Partnership X, L.P. (the “SST X Operating Partnership” or “SST X OP”). Pursuant to the Separation Agreement, POHG is no longer entitled to receive
17.5
% of the asset management fees that SST X Advisor earns pursuant to the SST X Advisory Agreement.
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
10.0
% of the Total Return with respect to Class F-T Common Units, Class F-D Units and Class F-I Common Units (
12.5
% with respect to Class T Units, Class D Units and Class I Units), subject to a
5
% Hurdle Amount and a High Water Mark with respect to such class of units, with a Catch-Up (each term as defined in the limited partnership agreement of the SST X Operating Partnership). Such allocation and the related distribution are made annually.
As of September 30, 2025, SST X had sold approximately $
2.0
million of its Class F-I Common Shares, but did not yet own any properties, and we had a receivable of approximately $
1.4
million from SST X related to the costs described above.
On October 29, 2025, we made an investment of $
1.8
million in the operating partnership of SST X, and on October 30, 2025, we sold the Murfreesboro, Tennessee property to SST X for approximately $
7.9
million.
Please see Note 14 – Subsequent Events, for additional information.
Managed REIT Property Management Agreements
58
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
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
6
% of the gross revenues from the properties, generally subject to a monthly minimum of $
3,000
per property, plus reimbursement of the costs of managing the properties, and a one-time fee of $
3,750
for each property acquired that would be managed by the Managed REITs’ Property Managers. Reimbursable costs and expenses include wages and salaries and other expenses of employees engaged in operating, managing and maintaining such properties. Pursuant to the property management agreements, we through our Operating Partnership employ the on-site staff for the Managed REITs’ properties.
The SST VI, SSGT III, and SST X property managers are or will be entitled to a construction management fee equal to
5
% of the cost of a related construction or capital improvement work project in excess of $
10,000
.
Summary of Fees and Revenue Related to the Managed REITs
Pursuant to the terms of the various agreements described above for the Managed REITs, the following summarizes the related party fees for the periods presented (in thousands):
Three Months Ended
Nine Months Ended
September 30,
September 30,
Managed REIT Platform Revenues
2025
2024
2025
2024
Asset Management Fees:
SST VI
1,123
1,082
3,276
3,208
SSGT III
546
367
1,399
1,039
1,669
1,449
4,675
4,247
Property Management Fees:
SST VI
507
436
1,459
1,244
SSGT III
371
150
971
407
JV Properties
230
248
749
703
1,108
834
3,179
2,354
Tenant Protection Program Fees:
SST VI
365
317
1,034
883
SSGT III
320
106
798
281
JV Properties
112
100
322
270
797
523
2,154
1,434
Acquisition Fees:
SST VI
—
—
—
34
SSGT III
325
103
2,088
162
325
103
2,088
196
Other Managed REIT Fees
(1)
215
232
673
695
Managed REIT Platform Fees
4,114
3,141
12,769
8,926
Sponsor funding reduction
(2)
(
273
)
(
218
)
(
779
)
(
598
)
Total Managed REIT Platform Revenues
$
3,841
$
2,923
$
11,990
$
8,328
(1)
Such revenue primarily includes other property management related fees, construction management fees, development fees, and other miscellaneous revenues.
(2)
Pursuant
to the Sponsor Funding Agreement, SmartStop funds certain costs of SST VI's share sales, and in return receives Series C Units in SST VI's OP. As of June 30, 2025, SST VI had closed its offering to new subscriptions. As such, we no longer had any funding obligation pursuant to the Sponsor Funding Agreement. The excess of the
59
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
funding
over the value of the Series C Units received was 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.
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
99.9
% by us through a TRS subsidiary and
0.1
% by the Managed REIT. Under the terms of the operating agreements of the joint venture entities, we receive
99.9
% of the net revenues generated from such Tenant Protection Programs and the Managed REIT receives the other
0.1
% of such net revenues.
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 September 30, 2025 and December 31, 2024 we had receivables due from the Managed REITs totaling approximately $
19.4
million and $
16.7
million, respectively. Such amounts are included in investments in and advances to the Managed REITs line-item in our consolidated balance sheets. Such amounts included unpaid amounts relative to the above table, in addition to other direct routine reimbursable expenditures of the Managed REITs that we directly funded.
Investments in and advances to SST VI OP
Equity Investments
On March 10, 2021, SmartStop OP made an investment of $
5.0
million in SST VI OP, in exchange for common units of limited partnership interest in SST VI OP. Additionally, a subsidiary of SmartStop OP owns a special limited partnership i
nterest (the “SST VI SLP”) in SST VI OP.
For the three and nine months ended September 30, 2025 we recorded a loss related to our equity interest in SST VI OP of approximately $
0.2
million and $
0.3
million, respectively, and received distributions in the amount of approximately $
0.1
million and $
0.3
million, respectively, excluding distributions received related to the Series D Preferred Units, defined below.
For the three and nine months ended September 30, 2024 we recorded a loss related to our equity interest in SST VI OP of approximately $
0.2
million and $
0.6
million, respectively, and received distributions in the amount of approximately $
0.1
million and $
0.3
million, respectively.
On September 4, 2025, we, through one our subsidiaries entered into a preferred unit purchase agreement with SST VI OP (the "Series D Preferred Unit Purchase Agreement") for up to
1,400,000
Series D cumulative redeemable preferred units ("Series D
Preferred Units")
, in consideration for up to $
35.0
million.
Distributions on the Series D Preferred units of SST VI OP are cumulative from the date of issuance and are payable monthly in arrears
. Distributions are payable at a rate of: (a) 6% per annum from the date of issuance until the second anniversary after the date of issuance; (b) 7% per annum commencing the day following the second anniversary after the date of issuance until the third anniversary after the date of issuance; (c) 8% per annum commencing the day following the third anniversary after the date of issuance until the fourth anniversary after the date of issuance; and (d) 9% per annum thereafter.
The Series D Preferred Unit Purchase Agreement provides that the purchase price for the Series D Preferred Units shall be equal to $
25
per share. The Series D Preferred Units require an investment fee equal to
1.0
% of the amount invested at any closing.
60
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
On September 4, 2025, we made an initial investment of $
5.0
million or
200,000
Series D Preferred Units
at a purchase price of $
25.00
per unit. During September 2025, we made additional purchases of
800,000
Series D Preferred Units for an additional $
20.0
million.
SST VI used some of the funds received from our investment in the Series D Preferred Units to repay approximately $
19.3
million in intercompany balances owed to SmartStop.
As of September 30, 2025, we had purchased an aggregate of
1.0
million Series D Preferred Units, and received approximately $
0.3
million in investment fees from SST VI OP.
For the three and nine months ended September 30, 2025 we recorded income of approximately $
0.1
million and $
0.1
million, respectively, from our investment in the Series D Preferred Units.
As of September 30, 2025, we were potentially required until January 4, 2026, to purchase up to an additional $
10.0
million in Series D Preferred Units, upon SST VI's request. On October 29, 2025 we purchased an additional $
3.0
million in Series D Preferred Units.
Sponsor Funding Agreement
On November 1, 2023, SRA, a subsidiary of our Operating Partnership, entered into a Sponsor Funding Agreement with SST VI and SST VI OP, in connection with certain changes to the public offering of SST VI.
Pursuant to the Sponsor Funding Agreement, SRA, as sponsor of the SST VI offering, had agreed to fund the payment of (i) the upfront
3
% sales commission for the sale of Class Y shares sold in the SST VI offering, (ii) the upfront
3
% dealer manager fee for the Class Y shares sold in the SST VI offering, and (iii) the estimated
1
% organization and offering expenses for the sale of Class Y shares and Class Z shares sold in the SST VI offering. SRA had also agreed to reimburse SST VI in cash to cover the dilution from certain one-time stock dividends which were issued by SST VI to existing stockholders in connection with the sponsor funding changes to the SST VI offering. On December 15, 2023, we paid SST VI approximately $
6.6
million for the reimbursement of the aforementioned stock dividend.
In consideration for SRA providing the funding for the front-end sales load and the cash to cover the dilution from the stock dividends described above, SST VI OP issued a number of Series C Units to SRA equal to the dollar amount of such funding divided by the then-current offering price for the Class Y shares and Class Z shares sold in the SST VI offering, which was initially $
9.30
per share. Pursuant to the Sponsor Funding Agreement, SRA reimbursed SST VI monthly for the applicable front-end sales load it had agreed to fund, and SST VI OP issued the Series C Units on a monthly basis upon such reimbursement.
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 $
10.00
per share for each Class of SST VI shares of common stock, including the Class Y shares and Class Z shares, calculated net of the Series C Units to be converted.
On August 7, 2024, SST VI declared an estimated net asset value per share of $
10.00
. Since the Series C Units that could be converted would result in the net asset value falling below $
10.00
per share, none of the Series C Units we owned were converted into Class A units of SST VI OP, and thereafter our future purchases were determined based on the current estimated net asset value at such time. Subsequent to SST VI declaring an estimated net asset value of $
10.00
per share, the number of Series C Units SmartStop receives in exchange for funding the front-end sales load of the sale of SST VI's Class Y and Class Z shares was calculated as the dollar amount of such sponsor funding divided by the current offering price of $
10.00
per share for such Class Y and Z shares. The Sponsor Funding Agreement was terminated effective as of June 30, 2025.
As of June 30, 2025, SST VI closed the primary portion of its public offering. The Sponsor Funding Agreement was terminated immediately in connection with the closedown of SST VI’s primary offering. In accordance therewith, we have no further funding obligation in connection with the Sponsor Funding Agreement.
61
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Through September 30, 2025, we had incurred approximately $
10.2
million in connection with the now terminated Sponsor Funding Agreement, representing approximately
1.1
million Series C Units issued by SST VI OP. During the nine months ended September 30, 2025 we incurred approximately $
0.9
million.
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 $
15.0
million. Interest on the loan accrued at
SOFR plus 3.0%
. Payments on the SST VI Note are interest only. The loan was extended on December 8, 2023 to December 31, 2024 at the borrower's option and as such, the interest rate on the loan increased to
SOFR plus 4.0%
, and a fee equal to
0.25
% of the outstanding principal balance was due as a result of SST VI exercising the extension option.
The SST VI Note required a commitment fee equal to
1.0
% of the aggregate principal amount of the loan.
On June 28, 2024, the SST VI Note was amended to expand the borrowing capacity up to $
25.0
million and further extend the maturity date from
December 31, 2024
to
December 31, 2025
. On July 29, 2024, SST VI borrowed an additional $
8.0
million on the SST VI Note. On July 29, 2025, SST VI borrowed an additional $
2.0
million on the SST VI Note.
The following tabl
e summarizes the carrying value of our investments in and advances to SST VI as of September 30, 2025 and December 31, 2024 (in thousands):
Receivables:
As of
September 30, 2025
As of
December 31, 2024
Receivables and advances due
$
2,372
$
13,929
Debt:
SST VI Note
25,000
23,000
Equity:
Series D Preferred Units
(1)
24,750
—
SST VI OP Units and
SST VI SLP
135
728
SST VI Series C Units
5,077
4,554
Total investments in and advances
$
57,334
$
42,211
(1)
On October 29, 2025, we purchased an additional
120,000
Series D Preferred Units for $
3.0
million.
Investments in and advances to SSGT III OP
Equity Investments
On August 29, 2022, SmartStop OP made an investment of $
5.0
million in SS Growth Operating Partnership III, L.P., the operating partnership of SSGT III (“SSGT III OP”), in exchange for common units of limited partnership interest in SSGT III OP. Additionally, a subsidiary of SmartStop OP owns a special limited partnership interest (the “SSGT III SLP”) in SSGT III OP.
For the three and nine months ended September 30, 2025 we recorded a loss related to our equity interest in SSGT III OP of approximately $
0.2
million and $
0.4
million, respectively, and received distributions in the amount of approximately $
0.1
million and $
0.2
million, respectively.
For the three and nine months ended September 30, 2024 we recorded a loss related to our equity interest in SSGT III OP of approximately $
0.1
million and $
0.4
million, respectively, and received distributions in the amount of approximately $
0.1
million and $
0.2
million, respectively.
62
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Debt Investments
On July 31, 2024, our Operating Partnership provided a bridge loan to an indirect wholly-owned subsidiary of SSGT III for $
20.0
million (the “SSGT III Bridge Loan”) to facilitate SSGT III’s acquisition of two self storage facilities. During the three months ended March 31, 2025, SSGT III and its subsidiaries had repaid all amounts outstanding on the SSGT III Bridge Loan, in accordance with the terms of the SSGT III Bridge Loan, no further draws were permitted.
On December 16, 2024, a subsidiary of SSGT III entered into a promissory note with our Operating Partnership for a $
7.0
million loan (the “SSGT III Promissory Note”), the entire principal amount of the loan was disbursed to SSGT III on such date. Pursuant to this note, interest on the SSGT III Promissory Note accrued at a variable rate equal to
SOFR plus 3.0%
per annum. Payments on the SSGT III Promissory Note were interest only, and it had an initial maturity date of
March 17, 2025
. The SSGT III Promissory Note required a commitment fee equal to
0.50
% of the amount drawn at closing of the SSGT III Promissory Note. During the three months ended March 31, 2025, SSGT III and it subsidiaries had repaid all amounts outstanding on the SSGT III Promissory Note, including accrued interest.
On June 3, 2025, a subsidiary of SSGT III entered into a promissory note with our Operating Partnership for a loan of up to $
25.0
million (the “SSGT III Promissory Note II”). On June 5, 2025, $
4.0
million was initially drawn on the loan and disbursed to SSGT III. Interest on the SSGT III Promissory Note II accrues at a variable rate equal to
SOFR plus 3.0%
per annum. Payments on the SSGT III Promissory Note II are interest only until maturity. This note has an initial maturity date of
December 31, 2025
, with two optional extensions, each for 6 months, subject to certain conditions. The SSGT III Promissory Note II requires a commitment fee equal to
0.50
% of the amount drawn at such time. Since the initial draw, SSGT III made a series of additional draws, whereby as of September 30, 2025, there was $
21.0
million outstanding on the SSGT III Promissory Note II.
On June 24, 2025, our Operating Partnership fully funded a secured term loan pursuant to a promissory note entered into by a subsidiary of SSGT III for a $
25.0
million loan (the “SSGT III Secured Note”). Interest on the SSGT III Secured Note accrues at a variable rate equal to
SOFR plus 3.0%
per annum. Payments on the SSGT III Secured Note are interest only until maturity. This note has an initial maturity date of December 31, 2025, with two optional extensions, each for 6 months, subject to certain conditions. The SSGT III Secured Note requires a commitment fee equal to
0.50
% of the amount drawn at such time. In September 2025, SSGT III paid down $
12.0
million on the SSGT III Secured Note, such that as of September 30, 2025, there was $
13.0
million outstanding on the SSGT III Secured Note.
The following table summarizes the carrying value of our investments in and advances to SSGT III as of September 30, 2025 and December 31, 2024
(in thousands):
Receivables:
As of
September 30, 2025
As of
December 31, 2024
Receivables and advances due
$
15,623
$
2,769
Debt:
SSGT III Secured Note
13,000
—
SSGT III Promissory Note II
21,000
—
SSGT III Bridge Loan
—
2,919
SSGT III Promissory Note
—
7,000
Equity:
SSGT III OP Units and
SSGT III SLP
2,246
2,823
Total investments in and advances
$
51,869
$
15,511
Investments in and advances to SST X OP
Equity Investments
63
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
SmartStop Storage Advisors, LLC (“SSA”), a subsidiary of SmartStop OP, made two contributions of $
1,000
to SST X OP, in exchange for common units of limited partnership interest in SST X OP, one on January 14, 2025 in connection with the formation of SST X OP and the other on June 27, 2025 in connection with the entry into the advisory agreement and the first amended and restated limited partnership agreement of SST X OP, in which SSA was granted a special limited partnership interest in SST X OP. Similarly, the SST X Advisor made a $
1,000
investment in common shares on January 28, 2025 in connection with the formation of SST X.
On October 29, 2025, we made an investment of $
1.8
million in series A cumulative redeemable preferred units of SST X OP ("Series A Preferred Units").
Please see Note 14 – Subsequent Events, for additional information.
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 nine months ended September 30, 2025, we incurred reimbursements payable to SAM under the Administrative Services Agreement of approximately $
0.1
million and $
0.5
million, respectively.
For the three and nine months ended September 30, 2024, we incurred reimbursements payable to SAM under the Administrative Services Agreement of approximately $
0.3
million and $
0.6
million, respectively.
We recorded reimbursements from SAM of approximately $
0.1
million and $
0.4
million, during the three and nine months ended September 30, 2025, respectively, related to services provided to SAM, which were included in Managed REIT Platform revenue in our consolidated statements of operations.
We recorded reimbursements from SAM of approximately $
0.1
million and $
0.2
million, during the three and nine months ended September 30, 2024, respectively, related to services provided to SAM, which were included in Managed REIT Platform revenue in our consolidated statements of operations.
As of September 30, 2025 and December 31, 2024, a receivable of approximately $
0.4
million and $
12,000
, was due from SAM, respectively, related to the Administrative Services Agreement.
Please see Note 4 – Investments in Unconsolidated Real Estate Ventures for additional information regarding other equity method investees deemed to be a related party, given they are accounted for as equity method investments.
Note 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 September 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”).
Prior to April 1, 2025, the day we executed our underwriting agreement and sold
27,000,000
shares
of common stock pursuant to our Underwritten Public Offering, the fair value of our restricted stock was 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 previously used in estimating the fair value
64
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
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 are further adjusted as compared to the determined restricted stock value 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 is 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 six months,
one
,
three
, or
four years
commencing in the year of grant, subject to the recipient’s continued employment or service through the applicable vesting date. All grants of time based restricted stock have limitations on transferability during the vesting period, and the grantee does not have the ability to vote any unvested shares. Transfers of the unvested portion of restricted stock are restricted.
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, 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.
The following table summarizes the activity related to our time based awards:
Restricted Stock
LTIP Units
Time Based Award Grants
Shares
Weighted-Average
Grant-Date
Fair Value
Units
Weighted-Average
Grant-Date
Fair Value
Unvested at December 31, 2023
21,329
$
53.77
95,071
$
50.75
Granted
11,476
57.18
78,991
54.12
Vested
(
11,830
)
51.15
(
65,624
)
50.11
Forfeited
(
1,313
)
57.12
(
3,954
)
51.45
Unvested at December 31, 2024
19,662
57.12
104,484
53.68
Granted
350,368
30.18
365,195
33.83
Vested
(1)
(
10,672
)
57.05
(
16,841
)
36.82
Forfeited
(
16,015
)
30.89
—
—
Unvested at September 30, 2025
343,343
$
30.85
452,838
$
38.29
(1)
Such amount included
12,412
LTIP units related to the accelerated vesting of a former member of the board of directors upon their retirement, effective 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
100
% of the targeted award, whereas the number of LTIP Units granted as of the grant date equaled
200
% of the targeted amount of the award. The targeted award for each executive was determined and approved by the Compensation Committee of our board of directors. The actual number of shares of restricted stock or LTIP Units, as applicable, to be issued upon vesting may range from
0
% to
200
% of the targeted award, such determination being based upon the results of the performance measure. Performance based awards vest based upon our performance as ranked amongst a peer group of self storage related companies. This comparison is conducted using a performance measure of average annual same-store revenue growth, analyzed over a three-year period. Earned awards for the 2023, 2024 and 2025 grants will vest, as applicable, no later than
March 31, 2026
,
2027
, and
2028
, respectively.
65
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
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.
Recipients of performance based LTIP Units are issued LTIP Units at
200
% of the targeted award and are entitled to receive distributions and allocations of profits and losses with respect to the performance based LTIP Units as of the effective date of each award in an amount equal to 10% of the distributions available to such LTIP Units, until the Distribution Participation Date (as defined in the Operating Partnership Agreement). The remaining 90% of distributions will accrue and will be payable on the Distribution Participation Date based upon the performance level attained and number of performance based LTIP Units that vest.
Following the Distribution Participation Date, recipients will be entitled to receive the full amount of distributions with respect to the vested performance-based LTIP Units, such amount being equivalent to distributions declared and paid on our Common Shares.
The following table summarizes our activity related to our performance based awards:
LTIP Units
Performance Based Award Grants
Units
Weighted-Average
Grant-Date
Fair Value
Unvested at December 31, 2023
133,254
$
48.64
Granted
67,524
54.20
Vested
(
37,097
)
37.20
Forfeited
(
4,040
)
53.45
Unvested at December 31, 2024
159,641
53.53
Granted
68,634
52.12
Vested
(1)
(
13,633
)
52.72
Forfeited
(
13,633
)
52.72
Unvested at September 30, 2025
201,009
$
53.16
(1)
In March of 2025, the Compensation Committee of the board of directors approved the vesting of the 2022 performance grant at
100
% of the targeted award.
Holders of performance based restricted stock
do not have
any rights as a stockholder with respect to the unvested portion of such restricted stock awards. Prior to vesting, shares of performance based restricted stock generally may not be transferred, other than by laws of descent and distribution.
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
one vote per LTIP Unit
held. Prior to vesting, performance based LTIP Units generally may not be transferred, other than by laws of descent and distribution.
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 September 30, 2025,
1,437,933
shares of stock were available for issuance under the Plan.
We recorded approximately $
3.8
million and $
9.0
million, respectively, of equity based compensation expense in general and administrative expense during the three months and nine months ended September 30, 2025, compared to approximately $
1.3
million and $
3.7
million, respectively, during the three and nine months ended September 30, 2024.
We recorded approximately $
1.6
million and $
3.3
million of equity based compensation expense in property operating expenses, within our consolidated statements of operations for the three and nine months ended September 30, 2025, respectively, compared to approximately $
0.1
million and $
0.2
million during the three and nine months ended September 30, 2024, respectively.
66
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
We recorded approximately $
0.9
million and $
1.9
million of equity based compensation expense in Managed REIT Platform expenses, within our consolidated statements of operations for the three and nine months ended September 30, 2025, respectively, compared to none during the three and nine months ended September 30, 2024.
As of September 30, 2025, there was approximately $
19.7
million of total unrecognized compensation expense related to non-vested equity awards, with such cost expected to be recognized over a weighted-average period of approximately
3.1
years.
As of December 31, 2024, there was approximately $
7.9
million of total unrecognized compensation expense related to non-vested equity awards, with such cost expected to be recognized over a weighted-average period of approximately
2.1
years.
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.
In March 2025, an aggregate of
68,634
performance-based LTIP Units and approximately
69,673
time-based LTIP Units were issued to executive officers. The performance-based LTIP Units vest after the three year performance period, based upon the performance level attained. The time-based LTIP Units vest ratably over
four years
, with the first tranche vesting on December 31, 2025, subject to the recipient’s continued employment through the applicable vesting date.
In April 2025, in connection with the Underwritten Public Offering, an aggregate of approximately
287,080
time-based LTIP Units and
344,894
time-based shares of restricted stock were issued to approximately
320
employees and directors (the "IPO Grant"). As prescribed in the IPO Grant in April 2025, approximately
287,080
of these LTIP Units, and approximately
119,829
of these restricted shares were scheduled to vest ratably over
four years
, respectively, with the first tranche vesting on April 1, 2026. Approximately
225,065
of the total shares issued were scheduled to vest after
six months
, on October 1, 2025. All such grants vest subject to the recipient’s continued employment through the applicable vesting date.
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
2.7
million of Class A Common Stock and approximately
0.3
million of Class T Common Stock through our distribution reinvestment plan.
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
30
days’ notice to our stockholders.
On
April 29,
2025
, we terminated our SRP, given the completion of our Underwritten Public Offering. As such, the maximum payable am
ount related to the SRP was reclassified to permanent equity in our consolidated statements of equity and temporary equity during
67
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
the three months ended June 30, 2025.
During the year ended December 31, 2024, appr
oximately
0.5
million shares or $
29.9
million of requests that met the eligibility criteria were requested to be redeemed; approximately $
29.9
million of which were fulfilled during the year ended December 31, 2024. Due to the suspension of our SRP, we were unable to honor redemption requests not yet fulfilled prior to the suspension, including requests submitted subsequent to such suspension, which became effective November 25, 2024. On April 29, 2025, in light of our listing on the NYSE, our board of directors approved the termination of our SRP, which termination became fully and finally effective on May 29, 2025.
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 redeem their limited partnership units by issuing
one
share of our common stock for each limited partnership unit redeemed. Furthermore, limited partners may exercise their redemption rights only after their limited partnership units have been outstanding for
one year
.
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 September 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.
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 August 28, 2025, our board of directors approved a distribution amount for the month of September 2025 such that all holders of our outstanding common stock for the month of September, inclusive of our Class A, Class T and unclassified shares of Common Stock, received a distribution equal to $
0.1315
per share. The September 2025 distribution payable to each stockholder of record at the end of September was paid on October 15, 2025.
On September 26, 2025, our board of directors approved a distribution amount for the month of October 2025 such that all holders of our outstanding common stock for the month of October will receive a distribution equal to $
0.1359
per share. The October 2025 distribution payable to each stockholder of record at the end of October will be paid on or about November 14, 2025.
68
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Note 14. Subsequent Events
Argus Transaction
On October 1, 2025, pursuant to a contribution agreement (the “Contribution Agreement”) we acquired Argus Professional Storage Management, LLC (“Argus”), a third-party property management company that (as of September 30, 2025) managed more than
225
operating properties across
27
states consisting of more than approximately
100,000
units and approximately
16.6
million rentable square feet. After the acquisition of Argus, we own or manage over
460
self-storage properties in North America. Under the terms of the Contribution Agreement, total upfront consideration provided in the transaction was approximately $
21.1
million, composed of $
8.5
million in cash, funded in part by a $
5.0
million deposit made and outstanding as of September 30, 2025, and
328,343
units of limited partnership interests (“OP Units”) in our Operating Partnership. In addition, the Contribution Agreement includes a potential earnout of up to an additional $
11.0
million based on revenues generated during fiscal year 2028, with
75
% payable in cash and
25
% being payable in OP Units. Our board of directors unanimously approved the transaction.
Through the Contribution Agreement we assumed various nominal amounts of current assets and liabilities, which are subject to a working capital adjustment to the consideration otherwise provided. The principal assets acquired were property management contracts, covering the management of more than approximately
225
properties and
400
employees, an operating lease for their corporate headquarters in Tucson, Arizona, other intellectual property and personal property. The Contribution Agreement contains customary representations, warranties, covenants, agreements, and indemnification obligations with respect to the sellers of Argus and us.
SST X Transactions
Subsequent to September 30, 2025, in late October, the nominating and corporate governance committee of our board approved: (i) an investment of $
1.8
million in the operating partnership of SST X, and (ii) the sale of our Murfreesboro, Tennessee property to SST X for approximately $
7.9
million, which was equal to the purchase price we paid for the property earlier this year, plus an additional amount to cover certain post-closing adjustments and capital improvements we made on the property since acquisition. These transactions were also approved by the nominating and corporate governance committee and the board of SST X, including its independent trustees.
On October 29, 2025, we, through one our subsidiaries, entered into a preferred unit purchase agreement with SST X OP (the "Series A Preferred Unit Purchase Agreement") for
72,000
Series A Preferred Units, in consideration for the $
1.8
million investment described above. Distributions on the Series A Preferred Units are cumulative from the date of issuance and are payable monthly in arrears.
Distributions are payable at a rate of: (a) 6% per annum from the date of issuance until the second anniversary after the date of issuance; (b) 7% per annum commencing the day following the second anniversary after the date of issuance until the third anniversary after the date of issuance; (c) 8% per annum commencing the day following the third anniversary after the date of issuance until the fourth anniversary after the date of issuance; and (d) 9% per annum thereafter.
The Series A Preferred Unit Purchase Agreement provides that the purchase price for the Series A Preferred Units shall be equal to $
25
per share. Pursuant to the agreement we are due an investment fee equal to
1.0
% of the amount invested by us.
RBC JV Term Loan III
On October 31, 2025, ten of our joint ventures with SmartCentres closed on a $
160
million CAD term loan (the “RBC JV Term Loan III”) with RBC pursuant to which ten of our joint venture subsidiaries that each own
50
% of a Joint Venture property serve as borrowers (the “RBC Borrowers III”). The RBC JV Term Loan III is secured by first mortgages on ten of the Canadian JV Properties, most of which were previously encumbered by either the RBC JV Term Loan, the RBC JV Term Loan II or the SmartCentres Financings. T
he RBC JV Term Loan III matures on
November 1, 2030
, which may be extended by one additional year, subject to certain terms. Interest on the RBC JV Term Loan III is fixed at an annual rate of
3.87
%, and monthly payments include interest and principal, amortized on a
30 year
basis until maturity. Proceeds from the RBC JV Term Loan III were used by the Joint Ventures to fully pay down the outstanding principal and accrued interest on the RBC JV Term Loan, the RBC JV Term Loan II, and the SmartCentres Financing. We serve as a recourse guarantor with respect to $
80
million CAD of the obligations under the RBC JV Term Loan III.
69
SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2025
(Unaudited)
Winter Garden Acquisition
On November 4, 2025, we purchased a self storage facility located in the Orlando Florida MSA (the "Winter Garden Property"). The purchase price for the Winter Garden Property was approximately $
15.3
million, plus closing costs. This acquisition was funded with proceeds drawn from the Credit Facility.
New York Preferred Investment
On October 31, 2025, we, through our TRS, invested approximately $
4.8
million in an unaffiliated entity to facilitate its purchase of
five
self storage properties and
one
retail property in the state of New York (the “NY Preferred Investment”). Our investment was structured as preferred equity, carrying a
10.0
% dividend. We will receive a
1.0
% investment fee for all amounts invested, and a redemption fee of
1.0
% for any amounts redeemed, unless redeemed within the first
90
days following the closing. We hold customary preferred equity rights and protections, and we have the right to call the NY Preferred Investment amounts after
five years
. The investment was utilized to purchase five self storage properties, all of which have us serving as Property Manager.
70
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS O
F 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. As of September 30, 2025, based on the Inside Self Storage Top-Operators List ranking for 2025, and before accounting for the October 1, 2025 acquisition of Argus, we were 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 September 30, 2025, our wholly-owned portfolio consisted of 177 operating self storage properties diversified across 20 states, the District of Columbia, and Canada comprising approximately 121,800 units and 13.9 million net rentable square feet. Additionally, we owned a 50% equity interest in 12 unconsolidated real estate ventures located in Canada, which included ten operating self storage properties, one property which is being developed into a self storage property, and another parcel of land which we intend to develop. 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, the Managed REIT's, and the properties owned by Delaware statutory trusts ("DSTs") sponsored and operated pursuant to a lease with the DSTs by one of the Managed REITs, in total, as of September 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 prospectively through our acquisition of Argus, 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.
On October 1, 2025, pursuant to a contribution agreement (the “Contribution Agreement”), we acquired Argus Professional Storage Management, LLC (“Argus”). The principal assets acquired were property management contracts, covering the management of more than 225 properties and 400 employees (as of September 30, 2025), and an operating lease for their corporate headquarters in Tucson, Arizona and other intellectual and personal property.
Additionally, we plan to continue to expand our third-party management platform in both Canada and the United States, by scaling our Argus third-party management platform or through additional investments in or acquisitions of third-party management firms.
71
We have provided financing to the Managed REITs in the form of mezzanine loans, bridge loans, promissory notes, and preferred equity as applicable. We intend to continue in this practice going forward, if necessary. We may look to further 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 expertise. 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, the properties owned by the ("DSTs") sponsored and operated pursuant to a lease with the DSTs by one of the Managed REITs, which together with one other self storage property we manage consist of, as of September 30, 2025, 49 operating properties and approximately 40,000 units and approximately 4.4 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 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 September 30, 2025, our wholly-owned operating self storage portfolio was composed as follows:
State
No. of
Properties
Units
(1)
Sq. Ft.
(net)
(2)
% of Total
Rentable
Sq. Ft.
Physical
Occupancy
%
(3)
Rental
Income
%
(4)
Alabama
1
1,090
163,300
1.2
%
90.1
%
0.6
%
Arizona
4
3,130
329,100
2.4
%
93.1
%
2.3
%
California
32
21,955
2,321,300
16.7
%
92.9
%
21.1
%
Colorado
11
6,475
750,450
5.4
%
90.2
%
4.5
%
Florida
27
20,920
2,454,450
17.7
%
92.6
%
20.6
%
Illinois
6
3,785
432,450
3.1
%
92.2
%
2.8
%
Indiana
2
1,030
112,700
0.8
%
93.0
%
0.6
%
Massachusetts
2
1,045
111,800
0.9
%
91.1
%
1.9
%
Maryland
2
1,610
169,500
1.2
%
92.2
%
1.3
%
Michigan
4
2,220
266,100
1.9
%
93.5
%
1.6
%
New Jersey
5
5,395
488,300
3.5
%
78.5
%
3.4
%
Nevada
9
7,160
865,000
6.2
%
93.1
%
5.8
%
North Carolina
18
8,670
1,138,850
8.1
%
92.8
%
7.3
%
Ohio
5
2,830
320,050
2.3
%
87.9
%
1.4
%
South Carolina
4
2,890
355,800
2.6
%
91.7
%
1.9
%
Tennessee
1
470
62,100
0.5
%
83.3
%
0.2
%
Texas
17
10,830
1,388,050
10.0
%
90.7
%
7.9
%
Virginia
1
830
71,100
0.5
%
84.0
%
0.8
%
Washington
5
3,430
390,550
2.8
%
92.8
%
3.1
%
Wisconsin
1
780
83,400
0.6
%
92.7
%
0.4
%
District of Columbia
1
830
72,000
0.6
%
93.5
%
0.6
%
Alberta, Canada
5
3,050
357,925
2.6
%
72.8
%
0.3
%
British Columbia, Canada
1
800
74,000
0.5
%
92.8
%
0.4
%
Ontario, Canada
13
10,610
1,110,700
7.9
%
91.9
%
9.3
%
Total
177
121,835
13,888,975
100
%
91.1
%
100
%
(1)
Includes all rentable units, consisting of storage units and parking (approximately 3,600 units).
(2)
Includes all rentable square feet, consisting of storage units and parking (approximately 1,100,000 square feet).
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(3)
Represents the occupied square feet of all facilities in a state or province divided by total rentable square feet of all the facilities in such state or area as of September 30, 2025.
(4)
Represents rental income (excludes administrative fees, late fees, and other ancillary income) for all facilities we owned in a state or province divided by our total rental income for the nine months ended September 30, 2025.
Additionally, we own our office located at 10 Terrace Rd, Ladera Ranch, California (the “Ladera Office”) which houses our corporate headquarters.
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.
Real 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.
Real 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,
73
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.
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 nine months ended September 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 Real 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.
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REIT Qualification
We made an election under Section 856(c) of the Internal Revenue Code of 1986 (the Code) to be taxed as a REIT under the Code, commencing with the taxable year ended December 31, 2014. By qualifying as a REIT for federal income tax purposes, we generally will not be subject to U.S. federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which our qualification is denied. Such an event could materially and adversely affect our net income and could have a material adverse impact on our financial condition and results of operations. However, we believe that we are organized and operate in a manner that will enable us to continue to qualify for treatment as a REIT for federal income tax purposes, and we intend to continue to operate as to remain qualified as a REIT for federal income tax purposes.
Recent Tax Legislation
Effective July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. Certain provisions of OBBBA modified U.S. tax law and impact us and our shareholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) permanently reinstated 100% bonus depreciation for certain property acquired after January 19, 2025, (iii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31, 2025, and (iv) increases the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of “adjusted taxable income” for taxable years beginning after December 31, 2024. We are currently evaluating the provisions of OBBBA, but do not expect it to have a material impact on our Consolidated Financial Statements.
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 in the U.S. 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 as a result of elevated 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 September 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.
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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 September 30, 2025 and 2024, we wholly-owned 177 and 157 operating self storage facilities, respectively.
Our operating results for the three months ended September 30, 2025 included full quarter results for 171 self storage facilities, and partial period results for six self storage facilities. Our operating results for the three months ended September 30, 2024 included full quarter results for 156 self storage facilities, and partial period results for one self storage facility.
Our operating results for the nine months ended September 30, 2025 included full period results for 161 self storage facilities, and partial period results for 16 self storage facilities. Our operating results for the nine months ended September 30, 2024 included full period results for 154 self storage facilities, and partial period results for three 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, 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 have 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%. Additionally, on September 24, 2025, we issued $200 million of CAD denominated debt through our 2030 Canadian Notes. Such proceeds were used to pay down our Credit Facility, reducing our interest costs. Such transactions have had a significant impact on our operating results for the three and nine months ended September 30, 2025, and will further impact our operating results in the future.
Comparison of the three months ended September 30, 2025 and 2024
Total Self Storage Revenues
Total self storage related revenues for the three months ended September 30, 2025 and 2024 were approximately $64.6 million and $55.4 million, respectively. The increase in total self storage revenues of approximately $9.2 million, or approximately 17%, is primarily attributable to an increase in non same-store revenues of approximately $7.6 million, largely as a result of 21 property acquisitions after September 30, 2024, the operating results of which were not included during the three months ended September 30, 2024. Additionally, our same-store revenues were up approximately $1.3 million, or approximately 2.5%.
We expect self storage revenues to primarily fluctuate based on the performance of our same-store pool, which will be influenced by the overall economic environment and increases in self storage supply, amongst other things. Additionally, we expect our non same-store revenues to grow, given certain of these properties were not owned for the full period.
Managed REIT Platform Revenues
Managed REIT Platform revenues for the three months ended September 30, 2025 and 2024 were approximately $3.8 million and $2.9 million, respectively. The increase in Managed REIT Platform revenues of approximately $0.9 million is attributable to increased recurring revenues derived from the Managed REITs, 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.
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Reimbursable Costs from Managed REITs
Reimbursable costs from Managed REITs for the three months ended September 30, 2025 and 2024 were approximately $2.0 million and $1.9 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 three months ended September 30, 2025 and 2024 were approximately $23.5 million (or 36% of self storage revenue) and $18.2 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 $5.2 million is largely attributable to increased property operating expenses of approximately $3.0 million related to our non same-store properties and an additional $1.9 million of stock based compensation and related costs due to the IPO Grant to store level employees, and to a lesser extent increased, 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 became 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 September 30, 2025 and 2024 were approximately $2.1 million and $1.1 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 September 30, 2025 was approximately $1.1 million of stock compensation and related costs associated with 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 September 30, 2025 and 2024 were approximately $2.0 million and $1.9 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 September 30, 2025 and 2024 were approximately $10.4 million and $7.2 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.
The increase in general and administrative expenses as compared to the prior period was primarily attributable to increased stock compensation related costs, which was approximately $2.5 million more compared to the prior year period, inclusive of approximately $1.5 million related to the IPO Grant. 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 September 30, 2025 and 2024 were approximately $19.2 million and $14.1 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 21 properties which were acquired after September 30, 2024.
Acquisition Expenses
Acquisition expenses for the three months ended September 30, 2025 and 2024 were approximately $0.5 million and less than $0.1 million, respectively. These acquisition expenses were recognized 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 September 30, 2025 and 2024 were less than $0.1 million and approximately $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 September 30, 2025 and 2024 were approximately $0.2 million and $0.2 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 September 30, 2025 and 2024 was approximately $4.7 million of income and $2.0 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. The favorable variance is primarily attributable to foreign currency changes associated with our Canadian Dollar denominated debt.
Interest Income
Interest Income for the three months ended September 30, 2025 and 2024 was approximately $1.5 million and $1.0 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. The favorable variance is related to increased lending to the Managed REITs. We expect interest income from the Managed REITs to fluctuate commensurate with their level of borrowings, as well as changes to benchmark interest rates on such borrowings.
Interest Expense
Interest expense for the three months ended September 30, 2025 and 2024 was approximately $12.5 million and $19.1 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 any interest rate derivatives designated for hedge accounting. The decrease of approximately $6.6 million as compared to the same period in the prior year is primarily attributable to decreased borrowings, primarily as a result of Underwritten Public Offering proceeds used to reduce our overall 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.
Income Tax Expense
Income tax expense for the three months ended September 30, 2025 and 2024 was approximately $0.6 million and $0.4 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.
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Same-Store Facility Results - three months ended September 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 September 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
%
Change
2025
2024
%
Change
2025
2024
%
Change
Revenue
(1)
$
52,623
$
51,342
2.5
%
$
9,476
$
1,861
N/M
$
62,099
$
53,203
16.7
%
Property
operating
expenses
(2)
17,470
16,715
4.5
%
3,881
924
N/M
21,351
17,639
21.0
%
Net operating
income
$
35,153
$
34,627
1.5
%
$
5,595
$
937
N/M
$
40,748
$
35,564
14.6
%
Number of
facilities
149
149
28
8
177
157
Rentable
square
feet
(3)
11,563,400
11,526,700
2,325,575
707,100
13,888,975
12,233,800
Average
physical
occupancy
(4)
92.6
%
92.2
%
0.4
%
87.7
%
N/M
N/M
91.8
%
91.8
%
00.0
%
Annualized
rent per
occupied
square
foot
(5)
$
20.35
$
20.21
0.7
%
$
22.10
N/M
N/M
$
20.61
$
20.04
2.8
%
N/M Not meaningful
(1)
Revenue includes rental income, certain ancillary revenue, administrative and late fees, and excludes Tenant Protection Program revenue.
(2)
Among other expenses, property operating expenses excludes Tenant Protection Program related expense and stock compensation expense related to the grant issued in connection with our Underwritten Public Offering. Please see the reconciliation of net operating income to net income (loss) below for the full detail of adjustments to reconcile net operating income to net income (loss).
(3)
Of the total rentable square feet, parking represented approximately 1,100,000 square feet as of September 30, 2025 and approximately 1,040,000 square feet as of September 30, 2024, respectively. On a same-store basis, for the same periods, parking represented approximately 977,000 square feet. Amount not in thousands.
(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. Properties are included in the respective calculations in their first full month of operations, as appropriate. In the event a property is disposed of, or becomes completely inoperable during the period, such property is excluded from the respective calculation.
(5)
Determined by dividing the aggregate rental income, net of discounts and concessions and excluding late and administrative fees 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. In the event a property is disposed of, or becomes completely inoperable during the period, such property is excluded from the respective calculation in the first full month of non-operation. We have excluded the rental revenue and occupied square feet related to parking herein for the purpose of calculating annualized rent per occupied square foot. Amount not in thousands.
Our same-store revenue increased by approximately $1.3 million, or approximately 2.5%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to an approximately 0.4% increase in average occupancy, an approximately 0.7% increase in annualized rent per occupied square foot, and an increase in administrative and late fees. Property operating expenses increased by approximately 4.5%, primarily attributable to increased property taxes and payroll costs.
79
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
September 30,
2025
2024
Net loss
$
5,548
$
(3,392
)
Adjusted to exclude:
Tenant Protection Program revenue
(1)
(2,494
)
(2,175
)
Tenant Protection Program
related expense
261
610
IPO Grant
(2)
1,879
—
Managed REIT Platform revenues
(3,841
)
(2,923
)
Managed REIT Platform expenses
2,074
1,053
General and administrative
10,435
7,210
Depreciation
16,274
13,836
Intangible amortization expense
2,904
215
Acquisition expenses
480
38
Interest expense
12,521
19,102
Interest income
(1,536
)
(1,023
)
Other, net
(4,667
)
1,981
Earnings from our equity method
investments in the JV Properties
47
380
Earnings from our equity method
investments in Managed REITs
248
248
Income tax expense
615
404
Total net operating income
$
40,748
$
35,564
(1)
Included within ancillary operating revenue within our consolidated statements of operations, approximately $2.1 million and $2.0 million of Tenant Protection Program revenue was earned at same-store facilities during the three months ended September 30, 2025 and 2024, respectively, with the remaining approximately $0.4 million and $0.1 million earned at non same-store facilities during the three months ended September 30, 2025 and 2024, respectively.
(2)
Stock compensation and related expense herein only includes such expense related to the Underwritten Public Offering (the "IPO Grant") that is included in property operating expense.
Comparison of the nine months ended September 30, 2025 and 2024
Total Self Storage Revenues
Total self storage related revenues for the nine months ended September 30, 2025 and 2024 were approximately $184.7 million and $163.0 million, respectively. The increase in total self storage revenues of approximately $21.6 million, or approximately 13%, is primarily attributable to an increase in non same-store revenues of approximately $17.5 million, largely as a result of 21 property acquisitions after September 30, 2024, the operating results of which were not included
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during the nine months ended September 30, 2024. Additionally, our same-store revenues were up approximately $3.1 million, or approximately 2.0%.
We expect self storage revenues to primarily fluctuate based on the performance of our same-store pool, which will be influenced by the overall economic environment and increases in self storage supply, amongst other things. Additionally, we expect our non same-store revenues to grow, given certain of these properties were not owned for the full period.
Managed REIT Platform Revenues
Managed REIT Platform revenues for the nine months ended September 30, 2025 and 2024 were approximately $12.0 million and $8.3 million, respectively. The increase in Managed REIT Platform revenues of approximately $3.7 million is primarily attributable to increased acquisition fees of approximately $1.9 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 nine months ended September 30, 2025 and 2024 were approximately $6.0 million and $5.0 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 nine months ended September 30, 2025 and 2024 were approximately $65.6 million (or 36% of self storage revenue) and $53.3 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 $12.3 million is largely attributable to increased property operating expenses of approximately $6.8 million related to our non same-store properties and an additional $3.6 million of stock based compensation and related costs 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 became 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 nine months ended September 30, 2025 and 2024 were approximately $6.6 million and $2.6 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 nine months ended September 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 $2.0 million of stock compensation and related costs associated with 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.
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Reimbursable Costs from Managed REITs
Reimbursable costs from Managed REITs for the nine months ended September 30, 2025 and 2024 were approximately $6.0 million and $5.0 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 nine months ended September 30, 2025 and 2024 were approximately $30.0 million and $22.4 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 nine months ended September 30, 2025, we incurred approximately $0.9 million related to our Underwritten Public Offering which was included in general and administrative expenses and were not capitalized as such costs 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 nine months ended September 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 and related compensation costs, which was approximately $5.3 million more compared to the prior period, inclusive of approximately $3.1 million related to the IPO Grant. 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 nine months ended September 30, 2025 and 2024 were approximately $53.2 million and $41.5 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 21 properties which were acquired after September 30, 2024.
Acquisition Expenses
Acquisition expenses for the nine months ended September 30, 2025 and 2024 were approximately $1.0 million and $0.1 million, respectively. These acquisition expenses were recognized 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 nine months ended September 30, 2025 and 2024 were approximately $0.4 million and $1.1 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 nine months ended September 30, 2025 and 2024 were approximately $0.6 million and $1.0 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 nine months ended September 30, 2025 and 2024 was approximately $3.7 million of income and $2.9 million of expense, respectively. Other, net consists primarily of certain state tax expenses, foreign currency fluctuations,
82
changes in value related to our foreign currency and interest rate hedges not designated for hedge accounting, and other miscellaneous items. The favorable variance is primarily attributable to foreign currency changes associated with our Canadian Dollar denominated debt. Additionally, 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.
Interest Income
Interest Income for the nine months ended September 30, 2025 and 2024 was approximately $3.0 million and $2.4 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. The favorable variance is related to increased lending to the Managed REITs. We expect interest income from the Managed REITs to fluctuate commensurate with their level of borrowings, as well as changes to benchmark interest rates on such borrowings.
Interest Expense
Interest expense for the nine months ended September 30, 2025 and 2024 was approximately $46.6 million and $52.9 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 any interest rate derivatives designated for hedge accounting. Such decrease of approximately $6.4 million as compared to the same period in the prior year was primarily due to decreased borrowings as a result of certain of our Underwritten Public Offering proceeds being used to reduce our overall borrowings, as well as a lower average effective interest rate. 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 nine months ended September 30, 2025 and 2024 was approximately $2.5 million, and $0.5 million, respectively. Loss on debt extinguishment for the nine months ended September 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 nine months ended September 30, 2025.
Loss on debt extinguishment for the nine months ended September 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 nine months ended September 30, 2024.
Income Tax Expense
Income tax expense benefit for the nine months ended September 30, 2025 and 2024 was approximately $1.5 million and $1.1 million of expense, respectively. Income tax expense consists primarily of state, federal, and Canadian income tax. The increase is primarily due to increasing operations and related tax expense at our Canadian properties. We expect our income tax expense to increase in future periods primarily related to our operations in Canada.
83
Same-Store Facility Results - nine months ended September 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 nine months ended September 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
%
Change
2025
2024
%
Change
2025
2024
%
Change
Revenue
(1)
$
155,377
$
152,288
2.0
%
$
22,085
$
4,584
N/M
$
177,462
$
156,872
13.1
%
Property operating
expenses
(2)
52,179
49,981
4.4
%
9,314
2,487
N/M
61,493
52,468
17.2
%
Net operating
income
$
103,198
$
102,307
0.9
%
$
12,771
$
2,097
N/M
$
115,969
$
104,404
11.1
%
Number of
facilities
149
149
28
8
177
157
Rentable square
feet
(3)
11,563,400
11,526,700
2,325,575
707,100
13,888,975
12,233,800
Average physical
occupancy
(4)
92.6
%
92.2
%
0.4
%
88.2
%
N/M
N/M
92.1
%
91.7
%
0.4
%
Annualized rent
per occupied
square foot
(5)
$
20.03
$
19.92
0.6
%
$
21.40
N/M
N/M
$
20.19
$
19.82
1.9
%
N/M Not meaningful
(1)
Revenue includes rental income, certain ancillary revenue, administrative and late fees, and excludes Tenant Protection Program revenue.
(2)
Among other expenses, property operating expenses excludes Tenant Protection Program related expense and stock compensation expense related to the grant issued in connection with our Underwritten Public Offering. Please see the reconciliation of net operating income to net income (loss) below for the full detail of adjustments to reconcile net operating income to net income (loss).
(3)
Of the total rentable square feet, parking represented approximately 1,100,000 square feet as of September 30, 2025 and approximately 1,040,000 square feet as of September 30, 2024, respectively. On a same-store basis, for the same periods, parking represented approximately 977,000 square feet. Amount not in thousands.
(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. Properties are included in the respective calculations in their first full month of operations, as appropriate. In the event a property is disposed of, or becomes completely inoperable during the period, such property is excluded from the respective calculation.
(5)
Determined by dividing the aggregate rental income, net of discounts and concessions and excluding late and administrative fees 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. In the event a property is disposed of, or becomes completely inoperable during the period, such property is excluded from the respective calculation in the first full month of non-operation. We have excluded the rental revenue and occupied square feet related to parking herein for the purpose of calculating annualized rent per occupied square foot. Amount not in thousands.
Our same-store revenue increased by approximately $3.1 million, or approximately 2.0%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to an approximately 0.4% increase in average occupancy, an approximately 0.6% increase in annualized rent per occupied square foot and increased administrative and late fees. Property operating expenses increased by approximately 4.4%, primarily attributable to increased property taxes and payroll costs.
84
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 Nine Months Ended
September 30,
2025
2024
Net loss
$
(4,706
)
$
(5,735
)
Adjusted to exclude:
Tenant Protection Program revenue
(1)
(7,208
)
(6,152
)
Tenant Protection Program
related expense
551
867
IPO Grant
(2)
3,584
—
Managed REIT Platform revenues
(11,990
)
(8,328
)
Managed REIT Platform expenses
6,559
2,552
General and administrative
29,980
22,449
Depreciation
46,741
41,057
Intangible amortization expense
6,431
461
Acquisition expenses
1,042
121
Interest expense
46,573
52,949
Interest income
(2,984
)
(2,375
)
Other, net
(3,703
)
2,949
Earnings from our equity method
investments in the JV Properties
408
1,068
Earnings from our equity method
investments in Managed REITs
620
957
Loss on debt extinguishment
2,533
471
Income tax expense
1,538
1,093
Total net operating income
$
115,969
$
104,404
(1)
Included within ancillary operating revenue within our consolidated statements of operations, approximately $6.2 million and $5.8 million of Tenant Protection Program revenue was earned at same-store facilities during the nine months ended September 30, 2025 and 2024, respectively, with the remaining approximately $1.0 million and $0.3 million earned at non same-store facilities during the nine months ended September 30, 2025 and 2024, respectively.
(2)
Stock compensation and related expense herein only includes such expense related to the Underwritten Public Offering (the "IPO Grant") that is included in property operating expense.
85
FFO and FFO, as Adjusted
Funds from Operations
Funds from operations (“FFO”), is a non-GAAP financial metric promulgated by the National Association of Real Estate Investment Trusts (NAREIT) that we believe is an appropriate supplemental measure to reflect our operating performance. We define FFO consistent with the standards established by the White Paper on FFO approved by the board of governors of NAREIT, 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.
86
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
Ended
September 30, 2025
Three Months
Ended
September 30, 2024
Nine Months
Ended
September 30, 2025
Nine Months
Ended
September 30, 2024
Net loss
(attributable to common stockholders)
$
5,227
$
(6,220
)
$
(11,540
)
$
(14,688
)
Add:
Depreciation of real estate
15,978
13,526
45,712
40,189
Amortization of real estate related intangible assets
2,881
178
6,362
278
Depreciation and amortization of real estate and
intangible assets from unconsolidated entities
768
719
2,205
1,914
Deduct:
Adjustment for noncontrolling interests
in our Operating Partnership
(1)
(1,136
)
(1,739
)
(4,220
)
(5,086
)
FFO (attributable to common stockholders)
$
23,718
$
6,464
38,519
22,607
Other Adjustments:
Intangible amortization expense - contracts
(2)
24
37
70
183
Acquisition expenses
(3)
480
38
1,042
121
Acquisition expenses, amortization of debt
issuance costs and foreign currency (gains)
losses, net from unconsolidated entities
87
(27
)
161
42
Accretion of fair market value of secured debt
176
—
544
80
Foreign currency and interest rate derivative
(gains) losses, net
(4)
(4,729
)
1,671
(2,945
)
2,308
Transactional expenses
(5)
—
—
2,422
330
IPO Grant
(6)
4,430
—
8,736
—
Adjustment of deferred tax assets and liabilities
(2)
441
282
883
602
Sponsor funding reduction
(7)
272
218
779
598
Amortization of debt issuance costs
(2)
1,100
1,202
3,089
2,975
Net loss on extinguishment of debt
(8)
—
—
2,533
471
Loss due to hurricane
(8)
—
500
—
500
Accretion - preferred equity costs
—
—
3,644
—
Adjustment for noncontrolling interests
in our Operating Partnership
(1)
(132
)
(473
)
(1,423
)
(987
)
FFO, as adjusted (attributable to common
stockholders)
$
25,867
$
9,912
$
58,054
$
29,830
FFO (attributable to common stockholders)
$
23,718
$
6,464
38,519
22,607
Net income (loss) attributable to the noncontrolling
interests in our Operating Partnership
321
(422
)
(682
)
(729
)
Adjustment for noncontrolling interests
in our Operating Partnership
(1)
1,136
1,739
4,220
5,086
FFO (attributable to common stockholders and
OP unit holders)
$
25,175
$
7,781
$
42,057
$
26,964
FFO, as adjusted (attributable to common stockholders)
$
25,867
$
9,912
$
58,054
$
29,830
Net income (loss) attributable to the noncontrolling
interests in our Operating Partnership
321
(422
)
(682
)
(729
)
Adjustment for noncontrolling interests
in our Operating Partnership
(1)
1,268
2,212
5,643
6,073
FFO, as adjusted (attributable to common
stockholders and OP unit holders)
$
27,456
$
11,702
$
63,015
$
35,174
87
(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 nine months ended September 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 nine months ended September 30, 2025 primarily included: i) approximately $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 of termination costs related to our Former Dealer Manager; and iii) 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 and related employer tax liabilities 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 funded 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 nine months ended September 30, 2025 increased compared to the three and nine months ended September 30, 2024 primarily as a result of increased segment operating income from our self storage business and from our Managed REIT business, reduced interest expense, as well as reductions to our distributions to preferred stockholders.
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Cash Flows
A comparison of cash flows for operating, investing and financing activities for the nine months ended September 30, 2025 and 2024 are as follows (in thousands):
Nine Months Ended
September 30, 2025
September 30, 2024
Change
Net cash flow provided by (used in):
Operating activities
$
70,613
$
53,422
$
17,191
Investing activities
$
(351,045
)
$
(80,301
)
$
(270,744
)
Financing activities
$
304,879
$
19,112
$
285,767
Cash flows provided by operating activities for the nine months ended September 30, 2025 and 2024 were approximately $70.6 million and $53.4 million, respectively. The increase of approximately $17.2 million in cash provided by our operating activities is primarily the result of an increase of approximately $12.8 million in net income when excluding the impact of non-cash items, largely due to an increase in net operating income of $11.6 million, primarily attributable to increases at our non same-store properties. We also benefited from favorable changes in working capital in the current year as compared to the same period in the prior year of approximately $4.4 million, largely attributable to increased collections of receivables from the Managed REITs.
Cash flows used in investing activities for the nine months ended September 30, 2025 and September 30, 2024 were approximately $351.0 million and $80.3 million, respectively, an increase in the use of cash of approximately $270.7 million. The net increase in cash used in investing activities primarily relates to a net change of approximately $233.8 million in cash flows related to acquisitions and investments in unconsolidated joint ventures and an increase in net debt and equity funding to the Managed REITs of approximately $41.8 million during the nine months ended September 30, 2025 as compared to the same period in the prior year.
Cash flows provided by financing activities for the nine months ended September 30, 2025 and September 30, 2024 were approximately $304.9 million and $19.1 million, respectively, an increase of approximately $285.8 million. The increase in cash provided by financing activities is primarily due to the net IPO proceeds of approximately $874.2 million, offset by the $200.0 million redemption of Series A Convertible Preferred Stock and net reductions in cash flows related to debt financing proceeds in the prior year and net repayments in the current year of approximately $384.9 million.
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, other strategic acquisitions and investments, 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 thereto, in July 2025 Kroll upgraded us to a credit rating of BBB/Stable. In addition, we received an initial credit rating from DBRS Morningstar, in May 2025 of BBB with stable trends.
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.
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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.
Common Stock Distributions
On August 28, 2025, our board of directors approved a distribution amount for the month of September 2025 such that all holders of our outstanding common stock for the month of September, inclusive of our Class A, Class T and unclassified shares of Common Stock, received a distribution equal to $0.1315 per share. The September 2025 distribution payable to each stockholder of record at the end of September was paid on October 15, 2025.
On September 26, 2025, our board of directors approved a distribution amount for the month of October 2025 such that all holders of our outstanding common stock for the month of October will receive a distribution equal to $0.1359 per share. The October 2025 distribution payable to each stockholder of record at the end of October will be paid on or about November 14, 2025.
Indebtedness
As of September 30, 2025, our net debt was approximately $1,042 million, which included approximately $1,036 million in fixed rate debt and approximately $12 million in variable rate debt, less approximately $4.4 million in net debt issuance costs and approximately $1.9 million in net debt discount.
Additionally, we were 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 served as borrowers (the “RBC Borrowers”). We were 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 served as borrowers (the “RBC Borrowers II”). We and SmartCentres each served 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 Real 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 September 30, 2025, approximately $70.0 million CAD or approximately $50.3 million in USD, was outstanding on the RBC JV Term Loan, approximately $46.0 million CAD or approximately $33.1 million in USD, was outstanding on the RBC JV Term Loan II, and approximately $18.8 million CAD or approximately $13.5 million in USD was outstanding on the SmartCentres Financing. See Note 4 – Investments in Unconsolidated Real Estate Ventures, of the Notes to the Consolidated Financial Statements contained in this report for additional information.
The RBC JV Term Loan, RBC JV Term Loan II, and SmartCentres Financing were all refinanced on October 31, 2025. See Note 14 – Subsequent Events, 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
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acquisitions, other strategic acquisitions and investments, investments in our Managed REITs, and distributions to our limited partners in our Operating Partnership and our stockholders, as necessary to maintain our REIT qualification.
Long-term potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, issuance of common equity in the public markets, issuance of other equity instruments, undistributed funds from operations, and additional public or private offerings. To the extent we are not able to secure requisite financing in the form of a credit facility or other debt, we will be dependent upon proceeds from the issuance of equity securities and cash flows from operating activities in order to meet our long-term liquidity requirements and to fund our distributions.
Our material cash requirements from contractual and other obligations primarily relate to our debt obligations. The expected timing of those outstanding principal payments are shown in the table below. The information in this section should be read in conjunction with Note 5 – Debt, and Note 12 – Commitments and Contingencies, of the Notes to the Consolidated Financial Statements contained within this report.
The following table presents the future principal payments required on outstanding debt as of September 30, 2025 (in thousands):
2025
$
792
2026
93,030
2027
55,982
2028
452,021
2029
104,289
2030 and thereafter
341,843
Total payments
$
1,047,957
As of September 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.
As of June 30, 2025, SST VI closed the primary portion of its public offering. The Sponsor Funding Agreement was terminated immediately in connection with the closedown of SST VI’s primary offering. In accordance therewith, we have no further funding obligation in connection with the Sponsor Funding Agreement.
See Note 10 – Related Party Transactions, of the Notes to the Consolidated Financial Statements for more information about our obligations under certain of these agreements.
For cash requirements related to potential acquisitions currently under contract, please see Note 3 – Real Estate Facilities and Note 4 – Investments in Unconsolidated Real 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.
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ITEM 3. QUANTITATIVE AND QUALITAT
IVE 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 September 30, 2025, our net debt was approximately $1,042 million, which included approximately $1,036 million in fixed rate debt and approximately $12 million in variable rate debt, less approximately $4.4 million in net debt issuance costs and approximately $1.9 million in net debt discount. See Note 5 – Debt, of the Notes to the Consolidated Financial Statements for more information about our indebtedness.
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 September 30, 2025, would decrease future earnings and cash flows by approximately $0.1 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 September 30, 2025 (in thousands):
2025
2026
2027
2028
2029
Thereafter
Total
Fixed rate debt
$
792
$
93,030
$
44,156
$
452,021
$
104,289
$
341,843
$
1,036,131
Average interest
rate
(1)
4.33
%
4.34
%
4.36
%
4.44
%
4.18
%
4.49
%
Variable rate debt
$
—
$
—
$
11,826
$
—
$
—
$
—
$
11,826
Average interest
rate
(1)
5.74
%
5.74
%
5.74
%
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 September 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 September 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.
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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 September 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. OTHE
R 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.
We may experience difficulties in integrating the operations of Argus Professional Storage Management, LLC and in realizing the expected benefits of the acquisition thereof, and we may experience similar difficulties in connection with any future acquisitions.
On October 1, 2025, we closed on the acquisition of Argus Professional Storage Management, LLC, a third-party self storage property management company (“Argus”). Following the closing, we own or manage over 460 self storage properties in the United States and Canada and maintain a team of over 1,000 self storage professionals. The long-term benefits of this acquisition, and any potential future acquisitions, will depend, in part, on the efficient and effective integration of the operations of Argus or any other acquired business, including their respective assets, personnel, systems, technologies, and business relationships, into our existing operations. Such integration could take longer than anticipated, could place a strain on our resources and personnel, and could result in the loss of key employees from the acquired business, the disruption of either our business or the acquired business, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures, and policies. Any of the foregoing could adversely affect our ability to continue relationships with the customers, employees, or third parties of the acquired business, or our ability to achieve the anticipated benefits of the acquisition, which could harm our financial performance. If we are unable to successfully integrate the operations of an acquired business, including Argus, with our business, we may incur unanticipated liabilities and be unable to realize the revenue growth, operating efficiencies, synergies and other anticipated benefits resulting from such transaction, and our business, results of operations and financial condition could be materially and adversely affected.
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:
•
any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock; or;
•
an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding stock of the corporation.
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.
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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 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:
•
the annual yield from distributions on shares of our common stock as compared to yields on other financial instruments;
•
equity issuances by us, or future sales of substantial amounts of shares of our common stock by our existing or future stockholders, or the perception that such issuances or future sales may occur;
•
increases in market interest rates or a decrease in our distributions to stockholders that lead purchasers of shares of our common stock to demand a higher yield;
•
changes in market valuations of similar companies;
•
fluctuations in stock market prices and volumes;
•
additions or departures of key management personnel;
•
our operating performance and the performance of other similar companies;
95
•
actual or anticipated differences in our quarterly operating results;
•
changes in expectations of future financial performance or changes in estimates of securities analysts;
•
publication of research reports about us or the self storage industry by securities analysts;
•
our failure to qualify as a REIT;
•
adverse market reaction to any indebtedness we incur in the future;
•
strategic decisions by us or our competitors, such as acquisitions, divestments, spin offs, joint ventures, strategic investments or changes in business strategy;
•
the passage of legislation or other regulatory developments that adversely affect us or the self storage industry;
•
speculation in the press or investment community;
•
changes in our actual or projected revenues, operating expenses and occupancy levels relating to our existing self storage properties;
•
failure to satisfy the listing requirements of the NYSE;
•
failure to comply with the requirements of the Sarbanes-Oxley Act;
•
actions by institutional stockholders;
•
changes in accounting principles; and
•
general market conditions, including factors unrelated to our performance.
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.
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,
96
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.
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 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.
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
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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.
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 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 EQUI
TY SECURITIES AND USE OF PROCEEDS
(a) On October 1, 2025, the Company, through its operating partnership, issued 328,343 units of limited partnership interests in its operating partnership (“OP Units”), or approximately $12.6 million in OP Units, to Argus Holdings, Inc. as partial consideration for 100% of the membership interests in Argus Professional Storage Management, LLC. Such OP Units must be held for at least one year, but thereafter they are redeemable by the holder for, at the election of the Company, shares of the Company’s Common Stock on a one-for-one basis or the cash value of such shares. The issuance of these OP Units was effected without registration in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, as a sale by the Company not involving a public offering. No underwriters were involved in such issuance.
(b) None.
(c) None.
ITEM 3. DEFAULTS UPO
N SENIOR SECURITIES
None.
ITEM 4. MINE SAF
ETY DISCLOSURES
Not applicable.
ITEM 5. OTHER
INFORMATION
On November 6, 2025, the Company entered into the Fourth Amended and Restated Limited Partnership Agreement of our Operating Partnership, effective as of October 1, 2025 (the “Fourth A&R LPA”), which amended, restated and
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superseded the Third Amended and Restated Limited Partnership Agreement dated June 28, 2019, (the “Third A&R LPA”), as amended to date.
The Fourth A&R LPA, among other things, (i) consolidates recent amendments to the Third A&R LPA, including the addition of LTIP Units as part of the Company’s 2022 Long Term Incentive Plan and other definition updates, (ii) removes references to (a) Class A-2 Units and (b) the Series A Convertible Preferred Partnership Units, which was included in Amendment No. 1 to the Third A&R LPA and which have been redeemed in full in connection with the redemption of the Series A Convertible Preferred Stock of the Company, (iii) reflects the automatic conversion of Class A Common Stock and Class T Common Stock into undesignated common stock of the Company and resulting Class A Units and Class T Units of the Operating Partnership, that occurred on October 1, 2025, (iv) reflects the issuance of undesignated Common Stock of the Company and undesignated Common Units of the Operating Partnership, (v) reduced the timing of the Specified Exchange Date in connection with a Notice of Exchange of Common Units to 30 calendar days, and (vi) made other conforming changes.
The summary above is qualified in its entirety by reference to the full text of the Fourth A&R LPA, which is filed as Exhibit 10.1 to this report and is incorporated herein by reference. Defined terms above reflect defined terms included in the Fourth A&R LPA.
ITEM 6. E
XHIBITS
The exhibits required to be filed with this report are set forth on the Exhibit Index hereto and incorporated by reference herein.
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EXHIBIT
IN
DEX
The following exhibits are included in this report on Form 10-Q for the period ended September 30, 2025 (and are numbered in accordance with Item 601 of Regulation S-K).
The following SmartStop Self Storage REIT, Inc. financial information for the three and nine months ended September 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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The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 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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SIGNAT
URES
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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