SmartStop Self Storage REIT, Inc. (“SmartStop” or “the Company”), a self-managed and fully-integrated self-storage company, announced its overall results for the three and nine months ended September 30, 2024.

“First and foremost, our thoughts and prayers are with the families of those impacted by the devastation from Hurricanes Helene and Milton,” said H. Michael Schwartz, Chairman and Chief Executive Officer of SmartStop. “We are relieved to report that the SmartStop team members are all safe, and I’m proud of the efforts made by our team to help participate in the recoveries in markets where significant damage has occurred, especially in our Asheville markets where we have such deep ties to the community.

“Moving on to our overall third quarter results, despite muted U.S. single-family home market activity relative to historical levels, we saw improving customer demand throughout our peak rental season and into the fall. We saw many of our key metrics stabilizing with strong quarter-end same-store occupancy of 92.6% and a year-over-year increase in our achieved rents. Many of our largest markets like the Greater Toronto Area continue to outperform, proving out our operating strategy. Lastly, we acquired two properties during the quarter and are encouraged by the increased activity that has been occurring in the transaction market. These acquisitions, along with our operating results, are a testament to our tremendous team, as well as the strength of our best-in-class North American self-storage portfolio.”

Three Months Ended September 30, 2024 Financial Highlights:

• Net loss attributable to common stockholders was approximately $6.2 million. This represents a decrease in earnings of approximately $5.6 million when compared to the same period in 2023. Net loss per Class A and Class T shares (basic and diluted) was $0.07, an increase in net loss per share of $0.06 as compared to the same period in 2023.
• Total self storage-related revenues were approximately $55.4 million, an increase of approximately $0.6 million when compared to the same period in 2023.
• FFO, as adjusted (attributable to common stockholders and Operating Partnership (“OP”) unit holders), was approximately $11.7 million, a decrease of approximately $3.0 million when compared to the same period in 2023.
• FFO, as adjusted per share and OP unit outstanding – diluted was $0.11, a decrease of approximately $0.03 when compared to the same period in 2023.
• Same-store revenues decreased by 0.4%, same-store expenses increased by 6.3%, while same-store net operating income (“NOI”) decreased by 3.3% compared to the same period in 2023.
• Same-store average physical occupancy decreased by 0.7% to 92.4% compared to the same period in 2023.
• Same-store annualized rent per occupied square foot was approximately $20.25, an increase of approximately 0.5% when compared to the same period in 2023.

Nine Months Ended September 30, 2024 Financial Highlights:

• Net loss attributable to common stockholders was approximately $14.7 million. This represents a decrease in earnings of approximately $13.1 million when compared to the same period in 2023. Net loss per Class A and Class T shares (basic and diluted) was $0.16, an increase in net loss per share of $0.14 when compared to the same period in 2023.
• Total self storage-related revenues were approximately $163.0 million, an increase of approximately $0.9 million when compared to the same period in 2023.
• FFO, as adjusted (attributable to common stockholders and Operating Partnership (“OP”) unit holders), was approximately $35.2 million, a decrease of approximately $11.4 million when compared to the same period in 2023.
• FFO, as adjusted per share and OP unit outstanding – diluted was $0.32, a decrease of approximately $0.10 when compared to the same period in 2023.
• Same-store revenues decreased by 0.3%, same-store expenses increased by 5.0%, while same-store net operating income (“NOI”) decreased by 2.6% compared to the same period in 2023.
• Same-store average physical occupancy decreased by 0.7% to 92.4% compared to the same period in 2023.
• Same-store annualized rent per occupied square foot was approximately $19.96, an increase of approximately 0.5% when compared to the same period in 2023.

External Growth

During the quarter, the Company acquired a self-storage property in Spartanburg, SC. The property comprises approximately 110,000 net rentable square feet and 950 storage units. Also during the quarter, the Company acquired a self-storage property in Miami, FL. The property comprises approximately 95,200 net rentable square feet and 1,050 storage units. The combined purchase price was approximately $44.4 million.

Capital Market Activities

During the quarter, three of the Company’s joint ventures with SmartCentres closed on a $46.0 million CAD term loan (the “RBC JV Term Loan II”) with Royal Bank of Canada pursuant to which the Company’s joint venture subsidiaries that each own 50% of a joint venture property are borrowers. The RBC JV Term Loan is secured by first mortgages on such JV properties which were previously encumbered. The maturity date of the RBC JV Term Loan II is November 3, 2025, which may be requested to be extended by one additional year at the sole discretion of RBC and subject to certain conditions. Interest is a fixed annual rate of 4.97%. The net proceeds from the RBC JV Term Loan II were used to fully repay the allocated loan amounts of approximately $46.4 million CAD or approximately $34.1 million USD under loans previously provided by SmartCentres for each of the three JV properties. As of September 30, 2024, approximately $46.0 million CAD or approximately $34.0 million USD, was outstanding on the RBC JV Term Loan II. As of September 30, 2024, SmartStop’s proportionate percentage of that financing was $23.0 million CAD, or $17.0 million USD.

During the quarter, the Company entered into a bridge loan with KeyBank for up to $45.0 million (the “KeyBank Bridge Loan”) which matures on July 31, 2025. At closing, the Company drew $20.0 million. There were no subsequent draws within 90 days after initial closing, and the Company no longer has the ability to draw additional funds pursuant to this loan. The KeyBank Bridge Loan was completed in connection with Strategic Storage Growth Trust III, Inc.’s (“SSGT III”) acquisition of two self storage facilities on July 31, 2024, whereby our Operating Partnership provided a similar 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 closing on such properties. An indirect wholly-owned subsidiary of SSGT III is sponsoring a private offering of beneficial interests in a Delaware statutory trust (“DST”) relating to the two properties. SmartStop, through a newly formed subsidiary of SmartStop REIT Advisors, LLC, will serve as property manager of both properties. The KeyBank Bridge Loan incurs interest based on adjusted daily simple SOFR plus 275 basis points. The SSGT III Bridge Loan incurs interest based on adjusted daily simple SOFR plus 300 basis points. As of September 30, 2024, $5.0 million was outstanding on both the KeyBank Bridge Loan and the SSGT III Bridge Loan.

Managed REIT Platform Update

SmartStop, through an indirect subsidiary, serves as the sponsor of SSGT III and Strategic Storage Trust VI, Inc. (“SST VI” and together with SSGT III, the “Managed REITs”). SmartStop receives asset management fees, property management fees, acquisition fees, and other fees and receives substantially all of the tenant protection program revenue earned by the Managed REITs, which had a combined portfolio of 34 operating properties and approximately 26,500 units and 2.9 million rentable square feet at quarter end. Assets under management for the Managed REITs was approximately $780.7 million at quarter end. SmartStop also manages one additional property, not owned by the Managed REITs.

Recent Hurricane Activity

Hurricane Helene caused record flooding in late September 2024 in Asheville, North Carolina. Before, during and after the storm, the Company prioritized the safety and security of our employees, customers and properties. For all 14 of the Company’s wholly-owned properties in the Asheville area, except for one, the impact was generally limited to wind, wind-blown debris and downed trees and branches, with minimal damage sustained. These properties were temporarily closed, but resumed operations shortly after the storm.

One property, which represented approximately 66,400 net rentable square feet and 390 units, sustained significant damage due to flooding. As a result of the flooding and related damage, the Company recorded a net casualty loss of approximately $4.6 million during the three months ended September 30, 2024, to write-off the carrying value. The Company expects to rebuild and therefore believes it probable that it will receive insurance proceeds to offset the casualty loss, and has recorded a receivable related to the pending insurance claims. Consequently the casualty loss was completely offset by such recovery. Any amount of insurance recovery related to the property damage in excess of the casualty loss incurred is considered a gain contingency, and will be recognized upon final settlement of the claims. Additionally, the Company accrued $0.5 million related to other losses, which was included in property operating expenses.

Since Hurricane Helene passed, the Company has worked towards quickly re-opening our properties, except the flooded Asheville property, to normal operating conditions, with our efforts focused on debris cleanup and removal and other more minor repairs.

Subsequent to September 30, 2024, Hurricane Milton also made landfall in Florida and the majority of the Company’s Florida properties were temporarily closed but resumed operations shortly after the storm. Damages were generally minor and limited to wind, downed fences, wind-blown debris and downed trees and branches.

Declared Distributions

On September 27, 2024, our board of directors declared a distribution rate for the month of October 2024 of approximately $0.0508 per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on October 31, 2024. Such distributions payable to each stockholder of record will be paid the following month.

On October 25, 2024, our board of directors declared a distribution rate for the month of November 2024 of approximately $0.0492 per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on November 30, 2024. Such distributions payable to each stockholder of record will be paid the following month.

N/M Not meaningful

SmartStop's same-store revenue decreased by approximately $0.2 million, or approximately 0.4%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to an approximately 0.7% decrease in average occupancy. The increase in property operating expenses is primarily attributable to increased property insurance costs, payroll costs, repairs and maintenance expenses, and advertising expenses.

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):

N/M Not meaningful

SmartStop's same-store revenue decreased by approximately $0.4 million, or approximately 0.3%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due to an approximately 0.7% decrease in average occupancy, partially offset by an approximately 0.5% increase in annualized rent per occupied square foot. The increase in property operating expenses is primarily attributable to increased property insurance costs, payroll costs, repairs and maintenance expenses, and advertising expenses.

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):

ADDITIONAL INFORMATION REGARDING NOI, FFO, and FFO, as adjusted

Net Operating Income (“NOI”)

NOI is a non-GAAP measure that SmartStop defines as net income (loss), computed in accordance with GAAP, generated from properties, excluding tenant protection plan revenue, before corporate general and administrative expenses, asset management fees, interest expense, depreciation, amortization, acquisition expenses and other non-property related expenses. SmartStop believes that NOI is useful for investors as it provides a measure of the operating performance of its operating assets because NOI excludes certain items that are not associated with the ongoing operation of the properties. Additionally, SmartStop believes that NOI is a widely accepted measure of comparative operating performance in the real estate community. However, SmartStop’s use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount.

Funds from Operations (“FFO”) and FFO, as Adjusted

Funds from Operations

Funds from operations ("FFO"), is a non-GAAP financial metric promulgated by NAREIT that SmartStop believes is an appropriate supplemental measure to reflect operating performance. SmartStop defines FFO consistent with the standards established by the white paper on FFO approved by the board of governors of NAREIT, or the White Paper. The White Paper defines FFO as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of property and real estate related asset impairment write downs, plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Additionally, gains and losses from change in control are excluded from the determination of FFO. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. SmartStop’s FFO calculation complies with NAREIT’s policy described above.

FFO, as Adjusted

SmartStop uses FFO, as adjusted, as an additional non-GAAP financial measure to evaluate their operating performance. FFO, as adjusted, provides investors with supplemental performance information that is consistent with the performance models and analysis used by management. In addition, FFO, as adjusted, is a measure used among SmartStop’s peer group, which includes publicly traded REITs. Further, SmartStop believes FFO, as adjusted, is useful in comparing the sustainability of their operating performance with the sustainability of the operating performance of other real estate companies.

In determining FFO, as adjusted, SmartStop makes further adjustments to the NAREIT computation of FFO to exclude the effects of non-real estate related asset impairments and intangible amortization, acquisition related costs, other write-offs incurred in connection with acquisitions, contingent earnout expenses, accretion of fair value of debt adjustments, amortization of debt issuance costs, gains or losses from extinguishment of debt, adjustments of deferred tax assets and liabilities, realized and unrealized gains/losses on foreign exchange transactions, gains/losses on foreign exchange and interest rate derivatives not designated for hedge accounting, and other select non-recurring income or expense items which SmartStop believes are not indicative of their overall long-term operating performance. SmartStop excludes these items from GAAP net income (loss) to arrive at FFO, as adjusted, as they are not the primary drivers in their decision-making process and excluding these items provides investors a view of their continuing operating portfolio performance over time, which in any respective period may experience fluctuations in such acquisition, merger or other similar activities that are not of a long-term operating performance nature. FFO, as adjusted, also reflects adjustments for unconsolidated partnerships and jointly owned investments. SmartStop uses FFO, as adjusted, as one measure of their operating performance when they formulate corporate goals and evaluate the effectiveness of their strategies.

Presentation of FFO and FFO, as adjusted, is intended to provide useful information to investors as they compare the operating performance of different REITs. However, not all REITs calculate FFO and FFO, as adjusted, the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and FFO, as adjusted, are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance, as an alternative to cash flows from operations as an indication of SmartStop’s liquidity or indicative of funds available to fund their cash needs including their ability to make distributions to their stockholders. FFO and FFO, as adjusted, should be reviewed in conjunction with other measurements as an indication of our performance.

Neither the SEC, NAREIT, nor any other regulatory body has passed judgment on the acceptability of the adjustments that SmartStop uses to calculate FFO or FFO, as adjusted. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the publicly registered, non-traded REIT industry and SmartStop would have to adjust its calculation and characterization of FFO or FFO, as adjusted.

This press release, our Form 10-Q for the three and nine months ended September 30, 2024, a financial supplement, and additional information about SmartStop are available on our website, investors.smartstopselfstorage.com.

About SmartStop Self Storage REIT, Inc. (“SmartStop”):

SmartStop Self Storage REIT, Inc. (“SmartStop”) is a self-managed REIT with a fully integrated operations team of approximately 525 self-storage professionals focused on growing the SmartStop® Self Storage brand. SmartStop, through its indirect subsidiary SmartStop REIT Advisors, LLC, also sponsors other self-storage programs. As of November 13, 2024, SmartStop has an owned or managed portfolio of 203 operating properties in 22 states and Canada, comprising approximately 144,000 units and 16.2 million rentable square feet. SmartStop and its affiliates own or manage 37 operating self-storage properties in Canada, which total approximately 32,300 units and 3.3 million rentable square feet.

Forward-Looking Statements

Certain of the matters discussed in this earnings release, other than historical facts, constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. There are several factors which could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements, including, without limitation, the following: (i) disruptions in the economy, including debt and banking markets and foreign currency changes; (ii) significant transaction costs, including financing costs, and unknown liabilities; (iii) whether we will be successful in the pursuit of our business plan; (iv) whether we will succeed in our investment objectives; (v) changes in the political and economic climate, economic conditions and fiscal imbalances in the United States, and other major developments, including wars, natural disasters, epidemics and pandemics, military actions, and terrorist attacks; (vi) changes in tax and other laws and regulations; (vii) difficulties in our ability to attract and retain qualified personnel and management; or (viii) the effect of competition at our self-storage properties or from other storage alternatives, which could cause rents and occupancy rates to decline.

Actual results may differ materially from those indicated by such forward-looking statements. In addition, the forward-looking statements represent SmartStop’s views as of the date on which such statements were made. SmartStop anticipates that subsequent events and developments may cause its views to change. These forward-looking statements should not be relied upon as representing SmartStop’s views as of any date subsequent to the date hereof.

Additional risk factors that may affect the business or financial results of SmartStop are described in the risk factors included in SmartStop’s filings with the SEC, including SmartStop’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, 10-Q for the quarter ending September 30, 2024 and Current Reports on Form 8-K, which factors are incorporated herein by reference, all of which are filed with the SEC and available at www.sec.gov. All forward-looking statements speak only as of the date hereof and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. SmartStop expressly disclaims a duty to provide updates to forward-looking statements, whether as a result of new information, future events or other occurrences.

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