Monday, September 20

SmartStop Self Storage REIT, Inc. Reports Strong Second Quarter 2021 Results With Record Same-Store Revenue and NOI Growth


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LADERA RANCH, Calif. — SmartStop Self Storage REIT, Inc. (“SmartStop”), a self-managed and fully-integrated self storage company with approximately $1.8 billion of self storage assets under management, announced its overall results for the three and six months ended June 30, 2021.

“SmartStop had an exceptionally strong second quarter, with our highest ever recorded same-store occupancy of 96.3% at quarter end and strong rental rate growth. This resulted in same-store revenue and NOI growth of 21.5% and 28.7% for the quarter, respectively, both higher than all of our publicly-traded peers,” said H. Michael Schwartz, Chairman and Chief Executive Officer of SmartStop. “Our best-in-class portfolio posted strong results in all of our markets throughout North America. Specifically, the Greater Toronto Area (“the GTA”) was our best performing market this quarter with same-store revenue and NOI growth of 33.6% and 45.0%, respectively. The GTA continues to be a high performing market, a key differentiator between SmartStop and our peer group and a primary piece of our Company’s growth initiatives. On the external growth front, we continue to find accretive acquisitions, acquiring two wholly-owned properties for $31 million during the quarter and our acquisition pipeline remains healthy. With ample attractively priced capital, a strong acquisitions pipeline and a robust operating environment, we believe the company is well positioned to execute both our internal and external growth initiatives, driving stockholder value in 2021 and beyond.”

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Three Months Ended June 30, 2021 Financial Highlights:

  • Net loss attributable to common stockholders decreased by approximately $4.6 million when compared to the same period in 2020. Net loss per Class A and Class T shares (basic and diluted) decreased $0.09 when compared to the same period in 2020.
  • Total self storage-related revenues increased by approximately $14.0 million, or 53.6%, when compared to the same period in 2020.
  • FFO, as adjusted (attributable to common stockholders and Operating Partnership (“OP”) unit holders), increased by approximately $7.7 million, or 445%, when compared to the same period in 2020.
  • FFO, as adjusted per share and OP unit outstanding – diluted was $0.10, an increase of $0.07, or 233%, when compared to the same period in 2020.
  • Same-store revenues increased by 21.5% compared to the same period in 2020.
  • Same-store expenses increased by 7.2% compared to the same period in 2020.
  • Same-store NOI increased by 28.7% compared to the same period in 2020.
  • Same-store average physical occupancy increased by 6.1% to 95.8% for the three months ended June 30, 2021, compared to 89.7% during the same period in 2020.
  • Same-store annualized rent per occupied square foot was approximately $16.50 for the three months ended June 30, 2021, which represented an increase of approximately 14.7% when compared to the same period in 2020.

Six Months Ended June 30, 2021 Financial Highlights:

  • Net loss attributable to common stockholders decreased by approximately $25.8 million when compared to the same period in 2020. Net loss per Class A and Class T shares (basic and diluted) decreased $0.50 when compared to the same period in 2020.
  • Total self storage-related revenues increased by approximately $18.3 million, or 34.7%, when compared to the same period in 2020.
  • Same-store revenues increased by 15.5% compared to the same period in 2020.
  • Same-store expenses increased by 4.1% compared to the same period in 2020.
  • Same-store NOI increased by 21.4% compared to the same period in 2020.
  • Same-store average physical occupancy increased by 5.3% to 94.5% for the six months ended June 30, 2021, compared to 89.2% during the same period in 2020.
  • Same-store annualized rent per occupied square foot was approximately $15.93 for the six months ended June 30, 2021, which represented an increase of approximately 8.9% when compared to the same period in 2020.

External Growth

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In April, SmartStop acquired a recently built, six-story self storage facility in Oakville, Ontario, Canada. The property was completed in April 2020 and was approximately 40% occupied at acquisition. The property’s 1,070 units are 100% climate-controlled across approximately 81,500 square feet. The property offers customers a variety of amenities including state-of-the-art security systems, elevators, keypad access, a gated drive-in loading area and more. The facility is our third in Oakville, establishing SmartStop as a dominant player in the submarket. This was SmartStop’s 17th owned or managed operating property in the GTA.

In May, SmartStop acquired a self storage facility in Riverside, CA, the most populous city in Southern California’s “Inland Empire.” This prime location has great visibility from Van Buren Boulevard and provides easy access from the Riverside Freeway. The facility serves the communities of La Sierra, Corona, East Vale, Ramona, and Jurupa Valley and is located next to Riverside Municipal Airport. The property’s 379 units and 71 RV parking spaces span across approximately 68,700 square feet. The property offers customers a variety of amenities including a gated drive-in loading area, state-of-the-art security systems, keypad access and large truck accessibility. With an RV parking component, this new facility offers customers a complimentary product type from our two neighboring SmartStop facilities, one of which is directly adjacent. The facility is the Company’s third in the submarket and 29th owned or managed location in California.

Declared Distributions

On June 23, 2021, SmartStop’s board of directors declared a distribution rate for the third quarter of 2021, of approximately $0.00164 per day per share on the outstanding shares of common stock payable to both Class A and Class T stockholders. In connection with these distributions, after the stockholder servicing fee is paid, approximately $0.0014 per day will be paid per Class T share. Such distributions payable to each stockholder of record during a month will be paid the following month.

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30,

2021

(Unaudited)

December 31,

2020

ASSETS

Real estate facilities:

Land

$

396,430,618

$

335,800,354

Buildings

1,101,336,919

810,480,845

Site improvements

77,553,126

63,821,383

1,575,320,663

1,210,102,582

Accumulated depreciation

(135,187,165

)

(115,903,045

)

1,440,133,498

1,094,199,537

Construction in process

1,857,047

1,761,303

Real estate facilities, net

1,441,990,545

1,095,960,840

Cash and cash equivalents

26,580,765

72,705,624

Restricted cash

7,276,448

7,952,052

Investments in unconsolidated real estate ventures

20,682,690

Investments in and advances to Managed REITs

12,033,750

15,624,389

Other assets, net

14,087,618

7,734,276

Intangible assets, net of accumulated amortization

21,190,218

12,406,427

Trademarks, net of accumulated amortization

16,123,529

16,194,118

Goodwill

53,643,331

53,643,331

Debt issuance costs, net of accumulated amortization

2,258,004

Total assets

$

1,615,866,898

$

1,282,221,057

LIABILITIES AND EQUITY

Debt, net

$

849,209,991

$

717,952,233

Accounts payable and accrued liabilities

24,971,528

23,038,976

Due to affiliates

694,739

667,429

Distributions payable

8,088,854

6,650,317

Contingent earnout

19,900,000

28,600,000

Deferred tax liabilities

7,704,673

8,380,215

Total liabilities

910,569,785

785,289,170

Commitments and contingencies

Redeemable common stock

64,028,104

57,335,575

Preferred stock, $0.001 par value; 200,000,000 shares authorized:

Series A Convertible Preferred Stock, $0.001 par value; 200,000 shares authorized; 200,000 and 200,000 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively, with aggregate liquidation preferences of $203,116,438 and $202,928,620 at June 30, 2021 and December 31, 2020, respectively

196,356,107

196,356,107

Equity:

SmartStop Self Storage REIT, Inc. equity:

Class A common stock, $0.001 par value; 350,000,000 shares authorized; 76,516,281 and 52,660,402 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

76,517

52,661

Class T common stock, $0.001 par value; 350,000,000 shares authorized; 7,978,951 and 7,903,911 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

7,979

7,904

Additional paid-in capital

724,292,971

492,408,006

Distributions

(185,799,706

)

(163,953,169

)

Accumulated deficit

(159,234,728

)

(141,444,880

)

Accumulated other comprehensive loss

(1,882,006

)

(3,834,228

)

Total SmartStop Self Storage REIT, Inc. equity

377,461,027

183,236,294

Noncontrolling interests in our Operating Partnership

67,440,975

59,982,111

Other noncontrolling interests

10,900

21,800

Total noncontrolling interests

67,451,875

60,003,911

Total equity

444,912,902

243,240,205

Total liabilities and equity

$

1,615,866,898

$

1,282,221,057

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SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Revenues:

Self storage rental revenue

$

38,104,699

$

24,946,793

$

67,608,141

$

50,514,812

Ancillary operating revenue

2,027,041

1,183,418

3,584,471

2,336,261

Managed REIT Platform revenue

1,058,291

1,852,893

3,346,031

3,636,680

Reimbursable costs from Managed REITs

1,061,619

1,486,441

2,277,662

3,279,915

Total revenues

42,251,650

29,469,545

76,816,305

59,767,668

Operating expenses:

Property operating expenses

12,479,969

9,195,043

22,823,250

18,870,069

Managed REIT Platform expenses

316,142

1,008,014

636,032

2,182,823

Reimbursable costs from Managed REITs

1,061,619

1,486,441

2,277,662

3,279,915

General and administrative

6,811,313

4,149,713

11,564,302

7,817,660

Depreciation

10,742,801

7,842,443

19,286,728

15,559,114

Intangible amortization expense

3,653,681

3,218,152

4,913,228

6,887,783

Acquisition expenses

30,448

97,221

336,098

125,326

Contingent earnout adjustment

400,000

500,000

2,519,744

(6,700,000

)

Impairment of goodwill and intangible assets

36,465,732

Impairment of investments in Managed REITs

4,376,879

Write-off of equity interest and preexisting relationships in SST IV upon acquisition of control

8,389,573

Total operating expenses

35,495,973

27,497,027

72,746,617

88,865,301

Gain on sale of real estate

178,631

178,631

Operating income (loss)

6,934,308

1,972,518

4,248,319

(29,097,633

)

Other income (expense):

Interest expense

(7,950,702

)

(8,284,429

)

(15,926,166

)

(16,623,732

)

Interest expense – accretion of fair market value of secured debt

31,250

32,892

63,116

65,549

Interest expense – debt issuance costs

(496,897

)

(936,278

)

(1,169,370

)

(1,879,761

)

Net loss on extinguishment of debt

(2,444,788

)

Other

171,203

152,456

1,614,585

2,729,155

Net loss

(1,310,838

)

(7,062,841

)

(13,614,304

)

(44,806,422

)

Net loss attributable to the noncontrolling interests in our Operating Partnership

546,092

933,443

2,023,086

5,965,095

Less: Distributions to preferred stockholders

(3,116,438

)

(2,362,023

)

(6,198,630

)

(4,724,045

)

Net loss attributable to SmartStop Self Storage REIT, Inc. common stockholders

$

(3,881,184

)

$

(8,491,421

)

$

(17,789,848

)

$

(43,565,372

)

Net loss per Class A share – basic and diluted

$

(0.05

)

$

(0.14

)

$

(0.24

)

$

(0.74

)

Net loss per Class T share – basic and diluted

$

(0.05

)

$

(0.14

)

$

(0.24

)

$

(0.74

)

Weighted average Class A shares outstanding – basic and diluted

75,994,754

51,622,509

66,252,067

51,469,807

Weighted average Class T shares outstanding – basic and diluted

7,960,999

7,776,128

7,944,502

7,764,393

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SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NON-GAAP MEASURE – COMPUTATION OF ADJUSTED FUNDS FROM OPERATIONS

(Unaudited)

Three Months

Ended

June 30, 2021

Three Months

Ended

June 30, 2020

Six Months

Ended

June 30, 2021

Six Months

Ended

June 30, 2020

Net loss (attributable to common stockholders)

$

(3,881,184

)

$

(8,491,421

)

$

(17,789,848

)

$

(43,565,372

)

Add:

Depreciation of real estate

10,521,283

7,705,792

18,898,768

15,293,130

Depreciation and amortization of real estate and intangible assets from unconsolidated entities

213,959

230,996

Amortization of real estate related intangible assets

3,441,144

2,170,465

4,003,229

4,343,030

Gain on deconsolidation

(169,533

)

(169,533

)

Gain on sale of real estate

(178,631

)

(178,631

)

Deduct:

Adjustment for noncontrolling interests

(1,500,869

)

(1,305,577

)

(2,616,924

)

(2,603,208

)

FFO (attributable to common stockholders)

8,446,169

79,259

2,378,057

(26,532,420

)

Other Adjustments:

Intangible amortization expense – contracts(1)

212,537

1,047,687

909,999

2,544,753

Acquisition expenses(2)

30,448

97,221

336,098

125,326

Acquisition expenses and foreign currency (gains) losses, net from unconsolidated entities

107,388

107,388

Contingent earnout adjustment(3)

400,000

500,000

2,519,744

(6,700,000

)

Impairment of goodwill and intangible assets(4)

36,465,732

Impairment of investments in Managed REITs(4)

4,376,879

Write-off of equity interest and preexisting relationships in SST IV upon acquisition of control

8,389,573

Accretion of fair market value of secured debt(5)

(31,250

)

(32,892

)

(63,116

)

(65,549

)

Net loss on extinguishment of debt(6)

2,444,788

Foreign currency and interest rate derivative (gains) losses, net(7)

(643,547

)

(57,676

)

(425,549

)

109,843

Adjustment of deferred tax liabilities(1)

(56,880

)

(276,216

)

(1,929,746

)

(3,023,113

)

Adjustment for noncontrolling interests

(1,784

)

(168,680

)

(1,435,079

)

(4,488,613

)

FFO, as adjusted (attributable to common stockholders)

8,463,081

1,188,703

13,232,157

2,812,838

Net loss attributable to the noncontrolling interests in our Operating Partnership

(546,092

)

(933,443

)

(2,023,086

)

(5,965,095

)

Adjustment for noncontrolling interests

1,502,653

1,474,257

4,052,003

7,091,820

FFO, as adjusted (attributable to common Stockholders and OP unit holders)

$

9,419,642

$

1,729,517

$

15,261,074

$

3,939,563

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(1)

These items represent the amortization, accretion, or adjustment of intangible assets or deferred tax liabilities. As these items are non-cash and not primary drivers in SmartStop’s decision-making process, FFO is adjusted for their effect to arrive at FFO, as adjusted, as a means of determining a comparable sustainable operating performance metric to other real estate companies.

(2)

In evaluating investments in real estate, SmartStop differentiates the costs to acquire the investment from the operations derived from the investment. Such information would be comparable only for publicly registered, non-traded REITs that have generally completed their acquisition activity and have other similar operating characteristics.

(3)

The contingent earnout adjustment represents the adjustment to the fair value of the Class A-2 Units issued in connection with the Self Administration Transaction. FFO is adjusted to arrive at FFO, as adjusted, as this acquisition related item is not a primary driver in SmartStop’s decision-making process and excluding this provides investors a view of SmartStop’s continuing operating portfolio performance over time.

(4)

The impairment charges relate to SmartStop’s goodwill, intangible assets and investments in the Managed REIT Platform acquired in the Self Administration Transaction. SmartStop believes that adjusting for such non-recurring items provides useful supplemental information because such expenses may not be reflective of on-going operations and is consistent with management’s analysis of SmartStop’s operating performance and provides for a means of determining a comparable sustainable operating performance metric.

(5)

This represents the difference between the stated interest rate and the estimated market interest rate on assumed notes as of the date of acquisition. Such amounts have been excluded from FFO, as adjusted, because SmartStop believes FFO, as adjusted, provides useful supplementary information by focusing on operating fundamentals, rather than events not related to SmartStop’s normal operations. SmartStop is responsible for managing interest rate risk and do not rely on another party to manage such risk.

(6)

The net loss associated with the extinguishment of debt includes prepayment penalties, the write-off of unamortized deferred financing fees, and other fees incurred. SmartStop believes that adjusting for such non-recurring items provides useful supplemental information because such losses may not be reflective of on-going transactions and operations and is consistent with management’s analysis of SmartStop’s operating performance.

(7)

This represents the mark-to-market adjustment for SmartStop’s derivative instruments not designated for hedge accounting and the ineffective portion of the change in fair value of derivatives recognized in earnings, as well as changes in foreign currency related to SmartStop’s foreign equity investments not classified as long term. These derivative contracts are intended to manage the Company’s exposure to interest rate and foreign currency risk which may not be reflective of SmartStop’s ongoing performance and may reflect unrealized impacts on SmartStop’s operating performance. Such amounts are recorded in “Other” within SmartStop’s consolidated statements of operations.

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

The following table sets forth operating data for SmartStop’s same-store facilities (those properties included in the consolidated results of operations since January 1, 2020, excluding nine lease-up properties SmartStop owned as of January 1, 2020) for the three months ended June 30, 2021 and 2020. SmartStop considers the following data to be meaningful as this allows for the comparison of results without the effects of acquisition, lease up, or development activity.

Same-Store Facilities

Non Same-Store Facilities

Total

2021

2020

%

Change

2021

2020

%

Change

2021

2020

%

Change

Revenue (1)

$

30,011,041

$

24,702,072

21.5

%

$

10,120,699

$

1,428,139

N/M

$

40,131,740

$

26,130,211

53.6

%

Property operating expenses (2)

8,878,839

8,279,464

7.2

%

3,601,130

915,579

N/M

12,479,969

9,195,043

35.7

%

Property operating income

$

21,132,202

$

16,422,608

28.7

%

$

6,519,569

$

512,560

N/M

$

27,651,771

$

16,935,168

63.3

%

Number of facilities

103

103

36

(6)

9

139

(6)

112

Rentable square feet (3)

7,595,600

7,557,300

2,982,400

680,300

10,578,000

(6)

8,237,600

Average physical occupancy (4)

95.8

%

89.7

%

N/M

N/M

94.6

%

88.1

%

Annualized rent per occupied square foot (5)

$

16.50

$

14.38

N/M

N/M

$

16.18

$

14.12

N/M Not meaningful

(1)

Revenue includes rental revenue, Tenant Programs revenue, ancillary revenue, and administrative and late fees.

(2)

Property operating expenses excludes corporate general and administrative expenses, interest expense, depreciation, amortization expense, and acquisition expenses.

(3)

Of the total rentable square feet, parking represented approximately 937,000 square feet and 678,000 square feet as of June 30, 2021 and 2020, respectively. On a same-store basis, for the same periods, parking represented approximately 678,000 square feet.

(4)

Determined by dividing the sum of the month-end occupied square feet for the applicable group of facilities for each applicable period by the sum of their month-end rentable square feet for the period.

(5)

Determined by dividing the aggregate realized rental income for each applicable period by the aggregate of the month-end occupied square feet for the period. Properties are included in the respective calculations in their first full month of operations, as appropriate. SmartStop has excluded the realized rental revenue and occupied square feet related to parking herein for the purpose of calculating annualized rent per occupied square foot.

(6)

Included in the non same-store data is a self storage facility consisting of approximately 84,000 square feet owned by SST VI OP for the period during which SmartStop consolidated their financial statements. As of June 30, 2021, SmartStop was no longer required to consolidate their financial statements.

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SmartStop’s same-store revenue increased by approximately $5.3 million for the three months ended June 30, 2021 compared to the three months ended June 30, 2020 due to higher annualized rent per occupied square foot and increased occupancy.

The following table presents a reconciliation of net loss as presented on SmartStop’s consolidated statements of operations to property operating income, as stated above, for the periods indicated:

For the Three Months Ended June 30,

2021

2020

Net loss

$

(1,310,838

)

$

(7,062,841

)

Adjusted to exclude:

Managed REIT Platform revenue

(1,058,291

)

(1,852,893

)

Managed REIT Platform expenses

316,142

1,008,014

General and administrative

6,811,313

4,149,713

Depreciation

10,742,801

7,842,443

Intangible amortization expense

3,653,681

3,218,152

Acquisition expenses

30,448

97,221

Contingent earnout adjustment

400,000

500,000

Gain on sale of real estate

(178,631

)

Interest expense

7,950,702

8,284,429

Interest expense – accretion of fair market value of secured debt

(31,250

)

(32,892

)

Interest expense – debt issuance costs

496,897

936,278

Other

(171,203

)

(152,456

)

Total property operating income

$

27,651,771

$

16,935,168

The following table presents a reconciliation of same-store metrics by Metropolitan Statistical Area (“MSA”) or Census Metropolitan Areas (“CMA”), for the periods indicated:

% of

# of

Net Rentable

Net Rent per
Occupied Sq. Ft.
for the Three
Months Ended
June 30,(1)

Avg.
Occupancy for
the Three
Months Ended
June 30,

%

Revenue for the Three
Months Ended June 30,(3)

%

Expenses for the Three
Months Ended June 30,(3)

%

NOI for the Three Months
Ended June 30,(3)

%

MSA/CMA

NOI

Stores

Sq. Ft.

Units

2021

2020

2021

2020

Change

2021

2020

Change

2021

2020

Change

2021

2020

Change

Miami – Fort Lauderdale

15.8

%

9

941,400

7,750

$

20.65

$

18.70

94.8

%

88.8

%

6.0

%

$

4,429,592

$

3,790,280

16.9

%

$

1,087,089

$

1,009,228

7.7

%

$

3,342,503

$

2,781,052

20.2

%

Toronto (2)

14.7

%

10

849,600

7,800

20.20

15.13

95.5

%

92.5

%

3.0

%

4,222,800

3,159,757

33.6

%

1,107,797

1,011,978

9.5

%

3,115,003

2,147,779

45.0

%

Los Angeles

11.4

%

10

660,400

6,200

19.78

17.75

96.8

%

90.8

%

5.9

%

3,201,084

2,640,544

21.2

%

794,447

750,095

5.9

%

2,406,637

1,890,449

27.3

%

Asheville

7.6

%

13

780,200

5,530

12.79

11.35

95.4

%

89.3

%

6.1

%

2,243,269

1,941,617

15.5

%

645,575

579,851

11.3

%

1,597,694

1,361,766

17.3

%

Las Vegas

7.2

%

5

552,500

4,380

15.30

13.35

96.3

%

91.3

%

5.0

%

1,871,000

1,523,832

22.8

%

355,546

344,191

3.3

%

1,515,454

1,179,641

28.5

%

San Francisco – Oakland

6.2

%

4

322,600

2,920

21.93

19.66

95.5

%

88.5

%

7.1

%

1,748,144

1,436,514

21.7

%

445,084

421,353

5.6

%

1,303,060

1,015,161

28.4

%

Detroit

3.1

%

4

266,100

2,220

13.05

11.93

96.8

%

87.8

%

8.9

%

874,187

724,116

20.7

%

212,137

200,405

5.9

%

662,050

523,711

26.4

%

Riverside – SB

3.0

%

3

180,700

1,770

17.58

14.50

98.8

%

92.8

%

6.0

%

828,481

643,495

28.7

%

192,051

186,064

3.2

%

636,430

457,431

39.1

%

Dayton

2.8

%

7

392,400

3,340

10.58

8.89

95.5

%

92.9

%

2.6

%

1,035,962

857,345

20.8

%

441,251

361,157

22.2

%

594,711

496,188

19.9

%

Port St. Lucie

2.7

%

3

251,600

2,010

15.46

13.49

96.6

%

86.9

%

9.7

%

896,173

707,321

26.7

%

333,659

344,826

-3.2

%

562,514

362,495

55.2

%

Denver

2.6

%

5

290,700

2,550

12.73

11.66

96.3

%

86.7

%

9.6

%

945,909

779,657

21.3

%

401,721

375,148

7.1

%

544,188

404,509

34.5

%

Chicago

2.4

%

5

315,600

2,880

11.97

10.82

95.8

%

87.7

%

8.1

%

959,511

785,361

22.2

%

459,223

416,239

10.3

%

500,288

369,122

35.5

%

Myrtle Beach

2.1

%

2

197,800

1,450

12.51

11.86

93.7

%

88.0

%

5.8

%

572,286

501,239

14.2

%

133,829

127,569

4.9

%

438,457

373,670

17.3

%

Raleigh – Cary

1.4

%

3

163,800

1,090

11.02

10.17

96.6

%

89.6

%

7.0

%

436,942

369,200

18.3

%

151,057

159,630

-5.4

%

285,885

209,570

36.4

%

Other

17.2

%

20

1,430,200

12,780

16.42

14.53

95.9

%

89.1

%

6.7

%

5,745,701

4,841,794

18.7

%

2,118,373

1,991,730

6.4

%

3,627,328

2,850,064

27.3

%

Total Same-Store

100.0

%

103

7,595,600

64,670

$

16.50

$

14.38

95.8

%

89.7

%

6.1

%

$

30,011,041

$

24,702,072

21.5

%

$

8,878,839

$

8,279,464

7.2

%

$

21,132,202

$

16,422,608

28.7

%

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(1)

RentPOF defined as rental revenue net of discounts & concessions, excluding late fees, admin fees and parking income, divided by occupied square feet of storage..

(2)

Presented in US Dollars (USD) as translated on average for the quarter.

(3)

Same-store revenue, expense and NOI are non-GAAP measures. See Computation of Same-Store Operating Results for a reconciliation of these measures to the most directly comparable GAAP financial measures.

The following table sets forth operating data for SmartStop’s same-store facilities (those properties included in the consolidated results of operations since January 1, 2020, excluding nine lease-up properties SmartStop owned as of January 1, 2020) for the six months ended June 30, 2021 and 2020. SmartStop considers the following data to be meaningful as this allows for the comparison of results without the effects of acquisition, lease up, or development activity.

Same-Store Facilities

Non Same-Store Facilities

Total

2021

2020

%

Change

2021

2020

%

Change

2021

2020

%

Change

Revenue (1)

$

57,882,936

$

50,107,107

15.5

%

$

13,309,676

$

2,743,966

N/M

$

71,192,612

$

52,851,073

34.7

%

Property operating expenses (2)

17,696,351

16,996,158

4.1

%

5,126,899

1,873,911

N/M

22,823,250

18,870,069

20.9

%

Property operating income

$

40,186,585

$

33,110,949

21.4

%

$

8,182,777

$

870,055

N/M

$

48,369,362

$

33,981,004

42.3

%

Number of facilities

103

103

36

(6)

9

139

(6)

112

Rentable square feet (3)

7,595,600

7,557,300

2,982,400

680,300

10,578,000

(6)

8,237,600

Average physical occupancy (4)

94.5

%

89.2

%

N/M

N/M

93.5

%

87.4

%

Annualized rent per occupied square foot (5)

$

15.93

$

14.63

N/M

N/M

$

15.72

$

14.40

N/M Not meaningful

(1)

Revenue includes rental revenue, Tenant Programs revenue, ancillary revenue, and administrative and late fees.

(2)

Property operating expenses excludes corporate general and administrative expenses, interest expense, depreciation, amortization expense, and acquisition expenses. Property operating expenses for the six months ended June 30, 2020 also includes COVID-19 related costs, including specialized cleaning costs, the purchase of personal protective equipment, and bonuses to SmartStop’s store personnel, totaling approximately $0.5 million. On a same-store basis, COVID-19 related costs represented approximately $0.5 million of the total property operating expenses for the six months ended June 30, 2020.

(3)

Of the total rentable square feet, parking represented approximately 937,000 square feet and 678,000 square feet as of June 30, 2021 and 2020, respectively. On a same-store basis, for the same periods, parking represented approximately 678,000 square feet.

(4)

Determined by dividing the sum of the month-end occupied square feet for the applicable group of facilities for each applicable period by the sum of their month-end rentable square feet for the period.

(5)

Determined by dividing the aggregate realized rental income for each applicable period by the aggregate of the month-end occupied square feet for the period. Properties are included in the respective calculations in their first full month of operations, as appropriate. SmartStop has excluded the realized rental revenue and occupied square feet related to parking herein for the purpose of calculating annualized rent per occupied square foot.

(6)

Included in the non same-store data is a self storage facility consisting of approximately 84,000 square feet owned by SST VI OP for the period during which SmartStop consolidated their financial statements. As of June 30, 2021, SmartStop was no longer required to consolidate their financial statements.

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SmartStop’s same-store revenue increased by approximately $7.8 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020 due to higher annualized rent per occupied square foot and increased occupancy.

The following table presents a reconciliation of net loss as presented on SmartStop’s consolidated statements of operations to property operating income, as stated above, for the periods indicated:

For the Six Months Ended June 30,

2021

2020

Net loss

$

(13,614,304

)

$

(44,806,422

)

Adjusted to exclude:

Managed REIT Platform revenue

(3,346,031

)

(3,636,680

)

Managed REIT Platform expenses

636,032

2,182,823

General and administrative

11,564,302

7,817,660

Depreciation

19,286,728

15,559,114

Intangible amortization expense

4,913,228

6,887,783

Acquisition expenses

336,098

125,326

Contingent earnout adjustment

2,519,744

(6,700,000

)

Impairment of goodwill and intangible assets

36,465,732

Impairment of investments in Managed REITs

4,376,879

Write-off of equity interest and preexisting relationships in SST IV upon acquisition of control

8,389,573

Gain on sale of real estate

(178,631

)

Interest expense

15,926,166

16,623,732

Interest expense – accretion of fair market value of secured debt

(63,116

)

(65,549

)

Interest expense – debt issuance costs

1,169,370

1,879,761

Net loss on extinguishment of debt

2,444,788

Other

(1,614,585

)

(2,729,155

)

Total property operating income

$

48,369,362

$

33,981,004

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 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 (also referred to as property operating income) 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.

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

Funds from Operations

Funds from operations (“FFO”) is an industry wide metric promulgated by the National Association of Real Estate Investment Trusts, or NAREIT, which SmartStop believes to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure.

SmartStop defines FFO, a non-GAAP measure, 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 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 its operating performance. SmartStop previously used Modified Funds from Operations (“MFFO”) (as defined by the Institute for Portfolio Alternatives) as a non-GAAP measure of operating performance. Management replaced the MFFO measure with FFO, as adjusted, because 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 its 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, adjustments of fair value of debt adjustments, gains or losses from extinguishment of debt, accretion of deferred tax liabilities, realized and unrealized gains/losses on foreign exchange transactions, and gains/losses on foreign exchange and interest rate derivatives not designated for hedge accounting, which SmartStop believes are not indicative of the Company’s overall long-term operating performance. SmartStop excludes these items from GAAP net income to arrive at FFO, as adjusted, as they are not the primary drivers in its decision-making process and excluding these items provides investors a view of its continuing operating portfolio performance over time and makes its results more comparable period to period and to other REITs, 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 operating performance when SmartStop formulates corporate goals and evaluate the effectiveness of its strategies.

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Presentation of FFO and FFO, as adjusted, is intended to provide useful information to investors as they compare the operating performance of different REITs, although it should be noted that 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) or income (loss) from continuing operations as an indication of SmartStop’s performance, as an alternative to cash flows from operations, which is an indication of liquidity, or indicative of funds available to fund SmartStop’s cash needs including SmartStop’s ability to make distributions to its stockholders. FFO and FFO, as adjusted, should not be considered as an alternative to net income (determined in accordance with GAAP) and should be reviewed in conjunction with other measurements as an indication of SmartStop’s 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.

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

SmartStop is a self-managed REIT with a fully integrated operations team of approximately 400 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. SmartStop is the tenth-largest self storage company in the U.S., with approximately $1.8 billion of real estate assets under management, including an owned and managed portfolio of 155 properties in 19 states and Toronto, Canada and comprising approximately 105,000 units and 11.9 million rentable square feet. SmartStop and its affiliates own or manage 17 operating self storage properties in the Greater Toronto Area, which total approximately 14,300 units and 1.5 million rentable square feet. Additional information regarding SmartStop is available at www.smartstopselfstorage.com.

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Certain of the matters discussed in this communication 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.

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. Such forward-looking statements include, but are not limited to, statements about the expected effects and benefits of the SST IV merger, the SSGT merger, the self administration transaction and the Series A Preferred equity investment, including anticipated future financial and operating results and synergies, as well as all other statements in this press release, other than historical facts. 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) risks related to disruption of management’s attention from SmartStop’s ongoing business operations due to the SST IV merger, the self administration transaction, or other business matters; (ii) significant transaction costs, including financing costs, and unknown liabilities; (iii) failure to realize the expected benefits and synergies of either of the SST IV merger, the SSGT merger or the self administration transaction in the expected timeframes or at all; (iv) costs or difficulties related to the integration of acquired self storage facilities and operations, including facilities acquired through the SST IV merger, the SSGT merger and operations acquired through the self administration transaction; (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, including the outbreak of novel coronavirus (COVID-19), military actions, and terrorist attacks; (vi) changes in tax and other laws and regulations; or (vii) difficulties in SmartStop’s ability to attract and retain qualified personnel and management.

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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 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, 2020 and subsequent Quarterly Reports on Form 10-Q 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. SmartStop expressly disclaims a duty to provide updates to forward-looking statements, whether as a result of new information, future events or other occurrences.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210817005925/en/

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Contacts

David Corak
VP of Corporate Finance
SmartStop Self Storage REIT, Inc.
949-542-3331
[email protected]

#distro

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