Smartstop Self Storage REIT Inc (SMA) Q1 2026 Earnings Report, Transcript and Summary

Greetings, and welcome to Smartstop Self Storage REIT Inc Q1 2026 Earnings Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I would now like to turn the conference over to David Corak, senior vice president of corporate finance and strategy. Thank you. You may now begin.

Before we begin, I would like to remind everyone that certain statements made during today's call, including statements about our future plans, prospects, and expectations, may be considered forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act. Forward-looking statements are subject to numerous risks and uncertainties as described in our filings with the Securities and Exchange Commission, and these risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in our earnings release that we issued last night, along with the comments on this call, are made only as of today. The company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, we will also refer to certain non-GAAP financial measures. Information regarding our use of these measures and a reconciliation of these measures to GAAP measures can be found in our earnings release and supplemental disclosure that we issued last night and are available for download on our website at investors.smartstopselfstorage.com. In addition to myself, today, we have H. Schwartz, founder, chairman, and CEO, as well as James Barry, our CFO. Now I will turn it over to Michael.

Thank you, David, and thank you for joining us today for our first quarter earnings call. We posted strong same-store revenue growth of 1.5%, NOI growth of 2%, and maintained average occupancy of 92.5% while facing our toughest quarterly comp of the year. Operationally, we posted very strong results despite recent geopolitical news. With that said, 10 of our top 15 markets posted positive same-store NOI growth and good expense control led to a 30 basis point growth in our same-store operating margins. Likewise, other areas of our business outperformed expectations. We reported FFO as adjusted per share of $0.49, up 19.3% year over year. In February, we completed the recast of our $500 million syndicated bank facility at an all-in cost of about 30 basis points below the previous facility. Additionally, we acquired a parcel of land in Canada that we intend to develop into Class A storage in our SmartCentres joint venture. Lastly, in March, we entered into a strategic joint venture with Axxess Capital focused on providing bridge capital to self-storage sponsors across the United States. In terms of guidance, we are now narrowing our same-store revenue growth from a range of negative 0.5% to 2% to a range of negative 0.25% to 1.75%. Additionally, we are reducing our overall OpEx growth range from 2% to 4% to 1.75% to 3.75%. The result is an increase of our NOI growth midpoint from negative 40 basis points to negative 25 basis points. Additionally, we are narrowing our FFO as adjusted per share from $1.93 to $2.05 to a range of $1.94 to $2.04. Turning to operations, January and February were strong months for us, slightly above our initial expectations. In March, we saw a pullback in demand that directly coincided with the geopolitical news. This played through from March until about April when things really started to turn for the better. Demand has returned, and it appears rental season is upon us. We are still very early in the year, and in the self-storage business, rental season can end up impacting annual results. That said, we are certainly encouraged going into the rental season. With that, I will turn it over to James to discuss the quarter.

Starting with our operating performance, our same-store pool posted year-over-year revenue growth of 1.5%, with operating expense growth of 60 basis points, leading to an NOI increase of 2% with quarter-ending occupancy of 92.3%. While we did increase promotional utilization during the quarter, we were able to hold a solid average occupancy level of 92.5% with limited increases in marketing spend in the first quarter. Our achieved move-in rates per square foot were down 7% on average, while our move-in rates per unit were actually up 2% year over year during the quarter. As we moved into April, we grew our occupancy, ending April at 92.6%, only down 45 basis points year over year and notably up 30 basis points from March. We were pleased with our operating expenses as well, with year-over-year growth of only 60 basis points in the same-store pool. This expense control led to an increase in our same-store margins of 30 basis points, the first year-over-year margin increase since 2023. We experienced a tailwind from FX during the quarter for the first time in a long time. Our 13 Canadian same-store assets posted same-store revenue growth of 4.1% and negative 50 basis points on a constant currency basis. These results were in line with our expectations, as the GTA had a 7% constant currency revenue comp in 2025, far and away our toughest comp of the year. In terms of our Asheville portfolio, our occupancy gap has narrowed dramatically since December, averaging down 260 basis points year over year in the first quarter. And as of April, we are only down 130 basis points year over year at 92.2% occupancy. That is notably up 200 basis points from December 2025. On the external growth front, we acquired one parcel of land in Toronto within our Smart joint venture that we intend to develop into Class A storage. Turning to our third-party management platform, we ended the quarter with 227 properties under management, in line with our expectations. The result of all of this is that for 2026, we posted fully diluted FFO as adjusted per share and unit of $0.49. Lastly, turning to the balance sheet, during the quarter, we completed the recast of our $500 million syndicated bank facility, as H. Schwartz mentioned earlier. That facility matures in February 2030 and has a one-year extension option, and the credit agreement has built-in language that would allow for a further pricing step-down upon reaching an investment-grade rating from S&P and Moody's rating services. At quarter-end, our Canadian FX exposure is fully hedged naturally from a cash flow standpoint, and 94% of our outstanding debt was fixed as of quarter-end. Smartstop Self Storage REIT Inc's balance sheet is positioned to access a wide variety of attractive capital sources, both in terms of debt and equity, to execute on future growth opportunities. And with that, operator, we will open it up to questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question comes from the line of Todd Thomas with KeyBanc Capital Markets. Your line is open. Please go ahead.

Alright. Hi. Thanks. Good afternoon. I appreciate some of the details on April. I was wondering if you could just provide a little bit more detail on the move-in rent trends that you saw in April and how the promotional activity trended.

Hey, Todd. It is Corak. So as James mentioned, at April, our occupancy was at 92.6%, down 50 basis points year over year. Our move-in rates on a unit basis were up about 1% year over year in April, while the move-in rents on a per square foot basis were down about 6.5% on a year-over-year basis. April ended up being a pretty good month overall even with a sort of a slower start. We had a record number of web reservations, over 10,000 for April, up 25% over last year with a really nice low abandonment rate, something that we take a lot of pride in. The team has done a really good job of managing receivables, which is just a really good overall practice, but also creates more unit availability for rental season, which is a nice positive for us. So I think we are really encouraged as we are getting into rental season here. Do you want to talk a little bit about Canada?

Yeah. Absolutely. Thank you, David. From a Canadian perspective, on a constant currency basis, the same-store revenue was down about 50 basis points in Q1. The comp that we had for Q1 2025 was 7%. So we had a much tougher comp than in the United States. However, that is still 6.5% growth over a two-year period, and so I think in this environment, we think that is an excellent result. If you look at our joint venture properties that would meet our same-store definition, they actually did even better at around 10% year-over-year revenue growth on a constant currency basis. At April, our GTA same-store occupancy was 93.1%. That was flat year over year but slightly higher than the states, and meanwhile, our in-place rates were actually up 1.5% year over year in April. So our outlook for the full year in our GTA portfolio is that it will perform slightly better than our United States portfolio in 2026 even with the tougher comps.

Okay. And in the quarter, can you speak to the increase in vacate activity that you experienced? What was that attributable to? Was there anything notable that occurred on the move-out side during the period?

Yeah, Todd. This is James. I will jump in and just say, first of all, there are a couple of things going on with the increase in vacates. First and foremost, we were coming off a tougher comp. 2025 was down year over year in vacates, and so there is a cycling of that comp. In addition, as we mentioned in our prepared remarks, we did see an uptick in vacates really starting in March, with some of the geopolitical uncertainty and some consumer decisions. That has abated since the first two weeks of March. But that is what is driving the first quarter increase in vacates.

Okay. Alright. Thank you.

Thanks, Todd.

Your next question comes from the line of Viktor Fediv with Scotiabank. Your line is open. Please go ahead.

Thank you. Good afternoon, everyone. I have a question on the Argus Professional Storage Management platform. You have a full quarter in Q1 now. How has the operational integration gone, and were you able to identify potential synergies for SMA as a whole? And what is the expected timing for those?

I will jump in first. This is James. On the expense side and integration, clearly, it has been six months since the close, and we have been doing a lot of processes in terms of migrating employees over into the Smartstop Self Storage REIT Inc platform. In addition, as it relates to the first quarter results and our expenses there, there is a lot of seasonal effect. We had multiple conferences that all take place in the first quarter, including our owners conference, which we talked about on our last earnings call. That does not happen over the next couple of quarters. That is an annual event. And so we would expect the margins to increase from here. I think it is still going to take a handful of quarters and even into 2027 before we start to really see the operating margin synergies, although we are starting to see them in smaller pockets such as Denver where we have quadrupled our overall store count between Smartstop Self Storage REIT Inc managed, Smartstop Self Storage REIT Inc legacy, as well as the private label properties under the Argus platform.

I was going to jump in there and just say that I think the integration has been going well. There has been a significant amount of technology upgrade for our third-party owners, which has been incredibly positive. We actually have signed up our first Canadian property in the Greater Toronto Area, and we have a nice pipeline of existing private label owners who now see the power of Smartstop Self Storage REIT Inc with respect to the top of the funnel. Those properties that we ported over, those owners are incredibly successful. Some of them are generating more leads than they ever have on a private label basis. We think over the next 12 months we will start to see a strong migration from our private label platform to either the legacy or the full-blown Smartstop Self Storage REIT Inc platform. We are really pretty excited about the integration, the people, and the ability to keep growing this in the future.

Thank you for the additional color. And I have a follow-up on move-out trends. I appreciate the details on move-in side in terms of the sizes of units that are involved there. Can you provide some additional details on move-outs in terms of what sizes were more heavily impacted in Q1?

When we look at the move-outs in terms of the average size, it is really in line with our portfolio average. What is unique is that the move-ins are skewing more toward the larger units, but the move-outs are not matching that same disconnect on a year-over-year basis. It is pretty consistent on a year-over-year basis, Q1 2026 versus Q1 2025, in terms of the size of the units.

Understood. Thank you.

Your next question comes from the line of Eric Luebchow with Wells Fargo. Your line is open. Please go ahead.

Great. Thanks for taking the question. Maybe you could talk a little bit about the acquisition environment. I know you are a little more restricted in what you can do, wholly owned on balance sheet this year, but maybe update us on the discussions around an institutional JV partnership, and how those conversations are trending.

Let me just start by saying that I have been doing this a very long time, and from an acquisition perspective, I think this is one of the single greatest opportunities to transact in self-storage since the Great Recession on a risk-adjusted basis. You have a lot of markets that have readjusted from a rate perspective down 25% to 35%, and so we think that there is a really nice recovery of acquiring at really solid cap rates with either management upside and/or rate upside. There are a lot of groups out there that acquired at very aggressive cap rates in 2021, 2022, and probably half of 2023 at 4%. They had short-term debt, and some of them even had bridge loans, and they have had to extend those loans. Now you are facing an environment where lenders are no longer willing to extend and pretend, and this is creating a really nice wave of high-quality properties that are coming to sale because the owners are currently out of options. We are seeing a lot of attractive opportunities on the stabilized front now in the United States and also Canada. The deals that we have closed, I think, are great examples of this, and we are continually encouraged about the current pipeline and deal flow out there. There are some larger portfolios out there, but there are also enough onesies and twosies. I just want to emphasize that a lot to us may not be a lot to others. For every $300 million that we can acquire, it increases our market cap by approximately 10%. As you are probably well aware, we acquired about $370 million in February 2025, about $500 million since 2024, and that is meaningful growth for us, and it is enough for us to move the needle, and it obviously benefits our size. We are still seeing a healthy amount of aggregate opportunities, so from that perspective, we feel pretty good. As for the second part of your question, around institutional JV and how those discussions are coming along, those discussions are ongoing, and I think they are coming along nicely. Obviously, as you know, we have a very solid institutional joint venture with SmartCentres on the development of self-storage in Canada, and we are looking to expand that for existing, either lease-up or stabilized properties. We are out there trying to find the right partner, but as you can imagine, we currently have a lot that we are doing on a daily basis, and so we are going to take our time to find the right capital partner for the long term.

Great. And just one follow-up on the shaping of same-store revenue growth this year. I know you have some tough comps in Asheville, although it sounds like you have gotten a lot of that occupancy back, some hurricane comps in markets like Tampa, and then the LA rent restrictions. Maybe putting it all together, could you talk about the shaping of same-store revenue growth the next couple quarters embedded in your guide and some of the callouts on those items?

Thanks for the question, Eric. It is Corak. When you look at the comps last year, the first quarter was our toughest comp at 3.2%. The comps are significantly easier in the second and third quarter and then get a little bit harder in the fourth quarter. Just on that alone, one would think that second and third quarter will probably be our best quarters of revenue growth year over year, but obviously, that is not exactly what the guidance would imply at this point on the midpoint. The other two things that are impacting the cadence of same-store revenue growth are, as you pointed out, Asheville and the ECRI restrictions in LA. In Asheville, we were coming off of a really strong year, and we lapped that comp. As you get into the first quarter, we were still positive in terms of rates, negative in terms of occupancy. However, as you get into the second quarter, the rates will turn negative on a year-over-year basis and will continue to be negative through the second and third quarter, again on a year-over-year basis, and then the comp gets a lot easier in the fourth quarter. The other element is, of course, the LA restrictions. We are not assuming that the restrictions will be lifted for 2026. So there is a compounding effect that happens where the second quarter impact is worse than the first quarter, and then the third quarter, fourth quarter, and so on. Those are the other things impacting the shape of the curve overall. Asheville is in an interesting spot. Michael, do you want to talk a little bit about where Asheville stands today?

Yeah. Absolutely. In the fourth quarter, we talked about Asheville. As we position where we are at today, Asheville was our best-performing market in 2025. We had 6% same-store revenue growth year over year, and so we are obviously facing some tough occupancy comps in 2026, but the year-over-year occupancy gap has narrowed dramatically, and I think James discussed this a little bit. Since December, our average is down only 260 basis points year over year. In the first quarter, our occupancy was at 91.6%. At April, we were only down 130 basis points and we are settling at 92.2%. That is a great position to be in as we move into the busy season, notably up 200 basis points from December and generally in line with the rest of our United States portfolio, which is positioned nicely also. This is a fairly traditional cadence of occupancy for a natural disaster of this kind, and we are now at a post–natural disaster stabilized occupancy level. Overall, we still expect Asheville to be a relative underperformer in 2026, specifically through the end of the third quarter. That being said, the portfolio is performing slightly better than expected through April. That says a lot about our technology and our process. We were able to capture that upside with respect to occupancy and rate, and then as occupancy pulled back, we were able to refill that funnel, stabilize the physical occupancy, and get it prepared for the busy season.

Alright. Thank you, guys.

Your next question comes from the line of Michael Mueller with JPMorgan. Your line is open. Please go ahead.

Yeah. Hi. So two questions. First, can you talk about the move-in rate expectations for the balance of the year compared to, I think, about 6.5% down, you said, in April? And then from a higher-level perspective, how should we be thinking about a bridge loan pref program, how it fits into the business, can it be a needle mover going forward, etcetera?

Hey, Michael. I will give you the operating assumptions. We went over these slightly last quarter, but I will review them. They really have not changed. From a move-in rent standpoint, we have a handful of markets that have already turned positive this year and other supply markets still somewhat negative. Our assumption is that by the end of rental season—call it August or September—we will, on the whole, be largely back to a neutral kind of inflection point. If we do not get back there, it does not have a material impact on the rest of the year, but it will have some impact on the third and fourth quarter. From an occupancy standpoint, we are modeling fairly flat to slightly positive relative to 2025 with the exception of Asheville. For the rest of the portfolio, think fairly flat to maybe slightly positive. ECRIs we are modeling at or better levels than in 2025. Those are basically what we have been doing given the strength and the health of the existing customer, the exception being the California wildfire impacted properties, which we assume are going to be impacted for the full year. I will remind you, our length of stay is actually up year over year, which is a trend that we and some of our peers are seeing, which is really good from that perspective. On the supply front, we are assuming that the supply impact decreases throughout the year. In terms of your second question on Axxess and the bridge lending: Access is a portfolio company of Conversant Capital. For some background, they run an institutional commercial real estate finance platform. H. Schwartz and the principal of Axxess have a very long-standing relationship. This was well thought out for a long time. Axxess’s role in this relationship will be to help us source, structure, and service bridge loans and investments, and they will be a 5% participant in the JV’s investments. The partnership gives us the horsepower to grow our bridge lending business efficiently without burdening our G&A. We are really excited at the potential of the partnership and the synergistic relationship the program will have on third-party management and our overall external growth trajectory. The pipeline overall is very strong. We are actively looking at over $100 million of deals with average yields of 10% to 14%. Obviously, like an acquisitions pipeline, we are not going to close on all of those deals, but our pipeline is filled with really strong deals in markets that we like with sponsors that we generally like. We are typically looking at some sort of mezz or pref position on a deal that already has senior debt on it or is in market with senior debt. We would also do an A-note, B-note approach, but the pipeline is really dictating the former strategy. The pipeline is a mix of recaps, acquisition financing, and development deals, though I will note we are particularly selective on any new development deals. There is a ton of potential on this front, obviously working off of a very small denominator. We really like the risk-adjusted returns on a lot of these deals that we are going after, but are certainly sensitive to the quality of the property, the quality of the sponsor, the impact on our leverage, and the overall quality of our earnings.

I would just add that it is also opening up additional third-party property management assignments.

Got it. Okay. Thank you.

Your next question comes from the line of Mason Guel with Baird. Your line is open. Please go ahead.

Hey. Thanks for taking my question. On the expense side, what drove some of the favorable expense growth, and then what is driving the higher expected growth for the remainder of the year compared to the first quarter?

I will jump in there. In the first quarter, we had a good number on our property tax line item, which is obviously our single largest expense line item. That came in at a pretty nominal level. As we have talked about, on the insurance front we have not only realized the benefits of a strong general liability renewal that took place in November 2025 and is carrying forward for a full year, in addition, we also had a very strong property renewal that took place in April. It is not in our Q1 numbers, but it is part of the outlook and is the main reason behind our OpEx guide down—those savings on the property and insurance renewal. Part of the offset and part of the reason we were still positive is we had some weather-related expenses both in utilities and R&M, and our payroll is at a nominal level, call it in the low- to mid-single digits. I will also note that advertising was up about 1.9% for the quarter on a year-over-year basis, but that is a lever that we want to potentially be strategic with in terms of the trade-off in getting new rentals between concessions, pricing, and marketing. That is something we want to keep flexibility on. That is the overall shape of OpEx, but we felt really good about the property insurance renewal, and that allowed us to reduce the OpEx guide.

Great. And then can you talk about what drove the higher managed REIT EBITDA guide and how that segment has been performing?

Overall, the recurring revenues from that portfolio in the managed REIT platform—as a reminder, those assets are largely unstabilized—grew at an outsized pace relative to, for example, our same-store portfolio growth rate. Those revenues came in higher than our expectations. Cumulatively, we are talking about an annualized run-rate in the first quarter on revenues in the managed REIT platform of just over $16 million on an annualized basis. That is a really powerful base of recurring revenues for Smartstop Self Storage REIT Inc.

Got it. Thank you.

There are no further questions at this time. I would now like to pass the call over to H. Schwartz, chairman and CEO, for closing remarks. Please go ahead.

Thank you. It has been a solid first quarter for us. I want to thank you for your time and interest in Smartstop Self Storage REIT Inc, the smarter way to store. Have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.