SmartStop Self Storage REIT, Inc. (“SmartStop” or “the Company”), a self-managed and fully-integrated self storage company, announced its overall results for the three months and six months ended June 30, 2023.

“In the face of difficult year over year comparables, normalization of pandemic-related demand drivers, and a slowdown in the housing market, our performance in the second quarter demonstrated both the power of the SmartStop platform as well as the benefits of the strategic diversification of our North American portfolio,” said H. Michael Schwartz, Chairman and Chief Executive Officer of SmartStop. “Notably, of all of our major markets, Toronto was our best performing market. Additionally, our Managed REIT Platform continues to grow overall property count and net rentable square feet, with assets under management of nearly $700 million at quarter end, resulting in continued growth of our overall Managed REIT Platform revenues. This off-balance sheet growth within the Managed REITs was capped off by the acquisition of seven facilities located in the Greater Toronto Area in June. With the acquisition of these facilities, we now own or manage 33 operating self-storage properties in Canada, making us the fifth largest operator in Canada. With our resilient performance and demonstrated ability to grow this quarter, we are confident in the ability of the SmartStop platform and team to deliver outstanding results for our stockholders in 2023 and beyond.”

Three Months Ended June 30, 2023 Financial Highlights:

• Net income attributable to common stockholders was approximately $0.4 million. This represents a decrease in the Company’s earnings of approximately $8.7 million when compared to the same period in 2022. Net income per Class A and Class T shares (diluted) was $0.00, a decrease per share of $0.10 when compared to the same period in 2022.
• Total self storage-related revenues were approximately $53.9 million, an increase of approximately $5.3 million when compared to the same period in 2022.
• FFO, as adjusted (attributable to common stockholders and Operating Partnership (“OP”) unit holders), was approximately $15.5 million, a decrease of approximately $1.9 million when compared to the same period in 2022.
• FFO, as adjusted per share and OP unit outstanding – diluted was $0.14, a decrease of $0.03 when compared to the same period in 2022.
• Same-store revenues, expenses and net operating income (“NOI”) increased by 5.3%, 13.7% and 1.9%, respectively, compared to the same period in 2022.
• Same-store average physical occupancy decreased by 1.8% to 93.7% compared to the same period in 2022.
• Same-store annualized rent per occupied square foot was approximately $19.99, an increase of approximately $1.49 when compared to the same period in 2022.

Six Months Ended June 30, 2023 Financial Highlights:

• Net loss attributable to common stockholders was approximately $1.0 million. This represents a decrease in the Company’s earnings of approximately $9.9 million when compared to the same period in 2022. Net loss per Class A and Class T shares (diluted) was $0.01, a decrease per share of $0.11 when compared to the same period in 2022.
• Total self storage-related revenues were approximately $107.3 million, an increase of approximately $13.7 million when compared to the same period in 2022.
• FFO, as adjusted (attributable to common stockholders and Operating Partnership (“OP”) unit holders), was approximately $30.4 million, a decrease of approximately $3.2 million when compared to the same period in 2022.
• Same-store revenues, expenses and net operating income (“NOI”) increased by 7.0%, 13.5% and 4.3%, respectively, compared to the same period in 2022.
• Same-store average physical occupancy decreased by 1.8% to 93.4% compared to the same period in 2022.
• Same-store annualized rent per occupied square foot was approximately $19.91, an increase of approximately $1.78 when compared to the same period in 2022.

Managed REIT Platform Update

SmartStop, through an indirect subsidiary, serves as the sponsor of Strategic Storage Growth Trust III, Inc. (“SSGT III”) and Strategic Storage Trust VI, Inc. (“SST VI” and together with SSGT III, the “Managed REITs”). SmartStop receives advisory fees and property management fees from the Managed REITs, which had a combined portfolio of 30 operating properties and approximately 23,590 units and 2.6 million rentable square feet at quarter end. During the quarter, assets under management for the Managed REITs increased by $259.7 million to approximately $698.6 million.

Additionally, SmartStop has made investments in the Managed REITs in the form of mezzanine loans, notes and preferred limited partnership interests in the operating partnerships of the respective Managed REITs. During the quarter, SST VI fully repaid the outstanding principal, plus all applicable accrued interest due on the SST VI Mezzanine Loan as of such date for a total amount of approximately $51.7 million. SST VI also fully redeemed SmartStop's preferred investment of 600,000 Series A Cumulative Redeemable Preferred units of limited partnership interest in Strategic Storage Operating Partnership VI, L.P. (“SST VI OP”), the operating partnership for SST VI, and repaid accrued distributions due as of the date of redemption for a total amount of approximately $15.1 million. During the quarter, SST VI OP entered into a promissory note agreement with SmartStop OP, L.P. ("SmartStop OP”), the operating partnership for SmartStop, to borrow $15.0 million from SmartStop OP, which loan was outstanding as of June 30, 2023. During the quarter, SSGT III borrowed $8.0 million on the SSGT III Mezzanine Loan, which was outstanding as of June 30, 2023. Subsequent to quarter end, SSGT III paid down $3.0 million on the SSGT III Mezzanine Loan.

Canadian Portfolio Acquisition

During the quarter, the Managed REITs acquired seven facilities in the Greater Toronto Area (GTA). SST VI had previously acquired one facility from the same seller in the first quarter of 2023. This eight-facility portfolio totals approximately 7,400 units and 758,000 rentable square feet. With the acquisition of these facilities, SmartStop now owns or manages 33 operating self-storage properties in Canada, consisting of approximately 3.0 million square feet, making it the fifth largest operator in Canada.

Declared Distributions

On June 26, 2023, the Company’s board of directors declared a distribution rate for the month of July 2023 of approximately $0.05096 per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on the Company’s books at the close of business on July 31, 2023. Such distributions payable to each stockholder of record will be paid the following month. On July 24, 2023, the Company’s board of directors declared a distribution rate for the month of August 2023 of approximately $0.05096 per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on the Company’s books at the close of business on August 31, 2023. Such distributions payable to each stockholder of record will be paid the following month.

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NON-GAAP MEASURE – COMPUTATION OF FUNDS FROM OPERATIONS, AS ADJUSTED ATTRIBUTABLE TO COMMON STOCKHOLDERS AND OP UNITS OUTSTANDING – DILUTED

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

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

COMPUTATION OF SAME-STORE OPERATING RESULTS

(Unaudited)

Same-Store Facility Results - three months ended June 30, 2023 and 2022

The following table sets forth operating data for Smart-Stop’s same-store facilities (stabilized and comparable properties that have been included in the consolidated results of operations since January 1, 2022, excluding two other properties) for the three months ended June 30, 2023 and 2022. Smart-Stop 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.

SmartStop’s same-store revenue increased by approximately $2.3 million, or approximately 5.3%, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 due to higher annualized rent per occupied square foot, partially offset by an approximately 1.8% decrease in average occupancy. The increase in property operating expenses is primarily attributable to compensation related expenses, property insurance, property tax, and to a lesser extent, advertising.

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

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

COMPUTATION OF SAME-STORE OPERATING RESULTS

(Unaudited)

Same-Store Facility Results - six months ended June 30, 2023 and 2022

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

SmartStop’s same-store revenue increased by approximately $6.1 million, or approximately 7.0%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 due to higher annualized rent per occupied square foot, partially offset by an approximately 1.8% decrease in average occupancy. The increase in property operating expenses is primarily attributable to compensation related expenses, property insurance, property tax, and to a lesser extent, advertising.

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

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, gains or losses from extinguishment of debt, adjustments 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 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-K for the year ended December 31, 2022, our form 10-Q for the quarter ended June 30, 2023, 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 500 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 August 10, 2023, SmartStop has an owned or managed portfolio of 192 operating properties in 22 states and Canada, comprising approximately 135,000 units and 15.3 million rentable square feet. SmartStop and its affiliates own or manage 33 operating self-storage properties in Canada, which total approximately 28,800 units and 3.0 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) risks related to disruption of management’s attention from SmartStop’s ongoing business operations due to recent mergers, or other business matters; (ii) significant transaction costs, including financing costs, and unknown liabilities; (iii) failure to realize the expected benefits and synergies of recent mergers 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 recent mergers; (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; (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 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, 2022 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. 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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