Earnings call transcript: SmartStop Self Storage Q3 2025 earnings miss forecasts

SmartStop Self Storage REIT Inc. reported its third-quarter 2025 earnings, revealing an adjusted funds from operations (FFO) per share of $0.47, falling short of expectations by 2 cents. The company recorded a same-store revenue growth of 2.5% and a same-store net operating income (NOI) growth of 1.5%. Following the earnings release, the company's stock price experienced a decline, closing at $34.49, down 0.88% from the previous day.

Key Takeaways

• SmartStop's Q3 2025 FFO per share missed expectations by 2 cents.
• The company maintained a strong average occupancy rate of 92.6%.
• SmartStop completed the acquisition of Argus Professional Storage Management.
• The stock price fell by 0.88% following the earnings release.

Company Performance

SmartStop Self Storage demonstrated resilience in the third quarter of 2025, despite missing FFO expectations. The company focused on maintaining high occupancy rates and reducing concessions, achieving a 92.6% average occupancy. The acquisition of Argus Professional Storage Management and the expansion of its third-party management platform highlight SmartStop's strategic growth initiatives.

Financial Highlights

• Revenue: $61.77 million
• FFO per share: $0.47 (2 cents below expectations)
• Same-store revenue growth: 2.5%
• Same-store NOI growth: 1.5%

Market Reaction

Following the earnings announcement, SmartStop’s stock experienced a decline, closing at $34.49, a decrease of 0.88% from the previous day. The stock's movement reflects investor sentiment reacting to the earnings miss and aligns with broader market trends.

Outlook & Guidance

SmartStop provided a full-year 2025 FFO guidance range of $1.87 to $1.91 per share. The company remains cautiously optimistic about market recovery and aims for a 10% annual portfolio growth. It expects 2026 to show incremental improvements over 2025, driven by continued urban densification and strategic market positioning.

Executive Commentary

CEO H. Michael Schwartz emphasized SmartStop's strategic positioning: "We are a small-cap company with a large-cap platform built for continued growth in the U.S. and Canada." Schwartz also highlighted the company's focus on occupancy strategies to drive success.

Risks and Challenges

• Market Saturation: Potential oversupply in certain markets could pressure pricing.
• Economic Uncertainty: Macroeconomic factors may impact consumer demand for storage.
• Integration Challenges: The acquisition of Argus requires effective integration to realize expected benefits.
• Competitive Pressure: Maintaining market share amid aggressive competition remains a challenge.

Q&A

During the earnings call, analysts inquired about SmartStop's integration strategy for Argus and capital deployment approach. The company detailed its revenue management tactics and discussed Toronto's market performance, indicating a focus on maintaining high occupancy and optimizing revenue.

SmartStop's Q3 2025 performance highlights its strategic initiatives and market positioning, despite the earnings miss. The company's focus on growth and operational efficiency positions it well for future opportunities.

Full transcript - SmartStop Self Storage REIT Inc (SMA) Q3 2025:

Conference Operator: Ladies and gentlemen, thank you for standing by. My name is Colby, and I'll be your conference operator today. At this time, I would like to welcome you to the SmartStop Self Storage REIT third-quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers are marked, there will be a question-and-answer session. If you'd like to ask a question at that time, please press star, then the number one on your telephone keypad. If you'd like to withdraw your question at any time, please press star one again. I would now like to turn the call over to David Corak. Please go ahead.

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Thank you, Operator. 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. These 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 the reconciliation of these measures to GAAP measures can be found in our earnings release and supplemental disclosure that were issued last night and are available for download on our website at investors.smartstopselfstorage.com. In addition to myself, today we have H. Michael Schwartz, founder, chairman, and CEO, as well as James Barry, our CFO. Now, I'll turn it over to Michael.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: Thank you, David, and thank you for joining us today for our third-quarter earnings call to discuss our first full quarter as a New York Stock Exchange-listed company. I'll start with some introductory remarks on SmartStop, the Argus transaction, and the industry before I hand it over to James to discuss the quarter. After that, we'll open it up to Q&A with James, David, and myself. Before we dive into the high-level remarks, a few highlights of our third-quarter results. We posted a strong third quarter with sector-leading same-store revenue growth of 2.5% and average occupancy of 92.6%, both largely in line with our expectations. We reported FFO as adjusted per share of 47 cents, which was about 2 cents below our expectations for the quarter.

This was entirely driven by two events that we noted in last night's earnings release: an unexpected vacate of our only notable industrial tenant and the recognition of a one-time equity-based compensation expense related to performance units issued in 2023. James will elaborate on these items later in the call. With these pieces in mind and our Q3 strong operating results, we maintained the midpoint of our full year 2025 FFO as adjusted per share guidance. We had another robust quarter, both in terms of performance and activity. First, we opportunistically returned to the Canadian maple bond market, raising CAD 200 million at a 3.89% coupon, this time with a five-year maturity. During the quarter, we acquired approximately $86 million of Class A storage properties on balance sheet in both the U.S. and Canada. We also acquired one property subsequent to the quarter end for $15.3 million.

These on-balance sheet acquisitions are primarily Class A properties located in top markets consistent with our communicated acquisition strategy. We also increased our loans and preferred investments to the managed REITs by approximately $20 million. Between these loans and our on-balance sheet acquisitions, we deployed about $106 million of accretive capital during the quarter. Additionally, we are proud of SmartStop's inclusion as a member of the MSCI US REIT Index, more commonly known as the RMZ. Lastly, but certainly not least, we entered into a contribution agreement with Argus Professional Storage Management. Needless to say, it was another very active quarter. Before turning to the industry, I just want to spend a minute on the Argus transaction, which we closed on October 1, 2025.

Since the IPO roadshow, we have been communicating to the street that we intended to enter the third-party management business and were actively exploring either developing a platform of our own or acquiring an existing pure-play platform. After thoroughly studying the merits of both paths, we decided that if we could find the right partner, the latter would be the most beneficial to our shareholders. We've known the principals of Argus for almost two decades and have the utmost respect for what they've built, so we had tremendous confidence that we'd identified the right partner: one with a robust third-party management platform, a top-notch team of professionals, strong relationships across the United States, and a managed portfolio that strongly overlapped with ours. With approximately 230 stores under management across 26 states, Argus was the second-largest independent third-party storage manager in the U.S.

Together, we now operate more than 460 self-storage properties in North America, nearly doubling our store count and increasing our overall owned and managed net rental square feet to over 35 million. This deal immediately jump-starts our third-party management strategy in a creative manner rather than a dilutive and lengthy process of developing one ourselves. A few highlights of the deal: given the size of the managed portfolio, this essentially doubles our data sets, enabling better revenue management across both existing and new geographies. We get immediate property clustering in 12 current SmartStop markets, which in time should lead to margin expansion for both managed and owned properties. This provides SmartStop with direct access to a captive pipeline of potential acquisition targets, including off-market deals. It also opens the door to bridge lending to current or potential owners, which is something that no other independent third-party manager can provide.

Lastly, this deal paves the way for SmartStop to expand third-party management in Canada, a vastly underserved management market. As for an update, as of today, we have not experienced any attrition or indications of attrition beyond what we had already known in our underwriting. The integration is going very well, and we've had no turnover of Argus employees. Finally, I'll note that we've closed our first lending opportunity with a $4.8 million preferred investment related to a five-property portfolio that just onboarded onto our platform last week. Turning to the industry, on the operations front, we continue to believe that 2025 will be an incrementally better year than 2024, but not as strong as a more normalized year in storage. Accordingly, we saw a more normalized rental season as compared to the past two years, but again, still not quite a typical rental season.

The recovery in storage is happening, but the choppiness in customer demand continues. During the quarter, we saw a healthy July and August to close out busy season, but a weaker-than-anticipated September. Industry move-in rates continue to stabilize but are still negative year over year, though significantly less negative than the previous two years. However, our strategy is working. Website visits are up significantly, reservations remain strong, and the third quarter we posted the highest-ever lead conversion statistics in our company's history. We also posted the highest hit rate on tenant protection in our company's history. Our customers' health remains strong. Delinquencies remain at below-average levels and, in fact, are down year over year. 25% of our new rentals utilize our SmartPay feature for payment, and nearly 50,000 customers have downloaded our mobile app. ECRIs remain healthy without any change in attrition.

Customers citing their rental rates as a reason for leaving our properties is down year over year on our exit surveys. With our year-to-date results through busy season paired with an improved supply picture, we remain optimistic on the sector's slow and steady recovery, creating momentum as we head into 2026. I do want to quickly touch on the retail shareholder lockup expiration. On October 1, our six-month post-lockup of our existing retail shareholders expired. Over the course of the next two weeks, as expected, we saw elevated volume and volatility in our stock price. Since then, both volume and volatility have normalized. While we aren't able to calculate the exact turnover of our retail shareholder base, we want to once again thank our retail shareholders who have been such an important part of SmartStop.

Taking a step back, we have accomplished a tremendous amount in a short period of time as a publicly traded company. We believe we're off to a strong start and are executing on the story that we laid out on our IPO roadshow in March. 2025 will certainly be known as a transformational year for SmartStop. We had a successful IPO raising $931.5 million in some of the most difficult capital markets and tariff concerns, a.k.a. Liberation Day. We raised CAD 700 million in maple bonds at a sub-4% rate. We had more than $500 million in accretive acquisitions over the past 12 months, including the acquisition of Argus Professional Storage Management. Sector-leading same-store revenue growth, even with the backdrop of the single largest self-storage supply wave in our sector's history, and expected strong FFO growth that should further accelerate in the fourth quarter.

Without a doubt, we're in a choppy self-storage market with volatile capital markets and plenty of uncertainty in the broader economic environment. However, through all this choppiness, SmartStop's accomplishments over the past seven months have positioned this company to achieve solid forward growth and take advantage of the better days ahead in self-storage. We are a small-cap company with a large-cap platform built for continued growth in the U.S. and Canada. With that, I'll turn it over to James to discuss the quarter.

James Barry, CFO, SmartStop Self Storage REIT: Thank you, Michael. Starting with our operating performance, we are pleased to report that our same-store pool posted year-over-year revenue growth of 2.5%, with operating expense growth of 4.5%, leading to an NOI increase of 1.5%. These were all in line with our expectations. The FX impact from our 13 Canadian same-store assets was a headwind of approximately 10 basis points to our overall same-store pool, as we posted constant currency revenue growth of 2.6%, expense growth of 4.6%, and NOI growth of 1.6%. Revenue growth was in line for the third quarter, and we accomplished best-in-class same-store revenue growth utilizing less concessions and limited marketing dollars while maintaining strong occupancy of over 92%. On the operating expense front, property taxes were up 4.8%, and marketing expense was up only 1.8%. We saw muted or negative expense growth in payroll, utilities, professional, and administrative expenses.

Notably, our property insurance was down 4.5% this quarter as we finally started to see pressure alleviate in that market. The result was that same-store operating expenses were up 4.5% year over year. Our same-store pool ended the quarter at 92.4% occupancy, up 10 basis points year over year, while average occupancy was 92.6%, up 40 basis points year over year. Our web rates were down about 3.9% year over year for the third quarter, while our achieved move-in rates were down 8.5% on average as the stabilization of the rate environment slowly but surely continues. As we moved into October, we put a strong emphasis on maintaining occupancy headed into slow season. In doing so, we actually grew our average and ending occupancy over September by about 10 basis points. October ended occupancy at 92.5%, up 20 basis points year over year.

In-place rates were up 50 basis points year over year and flat versus September, and we are positive on a year-over-year basis for rentals in the month of October by 9%. On the external growth front, we acquired six properties for $83 million and a piece of land within a joint venture for $1 million during the quarter, leading to full year acquisitions of $318 million through the end of September. Subsequent to quarter end, we acquired Argus as well as one property in the Orlando MSA for $15.3 million. I'll note that as of September 30, we have acquired nearly $500 million on balance sheet over the last 12 months. Turning to the managed REIT platform, our three managed REIT funds, inclusive of 1031-eligible DST programs, ended the quarter with assets under management of $972 million.

We recognize gross fees of $3.6 million, and the managed REITs have a combined portfolio of 48 operating properties and approximately 4 million net rentable sq ft at quarter end. We also increased our loans and preferred investments to the managed REITs by approximately $20 million, all of which happened in September. As a result, we recognize interest income of $1.5 million during the quarter. The DST programs continue to successfully raise equity, and we are excited that SST10 has closed its first property subsequent to quarter end as that program gets up and running. The result of all of this is that for the third quarter of 2025, we posted fully diluted FFO as adjusted per share and unit of $0.47. As Michael mentioned, this was a few cents below our expectations driven by two main items.

First, we recorded an approximate $825,000 expense due to performance-based equity compensation in G&A from the expectation that legacy performance units issued in 2023 will vest at 200% of target. These units were tied to same-store operating performance relative to our peer group. The midpoint of our previous guidance for G&A expenses issued in August 2025 did not contemplate the recognition of this expense on the midpoint for the full year 2025. The impact of this expense to our FFO as adjusted per share and OP unit outstanding is about a penny and a half for the full year 2025. Second, during the quarter, a tenant renting industrial space at one of our non-same-store properties unexpectedly defaulted on their lease and vacated the space. This tenant accounted for approximately $730,000 of annual NOI.

We believe the impact to our FFO as adjusted per share to be just under a penny for the full year 2025. We are in the process of finding a replacement tenant while simultaneously evaluating a redevelopment of that space into traditional self-storage. Just to preempt the question, this was our only industrial space in the owned portfolio. Even in the face of those two items, the third quarter was a much cleaner quarter from a transaction standpoint as compared to the second quarter. There are a few more moving pieces to keep in mind headed into the fourth quarter on the capital side. These include the September maple bond, which was completed on September 26, the coupon step-down of our US private placement, which occurred on October 1, and the refinance of our joint venture-level debt, which was completed last week.

Looking out to the remainder of 2025, we updated our guidance for the full year last night. We are now expecting same-store revenue growth in the 1.9%-2.3% range, with operating expense growth in the 4.0%-4.4% range, resulting in NOI growth of 0.9%-1.1%. The other moving pieces, as compared to our previous guidance, were as follows: better than expected execution on the Canadian maple bond, better than expected managed REIT EBITDA, higher G&A primarily driven by the previously mentioned performance units, reduction of our same-store NOI guidance by 10 basis points at the midpoint, and a reduction to our non-same-store NOI due to the aforementioned industrial tenant. We also narrowed our acquisitions guidance to $365 million-$385 million.

The result of all of these updates is that we are tightening our FFO as adjusted per share range to $1.87-$1.91 for the full year 2025. Lastly, turning to the balance sheet, in September, we priced our second maple bond, raising CAD 200 million or approximately $144 million USD, the notes have a five-year maturity and bearer coupon of 3.888%. We were extremely pleased with this execution, which, coming off the back of our June offering, was multiple times oversubscribed. In October, we closed on a CAD 160 million term loan within our SmartSenter joint ventures, of which we are 50% owners. The loan is a five-year term and bears a fixed interest rate of 3.87%. We used the proceeds to pay off all the existing JV-level debt, which had a weighted average cost of 5.7%.

The joint venture was also able to raise excess proceeds of approximately CAD 27 million as a result of this refinance. With the maple bond and the JV-level debt issued in October, we have fully hedged our Canadian FX exposure from a cash flow standpoint naturally. Additionally, over 99% of our outstanding debt was fixed as of quarter end and pro forma for the JV refinance. While our work on the balance sheet is continuous, we are very happy with the transformation of the debt stack that we've been able to accomplish since April. With that, operator, we will open it up to questions.

Conference Operator: Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press star then the number one on your telephone keypad to raise your hand and enter the queue. If you'd like to withdraw your question at any time, simply press star one again. Thank you. Your first question comes from Todd Thomas with KeyBank Capital Markets. Your line is open.

Yeah, hi, thanks. James, I wanted to ask about acquisitions. You touched on investments that you've completed. I think it was over the last 12 months, targeting $375 million this calendar year. How are you thinking about acquisitions from here with a view into 2026? Do you pause given sort of some of the volatility in capital costs and with leverage in the high fives, or do you stay. Do you maintain this pace moving ahead?

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Hey, Todd, it's Corak. I'll start and then hand it over to the rest of the team here. What we've said from the get-go is that we've got this target leverage range in the five to six time range, and we intend to stay in there. Obviously, there's going to be periods where we are below it, as we were right after the IPO, and there's going to be periods that we opportunistically look to take that up a little bit. We do want to maintain that as our target range on a go-forward basis. When you think about the pace of acquisitions, right, this year, 375 is the midpoint of the range, which entails just over 10% growth of the asset base overall. We'd love to be able to grow the portfolio by 10% or more in a given year.

Realistically, when you just do the math. If we wanted to do that next year, that would require some common equity to help keep us in that target leverage range. What we've said from the beginning is we're not going to go out and issue common equity at a six and a half cap to go buy five and a half cap assets on a go-forward basis. The math just doesn't make sense to us. I think what I would say is when we look out. We're going to be really prudent with how we deploy capital and be opportunistic on a go-forward basis.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: Todd, this is Michael Schwartz. I would add also is that as many are aware, we've had some significant structural changes to our balance sheet, which we're starting to see kind of that kind of flow through with respect to kind of our FFO for the third quarter, moving in potentially the fourth quarter, and then 2026. As we look at our levers of growth, clearly, external growth is one that we'd like to capitalize on. We obviously need to be careful where we're trading. We do have other levers of growth. We do have our same-store pool. We do have our non-same-store pool. We have our joint venture pool. We have our third-party management platform with Argus, which obviously we're spending a lot of attention. Last but not least, we do have our managed.

REIT platform, which we think will add some additional contribution as we move forward. Finally, at this point, we do not have a joint venture partner. At some point in the future, we will have a joint venture partner, and we think that that will create additional lever for growth.

James Barry, CFO, SmartStop Self Storage REIT: Just to frame one more thing, Michael mentioned the acquisition of Argus, which obviously closed subsequent to quarter end. Some of the consideration there was in the form of equity for tax planning purposes. Actually, that transaction should bring down our leverage on a net basis when you roll from 9/30 to 10/1 just from that transaction alone.

Conference Operator: Okay, that's helpful. One or two on Argus, actually. First, can you talk about the integration of that platform, the timeline for SmartStop to fully integrate leasing, revenue management, financial reporting, whatever else? Michael, you talked about the scale benefits that you might expect to achieve in some of the overlapping markets. Any early update or insights on that and sort of the timeline to begin to see some of those benefits?

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: Todd, thank you. The good news here is that with the acquisition of Argus, there's not this integration within SmartStop, okay? Let me step back. When we decided to acquire Argus, we spent a lot of time understanding what Argus had built. They had built this entrepreneurial third-party management platform that was developed for entrepreneurial self-storage owners that were fiercely independent. Some want full service, but some actually want to stay in the overall aggregate operations. We recognize that we have to respect the entrepreneurial owners within that. What our strategy has been, and we've been making this clear, is that we want to provide the services that these owners want. What we stepped back and said, how do we do that? One.

We didn't think it was prudent to go in there and say to these owners that you now all have to be pushed onto the SmartStop platform. That's not very entrepreneurial whatsoever. And being an entrepreneur, I'm very sensitive to that. We put together a menu, a menu of options that gives us a differentiated experience versus some of the third-party platforms out there. One, if you want to be on the SmartStop platform, hey, great. We will brand you, sign a couple-year agreement, and we will kick in some dollars to change signs out and brand and honorary marks. Or if you like your brand, we love your brand too. You can keep your brand. You can move to the SmartStop platform. We'll create a page within the SmartStop environment, and you're utilizing all the benefits.

However, if you really want to maintain your independence through a private label solution, we're going to allow that. Now, do we think that the properties will perform better on the SmartStop platform? Absolutely, yes. However, we think there's some significant amount of enhancements that we're going to be able to offer the current owners. For an example, from an accounting perspective, from a reporting perspective, and in addition, consultation perspective on things that they're seeing, how we look at it. One of the big items that we're doing, we're having a very large operator meeting at the end of January. We need to get out and meet these operators one-on-one. We need to introduce ourselves to them. From that perspective, I think next year, we will start to see, I think, some of the choices that they will exercise.

That's how we kind of look at the transaction, and that's how we're handling the transaction. We do believe over time, at minimum, people will probably be choosing the SmartStop legacy brand at minimum. We're engaging. A lot of the owners right now, and a lot of them are very intrigued. I think in January, it would be a great opportunity to introduce ourselves. I think at that point, we will get a better sense of who's going to be transitioning to the SmartStop platform.

James Barry, CFO, SmartStop Self Storage REIT: Yeah. Todd, just to add on in terms of kind of timelines and lead flows that we've seen thus far, I would say we've seen interest across owners, across the spectrum of menus, right? We've had people that want to engage with a SmartStop branded location, some that want SmartStop legacy, and some want to continue on and then learn more about the platform. Overall, the reception from the owners has been positive and definitely curious about the upgrades that are going to.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: I will add that obviously, they're running on a separate operating system. We've received a separate data card, and we're about three to four weeks into being able to provide some similar aspects that we have at SmartStop. That takes a little bit of time. It's probably a 60-90 days just from a technology perspective.

James Barry, CFO, SmartStop Self Storage REIT: Lastly, one of the strategies we had in this transaction is we could actually bring our balance sheet to bear to help out owners. As we mentioned in our opening remarks, we've already closed on one of those transactions in a highly accretive manner, double-digit coupon and a preferred investment. Again, that's servicing our customers from an owner perspective.

Conference Operator: Okay, great. Thank you. Your next question comes from the line of Jonathan Hughes with Raymond James. Your line is open.

Hey, good afternoon. Thanks for the prepared remarks and commentary. I appreciate you adding the earnings bridge. I find it very helpful. I think some who see that might be inclined to annualize that implied fourth-quarter figure to get a sense of next year's earnings. What are some considerations we should be aware of as we look at that implied fourth-quarter FFO and think ahead to next year? I mean, I know there is overall seasonality in the business. Is there also maybe some G&A seasonality? Just some more color there would be great. Thanks.

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Thanks, Jonathan. It's Corak. I will try not to be long-winded here, but I will probably fail because there's a lot to unpack. Yeah, we gave the quarterly bridge just given the step-up in FFO from 3Q to 4Q. It's $0.56 for 4Q on the midpoint. I'll note, just to be clear, that that $0.56 is on the 4Q share count of about 59.2 million shares, not the full-year weighted average share count of 51 million shares. That $0.56, is that a good run rate in 2026 to your question? I'll try to answer that as best I can without going into actual guidance, which we will give in February.

4Q is the first quarter that reflects all of the various financing activities that we've done this year, from the IPO to the Maple Bonds to the JV refi to the private placement coupon step-down. It's not quite a full year of the JV, but that's the least impactful piece there. From a financing standpoint, it's a pretty darn good run rate, right? From a G&A standpoint, the implied guide for 4Q is about $7 million of clean G&A. That 3Q number was $9 million. In addition to the $825,000 of performance units, which all hit in the third quarter, there's some seasonality in G&A whereby 4Q is naturally less than 3Q. My point being that $7 million is probably not the right number, but also $9 million is probably not the right number. Somewhere in the middle.

Those are the two sort of pieces I would call out on that front. Everything else is sort of an assumption into next year. I do not want to get in the same store necessarily, just given the fact that we will guide to that as we get into February. For the non-same store pool, we have 28 properties and another 10 that are in the JV. The non-same store properties are obviously classified as such because they are non-stabilized and/or they are recent acquisitions or both. Inherently, in those, we would expect the NOI generated by the properties to be higher next year, offset, of course, by the property with the industrial tenant that we discussed. On the JVs, four of those 10 properties are non-stabilized. Six that are stabilized are putting up better NOI growth than the same store GTA properties.

Two of those three pools of our properties, in theory, would put up better NOI growth than this year. On the 3PM front, the third-party management front, obviously, we completed that transaction in October. The accretion for the full year is not quite recognized. You pair that, and that should be pretty good growth for us. It was an accretive transaction. We still feel really good about the yields that we gave on those numbers. On the managed REIT side, the natural growth and the fees from the revenue growth of those unstabilized portfolios paired with potential future AOM growth could benefit us into 2026. A lot there, but those are some of the big pieces I'd point to, Jonathan.

Very helpful. I appreciate it. Just one more for me on just the acquisitions front. Guidance for the year there was tightened. Can you talk about how you source investment opportunities? Maybe what percent are brokered versus sourced via relationships? Maybe how much do you look at on a monthly basis versus what is acquired? Effectively like a conversion rate.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: Yeah, that's a good question. Obviously, we believe we see, I think, most acquisitions out there in the U.S. and also Canada. We've got a team of about six people that are just tearing through acquisitions on both sides of the overall aggregate border. Many acquisitions are not institutional quality. I think they're discarded from at minimum. I think overall, the acquisition flow and quality has been pretty consistent from our perspective. I think sellers are willing to trade. Not all of them, but they are willing to trade. I think it's been evidenced by our $500,000,000. I think we found the right acquisitions at the right pricing, I think, at the right time. We feel pretty comfortable with respect to the flow. From where we get these, I mean, look, this is my 21st year. Wayne's been with me 17 years.

Between the two of us, we're getting from the traditional brokers, we're getting traditional from owners, developers, third parties. I mean, we get a lot of calls from a variety of different people that have self-storage properties, and so they can be on or off market. I think that has been very consistent. Obviously, Bliss in Canada has a tremendous amount of relationships within Canada. She's hearing and seeing all those deals and starting to pitch those to us. I think with respect to kind of a hit rate, I can't say I give you a number from a hit rate. What I can say, the ones we want, there's enough out there that we can transact.

All right. That's great. Thank you for the time.

Conference Operator: Your next question comes from the line of Nicholas Ielico with Scotiabank. The line is open.

Hello. This is Victor Fedeone with NIC. As we are getting closer to the end of this year, just trying to understand your framework of thinking about 2026. Kind of what is your base macro expectation for 2026 and how are you thinking about moving rents and occupancy dynamics kind of in the next 12 months versus the last 12 months?

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Hey, thanks for the question. I will once again be careful here on sort of the 2026 outlook. I think from a macro standpoint, there's a lot at play, a lot of moving pieces, both in the U.S. and Canada, right? I don't want to get too bogged down in the macro because honestly, I don't know. With that said, from a storage perspective, there is one thing I do know, and it's that the supply picture in self-storage in the U.S. is improving, right? The impact from that new supply will be less in 2026 than it will be in 2025. From the demand side, I think there's a lot of moving pieces, and it's too early to really tell.

From the supply side, which is a good half of the total equation, we feel better in about 2026 than 2025.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: Yeah. I think if you step back also, I think that you are seeing additional listings out there. Listings are up year over year. You're not seeing things trade. I think you're still probably seeing the prices maybe come down to 5-10-15%. I think that sets us up for 2026, and that in concert with the reduction in interest rates, I think could create some mobility. I do not want to overplay that. The listing for housing, I think, is a good indicator of future transactions. You're seeing a lot of markets where listings are increasing, and people are talking about that. I think we're cautiously optimistic with respect to that. In addition, I will add that what I'm seeing, even with all the choppiness we've talked about, you're seeing natural absorption in the storage market.

I think that's incredibly important. I know that I'm a broken record on supply, and we've talked about supply, but I think that natural absorption is going to carry over into 2026.

Understood. And then the second small one for me, now that you added this third-party managed platform and have access to much more data across several markets, where should we expect to see this first synergies in terms of improved pricing strategies and expense control?

James Barry, CFO, SmartStop Self Storage REIT: Yeah, this is James. I'll jump in on specifically the margin expansion story. We've always said whenever we get to sort of 10 properties or so in an MSA, that's sort of our benchmark for getting to economies of scale. Within the next 12 months, we start to see that margin improvement in those economies of scale start to come in. Clearly, we just closed on this Argus transaction on October 1, 2025. I will note there are four more markets that the Argus property overlap tips us into that 10-property mark, right? We were previously at six, and we've added four more as a result of that transaction. Again, it's going to take, call it a 12-month period before we start to see the economies of scale really chip in there.

From a revenue management perspective, I mean, clearly, that's our mousetrap, and our algorithms are continuing to incorporate that data and then further enhance their overall pricing synergies to maximize revenue, right? That's an ongoing process, whether it's our data or the newly integrated Argus data as well.

Got it. Thank you.

Conference Operator: Your next question comes from the line of Juan Sonabrida with BMO Capital Markets. Your line is open.

Thank you. This is Robin Haendeland sitting in for Juan. I was curious on Toronto what your preliminary thoughts are on the market's performance heading into 2026. And if you can provide some data points on expected new supply this year and 2026, specifically for Toronto.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: Yeah. Hi, it's Michael Schwartz. Why don't I talk about supply, and then I'll kick it over to David to talk about some of the KPIs. From a supply perspective, there's been a lot of chatter out there, and we've heard it with respect to additional supply in Canada and in Toronto. The answer is yes. We've been very clear in communicating that. On previous calls, there is a good amount of supply in Toronto right now. A lot of the supply that is from us. We have delivered seven properties in the GTA in the past 36 months. We have a pipeline of about a dozen identified properties that we'll look to deliver over the next five years and an additional pipeline behind that. Today, about half of our properties are being impacted by new supply.

Now, the sq ft under construction is approximately 10% from our estimation of existing stock. Now, those stats are pretty consistent with what we've seen for the past five years or so. When we look out, we expect to see that drop to 5-6% next year. That said, there are isolated trade areas, as there always will be, particularly where multiple projects are being delivered at once, and we will see temporary softness. This is not a structural or Toronto-wide issue. For example, Leaside, which is one of the most competitive, I think, markets within the GTA, we have eight properties in a half-mile ring of competition. We're still experiencing very high overall occupancy and $35-plus rents per sq ft. I think the answer is we can compete, specifically from a technology perspective.

At scale, the GTA in Canada in general remains dramatically undersupplied relative to the population. Urban densification continues. Living spaces are shrinking. New supply, they face significant barriers. In some areas, the development charges just for the privilege to develop self-storage is approximately $45 a sq ft. In a lot of cases, the math simply does not support a national regional oversupply narrative. We do not think that will be for the foreseeable future. David?

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Yeah. Just to talk about some of the metrics in Toronto right now. On a constant currency basis, same-store revenue growth was 1.4% in the third quarter. The comp in 3Q 2024 was 2.6%. A much tougher comp than the U.S., which was actually net. If you look at our joint venture properties that would meet the definition of our same-store pool, they actually did even better at around 5.3% year-over-year revenue growth on a constant currency basis. As we sit here today or at the end of October, excuse me, the occupancy is 92.5%. That is up 80 basis points year-over-year. That gap has widened and is actually wider than the States. We have added another 20 basis points in the first six days of November. Moving rates were down about 9% in October, which was actually better than the States.

I think our overall demand remains solid, right, in our trade areas. I think the platform continues to capture an outsized amount of that demand. Really, we have not seen any of the weakness from changes to immigration policy or macro environment. It appears that the recently proposed budget could be a potential economic catalyst. Given our operational advantages and everything I just said, our thesis on Canada and the GTA remains unchanged.

Just curious if it's impacting your thoughts on deploying capital through the SmartSynergy AV, if you'd like to take that elsewhere, or just curious on your thoughts here.

Can you repeat that? You were a little choppy there.

I was just curious on if that changes your view on deploying capital through the SmartSynergy AV if you're thinking about taking some of that capital deployment in other markets.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: No, no. I mean, actually, we're leaning into the SmartSynergy joint venture. Part of the strength of that relationship is their access to their retail platform and a lot of underutilized land within some of their retail that we can leverage up and put a SmartStop self-storage next to a Walmart, next to a Home Depot. So the answer is no. I think we are interested in expanding, but not at the expense of that joint venture. I think we've talked about that we believe there's a tremendous opportunity in Canada, and that's why we've moved into developing on the island of Victoria, Vancouver, Calgary, Edmonton, and Montreal. I think sitting and building out, I think, one of the nicest aggregate portfolio in the GTA is now going to benefit us with respect to our overall growth path throughout the top five metropolitan cities within Canada.

Thank you. Now that we're past the IPO lockup, can you maybe talk about what the potential recapture rate back into your managed REIT funds has been?

One of the things when it comes to the kind of the managed REIT platform, we were going to talk about this, is that because we switched over to a new managing broker-dealer, we were effectively about six months behind with respect to be able to kind of launch new products. I think at this point, the recapture rate, we're going to have to look at 2026 from that perspective. Right now, we don't have the proper product out in the marketplace right now.

Understood. I was just also curious if you can maybe disclose the industrial tenant that went bankrupt.

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Yeah. Actually, we're a little bit limited in what we can say in terms of this particular matter because, obviously, we had a tenant that broke their lease prematurely. And so we're evaluating all of our options as it relates to that contract. At this time, we're not at liberty just to talk about that particular property. Just to note, this is a component of this non-same-store asset where the majority of the square footage is self-storage. If you think about it, there is a redevelopment opportunity. It could also just be a releasing opportunity. We're looking at all those options.

Got it. Thank you.

Conference Operator: Your next question comes from Michael Mueller with JP Morgan. Your line is open.

Yeah. Hi. I guess for the two questions. First, I guess, how much higher are the margins in the markets that you were talking about where you have at least 10 properties compared to the others? The second question, just going down the path of adding a JV, I guess, what hole do you see that needs to be filled by adding a JV or that you can fill by adding a JV, especially because it could, I guess, increase optically the complexity to the story overall? I guess, how do you think about that trade-off?

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Yeah. Hey, I'll start with the margin question. When we look at our markets where we've consistently had 10-plus properties, we're generally about 300 basis points higher than our overall portfolio average. If you look at a market like Toronto where we have 35 properties in that MSA, we're actually closer to 500 basis points higher relative to our portfolio average. That just gives you a sense of the scalability of the platform in all of these particular markets. Yeah. From a joint venture to your second question there, Mike, I'll be clear. We already have a joint venture, right, with SmartSynergy. That is a pure development joint venture. I believe what you're referring to is if we added an institutional acquisitions joint venture. I'll speak to that specifically. What we'd look for and the right. Thanks.

What we'd look for there and the gap, I guess, we would be trying to fill is given the size of our company, right, if we wanted to go out and acquire a billion-dollar portfolio, right, and I'm making numbers up here, it would be tough for us to do that with the capital that we have right now, right? If we were able to partner with an institutional joint venture where we were a smaller part of the overall deal, ELP, and put 5%, 10%, 15%, 20% into a particular joint venture, that deal is all of a sudden a lot more achievable for SmartStop to take down. I think beyond that, portfolios that are maybe not pure stabilized, maybe there's a place in there. I think the main goal would be to be able to compete for.

Larger deals and make those deals accretive for SmartStop.

Okay. Thank you.

Conference Operator: Your next question comes from Wes Galaday with Baird. Your line is open.

Hey, everyone. Question on the revenue management. Sometimes it's early to detect signs of weakness in the economy. I'm just curious if your revenue management is pivoting more to an occupancy mentality right now.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: I mean, our strategy is currently an occupancy strategy. We think that best positions us for success. More importantly, best positions us in the slow seasons in the fourth quarter and the first quarter to maintain as high as occupancies as we can so that as we move into the busy season, we're only focusing on really economic overall aggregate occupancy. That, to us, has always been incredibly important. We focus on high occupancy, then we're focusing on rates and discounts, and then we're focusing on existing customer rent increases. That is kind of, has been our process.

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Yeah. If you think about the occupancy that we posted in the quarter. And then where we are in October, we're sitting here at the end of October at 92.5% occupancy. That's up 20 basis points year-over-year. And importantly, it's up 10 basis points over September, which is a really nice sequential move for us and really illustrates our strategy that Michael laid out to maintain occupancy into the fall. So we're really happy with that.

Okay. Maybe a quick follow-up on the fourth quarter. It looks like the guidance implies a small uptick in the fourth quarter on same-store revenue. Is that mainly going to be due to the occupancy build, or will that be potentially easy comps, rate? What's driving that?

Just doing the math, I think it actually it's a slight downtick versus the 2.5% in absolute on same-store revenue. It implies a further reduction of OpEx. So the OpEx is where the absolute NOI gain would be there. But we're assuming same-store revenue goes down in the fourth quarter versus the third quarter in terms of absolute dollars.

Okay. Thank you.

Conference Operator: Your last question comes from Eric Lubchow with Wells Fargo. Your line is open.

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Great. Thanks for taking the question. I apologize if I missed this earlier, but it seems like your Q3 same-store came in largely in line with expectations. Q4, obviously, maybe the expectations are a touch lower. Maybe you just touch on some of the moving parts and what you're seeing in October. I know there are some difficult comps and a handful of hurricane or storm-impacted markets that you're going to lap. Maybe just give us kind of an update on how you're feeling in terms of exit rate going into 2026 versus last quarter. Hey, thanks. I just went over the October occupancy numbers, so I'm not going to say that again. We feel really good about where occupancy is sitting in the 92.5% range.

When you think about moving rates during the quarter, the third quarter, James touched on this in his remarks, but they were down about 8.9%. In October, those were down about 18% year-over-year as the building occupancy strategy played out. You pointed this out, but I'll note that October 2024 was the most difficult move-in comp of the whole second half of 2024. Not too surprising to see that down year-over-year. As we moved into November, the trends have improved. We're still sitting at 92.5% occupancy, which is really, really happy with that. The move-in rates have actually improved sequentially by about 6-7% over the October numbers. In-place rates have actually improved sequentially over the October numbers as well. We're now up 40 basis points in occupancy year-over-year. Those stats have improved as we've gone into November.

Lastly, just to touch on ECRIs as they are a piece of the whole puzzle, we continue to pull that lever without changes to attrition there. Attrition is actually down year-over-year, as James and Michael mentioned. Without getting into specific numbers, because some of that is a bit proprietary, we gave ECRIs to more tenants in October than new rentals, right? That average ECRI was above the 18% in a really healthy place. We feel really good about all those pieces as we stand here right now. Just to touch, because you brought up the hurricane-impacted markets, just to kind of recap those, obviously, Asheville was a hurricane-impacted market, as was the Gulf Coast of Florida. We were effectively lapping the occupancy comp on Asheville, but remember, we did not do any sort of existing customer rate increases until the first quarter of 2025.

Both the Asheville market as well as, for example, the Tampa market, while we are starting to lap the occupancy comp where we had elevated occupancy, we are coming in with a pretty healthy head of steam on the rate side.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: Got it. Super helpful. Appreciate that. Maybe just one final question. I think, how are you guys thinking about, obviously, moving rates? There's a little bit of tough pressure in the back half of the year. Part of it is comp-based. We've heard of some of your larger peers kind of leaning in on discounts or promotions, kind of more short-term ways to bring people in the door. How are you seeing that competitive backdrop play out between discounted moving rates versus promotions or upfront discounts? What do you think is kind of more effective in keeping that occupancy number up?

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Yeah. If you look at what we've done this year versus last year, year to date, our concession numbers have been down pretty materially, like in the 20-30% range. We were able to drive rentals without using concessions nearly as much. That has paid off for us, I think, and you see it in the revenue growth numbers and the results overall. As we stand here today, that's less so the case, right? We're utilizing concessions a little bit more than we were in the third quarter, especially as compared to last year, but not drastically differently. I'd say we're utilizing all of our tools to drive rentals right now. The one thing I would point out is that from a marketing spend perspective, we've been not utilizing that nearly as much as we were last year.

I mean, in the second quarter, I think we were negative 4% or 5%. In this quarter, the third quarter, we were only up like 1.5%-1.8%, something like that. Not having to spend a lot to drive rentals.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: Great. Thank you.

David Corak, Likely Investor Relations/Corporate Communications, SmartStop Self Storage REIT: Those rentals, for what it's worth, were up 3% in the third quarter and are up 8%, 8 or 9% into October. The strategy is working.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage REIT: Thank you.

Conference Operator: Thank you. With no further questions in queue, I'd like to turn the conference back over to H. Michael Schwartz for closing remarks.

Thank you, operator. It's been amazing for seven months as a publicly traded company. We've accomplished a lot in just a short amount of time. We thank our investors, both retail and institution, for their support, and we look forward to the next quarter in 2026. Thank you for your time and interest in SmartStop Self Storage REIT, the smarter way to store. Have a great day.

This concludes today's conference call. You may now disconnect.

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