SmartStop Self Storage Q1 2026 Earnings Call - Geopolitical Headwinds Test Demand, but Margin Discipline and Strategic Capital JVs Position Company for Growth

Conference Call Operator: Greetings and welcome to SmartStop Self Storage Q1 2026 Earnings Call, at this time all participants are on 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 one on your telephone keypad. To withdraw your question press star one 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.

David Corak, Senior Vice President of Corporate Finance and Strategy, SmartStop Self Storage: 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 a reconciliation of these measures to GAAP measures can be found on 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. Michael Schwartz, Founder, Chairman, and CEO, as well as James Barry, our CFO. I’ll turn it over to Michael.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage: Thank you, David, and thank you for joining us today for our Q1 earnings call. I’ll start with a few highlights of our Q1 results. 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. 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% YoY.

In February, we’ve completed the recast of our $500 million syndicated bank facility at an all-in cost of about 30 basis points below the previous facility. 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 Axis Capital focused on providing bridge capital to self-storage sponsors across the U.S. In terms of guidance, we are now narrowing our same-store revenue growth from a range of -0.5%-2% to a range of -0.25%-1.75%. We’re reducing our overall OpEx growth range from 2%-4% to 1.75%-3.75%.

The result is an increase of our NOI growth midpoint from a negative 40 basis points to a negative 25 basis points. Additionally, we are narrowing our FFO as adjusted per share of $1.93-$2.05 to $1.94-$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 the second week of March until about the second week of 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’ll turn it over to James to discuss the quarter.

James Barry, Chief Financial Officer, SmartStop Self Storage: Thank you, Michael. Starting with our operating performance, our same-store pool posted YoY 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 Q1. Our achieved move-in rates per square foot were down 7% on average, while our move-in rates per unit were actually up 2% YoY during the quarter. As we moved into April, we grew our occupancy, ending April at 92.6%, only down 45 basis points YoY, and notably up 30 basis points from the end of March.

We were pleased with our operating expenses as well, with YoY 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 YoY 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 post 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 the Q1 of 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 YoY in the Q1.

As of the end of April, we are only down 130 basis points YoY at 92.2% occupancy. That’s notably up 220 basis points from the end of December 2025. On the external growth front, we acquired one parcel of land in Toronto within our SmartCentres 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 the Q1 of 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 Michael 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 or Moody’s Ratings. 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’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. With that, operator, we will open it up to questions.

Conference Call Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question press star one again. Please pick up your handset when asking your question.If you are muted locally please,remember to unmute your device. Please stand-by as 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.

Todd Thomas, Analyst, KeyBanc Capital Markets: All right. Hi. Thanks. Good afternoon. Appreciate some of the details on April. Was wondering if you could just provide a little bit more detail on the move-in rent trends that you saw in April and the how the promotional activity trended?

David Corak, Senior Vice President of Corporate Finance and Strategy, SmartStop Self Storage: Hey, Todd. It’s Corak. As James mentioned, at the end of April, our occupancy was at 92.6%, down 50 basis points YoY. Our move-in rates on a unit basis were up about 1% YoY in April, while the move-in rents on a per square foot basis were down about 6.5% on a YoY 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. Our call center broke an all-time high for rentals, which was kind of 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, you know, more unit availability for rental season, which is a nice, you know, positive for us. I think we are really encouraged as we’re getting into rental season here. Michael, do you wanna talk a little bit about Canada?

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage: Yeah, absolutely. Thank you, David Corak. You know, from a Canadian perspective, on a constant currency basis, the same-store revenue was down about 50 basis points in the Q1. The comp that we had for Q1 2025 was 7%. We had a much tougher comp than in the U.S.. However, that’s still 6.5% growth over a two-year period. I think in this environment, we think that’s 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% YoY revenue growth on a constant currency basis. At the end of April, our GTA same-store occupancy was 93.1%.

That was flat YoY, but slightly higher than the U.S. Meanwhile, our in-place rate, rates were actually up 1.5% YoY in April. Our outlook for the full year, in our GTA portfolio, it will perform slightly better than our U.S. portfolio in 2026, even with the tougher comps.

Todd Thomas, Analyst, KeyBanc Capital Markets: Okay. In the quarter, can you speak to the increase in vacate activity that you experienced? You know, what was that attributable to? Was there anything notable that occurred on the move-outside during the period?

James Barry, Chief Financial Officer, SmartStop Self Storage: Todd, this is James. I’ll jump in and just say, first of all, there’s a couple things going on with the increase in vacates. First and foremost, we were coming off a tougher comp. Q1 of 2025 was down YoY in vacates, 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 at the beginning of March with some of the geopolitical uncertainty and some consumer decisions. You know, that’s abated since, you know, since the first two weeks of March, that’s what’s driving the Q1 increase in vacates.

Todd Thomas, Analyst, KeyBanc Capital Markets: Okay. All right. Thank you.

David Corak, Senior Vice President of Corporate Finance and Strategy, SmartStop Self Storage: Thanks, Todd.

Conference Call Operator: Your next question comes from the line of Viktor Fediv with Scotiabank.

Viktor Fediv, Analyst, Scotiabank: Yeah.

Conference Call Operator: Your line is open. Please go ahead.

Viktor Fediv, Analyst, Scotiabank: Thank you. Good afternoon, everyone. I have a question on Argus Professional Storage Management platform. You have full quarter, 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?

James Barry, Chief Financial Officer, SmartStop Self Storage: I’ll jump in first. This is James. On the expense side and integrations, you know, clearly it’s been six months since the close, and, you know, we’ve been doing a lot of processes in terms of migrating employees over into the SmartStop platform. In addition, as it relates to the Q1 results and our expenses there’s a lot of seasonal effect.

We had multiple conferences that all take place in the Q1, including our owners conference, which we talked about on our last earnings call. That doesn’t happen, you know, in, over the course of, over the next couple of quarters. That’s an annual event. We would expect the margins to increase from here. I think it’s still going to take a handful of quarters and even into 2027 before we start to really see the operating margin synergies. Although we’re starting to see them in smaller pockets such as Denver, where, you know, we’ve quadrupled our overall store count between SmartStop managed, SmartStop legacy, as well as the private label properties under the Argus platform.

Viktor Fediv, Analyst, Scotiabank: Good.

James Barry, Chief Financial Officer, SmartStop Self Storage: Yeah.

Viktor Fediv, Analyst, Scotiabank: Just to follow up on, Oh, sorry.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage: This is Michael. I was going to jump in there and just say that, you know, I think the integration has been going well. There’s 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. We have a nice pipeline of existing private label owners who now see the power of SmartStop Self Storage 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, you know, over the next 12 months, we will start to see, you know, a strong migration from our private label platform to either the legacy or the full-blown SmartStop platform. You know, we’re really, I think, pretty excited about the integration, the people and the ability to keep growing this in the future.

Viktor Fediv, Analyst, Scotiabank: Thank you. Thank you for additional color. 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 and can you provide some additional details on move-outs in terms of what sizes were more heavily impacted in Q1?

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage: When we look at the move-outs in terms of the average size, it’s really in line with our portfolio average. What’s unique is that the move-ins were renting more of the larger units, but the move-outs are not matching that same disconnect, right? On a YoY basis, it’s pretty consistent on a year, you know, move-outs Q1 2026 versus Q1 2025 in terms of the size of the units.

Viktor Fediv, Analyst, Scotiabank: Understood. Thank you.

David Corak, Senior Vice President of Corporate Finance and Strategy, SmartStop Self Storage: Thanks, Viktor.

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

Eric Luebchow, Analyst, Wells Fargo: Great, thanks for taking the question. Maybe you could talk a little bit just about the acquisition environment. I know you’re 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.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage: Okay. You know, I’ll jump in here. Well, let me just start by saying that, I’ve been doing this a very long time. From an acquisition perspective, I think this is one of the, I think, 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, you know, 25%, you know, 35%, you know, %. You know, we think that there’s a really nice, you know, recovery of acquiring at really solid cap rates with either management upside and/or, you know, rate upside.

There’s 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’ve had to extend those loans. Now you’re facing an environment where they’re no longer willing to extend and pretend. This is a result of creating a really nice wave of high quality properties that are coming to sale because the owners are currently out of options. We’re seeing a lot of attractive opportunities on the stabilized front in the U.S. and also Canada.

The deals that we’ve closed I think are great examples of this, and I think, we are continually encouraged about the current pipeline, you know, deal flow, you know, out there. There are some, larger portfolios out there, but there’s also, you know, enough onesies and twosies. I just wanna 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, you know, 10%. As you guys are probably well aware that we acquired about $370 million in 2025, about $500 billion since 2024, and that’s meaningful, I think, growth for us. It’s enough for us to move the needle.

You know, and it obviously benefits our size. We are still seeing, a healthy amount of aggregate, you know, opportunity. I think from that perspective, you know, we feel pretty good. The second part of your question was?

Eric Luebchow, Analyst, Wells Fargo: Yeah, just around institutional JV and how those discussions are coming along.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage: No, those discussions are happening, as we speak. I think they’re 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. Obviously, we’re looking to kind of expand that for existing either lease up or stabilized properties. We’re out there trying to find the right partner. As you can imagine, we currently have a lot that we are doing on a daily basis. We’re gonna take our time to find the right capital partner that for the long term.

Eric Luebchow, Analyst, Wells Fargo: Great. 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’ve gotten a lot of that occupancy back. Some hurricane comps in markets like Tampa, and then the L.A. rent restrictions. Maybe kind of putting it all together, you could kind of talk about the shaping of same-store revenue growth the next couple quarters that’s embedded in your guide and some of the call-outs on those, on those items. Thank you.

David Corak, Senior Vice President of Corporate Finance and Strategy, SmartStop Self Storage: Yeah. Thanks for the question, Eric. It’s Corak. So,you know, when you look at the comps last year, obviously the Q1 was our toughest comp at 3.2%. The comps are significantly easier in the Q2 and Q3, gets a little bit harder in the Q4. Just on that alone, one would think that, you know, second and Q3 will probably be our best quarters of revenue growth YoY. Obviously, that’s 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 L.A..

Obviously in Asheville, we were coming off of a, you know, a really strong year, right? We lapped that comp. As you get into the Q1, we were still positive in terms of rates, but negative in terms of occupancy. However, as you get into the Q2, you know, that rate, the rates will turn negative on a YoY basis and will continue to be negative through, you know, the Q2 and Q3, again, on a YoY basis. The comp gets a lot easier in the Q4 as you sort of lap that. The other element is, of course, on the L.A. restrictions.

We are not assuming that the restrictions will be lifted for 2026. There’s a compounding effect that happens there, where, you know, the Q2, the impact is worse than the Q1, and then the Q3 is worse than the Q4, and so on. Those are the other kinds of things that are impacting the shape of the curve overall. You know, Asheville is in an interesting spot. Michael, do you want to talk a little bit about where Asheville stands today?

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage: Yeah, absolutely. Obviously in the Q4, we talked about Asheville. I think as we position and where we’re at today, Asheville was our best performing market in 2025. We had 6% same-store revenue growth YoY. We are obviously facing some tough occupancy comps in 2026. The YoY occupancy gap has narrowed dramatically. I think James discussed this a little bit. Since December, our average is down only 260 basis points YoY. In the Q1, our occupancy was at 91.6%.

At the end of April, we were only down 130 basis points, and we’re settling at 92.2%. That’s a great position to be in as we move into the busy season. That’s notably up 200 basis points from the end of December and generally in line with the rest of our U.S. portfolio, which is, you know, 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 underperform in 2026, specifically through the end of the Q3. That being said, the portfolio is performing slightly better than expected through April.

I think that says a lot about our technology, our process. You know, we were able to capture that upside with respect to occupancy and rate. As occupancy pulled back, we were able to refill that funnel, stabilize the physical occupancy, and get it prepared for the busy season.

Eric Luebchow, Analyst, Wells Fargo: All right. Thank you, guys.

Conference Call Operator: Your next question comes from the line of Michael Mueller with J.P. Morgan. Your line is open. Please go ahead.

Michael Mueller, Analyst, J.P. Morgan: Yeah. Hi. Two questions. I guess, on the first one, I apologize if I missed this, but can you talk about the move-in rate expectations for the balance of the year compared to, I think it was about 6.5% down, you said in April. You know, from higher level perspective, how should we be thinking about a bridge loan pref program? You know, how it fits into the business? Can it be a needle mover going forward, et cetera? Thanks.

David Corak, Senior Vice President of Corporate Finance and Strategy, SmartStop Self Storage: Hey, Mike. I’ll give you kind of the operating assumptions. We went over these slightly last quarter. I’ll review them. They really haven’t changed. From a move-in rent standpoint, obviously we have a handful of markets, some markets that have already turned positive this year, other supply markets still sort of negative. Our assumption is that by the end of rental season, so call it end of August, September, we’ll on the whole be largely back to a neutral kind of inflection point. If we don’t get back there, right, it doesn’t have a material impact on the rest of the year. We’ll have some impact on obviously the Q3 and Q4.

From an occupancy standpoint, we are modeling, you know, kind of fairly flat to slightly positive relative to 2025, with the exception of Asheville, obviously. For the rest of the portfolio, you know, think about sort of, you know, fairly flat to maybe slightly positive. ECRIs we’re, you know, modeling at or better than levels in 2025, which is basically what we’ve been doing given the strength and the health of the existing customer. The exception, of course, being the, you know, the California wildfire impacted properties, which we assume are gonna be impacted for the full year. I’ll remind you our length of stay is actually up year over year, which is a trend that us and some of our peers are seeing, which is really good from that perspective.

On the supply front, we’re obviously, you know, like everyone else assuming that the supply impact, you know, decreases throughout the year. In terms of your second question, Mike, on Axis and the bridge lending. Let me give a little bit of background on the relationship and talk about sort of the pipeline and how we’re looking at deals and what we’re looking at. Axis is a portfolio company of Conversant Capital. For some background, they run an institutional commercial real estate finance platform. Michael and the principal of Axis have a very long-standing relationship, this is not something that was just sort of thrown together overnight. This was, you know, well thought out for a long time.

Axis, their role in this relationship, you know, will help us source, structure, and service bridge loans, investments, et cetera, and they will be a 5% participant in the JVs investments. The partnership, you know, for us, gives us the horsepower to grow our bridge lending business efficiently without burdening our G&A, essentially, right? We’re really excited at this, right? We’re excited at the potential of the partnership and sort of the synergistic relationship that the program will have on third-party management and our overall external growth trajectory. When you think about the pipeline overall, it’s very strong. We’re very pleased with it in where it stands today. We’re actively looking at over $100 million of deals with average yields of 10%-14%.

Obviously, just like an acquisitions pipeline, we’re not gonna close on those $100 million deals, but our pipeline is filled with really strong deals and markets that we like, with sponsors that we, you know, we generally like. What we’re 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 sort of the A note, B note approach, but the pipeline is really dictating the former strategy. The pipeline is a mix of recaps, acquisition financing, development deals, and though I’ll note our, you know, we’re particularly selective on any new development deals. 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’re going after, but are certainly sensitive to the, you know, the quality of the property, the quality of the sponsor, the impact on our leverage, and then obviously, you know, the overall, you know, quality of our earnings.

James Barry, Chief Financial Officer, SmartStop Self Storage: I would just add that also it’s opening up an additional third-party property management assignments.

Michael Mueller, Analyst, J.P. Morgan: Got it. Okay, thank you.

David Corak, Senior Vice President of Corporate Finance and Strategy, SmartStop Self Storage: Thanks, Mike.

Conference Call Operator: Your next question comes from the line of Mason Guell with Baird. Your line is open. Please go ahead.

Mason Guell, Analyst, Baird: Hey, thanks for taking my question. On the expense side, what drove some of the favorable expense growth, and then kind of what is driving the higher expected growth for the remainder of the year kind of compared to the Q1?

James Barry, Chief Financial Officer, SmartStop Self Storage: Yeah, I’ll jump in there. You know, in terms of the Q1 and some of the favorable comps there is, 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. We also had, as we’ve talked about on the insurance front, we have not only realized the benefits of a strong general liability renewal that took place in November of 2025, and that’s carrying forward for a whole year. In addition, we also had a very strong property renewal that took place at the beginning of April.

It’s not in our Q1 numbers, but it is part of that, and it’s the main reason behind our OpEx guide down, is those savings on that property 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, we’ll call it, you know, in the low to mid-single digits. I’ll also note that advertising was up about, call it 1.9% for the quarter on a YoY basis, but that’s a lever that we wanna, you know, potentially be strategic with in terms of the trade-off, in terms of getting new rentals between concessions, pricing, and marketing.

You know, that’s something we wanna keep that flexibility on. That’s the overall shape of the OpEx, but we felt really good about that property insurance renewal, and that allowed us to reduce the OpEx guide.

Mason Guell, Analyst, Baird: Great. Could you talk about what drove the higher managed REIT EBITDA guide and how that segment has been performing?

James Barry, Chief Financial Officer, SmartStop Self Storage: I’ll also jump in there. Overall, the recurring revenues from that overall portfolio in the managed REIT platform, as a reminder, those assets are largely unstabilized, right? They 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’re talking about an annualized run rate in the Q1 on revenues in the managed REIT platform of, you know, just over $16 million on an annualized basis. Right. That’s a really powerful base of recurring revenues for SmartStop.

Mason Guell, Analyst, Baird: Got it. Thank you.

David Corak, Senior Vice President of Corporate Finance and Strategy, SmartStop Self Storage: Thanks, Mason.

Conference Call Operator: There are no further questions at this time. I would now like to pass the call over to Michael Schwartz, Chairman and CEO, for closing remarks. Please go ahead.

H. Michael Schwartz, Founder, Chairman, and CEO, SmartStop Self Storage: Thank you. It’s been a solid Q1 for us, I wanna thank you for your time and interest in SmartStop Self Storage, The Smarter Way to Store. Have a great day.

Conference Call Operator: This concludes today’s call. Thank you for attending. You may now disconnect.