SmartStop Swings to Profit, Raises 2026 Outlook
Second-quarter self-storage revenue rose $4.9 million to $65.8 million.
SmartStop Self Storage REIT (SMA), the self-storage real-estate investment trust, swung to a second-quarter profit as lower property costs lifted operating margins.
The quarter marked an operating inflection: same-store net operating income growth accelerated to 3.7% from 2.0% in the first quarter, even as same-store revenue growth slowed to 1.3% from 1.5%.
Net income attributable to common stockholders was $11.2 million, or $0.20 a share, compared with a loss of $8.4 million, or $0.16 a share, a year earlier. First-quarter net income was $9.6 million, or $0.17 a share. Adjusted funds from operations increased 20.2% to $29.3 million, while adjusted FFO rose to $0.49 a share from $0.42 and held steady sequentially.
Property operating expenses fell 3.4% from a year earlier after rising 0.6% in the first quarter, primarily because of lower insurance and repair-and-maintenance costs. The same-store operating margin reached 67.3%, expanding 150 basis points after a 30-basis-point increase in the prior quarter.
Pricing helped offset weaker occupancy. Annualized rent per occupied square foot rose 1.9% to $20.33, accelerating from 1.2% growth in the first quarter, while occupancy declined 0.6 percentage point to 92.5%. Managed Platform revenue climbed 67.2% to $6.7 million, outpacing an 8.1% increase in total property revenue, even as the third-party management platform contracted to about 220 stores from 227.
SmartStop now projects higher 2026 same-store NOI and adjusted FFO per share following the second-quarter performance, though the company didn't provide the size of either increase.
The company also deployed $29.7 million to acquire three facilities in the Spartanburg, S.C., area and made a $16.3 million preferred investment. Including a subsequent $3.1 million investment share, the preferred investments carried a weighted-average yield of about 10.9%. A pending merger of two managed REITs is set to generate a negotiated $2.0 million payment while keeping SmartStop as adviser and property manager of the combined company.