SmartStop Expands North American Platform With $140M In Strategic Investments

SmartStop Self Storage REIT Inc. (NYSE: SMA) is expanding its North American platform through approximately $140 million in strategic investments across Canada and the United States, while raising its 2026 same-store and adjusted FFO guidance.

The internally managed self-storage REIT said the investments advance four pillars of its Deca Initiative: disciplined capital allocation, acquisitions and joint ventures, third-party management and continued clustering in its core markets. The announcements follow a second quarter in which SmartStop reported 17.6% year-over-year growth in adjusted FFO per share.

“Today’s announcement is a perfect reflection of The Deca Initiative,” said H. Michael Schwartz, Founder, Chairman, and Chief Executive Officer of SmartStop. “We are significantly expanding our footprint in Canada, adding high-quality assets on-balance sheet in core U.S. markets, and growing a new programmatic investment relationship with an exceptionally high-quality sponsor, all while funding this growth on a leverage-neutral basis. The addition of 25 Class A self-storage properties increases clustering and operating efficiencies in many of our core markets. We expect these transactions and the associated financing to be materially accretive to our 2027 FFO, as adjusted per share on an approximately leverage-neutral basis. We believe the Strategic Storage Canada portfolio will see meaningful embedded NOI upside as the properties lease up over the coming years, with an anticipated stabilized yield over 6%.”

The largest component of the expansion is a planned investment of approximately CAD $74 million, or about $54 million, in a Canadian joint venture fund. The investment will give SmartStop a 50% general partner interest and an approximately 34% limited partner interest in 14 self-storage properties totaling about 961,000 net rentable square feet and 9,600 units.

The portfolio is in the early stages of lease-up and is approximately 50% physically occupied. SmartStop's investment consists of approximately CAD $49 million in limited partner equity and CAD $25 million in convertible preferred equity carrying a 6.5% coupon. The preferred equity can convert to limited partner equity over the following 24 months based on the net asset value established at closing, potentially increasing SmartStop's LP ownership to approximately 44% by the end of the second year.

SmartStop also has the opportunity to invest up to an additional CAD $228 million, or approximately $163 million, over the next several years, primarily in connection with additional self-storage properties acquired by the fund.

The joint venture also expands SmartStop's management platform. The company will provide property management services under five-year contracts, receive a right of first offer on fund properties and take on third-party management contracts for three additional Canadian properties outside the fund. It also has exclusivity on future third-party management for development projects by affiliates of the fund's sponsor.

Following the investment, SmartStop expects to become Canada's third-largest self-storage operator, with 70 operating properties. The transaction will increase its presence in Vancouver, Calgary and the Greater Toronto Area while establishing a new presence in Halifax and Quebec City.

The Canadian investment comes as SmartStop continues to see favorable operating trends in its Canadian portfolio. Same-store occupancy increased approximately 75 basis points year over year as of Aug. 31, 2026, outperforming the company's U.S. portfolio over the same period.

The transaction remains subject to approval under the Canadian Competition Act and other customary closing conditions, with completion expected during the fourth quarter.

In the United States, SmartStop expects to acquire two stabilized properties in Las Vegas and Asheville, North Carolina, for approximately $37 million. The properties comprise more than 186,000 net rentable square feet and approximately 1,600 units. The acquisitions will add density to SmartStop's existing operations in two of its top U.S. markets, including becoming the company's 10th wholly owned property in the Las Vegas metropolitan area.

SmartStop is also expanding its investment activities through a new programmatic partnership with AXCS Capital and a vertically integrated Class A self-storage developer.

The joint venture closed its first preferred investment in September, representing a $13.2 million net investment from SmartStop. Five additional preferred equity and/or mezzanine loan investments are expected to close by the end of the fourth quarter, representing approximately $35 million to $40 million in additional net investment from SmartStop.

The investments are expected to have average maturities of approximately five years and yields in the mid-teens. SmartStop expects to receive a right of first offer on all six assets and enter into property management agreements. The developer's broader platform includes nearly 50 properties totaling more than 4 million net rentable square feet, creating a potential pipeline for additional investments.

Schwartz said the company's emphasis on clustering is central to its broader strategy.

“Scale within a market is one of the most important drivers of margin in our business,” continued Mr. Schwartz. “As we addressed in our IPO Road Show, we believe our portfolio has tremendous upside driven by scale, one of the primary drivers of entry into third-party management. Our strategic asset management program will expedite this by divesting from markets where we lack density and reinvesting in markets where we already operate at scale. In doing so, we expect to strengthen our balance sheet while improving the overall quality and efficiency of our portfolio.”

To fund the investments while maintaining a leverage-neutral capital structure, SmartStop priced approximately 2.4 million shares through its at-the-market equity program on a forward basis at an average price of $32.01 per share. The offering is expected to generate gross proceeds of up to approximately $78 million, depending on the timing of forward settlements, which are anticipated during the fourth quarter.

The Canadian investments also are supported by SmartStop's previously announced CAD $200 million Maple Bond offering, which closed Aug. 18. The bonds carry a fixed interest rate of 4.317% and mature in 2031.

SmartStop expects the latest investments and associated equity financing to be modestly accretive to full-year 2026 adjusted FFO per share and to add approximately $0.05 to $0.06 to full-year 2027 adjusted FFO per share.

Alongside the investment announcement, SmartStop has launched a strategic asset management program targeting the sale of select wholly owned properties in noncore markets. The company initially expects to pursue $75 million to $125 million of property dispositions beginning in early 2027.

The targeted properties generally are located in markets where SmartStop owns relatively few facilities and believes it cannot achieve the scale needed to generate significant operating efficiencies or clustering benefits. Proceeds are expected to be recycled into core markets, where the company can leverage shared staffing, marketing and revenue-management resources across multiple properties.

SmartStop also raised its full-year 2026 guidance for adjusted FFO per share by $0.01, primarily reflecting higher same-store expectations.

The company now expects 2026 same-store revenue growth of 0.75% to 1.75%, compared with its previous range of 0.50% to 1.50%. Its same-store operating expense growth guidance was lowered to 0.00% to 1.00%, from 0.25% to 1.25%, while same-store NOI growth guidance increased to 1.15% to 2.15%, compared with 0.65% to 1.65% previously.

SmartStop's updated full-year 2026 adjusted FFO guidance is $1.99 to $2.05 per diluted share and operating partnership unit, compared with the previous range of $1.98 to $2.04.

The company's latest moves combine property acquisitions, joint ventures, preferred investments and third-party management opportunities as it seeks to expand its operating footprint while concentrating assets in markets where it can build greater density.