SmartStop Self Storage REIT Inc. reported higher revenue, net income and adjusted funds from operations for the third quarter of 2026, supported by lower property operating expenses and continued growth in rental rates. The company also raised its full-year same-store net operating income (NOI) outlook for the fourth time this year.
The Ladera Ranch, California-based self-storage real estate investment trust reported net income attributable to common stockholders of approximately $9 million for the three months ended Sept. 30, up $3.8 million from the same period in 2025. Net income per share increased to 16 cents from 9 cents.
Self-storage-related revenue totaled approximately $68.2 million, an increase of $3.6 million year over year. Funds from operations (FFO), as adjusted, reached $30.3 million, up $2.9 million, while adjusted FFO per diluted share and operating partnership unit increased to 51 cents from 47 cents.
Same-store performance also improved. Revenue increased 2%, while property operating expenses declined 3.8%, producing a 4.9% increase in same-store NOI. Average physical occupancy was 92.2%, down 0.4 percentage points from the prior-year quarter, while annualized rent per occupied square foot rose 2.6% to $20.99.
The results reflect the company's ability to improve operating margins through expense management and rental-rate growth despite modest occupancy declines.
“SmartStop delivered another strong quarter, with sector-leading same-store NOI growth of 4.9% and FFO as adjusted per share growth of over 9%, even with a currency headwind,” said H. Michael Schwartz, the company's founder, chairman and CEO. “2.0% same-store revenue growth and a 3.8% reduction in same-store operating expenses expanded our operating margin by 190 basis points, our third consecutive quarter of margin improvement. These results allowed us to raise our full-year same-store NOI guidance for the fourth time this year.”
Canadian Expansion and Portfolio Strategy
Beyond its quarterly operating results, SmartStop outlined several initiatives aimed at expanding its Canadian footprint, increasing investment activity and concentrating its portfolio in markets where it can achieve greater operating efficiencies.
The company's most significant planned expansion involves a proposed investment in Strategic Storage Canada, a Canadian joint venture fund. Announced in September, the transaction calls for SmartStop to invest approximately $74.3 million Canadian (about $52.3 million U.S.) in exchange for a 50% general partner interest and an initial expected 34% limited partnership interest.
The fund is expected to own 14 self-storage properties totaling approximately 961,000 net rentable square feet and 9,600 units. The portfolio is approximately 50% occupied and includes properties in Vancouver, Calgary and the Greater Toronto Area, as well as Halifax and Quebec City.
SmartStop has also committed to making additional investments of up to $228 million Canadian (approximately $160.5 million U.S.) over the three years following the transaction's closing, primarily to fund additional property acquisitions by the joint venture. The investment remains subject to Canadian Competition Act approval and other customary closing conditions. SmartStop expects to complete the transaction in the fourth quarter of 2026.
The investment is expected to make SmartStop Canada's third-largest self-storage operator, with 70 operating properties across five provinces. The company also expects to provide property management services to the joint venture's properties under five-year agreements and receive a right of first offer on future dispositions.
Separately, SmartStop has secured third-party management contracts for three additional Canadian properties outside the joint venture and exclusivity on future third-party management assignments for development projects from certain affiliates.
Schwartz said the Canadian expansion is part of the company's broader Deca Initiative, which also includes a programmatic investment partnership and additional financing activity.
SmartStop is also pursuing a strategic asset management program designed to recycle capital from non-core markets into areas where it has a stronger operating presence. The company initially plans to pursue $75 million to $125 million in property dispositions beginning in early 2027.
The targeted properties generally are located in markets where SmartStop owns only one or a small number of facilities, limiting opportunities to achieve operating efficiencies through shared staffing, marketing and revenue management. Proceeds from potential sales would be reinvested in the company's core markets.
Acquisitions and Investment Activity
SmartStop is under contract to acquire two stabilized self-storage properties in Las Vegas, Nevada, and Asheville, North Carolina, for approximately $37 million. The properties comprise more than 186,000 net rentable square feet and approximately 1,600 units. Both transactions are expected to close in the fourth quarter.
The company also expanded its lending and preferred investment activities during the quarter, closing two preferred investments totaling $18.2 million with joint venture partner AXCS Capital and a $16.7 million bridge loan. The investments carry a weighted average yield of approximately 17.6%, before AXCS Capital's management fee and promoted interest.
In October, SmartStop entered into a $10 million Canadian-dollar delayed-draw loan facility to provide financing for two self-storage development projects in Ontario. The loan carries a fixed interest rate of 8.5% and matures Oct. 9, 2029. The company initially advanced $800,000 Canadian under the facility.
Financing and Management Platform Growth
SmartStop completed a $200 million Canadian-dollar issuance of Series C senior unsecured notes during the quarter. The notes, issued through SmartStop's operating partnership, mature Feb. 18, 2031, and carry an annual interest rate of approximately 4.32%. They received BBB ratings with Stable Outlooks from Morningstar DBRS and Kroll Bond Rating Agency.
The company also used its at-the-market equity program to sell approximately 2.4 million shares on a forward basis at an initial gross average price of $32.01 per share, generating potential gross proceeds of approximately $78.1 million. SmartStop expects to settle the forward shares during the fourth quarter.
Its third-party management platform encompassed approximately 230 stores totaling 17 million net rentable square feet at the end of September.
SmartStop also reported approximately $1 billion in assets under management across its three sponsored managed REITs, which collectively operated 52 properties containing approximately 43,000 units and 4.6 million rentable square feet.
Effective Nov. 1, Strategic Storage Trust VI acquired Strategic Storage Growth Trust III through a merger. SmartStop sponsors both investment vehicles and continues to receive applicable asset management, property management, acquisition and other fees through the managed platform.
As of Nov. 4, SmartStop's overall owned and managed portfolio included approximately 475 operating properties across 36 states, the District of Columbia and Canada. The portfolio comprised more than 285,000 units and 36.7 million rentable square feet.
Full-Year Outlook Increased
Along with its quarterly results, SmartStop raised its 2026 same-store NOI growth guidance. The company now expects growth of 2% to 2.5%, compared with its previous range of 1.15% to 2.15%.
The updated outlook reflects expected same-store revenue growth of 1.25% to 1.75% and a decline in property operating expenses of 0.25% to an increase of 0.25%.
On a constant-currency basis, the company projects same-store NOI growth of 1.95% to 2.45%.
SmartStop maintained its full-year adjusted FFO guidance of $2.01 to $2.05 per diluted share and operating partnership unit.
For the nine months ended Sept. 30, the company reported net income attributable to common stockholders of approximately $29.8 million, compared with a loss of $11.5 million during the same period in 2025. Adjusted FFO totaled $88.4 million, up from $63 million, while adjusted FFO per diluted share and operating partnership unit increased to $1.49 from $1.31.
Self-storage-related revenue for the nine-month period reached approximately $198.8 million, an increase of $14.2 million year over year.
Same-store revenue increased 1.6%, while property operating expenses declined 2.2%, resulting in a 3.6% increase in NOI. Average physical occupancy was 92.3%, down 0.3 percentage points, while annualized rent per occupied square foot increased 1.9% to $20.48.
The company's results and updated outlook reflect a strategy centered on improving property-level profitability, expanding its Canadian operations and deploying capital through acquisitions, joint ventures and lending activities.