This article first appeared on GuruFocus .
Release Date: August 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Smartstop Self Storage REIT Inc ( NYSE:SMA ) reported strong same-store revenue growth of 1.3% and NOI growth of 3.7% in Q2 2026, with operating expenses down 3.4%.
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The company achieved a 150 basis point year-over-year improvement in same-store operating margins, reaching 67.3%, driven by disciplined expense control.
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FFO as adjusted per share grew 17.6% year-over-year to $0.49, and the company raised its full-year guidance for same-store revenue, NOI, and FFO.
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Smartstop Self Storage REIT Inc ( NYSE:SMA ) is executing on external growth, acquiring a 3-property portfolio at a high 5% cap rate and deploying $16.3 million in bridge capital at double-digit yields.
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The company reduced cash flow leverage to 6.2 times and sees a strong acquisition pipeline with attractive off-market opportunities, supported by the DECA initiative for long-term value creation.
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The managed platform is expanding, with 14% growth in recurring revenue, successful integration of the Argus platform, and the first third-party management property onboarded in Canada.
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Canadian joint venture properties delivered strong NOI growth of 9.4% year-over-year, and the GTA portfolio remains a strategic asset with long-term demand drivers intact.
Negative Points
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Same-store web rates were down 3.8% during the quarter, and achieved move-in rates per square foot declined 4.4% on average, indicating pricing pressure.
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Occupancy in July was 92.1%, down 65 basis points year-over-year, with some markets still experiencing negative move-in rent trends.
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The Asheville market continues to face occupancy challenges due to natural disaster and eminent domain proceedings, with properties underperforming until at least Q3 2026.
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The GTA same-store portfolio saw revenue down 1% year-over-year, with occupancy down 60 basis points, reflecting tougher comps and macro uncertainty from tariffs and geopolitical events.
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The company expects continued volatility and potential choppiness in the back half of the year, which could impact hitting the top end of guidance.
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Third-party management platform saw some off-boards, and full margin synergies from the Argus integration are not expected until 2027.
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The company faces increased competition in Canada with Public Storage's entry, which could intensify competitive dynamics in the GTA market.
Q & A Highlights
Q: Can you provide an update on the acquisition pipeline and expected cap rates for future transactions? A: Michael Schwartz (CEO) confirmed that the company is targeting similar cap rates around 5.5% in the US and 4-5% in Canada. He noted a solid acquisition cycle driven by owners who built during the COVID era and are now over-leveraged, creating attractive opportunities. The company reduced its full-year capital deployment guidance to $55-75 million but has room to be more active if the right opportunities arise, emphasizing that $300 million of acquisitions would move their market cap by about 10%, making growth meaningful for SmartStop.
Q: How much of the 150 basis point same-store margin expansion is sustainable operating leverage versus temporary benefits like insurance and R&M savings? A: James Barry (CFO) explained that savings came from multiple line items including payroll, repairs and maintenance, property insurance, and utilities. The property insurance renewal in April reflects a general softening in that market and will carry through the rest of the year. The larger structural story is in payroll, down 2.3% for the quarter, driven by clustering benefitsexemplified by the Argus platform integration in Denver, where going from 9 to over 50 properties between owned and managed is driving economies of scale.
Q: What are your operating assumptions for move-in rates and occupancy for the remainder of the year, and how could you hit the top end of FFO guidance? A: David Korak (SVP of Corporate Finance and Strategy) stated that some markets have already turned positive on web rates, while supply-heavy markets remain negative. They expect a broader inflection by Q4. The 2025 comps were lumpy (Q3 growth of 2.5% vs. Q4 of only 40 bps), which supports higher Q4 growth. The Asheville occupancy comp lapses on October 1st, and the California ECRI restriction lift will have a more positive impact on Q4. If the back half avoids volatility and sees a normal offseason, they feel good about hitting the top end of the revenue range.
Q: Can you discuss the Asheville market, the eminent domain proceedings, and plans to grow presence there? A: Michael Schwartz (CEO) noted Asheville was their best-performing market in 2025 with 6% same-store revenue growth. The occupancy gap has narrowed dramatically since December, with occupancy currently at 91.8%. James Barry (CFO) added that two properties were subject to eminent domain proceedings80% of one asset and 20% of another were taken. The North Carolina DOT is coordinating customer relocations. They are excited to announce breaking ground in early 2027 to rebuild a property destroyed by flooding, which will be 83% larger than the original, with delivery expected in late 2027 or early 2028.
Q: How are the fundamentals in Canada and the GTA market, and how does Public Storage's entry into Canada change the competitive dynamic? A: Michael Schwartz (CEO) explained that the GTA same-store pool (13 properties, 1.1 million sq ft) saw revenue down 1% on tough comps, but the JV properties with SmartCentres grew revenues 6.7% and NOI 9.4%. The GTA delivered 2.7% same-store revenue growth last year, about 100 bps ahead of the US, so this year's softness is a flip side of outperformance. New supply has peaked and will moderate. Regarding Public Storage's acquisition of PS Canada, Schwartz said it validates their Canadian strategy and they welcome the competition, having competed with them in the US for 22 years.
Q: How much more margin expansion is available through internal levers versus expanding scale? A: James Barry (CFO) reiterated that in markets with 10 or more properties, margins improve by about 300 basis points. The Argus transaction pushed three markets over that threshold. They believe significant margin expansion remains as programs integrate and they continue to grow across balance sheet, JVs, and third-party management. Additional drivers include favorable property insurance renewals and the ongoing solar initiative reducing utilities.
Q: Can you provide an update on the bridge lending joint venture? A: David Korak (SVP) stated the pipeline remains attractive at over $100 million with target yields of 10-14%, structured as mezzanine or preferred. As of June 30, they have a book of about $20 million on 6 properties, all with property management. They closed another $3 million after quarter end, with a blended yield just under 11%. They are also working on an A-note/B-note approach, selling off a 50-60% LTV note to another party. The program creates a symbiotic relationship with third-party management assignments and a natural pipeline for future acquisitions.
Q: How are you thinking about surveillance pricing regulation risk to your revenue management systems, and are there similar moves in Canada? A: Michael Schwartz (CEO) noted no direct exposure to New York City areas affected by recent regulations, but they are monitoring and working with local self-storage associations. He emphasized that everyone has proprietary pricing systems, and their algorithms differ from peers. Their pricing considers supply and demand factors, not personal data. In Montreal, regulatory concerns were more about transparency in presenting prices and fees. The industry is adapting to be as transparent as possible, and having proper culture and people to handle customer questions one-on-one is crucial.
Q: What is the overlap with Public Storage's Canadian portfolio, and could PSA's ownership lead to a different operating strategy? A: David Korak (SVP) confirmed the overlap is primarily in the GTA portfolio, both same-store and JV pools, with less in Alberta. Regarding strategy, he said it's tough to comment on another company's strategy, and since it's a new market for PS, they can't confidently predict what they'll do or the impact.
Q: Can you provide details on July trends, including move-in rents and occupancy? A: David Korak (SVP) reported that Q2 web rates were held fairly steady, down about 3.5% year-over-year. Move-in rates were down 4.4% for the quarter, an improvement from Q1. July was a good month: web reservations were up 6.7%, rentals up 7.2%, and concession usage declined year-over-year. Web rates were actually up 1%
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
