SmartStop Self Storage REIT, Inc. Reports 2020 Full Year Results
March 30, 2021
LADERA RANCH, Calif., March 30, 2021 /PRNewswire/ — SmartStop Self Storage REIT, Inc. (“SmartStop”), a self-managed and fully-integrated self storage company with approximately $1.7 billion of self storage assets under management, announced its overall results for twelve months ended December 31, 2020.
“SmartStop posted another strong year with FFO, as adjusted growth of 91% over the prior year as well as best-in-class same-store revenue and NOI growth as compared to our publicly traded peers,” said H. Michael Schwartz, Executive Chairman of SmartStop. “The power of the SmartStop® Self Storage platform was on full display this year, substantiating the investments we’ve made in the platform as well as the fantastic team that’s worked tirelessly to build our company. While 2020 was one of the most unprecedented years that our sector has seen, the current operating environment reinforces the resilient nature of our industry and portfolio. We believe the company is well positioned to deliver strong risk-adjusted returns and grow stockholder value in 2021 and beyond.”
Twelve Months Ended December 31, 2020 Financial Highlights:
• Total self storage-related revenues increased by approximately $7.0 million, or 6.8%, when compared to the same period in 2019.
• FFO, as adjusted, increased by approximately $5.2 million, or 91%, when compared to the same period in 2019.
• Same-store revenues increased by 3.6% compared to the same period in 2019.
• Same-store NOI increased by 7.8% compared to the same period in 2019.
• Same-store average physical occupancy increased by 2.0% to 90.6% for the twelve months ended December 31, 2020, compared to 88.6% during the same period in 2019.
• Same-store annualized revenue per occupied square foot was approximately $16.18 for the twelve months ended December 31, 2020, which represented an increase of approximately 1.1% when compared to the same period in 2019.
• Managed REIT Platform revenue of approximately $8.0 million for the twelve months ended December 31, 2020, up significantly from $3.1 million during the same period in 2019.
“In addition to our strong operating performance, on March 17, 2021, we executed on a strategic transaction to drive further growth and scalability, by closing the merger with Strategic Storage Trust IV, Inc. (“SST IV”),” continued Mr. Schwartz. “We are excited to welcome SST IV stockholders in a merger that allows us to recognize expense efficiencies and reduce borrowing costs, among other benefits, and better positions the combined company to execute on future growth plans. Additionally, in tandem with the closing of the merger, we secured a new $500 million credit facility, which was primarily used to refinance existing debt of both SmartStop and SST IV at significantly more attractive rates. This facility allows us to continue to execute our growth strategy utilizing a lower cost of debt capital, helping us drive stockholder returns going forward.”
Closed the All-Stock Acquisition of Strategic Storage Trust IV, Inc.
On March 17, 2021, SmartStop and SST IV announced that the companies closed a merger in which SST IV merged into a subsidiary of SmartStop, in an all-stock transaction with a value of approximately $380 million (which includes outstanding debt of SST IV assumed or repaid but excludes transaction costs) (the “Merger”). The Merger positions the combined company to achieve further economies of scale and drive incremental growth as it takes advantage of the benefits of a larger aggregate portfolio. As a result of the Merger, SmartStop acquired all of the real estate owned by SST IV, consisting of 24 wholly-owned self storage facilities located across nine states and six joint venture properties located in the Greater Toronto Area of Ontario, Canada. The total SST IV portfolio, including joint venture property estimates at completion of development, represents approximately 22,500 self storage units and 2.6 million net rentable square feet. The resulting consolidated portfolio consists of 136 wholly-owned properties and six joint venture properties with a combined gross book value of approximately $1.5 billion of self storage assets.
Closed a $500 Million Multi-Currency Credit Facility
On March 17, 2021, SmartStop announced that it entered into a multi-currency credit facility (the “Credit Facility”) of up to $500 million with a syndicate of banks led by KeyBank National Association, Wells Fargo, N.A., Citibank, N.A. and Bank of Montreal. The facility consists of a $250 million revolving credit facility (the “Revolver”) and a $250 million term loan (the “Term Loan”), and has an accordion feature permitting expansion of the Credit Facility up to $850 million, subject to certain conditions. The Revolver has a three-year term with a maturity date of March 17, 2024 and a one-year extension option. The Term Loan has a five-year term with a maturity date of March 17, 2026. Borrowings under the Credit Facility may be in either U.S. dollars or Canadian dollars at SmartStop’s election. Initial advances under the Term Loan bear interest at 195 basis points over 30-day LIBOR or 30-day CDOR, while initial advances under the Revolver bear interest at 200 basis points over 30-day LIBOR or 30-day CDOR. The Credit Facility is initially secured by a pledge of equity interests in certain of SmartStop’s property owning subsidiaries. SmartStop can elect to release the pledges upon the achievement of certain financial conditions, making the Credit Facility fully unsecured and resulting in a reduction in the applicable interest rate, among other changes.
Issuance of Series A Preferred Stock
On October 26, 2020, SmartStop exercised its option to issue an additional 50,000 shares of Series A Preferred Stock to Extra Space Storage LP, a subsidiary of Extra Space Storage Inc. (NYSE: EXR), pursuant to a preferred stock purchase agreement between SmartStop and Extra Space Storage LP announced in October of 2019. The proceeds from the $50 million issuance were used to pay down existing debt, finance self storage acquisitions, and for working capital or other general corporate purposes.
COVID-19 Update
SmartStop continues to operate its stores with safety and social distancing procedures in place, including the use of masks and plastic dividers. Additionally, SmartStop’s corporate headquarters and dedicated call center continue to meet the needs of the business while working remotely.
Many of the challenges associated with the COVID-19 pandemic in the second quarter of 2020 subsided. In fact, certain trends such as the broader shift of people working from home, migration patterns away from dense urban markets, and strength in the housing market helped drive the growth in self storage demand in the second half of 2020. SmartStop’s rental activity during the fourth quarter was strong, existing customer rate increases resumed in most markets, customer collections remained relatively consistent, and asking rates to new customers continued to improve on a year-over-year basis.
Below is a summary of the business indicators, drivers, and metrics which were impacted by the COVID-19 pandemic:
• Resumed existing customer rate increases on a modified basis beginning July 2020 and through the third and fourth quarters of 2020, after pausing rate increases for our existing customers during second quarter 2020;
• A reduction in late fees during full year 2020 of approximately 19% on a same-store basis as compared to full year 2019, an improvement from second quarter 2020, in which quarterly same-store late fees declined 35% year-over-year;
• Same-store move-ins increased approximately 6% during full year 2020 as compared to full year 2019, an improvement from the decline of approximately 5% year-over-year during the second quarter 2020;
• Same-store move outs declined approximately 5% during full year 2020 as compared to full year 2019, as compared to the decline of approximately 12% year-over-year for the second quarter 2020;
• Same-store asking rates for new customers increased during the fourth quarter 2020 as compared to fourth quarter 2019, after a decline year-over-year during the second quarter 2020;
• Rents billed and collected within the same month remained consistent on year-over-year basis at approximately 97% during the full year of 2020.
Declared Distributions
On December 3, 2020, SmartStop’s board of directors declared a distribution rate for the first quarter of 2021, of approximately $0.00164 per day per share on the outstanding shares of common stock payable to both Class A and Class T stockholders. Such distributions payable to each stockholder of record during a month will be paid the following month.
Partial Reinstatement of Share Redemption Program
On August 20, 2020, SmartStop’s board of directors partially reinstated its Share Redemption Program (“SRP”). Currently, our SRP remains suspended other than for redemptions sought in connection with a stockholder’s death, qualifying disability, or confinement to a long-term care facility or other exigent circumstances. The board further determined to revise the redemption price per share for all redemptions under the SRP to the most recently-published estimated net asset value per share.
Contact:
David Corak
VP of Corporate Finance
SmartStop Self Storage REIT, Inc.
949-429-6600
ir@smartstop.com
