S-11/A: SmartStop Self Storage REIT Eyes NYSE Listing with 27 Million Share Offering

SmartStop Self Storage REIT plans to list on the NYSE under the symbol 'SMA' through an initial public offering of 27 million shares, aiming to raise capital for debt reduction and expansion.

Summary

• SmartStop Self Storage REIT is offering 27 million shares of common stock with an expected price between $28.00 and $35.00 per share.
• The company intends to use the proceeds to redeem preferred stock, pay down debt, fund acquisitions, and for general corporate purposes.
• SmartStop is an internally-managed REIT focused on self-storage facilities in the United States and Canada.
• As of December 31, 2024, SmartStop owned or managed 208 operating stores comprising approximately 148,275 units and 16.7 million net rentable square feet.
• The company's strategy includes organic growth through technology and external growth via acquisitions and development.
• A one-for-four reverse stock split was effected on March 20, 2025.
• The company intends to make regular distributions to holders of shares of common stock offered in this offering, when, as and if authorized by our Board out of legally available funds, based on a distribution rate of approximately $0.1315 per share of common stock beginning the first full month following this offering.
• On an annualized basis, this would be $1.60 per share of common stock, or an annualized distribution rate of 5.1% based on the public offering price of $31.50 per share, which is the midpoint of the price range set forth on the front cover of this prospectus.

Sentiment

Score: 6

Explanation: The document presents a mix of positive growth strategies and negative financial results. The IPO and expansion plans are positive, but historical losses and high debt levels temper the outlook.

Positives

• The company has a high-quality and diversified self-storage portfolio.
• The company has exposure to key growth markets and sub-markets with strong demographics.
• The company has differentiated exposure to the Greater Toronto Area.
• The company has institutional-quality, technology-enabled, data-driven operations focused on customer service.
• The company has a scalable platform and asset base to drive significant growth.
• The company has proven acquisition execution in the self-storage space.
• The company has differentiated capital allocation capability through a Managed REIT platform.
• The company has an investment grade balance sheet well positioned for expansion.
• The company has an experienced and aligned management team with extensive operating expertise.

Negatives

• The company has historically incurred net losses and has an accumulated deficit.
• Certain officers and key personnel will face competing demands on their time and conflicts of interest.
• Revenue and earnings from the Managed REIT platform are uncertain.
• The company may be unable to promptly re-let units within its facilities at satisfactory rental rates.
• The company is susceptible to the effects of adverse macro-economic events that can result in higher unemployment, shrinking demand for products, large-scale business failures, and tight credit markets, such as inflation, rising interest rates, or labor shortages.

Risks

• The company's rental revenues will be significantly influenced by demand for self-storage space generally.
• The company faces significant competition in the self-storage industry.
• The company may be unable to promptly re-let units within its facilities at satisfactory rental rates.
• A high concentration of the company's properties in a particular geographic area would magnify the effects of downturns in that geographic area.
• The company's real estate assets may decline in value and be subject to significant impairment losses.
• The company's joint venture investments could be adversely affected by the company's lack of sole decision-making authority.
• Property taxes and insurance premiums may increase, which would adversely affect the company's net operating income and cash available for distributions.
• Changes in the CAD/USD exchange rate could have a material adverse effect on the company's operating results and value of the investment of the company's stockholders.
• The company has incurred and intends to continue to incur, mortgage indebtedness and other borrowings, which may increase the company's business risks.
• The company is party to loans that are subject to variable interest rates.
• If the company or the other parties to the company's loans or secured notes payable, as applicable, breach covenants thereunder, such loan or loans or secured notes payable could be deemed in default, which could accelerate the company's repayment date and materially adversely affect the value of the company's stockholders investment in the company.
• Failure to continue to qualify as a REIT would adversely affect the company's operations and the company's ability to continue to pay distributions at the company's current level as the company will incur additional tax liabilities.
• The estimated net asset value per share, or Estimated Per Share NAV, of the company's common stock is based on a number of assumptions that may not be accurate or complete and may not reflect the price at which shares of the company's common stock will trade when listed on a national securities exchange or the price a third party would pay to acquire the company.
• The market price and trading volume of shares of the company's common stock may be volatile.
• Because the company has a large number of stockholders and shares of the company's common stock have not been listed on a national securities exchange prior to this offering, there may be significant pent-up demand to sell shares of the company's common stock.
• The company may be unable to raise additional capital needed to grow the company's business.
• The company has no operating history as a publicly traded company and may not be able to successfully operate as a publicly traded company.

Future Outlook

The company expects to grow through organic improvements and external acquisitions, leveraging its technology platform and management capabilities. The company also plans to utilize its Managed REIT platform to sponsor non-traded REITs that will invest in, among other things, non-stabilized, growth-oriented assets, and development projects.

Management Comments

• Our Founder, Chairman and Chief Executive Officer, H. Michael Schwartz, founded our company in 2013, recognizing a market opportunity for a differentiated public self storage REIT focused on high quality self storage assets in high growth markets across the United States and Canada.

Industry Context

The self storage industry is highly fragmented, with opportunities for consolidation and improved management. The sector has historically outperformed other real estate sectors, driven by attractive fundamentals and superior operating performance.

Comparison to Industry Standards

• The gross margin percentage of SmartStop's same-store portfolio was 68.9% for the quarter ended December 31, 2024, 460 basis points below that of the average of the U.S. Listed Self Storage REITs.
• The company's same-store revenue growth for full year 2024 and fourth quarter 2024 were 0.4% and 2.4%, respectively, which were approximately 140 bps and 410 bps higher than the U.S. Publicly Listed REITs over the same periods, respectively.
• The average owned portfolio of the U.S. Listed Self Storage REITs is approximately 1,825 facilities, encompassing over approximately 132 million net rentable square feet as of December 31, 2024, or approximately ten times SmartStop's size by both metrics.

Related Party Transactions

• The company has entered into an Administrative Services Agreement with SAM, its former sponsor, for certain operational and administrative services.
• The company has a sponsor funding agreement with SST VI and SST VI OP, pursuant to which the company agreed to fund the payment of the upfront sales commission and the upfront dealer manager fee for the sale of shares of SST VIs Class Y common stock sold in the SST VI public offering and the estimated organization and offering expenses for the sale of Class Y Shares and shares of SST VIs Class Z common stock sold in the SST VI public offering.
• The company serves as the property manager for a self storage property in which SAM holds a minority interest.

Stakeholder Impact

• Shareholders will be impacted by the IPO, potential dilution, and future distributions.
• Employees will be impacted by the Listing Equity Grants.
• Customers will benefit from the company's focus on customer service and technology.
• The company's growth strategy will impact suppliers and the communities in which it operates.

Next Steps

• Complete the IPO and list on the NYSE.
• Redeem outstanding Series A Preferred Stock.
• Pay down existing debt.
• Fund external growth with property acquisitions.
• Continue to execute organic growth strategies.

Key Dates

Keywords

self storage, REIT, real estate, IPO, offering, acquisitions, Canada, Managed REITs, properties, investment