Q2 2026 SmartStop Self Storage REIT Inc Earnings Call

Speaker #1: Hello, everyone. Thank you for joining us, and welcome to SmartStop Self Storage's second quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Hello, everyone. Thank you for joining us, and welcome to SmartStop Self Storage's Q2 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to David Corak, Senior Vice President of Corporate Finance and Strategy. David, please go ahead.

Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to David Korek, Senior Vice President of Corporate Finance and Strategy.

Speaker #1: David, please go ahead.

Speaker #2: Thank you, operator. Before we begin, I would like to remind everyone that certain statements made during today's call, including statements about our future plans, prospects, and expectations, may be considered forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act.

David Corak: Thank you, operator. Before we begin, I would like to remind everyone that certain statements made during today's call, including statements about our future plans, prospects, and expectations, may be considered forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements are subject to numerous risks and uncertainties as described in our filings with the Securities and Exchange Commission. These risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in our earnings release that we issued last night, along with the comments on this call, are made only as of today. The company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, we will also refer to certain non-GAAP financial measures.

Speaker #2: These forward-looking statements are subject to numerous risks and uncertainties, as described in our filings with the Securities and Exchange Commission. And these risks could cause our actual results to differ materially from those expressed in or implied by our comments.

Speaker #2: Forward-looking statements in our earnings release, which we issued last night, along with the comments on this call, are made only as of today. The company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

Speaker #2: In addition, we will also refer to certain non-GAAP financial measures. Information regarding our use of these measures, and a reconciliation of these measures to GAAP measures, can be found in our earnings release and supplemental disclosure that we issued last night. These are available for download on our website at investors.smartstopselfstorage.com.

David Corak: Information regarding our use of these measures and a reconciliation of these measures to GAAP measures can be found in our earnings release and supplemental disclosure that we issued last night and are available for download on our website at investors.smartstopselfstorage.com. In addition to myself, today we have H. Michael Schwartz, Founder, Chairman, and CEO, as well as James Barry, our CFO. I'll turn it over to Michael.

Speaker #2: In addition to myself, today we have H. Michael Schwartz, founder, chairman, and CEO, as well as James Barry, our CFO. Now, I'll turn it over to Michael.

Speaker #3: Thank you, David. Thank you for joining us today for our second quarter earnings call. SmartStop Self Storage had a strong quarter of results, and we further reinforced our vision by communicating our long-term strategy for shareholder value creation with the announcement of our Decca Initiative in July.

H. Michael Schwartz: Thank you, David. Thank you for joining us today for our Q2 earnings call. SmartStop Self Storage had a strong quarter of results. We further reinforced our vision by communicating our long-term strategy for shareholder value creation with the announcement of our DECA initiative in July. Let me first touch on our results for the Q2. We posted strong same-store revenue growth of 1.3%, an operating expense decrease of 3.4%, and an NOI growth of +3.7%, and maintained average occupancy of 92.5%. Operationally, 10 of our top 15 markets posted positive same-store NOI growth. Our strong focus on expense control led to 150 basis point year-over-year growth in our same-store operating margin. This is our Q2 in a row of improved margins.

Speaker #3: Let me first touch on our results for the second quarter. We posted strong same-store revenue growth of 1.3%, an operating expense decrease of 3.4%, and NOI growth of 3.7%.

Speaker #3: And maintained average occupancy of 92.5%. Operationally, 10 of our top 15 markets posted positive same-store NOI growth. Our strong focus on expense control led to 150 basis points year-over-year growth in our same-store operating margin.

Speaker #3: This is our second quarter in a row of improved margins. This operational performance, coupled with overall efficiencies, resulted in reported FFO, as adjusted per share, of $0.49, up 17.6% year-over-year.

H. Michael Schwartz: This operational performance, coupled with overall efficiencies, resulted in reported FFO as adjusted per share of $0.49, up 17.6% year over year. With these results and better-than-expected momentum into H2, we raised the midpoint of our same-store revenue and same-store NOI guidance, as well as our FFO as adjusted per share guidance. In July, we introduced the DECA initiative, which is our multiyear strategic framework that guides our decision-making as a management team. The DECA initiative stands for disciplined execution, compounding appreciation through six defined pillars for outsized long-term value creation. This value creation is driven by relative outperformance, margin expansion, and outsized FFO as adjusted per share growth. This is the true goal of our DECA initiative. I communicated a $10 billion capitalization level, which will be the output of executing in a disciplined fashion on those goals.

Speaker #3: With these results and better-than-expected momentum into the second half of the year, we raised the midpoint of our same-store revenue and same-store NOI guidance, as well as our FFO as adjusted per share guidance.

Speaker #3: In July, we introduced the Decca Initiative, which is our multi-year strategic framework that guides our decision-making as a management team. The Decca Initiative stands for disciplined execution, compounding appreciation, through six defined pillars for outsized long-term value creation.

Speaker #3: This value creation is driven by relative outperformance, margin expansion, and outsized FFO as adjusted per share growth. This is the true goal of our Decca Initiative.

Speaker #3: I communicated a $10 billion capitalization level, which will be the output of executing in a disciplined fashion on those goals. That level is also the size at which we think SmartStop's platform can begin to recognize its full potential.

H. Michael Schwartz: That level is also the size that we think SmartStop's platform can begin to recognize its full potential. Our results and activity this quarter are a perfect reflection of this initiative. Strong same-store results driven by our revenue management platform, talented operations and store-level teams, growing efficiencies as we scale, and deliberate expense control. Same-store operating margins of 67.3%, up 150 basis points year over year, and a wide growth of 9.4% in our Canadian joint venture properties year over year. 14% growth of the reoccurring revenue stream for our managed REIT platform. The acquisition of a 3-property portfolio of high-quality self-storage properties at a high 5% cap rate. The deployment of approximately $16.3 million of bridge capital at a double-digit yield. An organic reduction to our cash flow leverage to 6.2 times. Finally, sector-leading FFO as adjusted per share growth of 17.6% year over year.

Speaker #3: Our results in activity this quarter are a perfect reflection of this initiative: strong same-store results, driven by our revenue management platform, talented operations and store-level teams, growing efficiencies as we scale, and deliberate expense control.

Speaker #3: Same-store operating margins of 67.3%, up 150 basis points year-over-year. NOI growth of 9.4% in our Canadian joint venture properties year-over-year. Fourteen percent growth of the recurring revenue stream for our managed REIT platform. The acquisition of a three-property portfolio of high-quality self-storage properties at a high 5% cap rate.

Speaker #3: The deployment of approximately $16.3 million of bridge capital at a double-digit yield, an organic reduction to our cash flow leverage to 6.2 times, and finally, sector-leading FFO as adjusted per share growth of 17.6% year-over-year.

Speaker #3: Sitting here, 16 months post-IPO, we are encouraged by the sector's momentum and our successful execution of the plans we laid out at the IPO.

H. Michael Schwartz: Sitting here 16 months post-IPO, we are encouraged by the sector's momentum and our successful execution of the plans we laid out at the IPO. We are excited to articulate and communicate the DECA initiative with all of you. While the pillars we outlined were on display in Q2, we've just begun to scratch the surface of this company's full potential. As I wrote in the letter, the DECA initiative is the future. The foundation is laid, progress has been made, and the work is underway. Now I'm going to turn it over to James.

Speaker #3: We are excited to articulate and communicate the Decca Initiative with all of you, and while the pillars we outlined were on display in the second quarter, we've just begun to scratch the surface of this company's full potential.

Speaker #3: As I wrote in the letter, the Decca Initiative is the future. The foundation is laid, progress has been made, and the work is underway.

Speaker #3: Now I'm going to turn it over to James.

Speaker #2: Thank you, Michael. Starting with our operating performance, our same-store pool posted year-over-year revenue growth of 1.3%, with a 3.4% decrease in operating expenses, leading to an NOI increase of 3.7%, with quarter-ending occupancy of 92.4%.

James Barry: Thank you, Michael. Starting with our operating performance, our same-store pool posted year-over-year revenue growth of 1.3%, with a 3.4% decrease in operating expenses, leading to an NOI increase of 3.7%, with quarter-ending occupancy of 92.4%. These results were slightly better on a constant currency basis. We were very pleased with our operating expenses, with a year-over-year decrease of 3.4% in the same-store pool in Q2. This expense control led to an increase in our same-store margins of 150 basis points. We saw a decrease in payroll, property insurance, repairs and maintenance, and utilities, with relatively flat growth in property taxes. Our web rates were down 3.8% during the quarter. Our achieved move-in rates per square foot were down 4.4% on average. Occupancy in July was 92.1%, down 65 basis points year over year.

Speaker #2: These results were slightly better on a constant currency basis. We were very pleased with our operating expenses, with a year-over-year decrease of 3.4% in the same-store pool in the second quarter.

Speaker #2: This expense control led to an increase in our same-store margins of 150 basis points. We saw a decrease in payroll, property insurance, repairs and maintenance, and utilities, with relatively flat growth in property taxes.

Speaker #2: Our web rates were down 3.8% during the quarter. Our achieved move-in rates per square foot were down 4.4% on average. Occupancy in July was 92.1%, down 65 basis points year over year.

Speaker #2: We felt more comfortable holding our asking rates heading into Q3, as our web rates were actually up 1.2% year-over-year for the month of July, slightly better than we anticipated.

James Barry: We felt more comfortable holding our asking rates heading into Q3, as our web rates were actually up 1.2% year-over-year for the month of July, slightly better than we anticipated. Our seven properties that were impacted by LA County fire ECRI restrictions posted -2% same-store revenue growth in Q2. However, with the lift of these restrictions, we are anticipating those returning to + same-store revenue growth for the remainder of the year. On the external growth front, we acquired three properties on balance sheet in Spartanburg, South Carolina, for approximately $30 million. We also closed on a preferred investment on a property in Goleta, California, for $16.3 million, which we assumed property management of that asset at the end of June.

Speaker #2: Our 7 properties that were impacted by LA County Fire ECRI restrictions posted negative 2% same-store revenue growth in the second quarter, however with the lift of these restrictions, we are anticipating those returning to positive same-store revenue growth for the remainder of growth front, we acquired 3 properties on balance sheet in Spartanburg, South Carolina, for approximately $30 million.

Speaker #2: We also closed on a preferred investment on a property in Goleta, California, for $16.3 million, and we assumed property management of that asset at the end of June.

Speaker #2: The result of all of this for the second quarter of 2026 is that we posted fully diluted FFO, as adjusted per share and unit, of $0.49.

James Barry: The result of all of this for Q2 2026 is that we posted fully diluted FFO as adjusted per share and unit of $0.49. Turning to guidance, we raised our same-store revenue guidance from a range of -0.25% to 1.75% to a range of 0.5% to 1.5%. The lift of the LA fire restrictions account for about a quarter of that raise, or five to seven basis points. The remainder comes from a combination of better-than-expected Q2 paired with better-than-expected momentum into H2. Additionally, we are reducing our overall operating expense growth range from 1.75% to 3.75% to a range of 0.25% to 1.25%, driven by a combination of controllable expenses and property insurance. The result is an increase of our NOI growth midpoint from -0.25% to +1.15%.

Speaker #2: Turning to guidance, we raised our same-store revenue guidance from a range of negative 0.25% to 1.75%, to a range of 0.5% to 1.5%. The lift of the LA fire restrictions accounts for about a quarter of that raise, or 5 to 7 basis points.

Speaker #2: The remainder comes from a combination of a better-than-expected second quarter paired with better-than-expected momentum into the second half. Additionally, we are reducing our overall operating expense growth range from 1.75% to 3.75%, to a range of 0.25% to 1.25%, driven by a combination of controllable expenses and property insurance.

Speaker #2: The result is an increase of our NOI growth midpoint from negative 0.25% to a positive 1.15%. Lastly, we raised our guidance on FFO as adjusted per share from $1.94 to $2.04, to $1.98 to $2.04.

James Barry: Lastly, we raised our guidance on FFO as adjusted per share from $1.94 to 2.04 to $1.98 to 2.04. With that, operator, we will open it up to questions.

Speaker #2: And with that operator, we will open it up to questions.

Speaker #1: We will now begin the question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again.

Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Wes Golladay with Baird. Wes, please go ahead.

Speaker #1: We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device.

Speaker #1: Please stand by while we compile the Q&A roster. Your first question comes from the line of Wes Goloday with Baird. Wes, please go ahead.

Speaker #4: Hey, everyone. Just a question on the acquisition pipeline that you're seeing. Are you expecting to transact around a similar cap rate of the 5.9 that you did in the quarter?

Wes Golladay: Hey, everyone. Just a question on the acquisition pipeline that you're seeing. Are you expecting to transact around a similar cap rate of the 5.9 that you did in the quarter?

Speaker #3: Yeah. Well, the answer, I think, is yes. I think that's kind of what our target is. I think if I step back, I want to kind of reinforce that we do believe this is a solid acquisition cycle.

H. Michael Schwartz: Yeah. Well, the answer I think is yes. I think that's kind of what our target is. I think if I step back, I want to kind of reinforce that we do believe this is a solid acquisition cycle. It is here. It's driven by primarily individuals that have built or bought during COVID heyday

Speaker #3: It is here. And it's driven by primarily individuals that have built or bought during COVID heyday, and now a lot of them are, quite frankly, over their skis.

James Barry: Now a lot of them are, quite frankly, over their skis. This result is a wave of high-quality properties that are coming up for sale because owners are effectively out of options. Today, we are seeing a lot of attractive opportunities out there on the stabilized front, US and Canada. US, kind of at that mid 5.5, and it's more between a 4 to 5, I would say, in a lot of the Canadian markets. Pricing, though, I think in broker market acquisitions are still a little high. I think there are deals out there. I think a lot of off-market deals seem to be the most attractive right now, if you can find those. Given where we sit in leverage, which I think is incredibly important to address with respect to that question.

Speaker #3: And so this result is a wave of high-quality properties that are coming up for sale. Because owners are effectively out of options. And so today, we are seeing a lot of attractive opportunities out there on the stabilized front, US and Canada.

Speaker #3: US kind of at that mid 5.5 and it's more between a 4 to 5, I would say, in a lot of the Canadian markets.

Speaker #3: Pricing, though—I think in broker market acquisitions, prices are still a little high. I think there are deals out there. I think a lot of off-market deals seem to be the most attractive right now, if you can find those.

Speaker #3: Given where we sit in leverage, which I think is incredibly important to kind of address with respect to that question, we did reduce our cash flow leverage.

James Barry: We did reduce our cash flow leverage again this quarter, even while deploying capital. We have raised our full-year capital deployment guidance to between $55 and 75 million range, and we definitely have room to be more active if the right opportunities present themselves. I do want to be clear that we're not going to just chase volume or size for its sake. We're obviously focusing on acquisitions that can be accretive to the platform. As we said before, and we want to reemphasize, $300 million of acquisitions actually move our market cap by about 10%. That's meaningful growth for SmartStop. SmartStop Self Storage, which is much different than our peers. They have to chase much larger asset sizes. It's an overall, I think, very solid acquisition environment.

Speaker #3: Again, this quarter, even while deploying capital, we have raised our full-year capital deployment guidance to the $55 million to $75 million range. And we definitely have room to be more active if the right opportunities present themselves.

Speaker #3: And so I do want to be clear that we're not going to just chase volume or size for its sake. We're obviously focusing on acquisitions that can be accretive to the platform.

Speaker #3: And as we have said before, we want to re-emphasize 300 million dollars of acquisitions actually move our market cap by about 10%. So that's meaningful growth for SmartStop.

Speaker #3: SmartStop self-storage which is much different than our peers. They have to chase much larger asset sizes. And so it's an overall, I think, very solid acquisition environment.

Speaker #4: Okay. Thanks for that. And just one, I guess, housekeeping question. You do have a $2 million one-time fee that you're going to earn from the funds consolidating.

Wes Golladay: Okay, thanks for that. Just one, I guess, housekeeping question. You do have a $2 million one-time fee that you're going to earn from the funds consolidating. Will that be included in your third-party management guide?

Speaker #4: Would that be included in your third-party management guide?

Speaker #3: Hey, Wes. This is Korak. Yeah. So that'll be included in the managed REIT guidance, which falls under the managed platform. And I would expect that to hit in the fourth quarter.

David Corak: Hey, Wes, this is Korac. Yeah. That'll be included in the managed REIT guidance, which falls under the managed platform. I would expect that to hit in Q4.

Speaker #3: And for what it's worth, that was a consideration in the initial guidance as well.

Wes Golladay: Okay. Thank you for that.

David Corak: For what it's worth, that was a consideration in the initial guidance as well.

Speaker #4: All right. I appreciate it. Thanks.

Wes Golladay: All right, I appreciate it. Thanks.

David Corak: Thanks.

Speaker #3: Wes.

Speaker #1: Your next question comes from the line of Victor Fedev with Scotiabank. Victor, please go ahead.

Operator: Your next question comes from the line of Victor Fedev with Scotiabank. Victor, please go ahead.

Speaker #2: Thank you. And hello, everyone. So your same-store NOI margin expanded 150 basis points here a year, up from 30 basis points last quarter. So how much of that improvement is actually sustainable operating leverage from increased market density versus more temporary benefits such as insurance and repair and maintenance savings?

Victor Fedev: Thank you, and hello, everyone. Your same-store NOI margin expanded 150 basis points year over year, up from 30 basis points last quarter. How much of that improvement is actually sustainable operating leverage from increased market density versus more temporary benefits such as insurance and repair and maintenance savings? Where do you see the biggest opportunity for further margin expansion going forward?

Speaker #2: And where do you see the biggest opportunity for farther margin expansion going forward?

Speaker #3: Yeah. Thanks, Victor. This is James. I'll jump in there. So just to touch on some of the savings we saw from an operating expense perspective in the second quarter, as we mentioned, it was on a number of line items.

James Barry: Yeah. Thanks, Victor. This is James. I'll jump in there. Just to touch on some of the savings we saw from an operating expense perspective in Q2, as we mentioned, it was on a number of line items. Payroll was there, repairs and maintenance, property insurance, and utilities as well. In terms of what's structurally happening in those operating expense savings, obviously we had our property insurance renewal that occurred in April, and that's part of a just general softening in that particular market, and that's going to carry forward through the rest of this year. In addition, repairs and maintenance, that was largely a comp consideration, although we are doing a good job of inspecting and expecting those dollars. I think the larger story is in the payroll section, right?

Speaker #3: So payroll was there, repairs and maintenance, property insurance, and utilities as well. So in terms of what's structurally happening in those operating expense savings, obviously, we had our property insurance renewal that occurred in April.

Speaker #3: And so, that's part of a general softening in that particular market, and that's going to carry forward through the rest of this year.

Speaker #3: In addition, repairs and maintenance, that was largely a comp consideration, although we are doing a good job of inspecting and expecting those dollars. I think the larger story is in the payroll section, right, where we were down about 2.3% for the quarter.

James Barry: We were down about 2.3% for the quarter, we believe that's part of the overall clustering story that we've been talking about pretty consistently about margins improving as we add. One of the examples we like to talk about is in the Denver market in particular, our operating expenses were down substantially, and it was almost entirely attributable to payroll. If you notice, when we took over the Argus platform in October of last year, we increased our overall presence in that market by about four times, right? Going from nine properties to over 50 between owned and managed is really helping drive some of those economies of scale and clustering that we've originally talked about.

Speaker #3: And we believe that's part of the overall clustering story that we've been talking about pretty consistently about margins improving as we add. So one of the examples we like to talk about is in the Denver market in particular, our operating expenses were down substantially and it was almost entirely attributable to payroll.

Speaker #3: And if you notice, when we took over the Argus platform in October of last year, we increased our overall presence in that market by about 4 times, right?

Speaker #3: And so going from 9 properties to over 50 between owned and managed is really helping drive some of those economies of scale and clustering that we've originally talked about.

Speaker #2: Makes sense. And then my second question is on your assumptions for moving rates and occupancy for the remainder of the year, and how can you end up being on the, for example, upper end of your AFFO per share sorry, AFFO per share range?

Victor Fedev: Makes sense. My second question is on your assumptions for move-in rates and occupancy for the remainder of the year, and how can you end up being on the, for example, upper end of your AFFO per share range?

Speaker #3: Hey, Victor. It's Korak. So I'll just kind of talk through some of the operating assumptions. Not too dissimilar from what we talked about last quarter.

David Corak: Hey, Victor, it's Corak. I'll just kind of talk through some of the operating assumptions. Not too dissimilar from what we talked about last quarter. In terms of the move-in rent trends and web trends, some markets, as you can see, have already turned positive. Other supply markets are still a little bit negative. We still think by the end of the year, by the end of rental season, in that Q4, I think we're going to start to see a broader inflection. From an occupancy standpoint, slightly negative relative to 2025 based on where we're sitting today. ECR is at or better than 2025 levels, right? Given the strength and the health of the existing customer. Our length of stay continues to increase and our bad debts are relatively muted.

Speaker #3: So, in terms of the move-in rent trends and web trends, some markets, as you can see, have already turned positive. Other supply markets are still a little bit negative.

Speaker #3: We still think by the end of the year, by the end of rental season, in that fourth quarter, I think we're going to start to see a broader inflection.

Speaker #3: From an occupancy standpoint, slightly negative relative to 2025 based on where we're sitting today. And ECRIs at or better than 2025 levels, right, given the strength and the health of the existing customer.

Speaker #3: Our length of stay continues to increase, and our bad debts are relatively muted. And then, of course, from a supply perspective—we've talked about this—but the supply impact continues to decrease through the rest of the year.

David Corak: Of course, from a supply perspective, we've talked about this, the supply impact continues to decrease through the rest of the year and into 2027 and 2028. In terms of talking about the hitting the top end of our guidance, I'm just going to start on the revenue growth side because that's obviously the most material piece to the overall AFFO. If you look back to 2025, I'm going to talk a little bit about the cadence and then talk about the magnitude there. If you look back to 2025, our 3Q revenue growth was 2.5%.

Speaker #3: And into '27 and '28. In terms of the talking about the hitting the top end of our guidance, I'm just going to start on the revenue growth side because that's obviously the most material piece to the overall AFFO.

Speaker #3: So if you look back to 2025, and I'm going to talk a little bit about the cadence and then talk about the magnitude there.

Speaker #3: If you look back to 2025, our three key revenue growth was 2.5%, while four key was only up about 40 basis points. So a fairly lumpy year-over-year comp that we have in the second half of the year, which would in itself dictate the fourth quarter growth would be higher than third quarter.

James Barry: While Q4 was only up about 40 basis points. A fairly lumpy year-over-year comp that we have in H2, which would in itself dictate Q4 growth would be higher than Q3. The other pieces at work there, of course, the Asheville occupancy comp, which laps on 1 October, and the California ECRI restriction lift that will have a more positive impact on Q4 than Q3. Again, those data points, just from a modeling perspective, would support a higher growth rate in Q4 versus Q3. When you think about the deceleration baked that you would calculate baked into the midpoint of guidance in terms of same-store revenue growth.

Speaker #3: The other pieces that work there, of course, are the Asheville occupancy comp, which lapsed on October 1st, and the California ECRI restriction lift, which will have a more positive impact on the fourth quarter than the third quarter.

Speaker #3: So again, those data points, just from a modeling perspective, would support a higher growth rate in the fourth quarter versus the third quarter. When you think about kind of the deceleration that you would calculate baked into the midpoint of guidance in terms of same-store revenue growth, I think one of the lessons that we've learned over the past 24 to 36 months in storage is that periods of volatility or choppiness can pop up, right?

James Barry: I think one of the lessons that we've learned over the past 24 to 36 months in storage is that periods of volatility or choppiness can pop up, right? It happened a few times in 2025. It happened in March and April of this year with some geopolitical noise, right? This summer, we've been relatively unscathed. Knock on wood, of course. If you think about our guidance this year, we're assuming that there is going to be some more periods of some volatility as we head into slow season here. We're assigning a probability that there could be some choppiness in H2. I think if we don't get that volatility and we see a more normal off-season, I think we feel pretty good about hitting the top end of that revenue range. Again, that's the biggest piece of the overall FFO story.

Speaker #3: It happened a few times in 2025. It happened in March and April of this year with some geopolitical noise, right? This summer, we've been relatively unscathed, right?

Speaker #3: Knock on wood, of course. So if you think about our guidance this year, we're assuming that there is going to be some more periods of some volatility as we head into slow season here.

Speaker #3: We're assigning a probability that there could be some choppiness in the back half of the year, but I think if we don't get that volatility and we see a more normal off-season, I think we feel pretty good about hitting the top end of that revenue range.

Speaker #3: Again, that's the biggest piece of the overall FFO story. I think if you go down the individual line items, there's probably—if we get some acquisitions in the managed REITs—that can help out as well.

James Barry: I think if you go down the individual line items, there's probably, if we get some acquisitions in the managed REITs, that can help out as well. Right now we're pretty comfortable with the midpoint of the guidance.

Speaker #3: But right now, we're pretty comfortable with the midpoint of the guidance.

Speaker #2: Got it. Thank you.

Victor Fedev: Got it. Thank you.

Speaker #3: Thanks, Victor.

James Barry: Thanks, Richard.

Speaker #1: Your next question comes from the line of Eric Libchow with Wells Fargo. Eric, please go ahead.

Operator: Your next question comes from the line of Eric Lipchow with Wells Fargo. Eric, please go ahead.

Speaker #4: Oh, great. Thanks for taking the question. I wanted to ask a little bit more about Asheville. A couple of properties contributed as part of the eminent domain proceeding and the occupancy falloff, as you alluded to, is improving.

Eric Lipchow: Great. Thanks for taking the question. I wanted to ask a little bit more about Asheville. Couple properties contributed as part of the eminent domain proceeding and the occupancy falloff, as you alluded to, is improving. Maybe you could talk about what you're seeing on the ground in Asheville. Obviously, I know the comps get easier in Q4, but what are your plans there to perhaps grow your presence over time? I know it was your best performing market, I believe, in 2025.

Speaker #4: So maybe you could talk about what you're seeing on the ground in Asheville. Obviously, I know the comps get easier in Q4, but what are your plans there to time?

Speaker #4: I know it was your best-performing market, I believe, in 2025.

Speaker #1: Absolutely. Let me kind of talk a little bit about the Asheville market, and then I'll flip it over to James to talk about eminent domain and new development that we have.

H. Michael Schwartz: Absolutely. Let me kind of talk a little bit about the Asheville market, then I'll flip it over to James to talk about kind of eminent domain and new development that we have. Many of you know we've been in the Asheville market for a pretty long time. It's been about 10 years. We know that market incredibly well. As you said, Asheville was our best performing market in 2025 with a 6% same-store revenue growth. We're obviously facing some tough occupancy comps in 2026, the year-over-year occupancy gap has narrowed dramatically since December, and it's averaging down, as we've said, about 230 basis points year-over-year in Q2. Occupancy currently is a solid 91.8%.

Speaker #1: Many of you know, we've been in the Asheville market for a pretty long time. It's been about 10 years. And so we know that market incredibly well.

Speaker #1: And as you said, the Asheville was our best performing market in 2025 with a 6% same-store revenue growth. We're obviously facing some tough occupancy comps in 2026, but the year-over-year occupancy gap has narrowed dramatically since December.

Speaker #1: And it's averaging down, as we've said, about 230 basis points year-over-year in the second quarter. Occupancy currently is a solid 91.8%. The web rates in the market have been stronger than we anticipated at the beginning of the year.

H. Michael Schwartz: The web rates in the market have been stronger than we've anticipated at the beginning of the year, and they're actually now positive year-over-year as we've moved into July. I think what we're seeing is a fairly traditional cadence of occupancy for a natural disaster of this kind. Now we've moved into kind of the post natural disaster stabilized occupancy level. Overall, we still expect Asheville to be a relative underperformer in 2026, specifically through the end of Q3. That said, the portfolio is performing slightly better than expected currently in July. James Barry?

Speaker #1: And they're actually now positive year-over-year as we've moved into July. And so I think what we're seeing is a fairly traditional cadence of occupancy for a natural disaster of this kind.

Speaker #1: And now we've moved into kind of the post-natural-disaster, stabilized occupancy level. Overall, we still expect Asheville to be a relative underperformer in 2026, specifically through the end of the third quarter.

Speaker #1: Now, that said, the portfolio's performing slightly better than expected currently in July. James?

Speaker #2: Yeah. Eric, as you mentioned, we did have two properties, and we disclosed this in our earnings release. We had two properties that were subject to eminent domain proceedings in Asheville.

James Barry: Yeah, Eric, as you mentioned, we did have two properties, and we disclosed this in our earnings release. We had two properties that were subject to eminent domain proceedings in Asheville. There was a large portion of one property, about 80% of that asset that was taken in Q2, and a small portion of a second property that was taken subsequent quarter, and that was about 20% of that property. The way these proceedings work is that you receive an initial payment, and then there is a legal process to determine the final value for those pieces of land that are taken. In addition, the North Carolina Department of Transportation is coordinating with us to relocate existing customers in the affected buildings. Some of that supply is coming offline.

Speaker #2: There was a large portion of one property, about 80% of that asset, that was taken in the second quarter. And a small portion of a second property that was taken subsequent quarter-end.

Speaker #2: That was about 20% of that property. The way these proceedings work is that you receive an initial payment, and then there is a legal process to determine the final value for those pieces of land that are taken.

Speaker #2: In addition, the North Carolina Department of Transportation is coordinating with us to relocate existing customers in the affected buildings. And so some of that supply is coming offline.

Speaker #2: The other thing that we wanted to note is, as you may recall, we did have a loss of a property as a result of the flooding that occurred, but we were excited to announce that in early of 2027, we will be breaking ground to rebuild that asset.

James Barry: The other thing that we wanted to note is, as you may recall, we did have a loss of a property as a result of the flooding that occurred. We are excited to announce that in early 2027, we will be breaking ground to rebuild that asset. This property will be about 83% larger than the original property that was destroyed. It's likely a late 2027, early 2028 delivery. We are reinvesting back into this market with some of the supply that's coming back offline as a result of the flood and these eminent domain proceedings.

Speaker #2: And this property will be about 83% larger than the original property that was destroyed. It's likely a late 2027, early 2028 delivery. So we are reinvesting back into this market with some of the supply that's coming offline as a result of the flood and these eminent domain proceedings.

Speaker #4: Thanks, guys, for that. And just one follow-up for me. Maybe we could just chat a little bit about Canada and the GTA market. I know that's also going through some pretty tough comps versus last year, but maybe you could fundamentals in Canada and once we get past these tougher comps how you think growth will trend.

Eric Lipchow: Thanks, guys, for that. Just one follow-up for me. Maybe we could just chat a little bit about Canada and the GTA market. I know that's also going through some pretty tough comps versus last year, but maybe you could talk about what you're seeing in terms of the fundamentals in Canada, and once we get past these tougher comps, how you think growth will trend. Then related to that, one of your largest competitors is moving into the Canadian market through a pending acquisition. Just wondering if that changes competitive dynamics at all or if you feel pretty confident in your trajectory there. Thank you.

Speaker #4: And then related to that, one of your largest competitors is moving into the Canadian market through a pending acquisition. So just wondering if that changes competitive dynamics at all or if you feel pretty confident in your trajectory there.

Speaker #4: Thank you.

Speaker #1: Yeah, great question. Again, a lot of those questions so let me first just start by talking about our same-store portfolio. Our Canadian self-storage same-store portfolio, it consists of 13 seasoned stabilized properties, but they're all in the Greater Toronto area.

H. Michael Schwartz: Great question. We get a lot of those questions. Let me first just start by talking about our same-store portfolio. Our Canadian self-storage same-store portfolio consists of 13 seasoned, stabilized properties, but they are all in the Greater Toronto Area, and as we say, the GTA. It represents about 1.1 million square feet. The same-store revenue for this pool was down 1%. On a constant currency basis in Q2, but we did have a tough comp at 2%. However, that was meaningfully tougher than the US. When you take a look at our joint venture properties with SmartCentres, we have 10 properties, 900 square feet. They are currently at 92.3%, and these skew towards more recently stabilized assets. Well, we were able to grow revenues at 6.7% and NOI growth of 9.4% in the quarter.

Speaker #1: And as we say, the GTA. It represents about 1.1 million square feet. The same-store revenue for this pool was down 1% on a constant currency basis in the second quarter, but we did have a tough comp at 2%.

Speaker #1: However, that was meaningfully tougher than the United States. And so, when you take a look at our joint venture properties with SmartCentres, we have 10 properties, 900,000 square feet.

Speaker #1: They're currently at 92.3%. And these skew towards more recently stabilized assets. What we were able to grow revenue is at 6.7%. And NOI growth of 9.4% in the quarter.

Speaker #1: So at the end of July, the GTA's same-store occupancy was 92.2%. Yes, it was down 60 basis points year-over-year, but it actually compares favorably to the US.

H. Michael Schwartz: At the end of July, the GTA's same-store occupancy was 92.2%. Yes, it was down 60 basis points year over year, but it actually compares favorably to the US. For the full year, we do expect that the GTA will run modestly below the US portfolio, primarily a function of tougher comps for 2025. The GTA delivered approximately 2.7% same-store revenue growth last year and about 100 basis points ahead of the US. Part of what we believe looks like relative softness this year is a flip side of the GTA's outperformance for last year. Quite frankly, the revenue growth in our GTA portfolio has been about three times that of the US portfolio over the last 36 months. New supply we have to talk about in the GTA. We think it has peaked and will moderate over the next two-plus years.

Speaker #1: And so for the full year, we do expect that the GTA will run modestly below the US portfolio, primarily a function of tougher comps for 2025.

Speaker #1: The GTA delivered approximately 2.7% same-store revenue growth last year, and about 100 basis points ahead of the US. So part of what we believe looks like relative softness this year is a flip side of the GTA's outperformance for last year.

Speaker #1: And quite frankly, the revenue growth in our GTA portfolio has been about three times that of the U.S. portfolio over the last 36 months.

Speaker #1: New supply, we have to talk about in the GTA. We think its peaked and will moderate over the next two-plus years. We know that pretty well because SmartStop is the single largest developer in the market.

H. Michael Schwartz: We know that pretty well because SmartStop is the single largest developer in the market, which will certainly strengthen, I think, our foothold on the GTA. In terms of demand, as you brought up, the Canadian consumer is pretty healthy. Our Canadian bad debt is currently less than half of the US levels and improving year over year. Macro uncertainty tied to events like the war, tariffs, have caused some hesitation and delay in the rental decisions. You concentrate that in only certain pockets. It is not throughout the GTA, there are certain pockets, but other Canadian markets are showing steadier trends. For an instance, our Alberta portfolio has grown occupancy by 15% in the past two quarters. The structural demand drivers, such as aging and downsizing population, shrinking home sizes, and continued urban densification, it remains intact.

Speaker #1: And which will certainly strengthen, I think, our foothold in the GTA. Now, in terms of demand, as you brought up, the Canadian consumer is pretty healthy.

Speaker #1: Our Canadian bad debt is currently less than half of the US levels. And improving year-over-year. Now, macro uncertainty tied to events like the war, tariffs, have caused some hesitation and delay in the rental decisions.

Speaker #1: And you concentrate that in only certain pockets. It's not throughout the GTA. There's certain pockets, but other Canadian markets are showing steadier trends. So for an instance, our Alberta portfolio has grown occupancy by 15% in the past two quarters.

Speaker #1: And so the structural demand drivers, such as aging and downsizing population, shrinking home sizes, and continued urban densification, it remains intact. Population growth, we believe, is expected to resume as the immigration policy normalizes.

H. Michael Schwartz: Population growth, we believe, is expected to resume as the immigration policy normalizes. We are also seeing, I think, a very unique environment as a window for disciplined external growth. We are evaluating currently numerous acquisitions and joint venture opportunities in this market. Look, we remain absolutely committed to the GTA and our growing Canadian portfolio. I will also say that I want to emphasize our GTA portfolio is irreplaceable real estate that has been built over the past 16 years. Having said that, there is no question we are getting a lot of questions with Public Storage and their acquisition of PS Canada. I think my comments are that having another competitor like Public come into Canada, I think it really just underscores, and it is a true testament to our Canadian vision and strategy, and it certainly validates why we entered this market 16 years ago.

Speaker #1: And we're also seeing, I think, a very unique environment as a window for disciplined external growth. We're evaluating currently numerous acquisitions and joint venture opportunities in this market.

Speaker #1: And so look, we remain absolutely committed to the GTA and our growing Canadian portfolio. And I will also say that I'm going to emphasize our GTA portfolio is irreplaceable real estate that has been built over the past 16 years.

Speaker #1: Now, having said that, there's no question we're getting a lot of questions with public storage and their acquisition of PS Canada. And so I think my comments are that having another competitor like Public of Canada, I think it really just underscores and it's a true testament to our Canadian vision and strategy.

Speaker #1: And it's certainly validates why we entered this market 16 years ago. And so we've been competing with them in the US now for the last 22 years.

H. Michael Schwartz: We've been competing with them in the US now for the last 22 years. There's no question it's going to be a more competitive environment, but we welcome it, and that's one thing I think you can guarantee on SmartStop Self Storage is that we're competitors. I think we'll rise to the occasion.

Speaker #1: And so there's no question it's going to be a more competitive environment, but we welcome it. And that's one thing I think you can guarantee on SmartStop self-storage is that we're competitors.

Speaker #1: And so I think we'll rise to the occasion.

Speaker #4: Great. Thank you, guys.

Eric Lipchow: Great. Thank you, guys.

Speaker #3: Your next question comes from the line of RJ Milligan. With Raymond James. RJ, please go ahead.

Operator: Your next question comes from the line of RJ Milligan with Raymond James. RJ, please go ahead.

Speaker #4: Yeah. Good morning to you guys. Good afternoon. I wanted to follow up on the question about the margin opportunity and I'm just curious how much more margin expansion is there available by pulling internal levers versus how much more margin expansion do you can you get through expanding scale?

RJ Milligan: Yeah. Good morning to you guys. Good afternoon. I wanted to follow up on the question about the margin opportunity. I'm just curious, how much more margin expansion is there available by pulling internal levers versus how much more margin expansion can you get through expanding scale?

Speaker #1: Yeah, RJ, this is James. I'll jump in there. So as we've consistently said, since our IPO, in pockets and in markets, MSAs where we have those 10 or more properties, we tend to have margins that are about that we see an improvement of about 300 basis points.

James Barry: RJ, this is James. I'll jump in there. As we've consistently said since our IPO, in pockets and in markets, MSAs, where we have those 10 or more properties, we tend to have margins that we see an improvement of about 300 basis points. For example, with the Argus transaction, because I mentioned the Denver expansion, there were three markets where we tipped over that 10 property mark when we transitioned from 30 September to 1 October of last year with that onboarding. We still believe that there's a lot of margin expansion to be realized as those programs and those platforms continue to integrate and as we continue to grow both on balance sheet within joint ventures and within third-party management.

Speaker #1: And so for example, with the Argus transaction, because I mentioned the Denver expansion, that's there were three markets where we tipped over that 10 property mark.

Speaker #1: When we transitioned from September 30th to October 1st of last year with that onboarding, we still believe that there's a lot of margin expansion to be realized as those programs and those platforms continue to integrate.

Speaker #1: And as we continue to grow both on balance sheet within joint ventures and within third-party management. And so and that coupled with items such as property insurance renewals that are favorable, our solar initiative, which is ongoing and producing results in reduced utilities, so we continue to be driving on all aspects of that.

James Barry: That coupled with items such as property insurance renewals that are favorable, our solar initiative, which is ongoing and producing results in reduced utilities. We continue to be driving on all

Speaker #3: Well, and I would just add, if we continue to perform and outperform on our same-store pool, that will naturally contribute to additional margin expansion.

David Corak: Well, I would just add, if we continue to perform and outperform on our same-store pool, that will naturally contribute to additional margin expansion.

Speaker #4: Thanks for that. And then you guys talked a little bit about the acquisition opportunities, but thinking about maybe other external growth areas, can you maybe give an update on the bridge lending joint venture?

RJ Milligan: Thanks for that. You guys talked a little bit about the acquisition opportunities, thinking about maybe other external growth areas, can you maybe give an update on the bridge lending joint venture?

Speaker #2: Hey, RJ, it's Korak. First of all, great to have you back in the world of self-storage. The lending access kind of pipeline for us remains very attractive.

David Corak: Hey, RJ, it's Korek. First of all, great to have you back in the world of self-storage. The lending access kind of pipeline for us remains very attractive. We've talked previously about a pipeline in excess of $100 million with target yields in the 10% to 14% range, typically structured as mezzanine or preferred. That pipeline remains. As of 30 June, we have a book of about $20 million, all pref at this point, on six properties, all of which we have property management on. We closed another $3 million pref after the quarter end, and the blended yield of everything we have today is just under 11%. We're actively also working on an A note, B note approach or a stretch senior type approach, where we would sell off a 50% to 60% LTV note to another party.

Speaker #2: We've talked previously about a pipeline in excess of $100 million, with target yields in the 10% to 14% range, typically structured as mezzanine or preferred.

Speaker #2: That pipeline remains. As of June 30th, we have a book of about $20 million, all pref at this point, on six properties—all of which we have property management on.

Speaker #2: We closed another $3 million pref after the quarter end, and the blended yield of everything we have today is just under 11%. So, we're actively also working on an A-note, B-note approach or a stretch senior type approach where we would sell off a 50% to 60% LTV A-note to another party.

Speaker #2: So really a broad array of arrows in the quiver for us at this point as the pipeline is really dictating both approaches. As we saw again this quarter, the platform tends to generate third-party management assignments on the underlying property.

David Corak: Really a broad array of arrows in the quiver for us at this point as the pipeline is really dictating both approaches. As we saw again this quarter, the platform tends to generate third-party management assignments on the underlying property. Really symbiotic relationship there, creating really strong, attractive returns on a capital-light basis. Additionally, the program we expect will inherently create a natural pipeline for future acquisitions at some point. We like the risk-adjusted returns on these deals a lot, the deals we're going after, are certainly sensitive to the quality of the underlying properties and the sponsor and the impact on leverage and of course overall earnings quality. I think you'll see us take a more balanced approach to building out this program.

Speaker #2: So really semiotic relationship there, creating really a strong attractive returns on a capital light basis. Additionally, the program we expect will inherently create a natural pipeline for future acquisitions at some point.

Speaker #2: We like the risk-adjusted returns on these deals a lot—the deals we're going after—but are certainly sensitive to the quality of the underlying properties and the sponsor.

Speaker #2: And the impact on leverage, and of course, overall earnings quality. But I think you'll see us take a more balanced approach to building out this program.

Speaker #4: That's great. Thank you, guys.

RJ Milligan: That's great. Thank you, guys.

Speaker #2: Thanks, RJ.

David Corak: Thanks, RJ.

Speaker #3: Your next question comes from the line of Spencer Glimcher with Green Street. Spencer, please go ahead.

Operator: Your next question comes from the line of Spenser Glimcher with Green Street. Spenser, please go ahead.

Speaker #5: Thank you. So pricing regulation specifically as it relates to surveillance pricing has become a real theme for the sector this year. And we've actually seen some regulation passed in New York.

Spenser Glimcher: Thank you. Pricing regulation specifically, as it relates to surveillance pricing, has become a real theme for the sector this year. We've actually seen some regulation passed in New York. I'm just curious how you're thinking about that risk to your revenue management systems, and then separately, just given how large your Toronto footprint is, are you guys seeing any similar regulatory moves in Canada at all?

Speaker #5: So I'm just curious how you're thinking about that risk to your revenue management systems. And then separately, just given how large your Toronto footprint is, are you guys seeing any similar regulatory moves in Canada at all?

Speaker #1: Yeah, I'll touch on the US in particular. I mean, obviously, we don't have any direct exposure to the New York City areas that we're affected by the recent some of the recent movements from a political perspective there.

James Barry: Yeah, I'll touch on the US in particular. Obviously, we don't have any direct exposure to the New York City areas that were affected by some of the recent movements from a political perspective there. However, it's a topic we're consistently monitoring and evaluating, and we're working with local Self Storage Association groups and task force to make sure we're staying abreast of everything going on. That being said, I think it is important to note that everyone has their own proprietary pricing systems, right? Our algorithms are different than other publicly traded peers as well as private operators. We're making decisions on our own with our own systems that are constantly evolving and changing. At the end of the day, this is still a month-to-month business structurally.

Speaker #1: However, it's a topic we're consistently monitoring and evaluating, and we're working with local self-storage associations, groups, and task forces to make sure we're staying abreast of everything going on.

Speaker #1: And that being said, I think it is important to note that everyone has their own proprietary pricing systems, right? And so our algorithms are different than other publicly traded peers, as well as private operators.

Speaker #1: And so we're making decisions on our own with our own systems that are constantly evolving and changing. And so, at the end of the day, this is still a month-to-month business, structurally.

Speaker #3: Yeah, I would also just add that I think there's probably some more risk with organizations using off-the-shelf pricing software that's aggregating a lot of different owners.

David Corak: I would also just add that I think there's probably some more risk with organizations using off-the-shelf pricing software that's aggregating a lot of different owners. I think that was one of the issues with respect that we saw kind of in the multifamily side. Our overall pricing side is just taking into account supply and demand factors, not taking into account personal data from individuals that can be and are highly sensitive. In concert with that, we've seen in areas, let's say in Montreal, where there were some regulatory concerns with respect to how rentals were being offered up and their discounts and promotions.

Speaker #3: I think that was one of the issues with respect to what we saw, kind of, in the multifamily side. And so, our overall pricing side is just taking into account supply and demand factors—not taking into account personal data from individuals, which can be and is highly sensitive.

Speaker #3: In concert with that, we've seen in areas—let's say in Montreal—where there were some regulatory concerns with respect to how rentals were being offered up, and their discounts and promotions.

Speaker #3: But as we went through that, what we found was it was more or less about just making sure that you were transparent to the consumer with respect to presenting what your price is and that the price can go up.

David Corak: As we went through that, what we've found, it was more or less about just making sure that you were transparent to the consumer with respect to your presenting what your price is, that the price can go up, and being clear on any additional fees in the first month, and clear what the ongoing overall expense is going to be in the second and third month. I think as an industry, I think what I've seen, and I think it's been amazing, is that they're adapting to being as transparent as possible. More importantly, as you have individuals that may have questions or concerns, is having the proper culture, people, and environment to deal with that on a one-on-one basis and not allowing people to not have kind of a voice. I think that the industry's doing a great job from that perspective.

Speaker #3: And being clear on any additional fees in the first month, and clear what the ongoing overall expenses are going to be in the second and third months.

Speaker #3: And so I think as an industry, I think what I've seen and I think it's been amazing is that they're adapting to being as transparent as possible.

Speaker #3: And more importantly, as you have individuals that may have questions or concerns, it's about having the proper culture, people, and environment to deal with that on a one-on-one basis, and not allowing people to not have a voice.

Speaker #3: And I think that the industry is doing a great job from that perspective.

Speaker #5: Okay, great. Thanks for all of that color. I know you provided a lot of commentary and detail on the expense side and the savings you experienced this quarter.

Spenser Glimcher: Okay, great. Thanks for all of that color. I know you provided a lot of commentary and color on the expense side and the savings you experienced this quarter. Is there anything that's been kind of achieved on the AI side that's helping you with cost savings?

Speaker #5: Is there anything that's been kind of achieved on the AI side that's helping you with cost savings?

James Barry: As we said from an AI perspective, it's kind of one of our pillars within the DECA initiative, that is something that's obviously continually evolving within our organization. There is no question that there are areas where I think we can enhance revenue, and I think there's areas that we can see some cost savings. I think that we're kind of in the early stages of addressing and developing the technology to do that. I can't say that right now that we've implemented some of the AI strategies yet with respect to cost savings. Some of those have to do with from an accounting perspective. They do have to do with our call center. I think some of that is some of the low-hanging fruit.

Speaker #3: You know, as we said from an AI perspective, it's one of the kind of one of our pillars within the deck initiative. And that is something that's obviously continually evolving within our organization.

Speaker #3: There is no question that there are areas where I think we can enhance revenue, and I think there are areas where we can see some cost savings.

Speaker #3: I think that we're kind of in the early stages of addressing and developing the technology to do that, so I can't say that right now we have implemented some of the AI strategies yet.

Speaker #3: With respect to cost savings, because some of those have to do with, from an accounting perspective, they do have to do with our call center.

Speaker #3: I think some of that is some of the low-hanging fruit. In addition, kind of having an analysis of employees and hours, and being able to kind of move individuals around appropriately within an AI-focused structure.

James Barry: In addition, kind of having an analysis of employees and hours and being able to kind of move individuals around appropriately within an AI kind of focused structure. I think some of those cost savings we're going to see over more of a midterm type of timeframe versus the short term. We've got to be very thoughtful. We believe, and we're all in on artificial intelligence, but we've just seen too often that some of these companies are just trying to sell axes, picks, and shovels to people that are trying to find gold. What we're trying to do is have a very thoughtful approach in making sure that every dollar that we spend, that we can follow it through to the ultimate savings and/or revenue enhancement that we believe it can achieve.

Speaker #3: And so, I think some of those cost savings we're going to see over more of a midterm type of timeframe, versus the short term.

Speaker #3: We've got to be very thoughtful. It's in, we believe, and we're all in on artificial intelligence. But we've just seen too often that some of these companies are just trying to sell axes, picks, and shovels to people that are trying to find gold.

Speaker #3: And what we're trying to do is have a very thoughtful approach and make sure that every dollar we spend, we can follow through to the ultimate savings and/or revenue enhancement that we believe it can achieve.

Speaker #5: Great. Thank you so much.

Spenser Glimcher: Great. Thank you so much.

Speaker #3: Your next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Todd, please go ahead.

Operator: Your next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Todd, please go ahead.

Speaker #4: Yeah, hi, thanks. A couple of follow-ups, I guess. I wanted to go back first to the PS Canada and Public Storage transaction. I'm curious what the overlap is like with SmartStop's Canada portfolio?

Todd Thomas: Yeah. Hi, thanks. A couple of follow-ups, I guess. I wanted to go back first to the PS Canada and Public Storage transaction. I'm curious what the overlap is like with SmartStop's Canada portfolio. Do you think that PSA's ownership could lead to a different operating or revenue management strategy than you've historically seen in those markets?

Speaker #4: And then, do you think that PSA’s ownership could lead to a different operating or revenue management strategy than you’ve historically seen in those markets?

Speaker #1: Hey Todd, it's Corax. So, I'll answer the first question about the overlap. It's primarily all of our GTA portfolio, both in the same store and the joint venture pools there.

David Corak: Hey, Todd. It's Gorak. I'll answer the first question about the overlap. It's primarily all of our GTA portfolio both in the same store and the joint venture pools there. It's a decent amount of overlap. Less so in the Alberta pools, but certainly in the GTA. In terms of strategy, Todd, it's really tough for us to sit here and comment on another company's strategy. We can learn from history, but we also don't know. It's a new market for PS, so I can't sit here and confidently call out what they're going to do or what the impact could be.

Speaker #1: So it's a decent amount of over, less so in the Alberta pools, but certainly in the GTA. In terms of strategy, Todd, I mean, it's really tough for us to sit here and comment on another company's strategy.

Speaker #1: We can learn from history, but we also don't know. It's a new market for PS, so we're not going to— I can't sit here and confidently call out what they're going to do or what the impact could be.

Speaker #4: Okay. And then in terms of some of the updates around July, I appreciate some of that. I heard occupancy and I think web rates, but it looked like move-in rents improved.

Todd Thomas: Okay. In terms of some of the updates around July, appreciate some of that. Heard the occupancy and I think web rates, looked like move-in rents improved throughout the quarter. Looked like June was a stronger month than what you reported for April and May, I was just curious if you could talk about that a little bit and also what move-in rents looked like in July.

Speaker #4: Throughout the quarter, looked like June was a stronger month than what you reported for April and May. And I was just curious if you could talk about that a little bit and also what move-in rents looked like in July.

Speaker #1: Yeah, sure, Todd. I'll start with the second quarter and then go into July. So the second quarter, we were able to hold web rates fairly steady.

David Corak: Yeah, sure, Todd. I'll start with Q2 and then go into July. The second quarter, we were able to hold web rates fairly steady. We were down about 3.5% year-over-year for the course of the entirety of Q2. We do have some new disclosure in the sup, as I'm sure you've seen. You can see the move-in rates per square foot for the quarter were down about 4.4% year-over-year. That is an apples-to-apples stat with the rent pops that we disclose in the sup. That was an improvement from Q1. Concessions were up modestly in Q2, I'm sorry. We continue to use that tool a little bit more. As we move into July ended up being a pretty good overall month for us.

Speaker #1: We were down about three and a half percent year over year for the course of the entirety of the second quarter. We do have some new disclosure in the SUP, as I'm sure you've seen.

Speaker #1: So you can see that move-in rates per square foot for the quarter were down about 4.4% year over year. That is an apples to apples stat with the rent cost that we disclose in the SUP.

Speaker #1: And so that was an improvement from the first quarter. Concessions were up modestly in the first quarter. In the second quarter, I'm sorry. So we continue to use that tool a little bit more.

Speaker #1: As we move into July, July ended up being a pretty good overall month for us. We went a very successful fourth of July and candidate day sale.

David Corak: We ran a very successful Fourth of July and Canada Day sale. Web reservations were up 6.7%, rentals were up 7.2%, and again, this is across both the US and Canada. Our concession usage actually declined year-over-year. As you probably heard, web rates were actually up 1% year-over-year in July. The move-in rents were down a little bit, down about 5% year-over-year. At the end of July, we were at an occupancy of 92.1, down 65-ish basis points year-over-year. Our in-place rates were up over 2% year-over-year. It's a fairly consistent theme with June in terms of balancing the rate and occupancy. I think we're fairly encouraged as we enter the shoulder seasons.

Speaker #1: Web reservations were up 6.7%. Rentals were up 7.2%. And again, this is across both the US and Canada. Our concession usage actually declined year over year.

Speaker #1: And as you probably heard, web rates were actually up 1% year over year in July. The move-in rents were down a little bit, down about 5% year over year.

Speaker #1: But at the end of July, we were at an occupancy of 92.1, down 65-ish basis points year over year. But our in-place rates were up over 2% year over year.

Speaker #1: So it's a fairly consistent theme with June in terms of balancing the rate and occupancy. So I think we're fairly encouraged as we enter the shoulder seasons.

Speaker #4: Okay, yeah, that's helpful. And then, I guess along those lines with occupancy—there was some commentary there too—but it's been unusually stable over the last several quarters. There was a little less seasonal improvement from Q1 to Q2 than we've typically seen.

Todd Thomas: Okay. Yeah, that's helpful. I guess along those lines and with occupancy, there was some commentary there too. It's been unusually stable over the last several quarters, a little less seasonal improvement from Q1 to Q2 than we've typically seen. Also there was less seasonality in H2 of 2025 as well. Is that primarily a function of some market-specific factors, or does that reflect kind of a deliberate operating strategy? I'm just wondering how we should think about seasonality in H2 of 2026 now, and sort of the earlier part of 2027.

Speaker #4: But also there was less seasonality in the back half of '25 as well. Is that primarily a function of some market specific factors or is that sort of does that reflect kind of a deliberate operating strategy?

Speaker #4: I'm just wondering how we should think about seasonality in the back half of '26 now, and in the earlier part of '27.

Speaker #1: Yeah, Todd, it's a good observation because you're right. Our occupancy has been pretty steady, and that's been a target of ours—to be at that 92% physical occupancy level, give or take.

James Barry: Todd, it's a good observation because you're right, our occupancy has been pretty steady, and that's been a target of ours, is to be at that 92% physical occupancy level, give or take. Moving into this Q2, there was a bit of a shift in our pricing systems and the way we were approaching things on a shift towards rate, as David alluded to with some of the web rates and reduced promotions and things like that. Our annualized rent per occupied square foot was up 1.9% to kind of counteract the occupancy. To your point, there are market dynamics going on, most notably Asheville. If you strip out Asheville out of our same store pool for the Q2, we were only down 45 basis points in occupancy, right?

Speaker #1: And so, moving into this second quarter, there was a bit of a shift in our pricing systems and the way we were approaching things—a shift towards rate, as David alluded to, with some of the web rates and the reduced promotions and things like that.

Speaker #1: So our annualized rent per occupant square foot was up 1.9% to kind of counteract the occupancy. To your point, there are market dynamics going on.

Speaker #1: Most notably, Asheville. And so if you strip out Asheville from our same store pool for the second quarter, we were only down 45 basis points in occupancy, right?

Speaker #1: So there is some dilution going on and some gives and some takes as we go. But overall, we still feel good about our approach into this busy season, as we've consistently said we want to be highly occupied—92% plus.

James Barry: There is some dilution going on and some gives and some takes as we go. Overall, we still feel good about our approach into this busy season. As we've consistently said, we want to be highly occupied, 92%-plus, so that we can drive rate during busy season, which we've been doing. Coming out of busy season, we do want to maintain a good base of occupancy. We are going to see some seasonal effects, but to your point, we're going to try and keep tenants in our storage units.

Speaker #1: So that we can drive rate during busy season, which we've been doing. And then, coming out of busy season, we do want to maintain a good base of occupancy.

Speaker #1: And so, we are going to see some seasonal effects, but to your point, we're going to try and keep tenants in our storage units.

Speaker #4: Okay. So it sounds like a more gradual return to seasonality, but perhaps still a little bit more muted in the back half of the year than what we would expect historically.

Todd Thomas: Okay. It sounds like a more gradual return to seasonality, but perhaps still a little bit more muted in the H2 than what we would expect historically. Does that sound about right?

Speaker #4: Is that sound about right?

Speaker #1: Yeah, I think that's how we're approaching the tail off of the busy season. That being said, our systems are dynamic, right? And if we see opportunities, they're going to respond to them.

James Barry: I think that's how we're approaching the tail off of the busy season. That being said, our systems are dynamic, right? If we see opportunities, they're going to respond to them. Yeah, I think that's how we're thinking about it today.

Speaker #1: But yeah, I think that's how we're thinking about it today.

Speaker #4: Okay. All right. Thank you.

Todd Thomas: Okay. All right. Thank you.

Speaker #3: Your next question comes from the line of Mike Mueller with JPM. Mike, please go ahead.

Operator: Your next question comes from the line of Mike Mueller with JPM. Mike, please go ahead.

Speaker #2: Yeah, hi. A couple more revenue questions. I guess first, when you're thinking about the move-in rate comps, when do you think you cross a depositive territory there?

Michael Mueller: Yeah. Hi. A couple more revenue questions. I guess first, when you're thinking about the move-in rate comps, when do you think you cross into positive territory there?

Speaker #1: Hey, Mike. When we laid out the sort of building blocks to the guidance as it stands today, we're looking at move-in rate as kind of the inflection point later this year, right?

James Barry: Hey, Mike. When we laid out the sort of building blocks to the guidance as it stands today, we're looking at move-in rate, kind of the inflection point later this year, right? Between the end of rental season and the end of the year, somewhere in that range.

Speaker #1: So, between the end of rental season and the end of the year—somewhere in that range.

Speaker #2: Okay. Got it. And then if you're looking at ECRI, can you give us a sense as to about what portion of your units get at least one increase during the year?

Michael Mueller: Okay. Got it. If you're looking at ECRI, can you give us a sense as to about what portion of your units get at least one increase during a year?

James Barry: Yeah, I'd say it's probably the majority of our customers get a rate increase at least one time, once during the busy season. That being said, our most valuable customers are the ones that are going to be staying the longest. As they evolve in their customer journey, they are less likely to actually be receiving one of those ECRIs. Just as a reminder, we're always testing, we're always monitoring our ECRI approach. We really haven't changed the cadence over the course of this year. We continue to be in that, on average, sort of low 20s% on a blended basis, over the course of 2026.

Speaker #1: Yeah, I'd say it's probably the majority of our customers get a rate increase at least one time during the busy season. That being said, our most valuable customers are the ones that are going to be staying the longest.

Speaker #1: And so, as they evolve in their customer journey, they are less likely to actually be receiving one of those ECRIs. And just as a reminder, we're always testing.

Speaker #1: We're always monitoring our ECRI approach. We really haven't changed the cadence over the course of this year, and we continue to be in that, on average, sort of low 20s percent on a blended basis over the course of 2026.

Speaker #2: Got it. Okay. Thank you.

Michael Mueller: Got it. Okay. Thank you.

Speaker #1: Thanks, Mike.

James Barry: Thanks, Mike.

Speaker #3: Thanks, Mike. Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Juan, please go ahead.

Operator: Thanks, Mike. Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Juan, please go ahead.

Speaker #5: Hi, this is Robin Handel. I'm sitting in for Juan. I was just curious if you could provide an update on the potential timing of a JV partner and transaction, and if you could share any hurdles you've overcome to date.

Robin Hanlon: Hi, this is Robin Hanlon sitting in for Juan. I was just curious if you can provide an update on the potential timing of a JV partner and transaction, and if you could share any hurdles you've overcome to date.

Speaker #3: Yeah, thank you. I would say the following, and we've been pretty consistent with our communication. We are having numerous conversations; they're ongoing.

James Barry: Yeah, thank you. I would say the following, we've been pretty consistent kind of with our communication. We are having numerous conversations, they're ongoing, we feel pretty good about the direction we're heading, the conversations we have. We do not have anything definitive to announce today. If and when we have something to announce on that front, we'll do so, and it's going to represent incremental capacity on top of what's already embedded in the updated guidance. I think what we're finding is there are a lot of organizations in the US and Canada that are very interested in allocating to storage. It's not if from a SmartStop perspective, it just when.

Speaker #3: And we feel pretty good about the direction we're heading, and the conversations we have. We do not have anything definitive to announce today, but if and when we have something to announce on that front, we'll do so.

Speaker #3: And it's going to represent incremental capacity on top of what's already embedded in the updated guidance. I think what we're finding is there are a lot of organizations in the U.S. and Canada that are very, very interested in allocating to storage.

Speaker #3: So, it's not—if, from a SmartStop perspective, it just went.

Speaker #5: Thank you. And then on the momentum building in your third-party platform—one store added now in Canada, but down on an ETH basis. Just curious if you can elaborate and perhaps add some color?

Robin Hanlon: Thank you. On the momentum building in your third-party platform, one store added now in Canada, down on a net basis. Just curious if you can elaborate and provide some color.

Speaker #3: Absolutely. Well, so far, we're very happy with the Argus third-party management platform. We think the receptivity thus far to the SmartStop from the current owner's base and the potential new owners remain strong.

James Barry: Well, so far, we're very happy with the Argus third-party management platform. We think the receptivity thus far to the SmartStop from the current owners base and the potential new owners remains strong. With any acquisition, you have different phases of integration to our platform. Phase 1 for us was understanding the people and the entrepreneurial owners at Argus. Two, phase 2 was introducing our people, the SmartStop people, the SmartStop culture, the SmartStop platform. Then three, as some of those private label Argus individuals, entrepreneurial individuals, moved over to SmartStop, getting those testimonials for the strength of the SmartStop and/or the SmartStop legacy platform. Overall, owners have been very impressed with the top of the funnel.

Speaker #3: Now, with any acquisition, you have different phases of integration into our platform. And so phase one for us was understanding the people and the entrepreneurial owners at Argus.

Speaker #3: Two, phase two was introducing our people—the SmartStop people, the SmartStop culture, the SmartStop platform. And then, three, as some of those private-label Argus individuals—entrepreneurial individuals—moved over to SmartStop, getting those testimonials for the strength of the SmartStop and/or the SmartStop legacy platform.

Speaker #3: And so, overall, owners have been very impressed with the top of the funnel. I think that's one of the biggest comments that we get.

James Barry: I think that's one of the biggest comments that we get, and in addition to our communication, our tech platform, and not losing sight of those entrepreneurial owners. The property performance has materially improved with those owners that have moved onto our platform. We're kind of in phase 4 now. It's that broader migration

Speaker #3: And in addition to our communication and our tech platform, we're not losing sight of those entrepreneurial owners. As a result, property performance has materially improved with those owners who have moved onto our platform.

Speaker #3: So we're kind of in phase four now. It's that broader migration onto the SmartStop platform. But we still want to provide options to meet the entrepreneurial spirit of our owners.

H. Michael Schwartz: Onto the SmartStop platform. We still want to provide options to meet the entrepreneurial spirit of our owners. We're currently coming out of phase 3 into phase 4, and I think September will start to kickstart phase 4 as we kind of roll off of the rental season, we move into the SSA Las Vegas meeting. Having said that, we do continue to see new contracts being signed across the spectrum of options, and we're encouraged by the adoption of the SmartStop branded and legacy platforms. The broader pattern that we've called out this last quarter, private label owners are seeing stronger lead flow once they're on the SmartStop platform, and they're gradually migrating towards either the legacy of the full SmartStop brand. This is continuing, and each and every month, we're starting to see these owners transfer.

Speaker #3: And so, we're currently coming out of Phase Three into Phase Four. I think September will start to kick off Phase Four as we roll off the rental season and move into the SSA Las Vegas meeting.

Speaker #3: Now, having said that, we do continue to see new contracts being signed across the spectrum of options, and we're encouraged by the adoption of the SmartStop-branded and legacy platforms.

Speaker #3: Now, the broader pattern that we've called out this last quarter: private label owners are seeing stronger lead flow once they're on the SmartStop platform.

Speaker #3: And they're gradually migrating towards either the legacy or the full SmartStop brand. And this is continuing, and each and every month we're starting to see these owners transfer.

Speaker #3: At this time, I wouldn't move up any kind of timeline for when the full margin synergies will show up in our P&L. I think that's more of a 2027 story, as the technology migration and the rebranding work their way through the portfolio.

H. Michael Schwartz: At this time, I wouldn't move up any kind of timeline when the full margin synergies will show up in our P&L. I think that's been more of a 2027 story as the technology migration and the rebranding works its way through the portfolio. We're starting to see some early signs of this. In addition, the underlying signs of owner satisfaction lead generation are consistent with what gives us confidence in the longer-dated payoff with respect to Argus 3:00 PM. We did have some off-boards on the private label platform, we're seeing improvement in the overall quality of the managed portfolio. The average square feet of storage for each onboard store was approximately 73% larger than our off-boards. We had 90,000 net rentable square feet of on-boards as compared to 52,000 net rentable square feet for the off-boards.

Speaker #3: But we're starting to see some early signs of this. In addition, the underlying signs of owner satisfaction, lead generation are consistent with what gives us confidence in the longer dated payoff with respect to Argus 3 PM.

Speaker #3: And so we did have some off boards on the private label platform, but we're seeing improvement in the overall quality of the managed portfolio.

Speaker #3: And so the average square feet of storage for each onboard store was approximately 73% larger than our off boards. And so we had 90,000 net rentable square feet of onboards as compared to 52,000 net rentable square feet for the off boards.

Speaker #3: So, the larger stores plus the stronger demographics mean these onboarded stores will have higher overall revenues than the offboards. In addition, as we've announced, we've onboarded our first third-party management property in Canada in Q2.

H. Michael Schwartz: The larger stores plus the stronger demographics mean these onboarded stores will have higher overall revenues than the off-boards. In addition, as we've announced, we've onboarded our first third-party management property in Canada in Q2, and that's obviously one small step with respect to our expansion and a third party in Canada. Interesting enough, we do have some Canadian owners of US properties that are actually so happy with what we're doing for them in the US, there are discussions with respect to their Canadian properties. Six of the properties that we've onboarded, which I think is important, are current bridge lending customers, and I think that demonstrates the symbiotic relationship between our bridge program and also our third-party management. Lastly, I think one of the biggest benefits that we're seeing out of Argus is the benefit of scale in terms of margin.

Speaker #3: And that's obviously one small step with respect to our expansion and the third-party in Canada. But interesting enough, we do have some Canadian owners of US properties that are actually so happy with what we're doing for them in the US.

Speaker #3: There are discussions with respect to their Canadian properties. And so six of the properties that we've onboarded, which I think is important, are current bridge lending customers.

Speaker #3: And I think that demonstrates the symbiotic relationship between our bridge program and also our third-party management. And lastly, I think one of the biggest benefits that we're seeing out of Argus is the benefit of scale in terms of margin.

Speaker #3: And so we've kind of talked about that through the call with respect to how that has impacted not only our entrepreneurial owners, but also our own same store margins.

H. Michael Schwartz: We've kind of talked about that through the call with respect to the Denver presence and how that has impacted not only our entrepreneurial owners but also our own same-store margins. The year-to-date, just want to reinforce that those Denver margins are up 430 basis points. I think overall we're far along within the integration. We still have a lot of work to do, but we're very happy about the progress thus far.

Speaker #3: And so, year-to-date, I just want to reinforce that those Denver margins are up 430 basis points. So I think overall, we're far along with the integration.

Speaker #3: We still have a lot of work to do, but we're very, very happy about the progress thus far.

Speaker #5: Thank you.

Robin Hanlon: Thank you.

Speaker #1: Thanks, Robin. There are no further questions at this time. I will now turn the call back to Michael Schwartz for closing remarks. Michael, please go ahead.

David Corak: Thanks, Rob.

Operator: There are no further questions at this time. I will now turn the call back to Michael Schwartz for closing remarks. Michael, please go ahead.

Speaker #4: Thank you, Operator. Well, SmartStop Self Storage had a phenomenal second quarter. I want to thank you for your time and interest in SmartStop Self Storage, a smarter way to store.

H. Michael Schwartz: Thank you, operator. Well, SmartStop Self Storage had a phenomenal Q2. I want to thank you for your time and interest in SmartStop Self Storage, a smarter way to store. Have a great day.

Speaker #4: Have a great day.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.