SmartStop Receives BBB Credit Rating From Morningstar DBRS

SmartStop Self Storage REIT (SMA) announced that Morningstar DBRS has assigned an Issuer Rating of BBB with a Stable trend to SmartStop OP, L.P., its operating partnership, and a BBB rating to its 2032 Private Placement Notes. The rating reflects SmartStop's credit risk profile and assumes future senior unsecured debt will be unsubordinated and rank equally with other unsecured obligations, fully guaranteed by SmartStop and its subsidiaries.

Analysis

SmartStop Self Storage REIT, Inc. (NYSE: SMA) has secured an investment-grade Issuer Rating of BBB with a Stable trend for its operating partnership, SmartStop OP, L.P., from Morningstar DBRS. Concurrently, SmartStop’s 2032 Private Placement Notes also received a BBB rating with a stable trend. This credit assessment, based on comprehensive information including financial forecasts and management presentations as of May 21, 2025, indicates a moderate credit risk profile for the REIT. The rating is supported by assumptions that any future senior unsecured debt issued by SmartStop OP, L.P. will be unsubordinated, rank pari passu with its other unsecured obligations, and carry full guarantees from SmartStop and its subsidiaries, consistent with its existing credit agreement. For SmartStop, which operates a substantial portfolio of 220 properties comprising approximately 17.7 million rentable square feet, achieving an investment-grade rating is a significant milestone that can enhance its access to capital markets and potentially lower its future borrowing costs, thereby supporting its financial flexibility and growth strategy. The moderately positive sentiment associated with this news reflects the improved creditworthiness and financial stability implied by the BBB rating.

Key Decisions for Investors

• Investors should view the BBB rating as a positive development that enhances SmartStop's credit profile, potentially leading to a lower cost of capital and improved financial flexibility which could support future growth and distributions.
• It is advisable to monitor SmartStop's adherence to the assumptions underlying the rating, particularly concerning the terms of future debt issuances, as maintaining these conditions is crucial for sustaining the current credit standing.
• While the investment-grade rating is a favorable indicator, investors should continue to assess it alongside SmartStop's operational performance, including occupancy rates, rental growth, and prevailing conditions in the self-storage market, before making or adjusting investment decisions.