SmartStop raises 2026 guidance as margins and occupancy hold

By Grace Kim

$2.01-$2.05 per share: SmartStop Self Storage REIT (NYSE: SMA) lifted its full-year 2026 adjusted funds from operations (FFO) guidance from $1.99-$2.05. Adjusted FFO is a common REIT operating-earnings measure.

What did the third-quarter result show?

Third-quarter same-store revenue, covering properties open in both comparison periods, rose 2% year over year; operating expenses fell 3.8%, and net operating income (NOI), or property income after operating costs, increased 4.9%. Adjusted FFO per diluted share and unit reached $0.51, compared with $0.47 a year earlier.

SmartStop used pricing and fewer concessions to maintain occupancy while delivering those gains.

Founder, Chairman and CEO H. Michael Schwartz said SmartStop reached a 68% same-store operating margin, up 190 basis points, or 1.90 percentage points, year over year. He called it the “third consecutive quarter of margin improvement” and the company's highest third-quarter margin since 2023.

Takeaway: Third-quarter revenue growth and lower costs produced a 4.9% NOI gain and supported higher full-year guidance.

What changed in the 2026 outlook?

• Same-store revenue growth: 1.25% to 1.75%, raised from 0.75% to 1.75%.
• Operating expenses: a 0.25% decline to a 0.25% increase, narrowed from 0% to 1% growth.
• Same-store NOI growth: CFO James Barry said the expected midpoint rose to 2.25% from 1.65%.
• Adjusted FFO: $2.01 to $2.05 per share, up from $1.99 to $2.05, primarily on stronger same-store performance.
• Capital deployment: $200 million to $220 million, versus $190 million to $210 million and the initial $45 million to $65 million.

Barry said favorable property insurance renewals and property tax benefits created some cyclical expense gains. He identified payroll efficiencies and the advantages of operating clusters of properties as more durable. Miami, Denver and Chicago posted year-to-date margin expansion of 250 to 300 basis points.

Takeaway: The guidance increase rests on stronger same-store performance, but part of the expense benefit is temporary.

How is pricing affecting occupancy?

Quarter-ending occupancy reached 92.1%. In-place rent per occupied square foot, meaning rent already charged on occupied space, rose 2.6% from a year earlier. Average move-in rental rates per square foot fell 5.7% as SmartStop prioritized occupancy, while move-ins increased 5.6% year over year.

Occupancy rose again to 92.2% at the end of October. David Corak, senior vice president of corporate finance and strategy, said SmartStop used fewer concessions and shifted pricing in selected markets. Current web rates in Toronto were up by a mid-single-digit percentage from a year earlier.

Barry said customer stays were lengthening in both the United States and Canada. He also said attrition showed no material change in connection with rental-rate increases for existing customers.

Takeaway: SmartStop accepted lower move-in rates per square foot to support more move-ins and occupancy, with no material attrition change tied to rate increases.

What is Canada contributing?

Schwartz said same-store revenue for SmartStop's 13-property Canadian pool was slightly positive on a constant-currency basis in Q3, improving from a 1% decline in Q2. Constant currency removes exchange-rate effects from the comparison.

The Alberta portfolio exceeded expectations, Schwartz said. Occupancy rose approximately 1,700 basis points since its acquisition in August of the prior year, while third-quarter revenue increased about 9.2% year over year.

Takeaway: Canadian revenue returned to slight growth in Q3, while Alberta exceeded expectations after the prior year's acquisition.

Where is capital going?

SmartStop announced an estimated $53 million investment in Strategic Storage Canada LP, a Canadian acquisition joint venture. Schwartz said the deal expands SmartStop's operating presence in Canada by more than 30%, to 70 stores.

The company is under contract to acquire two properties in core markets for approximately $37 million.

SmartStop also entered a programmatic investment partnership with a U.S. developer. Preferred and mezzanine (subordinated) investments carry blended in-place yields (current property yields) in the mid-teens, alongside property-management rights and potential future investment opportunities.

Takeaway: The program adds Canadian scale and core-market assets while preserving operating roles and options for more deals.

How will asset sales fund expansion?

SmartStop plans to sell an initial $75 million to $125 million of properties in non-core markets. The company expects closings in the first half of 2027. Schwartz said proceeds will be recycled into markets where SmartStop can build larger clusters of properties.

Corak said expected capitalization rates (property yields) on acquisitions and sales were fairly similar. He said operating efficiencies could make the program accretive (earnings-enhancing) in the short to medium term. Corak also said SmartStop “hoped to retain management of some properties it sells.”

Takeaway: The sales plan directs proceeds into larger clusters instead of simply reducing the portfolio, with closings set for the first half of 2027.

What does SmartStop own?

SmartStop operates as a self-managed real estate investment trust (REIT) that owns, operates and acquires self-storage properties. Its facilities serve individuals and businesses with units in a range of sizes, along with online reservations, electronic access and tenant-protection offerings.

The company serves customers primarily in the United States and also has exposure to the Canadian self-storage market. Its portfolio includes conventional self-storage facilities and properties offering vehicle, commercial and other specialized storage options.

Takeaway: SmartStop remains a directly operated, U.S.-centered storage owner, with Canada providing the clearest growth path.

Bottom line: Better margins now support higher 2026 guidance, while Canadian acquisitions and later non-core sales will determine how much scale follows.