SmartStop Self Storage has completed its first year in the black since it launched in 2007. The public non-traded REIT earned a profit of $4.8 million in 2014, according to its recently released annual results.
For the preceding several years the company ran at a loss while it focused on rapidly expanding its portfolio. In 2013, the company posted a net income loss of $7.4 million. With 164 self-storage facilities now in its portfolio in major metro markets, the operator appears to be on a path of sustainable profitability.
“We had another strong year, and have achieved our 12th consecutive quarter of year over year same-store revenue and net operating income growth,” said H. Michael Schwartz, CEO of SmartStop (pictured above).
Same-store revenue grew by 6.7 percent during the fourth quarter compared to the same period last year.
The company increased overall revenue by 18 percent in 2014 compared to the previous year, logging total proceeds of $98.25 million. Revenue growth was strong in the fourth quarter as well, with $25.27 million reported—a 12 percent increase over the same period last in 2013.
Operating fundamentals also continued in a positive trajectory. Average same-store occupancy grew more than 3 percent over the 12-month period from 83 percent in 2013 to 86.1 in 2014. Rent per occupied square foot increased to $11.02 in 2014, compared to $10.63 the previous year.
Expansion Through New REITs
SmartStop didn’t add any new facilities to its portfolio during the fourth quarter. On March 26, 2015 it purchased a facility in Tempe, AZ for $4.4 million.
Instead of continuing to grow its initial portfolio that it developed as Strategic Storage Trust (the REIT changed its name to SmartStop Self Storage Inc. last year), SmartStop has focused most of its expansion-related focus on helping to build up the portfolio of Strategic Storage Trust II, which is a separate non-traded REIT it has under management.
Since October 31, 2014, SmartStop drew $74 million in bridge financing from KeyBank, which it used to invest in Strategic Storage Trust II and its other managed REIT, Strategic Storage Growth Trust.
Strategic Storage Trust II used the $56.4 million SmartStop has invested thus far to help fund part of its $145 million acquisition of a 32-property portfolio in March. SmartStop also invested about $17.5 million in Strategic Storage Growth Trust, which used the funds to acquire 9 facilities for about $35.3 million.
All of the properties purchased by Strategic Storage Trust II and Strategic Growth Trust are managed under the SmartStop Self Storage brand.