Strategic Storage Growth Trust Inc. (SSGT) and Strategic Storage Trust II Inc. (SST II), both public, non-traded, self-storage real estate investment trusts (REITs) sponsored by SmartStop Asset Management LLC, have released their financial statements for the quarter that ended March 31. In general, the entities showed gains in revenue, net operating income (NOI) and occupancy.
SSGT increased same-store revenue 20.1 percent, with NOI growing 38.9 percent, compared to the same period in 2016. Same-store occupancy was 93.2 percent as of March 31, up from 84.1 percent the previous year. The REIT also reported growth in same-store annualized rent per occupied square foot, showing an increase of 8.1 percent ($11.51) year over year. It reported a net loss of $1.09 million.
During the quarter, SSGT closed on two self-storage acquisitions in Elk Grove Village, Ill., and Garden Grove, Calif., for $28.5 million. Combined, the assets comprise 177,000 net rentable square feet in 1,760 units.
“Our strong performance during the first quarter demonstrates the execution of our strategy: acquiring quality assets with good lease-up potential and delivering growth through institutional management,” said H. Michael Schwartz, chairman and CEO of both REITs.
SST II increased total revenue by about $11.5 million, a 184 percent bump compared to the first quarter last year. Same-store revenue grew 15.6 percent, while NOI showed a 32.2 percent increase year over year. Modified funds from operations grew $2.1 million, or 130 percent, though the company reported a net loss attributable to common shareholders of $5.19 million.
Same-store occupancy was 92.3 percent as of March 31, up from 84.2 percent the previous year. The REIT also reported growth in same-store annualized rent per occupied square foot, showing an increase of 5.5 percent ($13.29) year over year.
SST II closed on a self-storage property in Aurora, Colo., for $10.1 million. The facility comprises 53,400 rentable square feet in 400 units. In February, the REIT also agreed to merge with Strategic Storage Toronto Properties REIT Inc., another affiliate of SmartStop Asset Management. The deal includes the acquisition of five Toronto storage assets, along with the assumption of loans and other debt. SST II paid $7.3 million in cash and issued 483,197 class-A shares to Strategic Storage Toronto Properties REIT. The self-storage properties comprise 460,400 rentable square feet in 4,010 units.
“Our first-quarter same-store results show the execution of our strategy: acquiring quality assets in strong markets and recognizing greater revenues as the properties stabilize,” Schwartz said. “Our approach continues in 2017, with the acquisitions made in the past 12 months improving the operating results of the entire portfolio.”
SSGT focuses on the acquisition, development, redevelopment and lease-up of self-storage properties. Its portfolio currently consists of 18 storage facilities in eight states comprising approximately 1.4 million net rentable square feet in 11,900 storage units.
The SST II portfolio includes 83 self-storage facilities in Canada and the United States. It comprises approximately 51,300 self-storage units and about 6 million rentable square feet of storage space.
Both REITs are sponsored by SmartStop Asset Management, a diversified real estate company with a managed portfolio of 107 self-storage facilities in Canada and the United States. Its managed properties comprise approximately 7.8 million rentable square feet.