# SmartStop Self Storage REIT, Inc.: Form 10-Q for the period ended Sep 30, 2022

- Company: [SmartStop Self Storage REIT, Inc.](/companies/sma.md) (CIK 1585389)
- Form: 10-Q
- Filed: 2022-11-10
- Accepted by EDGAR: Nov 10, 2022, 18:18 ET
- Period: 2022-09-30
- Accession: 0000950170-22-024314
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1585389/000095017022024314/ck0001585389-20220930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1585389/000095017022024314/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-01 to 2022-09-30 | $56.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-01-01 to 2022-09-30 | $156.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2022-07-01 to 2022-09-30 | $12.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-01-01 to 2022-09-30 | $49.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2022-07-01 to 2022-09-30 | $11.8m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2022-01-01 to 2022-09-30 | $28.2m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-07-01 to 2022-09-30 | −$102.2k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-01-01 to 2022-09-30 | $402.2k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | $2.2m | us-gaap:ProfitLoss |
| Net income | 9 months, 2022-01-01 to 2022-09-30 | $19.5m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2022-07-01 to 2022-09-30 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-01-01 to 2022-09-30 | $0.08 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-07-01 to 2022-09-30 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-01-01 to 2022-09-30 | $0.08 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 9 months, 2022-01-01 to 2022-09-30 | 90,425,665 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-01-01 to 2022-09-30 | $69.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 9 months, 2022-01-01 to 2022-09-30 | $34.9m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2022-09-30 | $41.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2022-09-30 | $1.94bn | us-gaap:Assets |
| Total liabilities | at 2022-09-30 | $1.08bn | us-gaap:Liabilities |
| Shareholders' equity | at 2022-09-30 | $482.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 83,411 characters.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and notes thereto contained elsewhere in this report. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should also be read in conjunction with our consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021. See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I.

### Overview

We are a self-managed and fully-integrated self storage real estate investment trust (“REIT”). Our year end is December 31. As used in this report, “we,” “us,” “our,” and “Company” refer to SmartStop Self Storage REIT, Inc. and each of our subsidiaries.

We focus on the acquisition, ownership, and operation of self storage properties located primarily within the top 100 metropolitan statistical areas, or MSAs, throughout the United States and the Greater Toronto Area in Canada. According to the Inside Self Storage Top-Operators List for 2022, we are the 11th largest owner and operator of self storage properties in the United States based on number of properties, units, and rentable square footage. As of September 30, 2022, our wholly-owned portfolio consisted of 153 self storage properties diversified across 19 states and the Greater Toronto Area of Ontario, Canada comprising approximately 103,000 units and 11.8 million net rentable square feet. Additionally, we had a 50% equity interest in ten unconsolidated real estate ventures located in the Greater Toronto Area, which consisted of six operating self storage properties, three parcels of land currently under development into self storage facilities, and one single tenant industrial building, which we plan to convert into a self storage property over the long term. Further, through our Managed REIT Platform (as defined below), we serve as the sponsor of Strategic Storage Trust VI, Inc., a publicly-registered non-traded REIT ("SST VI"), and Strategic Storage Growth Trust III, Inc., a private company that intends to elect to qualify as REIT ("SSGT III" and together with SST VI, the "Managed REITs"), both of which pay us fees to manage these programs and manage their 17 operating self storage properties (as of September 30, 2022).

Our primary business model is focused on owning and operating high quality self storage properties in high growth markets in the United States and Canada. Our business model is designed to maximize cash flow available for distribution to our stockholders and to achieve sustainable long-term growth in cash flow in order to maximize long-term stockholder value at acceptable levels of risk. We execute our organic growth strategy by pursuing revenue-optimizing and expense-minimizing opportunities in the operations of our existing portfolio. We execute our external growth strategy by developing, redeveloping, acquiring and managing self storage facilities in the United States and Canada, and we look to acquire properties that are physically stabilized, recently developed, in various stages of lease up or at certificate of occupancy. We seek to acquire undermanaged facilities that are not operated by institutional operators, where we can implement our proprietary management and technology to maximize net operating income.

As discussed herein, we, through our subsidiaries, currently serve as the sponsor of SST VI and SSGT III. We also served as the sponsor of Strategic Storage Trust IV, Inc., a public non-traded REIT (“SST IV”) through March 17, 2021, and Strategic Storage Growth Trust II, Inc., a private REIT (“SSGT II”) through June 1, 2022. Prior to March 17, 2021 and June 1, 2022, SST IV and SSGT II, respectively, were also included in the “Managed REITs.” We operate the properties owned by the Managed REITs, consisting of, as of September 30, 2022, 17 operating properties and approximately 12,300 units and 1.4 million rentable square feet. In addition, we have the internal capability to originate, structure and manage additional self storage investment programs (the “Managed REIT Platform”) which would be sponsored by SmartStop REIT Advisors, LLC (“SRA”), our indirect subsidiary. We generate asset management fees, property management fees, acquisition fees, and other fees and also receive substantially all of the tenant protection program revenue earned by our Managed REITs. For the property management and advisory services that we provide, we are reimbursed for certain expenses that otherwise helps to offset our net operating expense burden.

As of September 30, 2022, our wholly-owned self storage portfolio was comprised as follows:

| State | No. of Properties | Units(1) | Sq. Ft. (net)(2) | % of Total Rentable Sq. Ft. | Physical Occupancy %(3) | Rental Income %(4) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Alabama | 1 | 1,090 | 163,300 | 1.4% | 93.2% | 0.8% |
| Arizona | 4 | 3,130 | 329,100 | 2.8% | 94.4% | 2.7% |
| California | 29 | 19,195 | 2,030,300 | 17.1% | 94.2% | 20.0% |
| Colorado | 8 | 4,550 | 493,085 | 4.2% | 92.3% | 3.7% |
| Florida | 26 | 19,870 | 2,363,100 | 20.1% | 94.6% | 22.0% |
| Illinois | 6 | 3,785 | 429,500 | 3.6% | 93.1% | 2.9% |
| Indiana | 2 | 1,030 | 112,700 | 1.0% | 94.1% | 0.6% |
| Massachusetts | 1 | 840 | 93,200 | 0.8% | 97.7% | 1.9% |
| Maryland | 2 | 1,610 | 169,500 | 1.4% | 94.5% | 1.4% |
| Michigan | 4 | 2,220 | 266,100 | 2.3% | 95.1% | 1.9% |
| New Jersey | 2 | 2,350 | 205,100 | 1.7% | 91.5% | 1.9% |
| Nevada | 9 | 7,160 | 865,000 | 7.3% | 94.0% | 7.0% |
| North Carolina | 19 | 9,190 | 1,192,400 | 10.1% | 94.4% | 8.3% |
| Ohio | 5 | 2,310 | 279,700 | 2.4% | 93.5% | 1.6% |
| South Carolina | 3 | 1,940 | 246,000 | 2.1% | 95.3% | 1.6% |
| Texas | 12 | 6,960 | 919,300 | 7.8% | 94.5% | 6.6% |
| Virginia | 1 | 830 | 71,100 | 0.6% | 91.2% | 0.9% |
| Washington | 5 | 3,427 | 390,545 | 3.3% | 88.8% | 3.3% |
| Wisconsin | 1 | 780 | 83,400 | 0.7% | 91.9% | 0.5% |
| Ontario, Canada | 13 | 10,610 | 1,092,300 | 9.3% | 94.7% | 10.4% |
| **Total** | **153** | **102,877** | **11,794,730** | **100%** | **94.0%** | **100%** |

(1) Includes all rentable units, consisting of storage units and parking (approximately 3,400 units).

(2) Includes all rentable square feet, consisting of storage units and parking (approximately 1,016,000 square feet).

(3) Represents the occupied square feet of all facilities in a state or province divided by total rentable square feet of all the facilities in such state or area as of September 30, 2022.

(4) Represents rental income (excludes administrative fees, late fees, and other ancillary income) for all facilities we owned in a state or province divided by our total rental income for the month ended September 30, 2022.

Additionally, we own our office located at 10 Terrace Rd, Ladera Ranch, California (the “Ladera Office”) which houses our corporate headquarters.

### Critical Accounting Policies

We have established accounting policies which conform to generally accepted accounting principles (“GAAP”). Preparing financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. Following is a discussion of the estimates and assumptions used in setting accounting policies that we consider critical in the presentation of our consolidated financial statements. Many estimates and assumptions involved in the application of GAAP may have a material impact on our financial condition or operating performance, or on the comparability of such information to amounts reported for other periods, because of the subjectivity and judgment required to account for highly uncertain items or the susceptibility of such items to change. These estimates and assumptions affect our reported amounts of assets and liabilities, our disclosure of contingent assets and liabilities at the dates of the financial statements and our reported amounts of revenue and expenses during the period covered by this report. If management’s judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied or different amounts of assets, liabilities, revenues and expenses would have been recorded, thus resulting in a materially different presentation of the financial statements or materially different amounts being reported in the financial statements. Additionally, other companies may use different estimates and assumptions that may impact the comparability of our financial condition and results of operations to those companies.

We believe that our critical accounting policies include the following: real estate purchase price allocations; the evaluation of whether any of our long-lived assets have been impaired; the valuation of goodwill and related impairment considerations, the valuation of our trademarks and related impairment considerations, the valuation of our contingent consideration liability, the determination of the useful lives of our long-lived assets; and the evaluation of the consolidation of our interests in joint ventures. The following discussion of these policies supplements, but does not supplant, the description of our significant accounting policies, as contained in Note 2 – Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements contained in this report, and is intended to present our analysis of the uncertainties involved in arriving upon and applying each policy.

### Real Estate Purchase Price Allocation

We account for asset acquisitions in accordance with GAAP which requires that we allocate the purchase price of a property to the tangible and intangible assets acquired and the liabilities assumed based on their relative fair values. This guidance requires us to make significant estimates and assumptions, including fair value estimates, which requires the use of significant unobservable inputs as of the acquisition date.

The value of the tangible assets, consisting of land and buildings is determined as if vacant. Because we believe that substantially all of the leases in place at properties we will acquire will be at market rates, as the majority of the leases are month-to-month contracts, we do not expect to allocate any portion of the purchase prices to above or below market leases. We also consider whether in-place, market leases represent an intangible asset. Acquisitions of portfolios of facilities are allocated to the individual facilities based upon an income approach or a cash flow analysis using appropriate risk adjusted capitalization rates which take into account the relative size, age, and location of the individual facility along with current and projected occupancy and rental rate levels or appraised values, if available.

Our allocations of purchase prices are based on certain significant estimates and assumptions, variations in such estimates and assumptions could result in a materially different presentation of the consolidated financial statements or materially different amounts being reported in the consolidated financial statements.

### Real Property Assets Valuation

We evaluate our real property assets for impairment based on events and changes in circumstances that may arise in the future and that may impact the carrying amounts of such assets. When indicators of potential impairment are present, we will assess the recoverability of the particular asset by determining whether the carrying value of the asset will be recovered, through an evaluation of the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. This evaluation is based on a number of estimates and assumptions. Based on this evaluation, if the expected undiscounted future cash flows do not exceed the carrying value, we will adjust the value of the real property asset and recognize an impairment loss. Our evaluation of the impairment of real property assets could result in a materially different presentation of the financial statements or materially different amounts being reported in the financial statements, as the amount of impairment loss, if any, recognized may vary based on the estimates and assumptions we use.

### Intangible Assets Valuation

In connection with the acquisition of the self storage advisory, asset management and property management businesses and certain joint venture interests of Strategic Asset Management I, LLC (f/k/a SmartStop Asset Management, LLC), our former sponsor (“SAM”), along with certain other assets of SAM (collectively, the “Self Administration Transaction”), we allocated a portion of the consideration to the contracts that we acquired related to the Managed REITs and the customer relationships related to our tenant insurance, tenant protection plans or similar programs (the “Tenant Protection Programs”). For these intangibles, we are amortizing such amounts on a straight-line basis over the estimated benefit period of the contracts and customer relationships. We evaluate these intangible assets for impairment when an event occurs or circumstances change that indicate the carrying value may not be recoverable. In such an event, an impairment charge is recognized and the intangible asset is marked down to its fair value.

### Goodwill Valuation

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible assets and other intangible assets acquired. Goodwill is allocated to various reporting units, as applicable, and is not amortized. We perform an annual impairment test for goodwill and between annual tests, we evaluate the recoverability of goodwill whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be fully recoverable. If circumstances indicate the carrying amount may not be fully recoverable, we perform a quantitative impairment test of goodwill to compare the fair value of each reporting unit to its respective carrying amount. If the carrying amount of goodwill exceeds its fair value, an impairment charge will be recognized.

### Trademarks Valuation

Trademarks are based on the value of our brands. Trademarks are valued using the relief from royalty method, which presumes that without ownership of such trademarks, we would have to make a stream of payments to a brand or franchise owner in return for the right to use their name. By virtue of this asset, we avoid any such payments and record the related intangible value of our ownership of the brand name.

We qualitatively evaluate whether any triggering events or changes in circumstances have occurred subsequent to our annual impairment test that would indicate an impairment condition may exist. If any change in circumstance or triggering event occurs, and results in a significant impact to our revenue and profitability projections, or any significant assumption in our valuation methods is adversely impacted, the impact could result in a material impairment charge in the future.

### Contingent Earnout Valuation

In connection with the Self Administration Transaction, we issued the Class A-2 Units, as a form of contingent consideration, which was required to be revalued at each reporting period (until the respective Class A-2 Units were converted into Class A-1 Units), based on the discounted probability weighted forecast of achieving the requisite AUM thresholds or the occurrence of an Earnout Acceleration Event (both as defined in Note 11 – Commitments and Contingencies, of the Notes to the Consolidated Financial Statements contained in this report).

### Estimated Useful Lives of Real Property Assets

We assess the useful lives of the assets underlying our properties based upon a subjective determination of the period of future benefit for each asset. We record depreciation expense with respect to these assets based upon the estimated useful lives we determine. Our determinations of the useful lives of the assets could result in a materially different presentation of the consolidated financial statements or materially different amounts being reported in the consolidated financial statements, as such determinations, and the corresponding amount of depreciation expense, may vary dramatically based on the estimates and assumptions we use.

### Consolidation Considerations

Current accounting guidance provides a framework for identifying a variable interest entity (“VIE”) and determining when a company should include the assets, liabilities, noncontrolling interests, and results of activities of a VIE in its consolidated financial statements. In general, a VIE is an entity or other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. Generally, a VIE should be consolidated if a party with an ownership, contractual, or other financial interest in the VIE (a variable interest holder) has the power to direct the VIE’s most significant activities and the obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and noncontrolling interest at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest.

We evaluate the consolidation of our investments in joint ventures in accordance with relevant accounting guidance. This evaluation requires us to determine whether we have a controlling interest in a joint venture through a means other than voting rights, and, if so, such joint venture may be required to be consolidated in our financial statements. Our evaluation of our joint ventures under such accounting guidance could result in a materially different presentation of the financial statements or materially different amounts being reported in the financial statements, as the joint venture entities included in our consolidated financial statements may vary based on the estimates and assumptions we use.

### REIT Qualification

We made an election under Section 856(c) of the Internal Revenue Code of 1986 (the Code) to be taxed as a REIT under the Code, commencing with the taxable year ended December 31, 2014. By qualifying as a REIT for federal income tax purposes, we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which our qualification is denied. Such an event could materially and adversely affect our net income and could have a material adverse impact on our financial condition and results of operations. However, we believe that we are organized and operate in a manner that will enable us to continue to qualify for treatment as a REIT for federal income tax purposes, and we intend to continue to operate as to remain qualified as a REIT for federal income tax purposes.

### Current Market and Economic Conditions

Our rental revenue and operating results depend significantly on the demand for self storage space. Since the beginning of the COVID-19 pandemic in late March 2020, the challenges associated with the pandemic were partially offset by other trends that helped maintain the demand for self storage. The broader shift of people working from home, elevated migration patterns and strength in the housing market helped drive continued growth in self storage demand through the first three quarters of 2022. As rental activity, occupancy levels, and rental rates increased during the second half of 2020 and through 2022, our financial performance has continued to be strong. However, same-store growth and overall results have started to normalize and are expected to normalize further over the coming quarters as the comparable periods change.

Recently, the broader economy began experiencing increased levels of inflation, higher interest rates, tightening monetary and fiscal policies and a slowdown in home price appreciation. This could result in less discretionary spending, weakening consumer balance sheets and reduced demand for self storage. However, demand for the self storage sector is dynamic with drivers that function in a multitude of economic environments, both cyclically and counter-cyclically. Demand for self storage tends to be needs-based, with numerous factors that lead customers to renting and maintaining storage units.

In addition to the sector’s numerous historical demand drivers, one significant demand driver that increased substantially during the COVID-19 pandemic is the trend towards working from home, or hybrid work environment. We believe the need for work space in residences will continue to be a driver of storage demand in 2022 and going forward, which could partially offset a potential reduction in population migration caused by a softening housing market.

Recently, the Federal Reserve has increased its targeted range for the federal funds rate, leading to increased interest rates. We currently have fixed interest rates for certain of our loans, either directly or indirectly through our use of interest rate hedges. The rise in overall interest rates has caused an increase in our variable rate borrowing costs and our overall cost of capital, resulting in an increase in net interest expense. Capitalization rates on acquisitions have not increased at the same magnitude as interest rates. These factors may limit our ability to acquire self storage properties in an as accretive manner going forward.

### Results of Operations

### Overview

We derive revenues principally from: (i) rents received from our self storage tenant leases; (ii) fees generated from our Managed REITs; (iii) our Tenant Protection Programs; and (iv) sales of packing and storage-related supplies at our storage facilities. Therefore, our operating results depend significantly on our ability to retain our existing tenants and lease our available self storage units to new tenants, while maintaining and, where possible, increasing the prices for our self storage units.

Competition in the market areas in which we operate is significant and affects the occupancy levels, rental rates, rental revenues and operating expenses of our facilities. Development of any new self storage facilities would intensify competition of self storage operators in markets in which we operate.

As of September 30, 2022 and 2021, we wholly-owned 153 and 138 operating self storage facilities, respectively. Our operating results for the three months ended September 30, 2022 include full quarter results for 153 self storage facilities. Our operating results for the three months ended September 30, 2021 include full quarter results for 138 self storage facilities. Operating results in future periods will depend on the results of operations of these properties and of the real estate properties that we acquire in the future.

Our operating results for the nine months ended September 30, 2022 include a full nine months of results for 139 self storage facilities and partial period results for 14 operating self storage facilities acquired during the nine months ended September 30, 2022. Our operating results for the nine months ended September 30, 2021 include a full nine months of results for 112 self storage facilities and partial period results for 26 operating self storage facilities acquired during the nine months ended September 30, 2021. Operating results in future periods will depend on the results of operations of these properties and of the real estate properties that we acquire in the future.

As discussed below, the results of operations presented herein cover a period of time prior to the SST IV Merger and SSGT II Merger. Our 2021 and 2022 operating results have been and will continue to be significantly impacted by these mergers as a result of collectively acquiring 34 operating self storage facilities and 50% equity interests in nine unconsolidated real estate ventures, as well as the elimination of management fees that we previously earned from SST IV and SSGT II. Over time we expect the SSGT II Merger and SST IV Merger to be accretive to FFO, as adjusted, primarily as the former SST IV and SSGT II properties eventually reach higher levels of either physical or economic occupancy or both.

### SST IV Merger

On March 17, 2021, we acquired 24 operating self storage facilities and six real estate joint ventures by way of merger with SST IV. The 24 SST IV operating properties had a weighted average physical occupancy of 93.0% and 95.6% as of September 30, 2022, and 2021, respectively. The 24 SST IV operating properties were included for both the three months ended September 30, 2022 and 2021, and such revenues were approximately $8.8 million and $7.8 million, respectively, representing an increase of approximately $1.0 million or 13.9%.

### SSGT II Merger

On June 1, 2022, we acquired 10 operating self storage facilities and three real estate joint ventures by way of merger with SSGT II.

### Comparison of the three months ended September 30, 2022 and 2021

#### Total Self Storage Revenues

Total self storage related revenues for the three months ended September 30, 2022 and 2021 were approximately $53.2 million and $42.7 million, respectively. The increase in total self storage revenues of approximately $10.5 million, or approximately 25%, is primarily attributable to an increase in same-store revenues of approximately $3.8 million, an increase in revenue at the 24 operating self storage facilities acquired in connection with the SST IV Merger (approximately $1.1 million), the 10 operating self storage facilities acquired on June 1, 2022 in connection with the SSGT II Merger (approximately $3.7 million), and approximately $1.8 million from other non same-store self storage properties.

We expect self storage revenues to increase in future periods as our lease-up or newly acquired properties increase occupancy and rates, and to otherwise fluctuate based on the performance of our same-store pool, which will be influenced by the overall economic environment and increases in self storage supply, amongst other things. Additionally, we expect to see increases in self storage revenues from any future acquisitions for a full period.

#### Managed REIT Platform Revenue

Managed REIT Platform revenue for the three months ended September 30, 2022 and 2021 was approximately $2.1 million and $1.3 million, respectively. The increase in Managed REIT Platform revenue of approximately $0.8 million is primarily attributable to acquisition fee revenue growth of approximately $0.8 million from our Managed REITs. We expect Managed REIT Platform Revenue to fluctuate commensurate with our Managed REITs' increase in operations and assets under management.

#### Reimbursable Costs from Managed REITs

Reimbursable costs from Managed REITs for the three months ended September 30, 2022 and 2021 were approximately $1.2 million and $1.0 million, respectively. Such revenues consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by our Managed REITs, pursuant to our related contracts with the Managed REITs. We expect reimbursable costs from Managed REITs to generally fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.

#### Property Operating Expenses

Property operating expenses for the three months ended September 30, 2022 and 2021 were approximately $16.0 million (or 30% of self storage revenue) and $12.6 million (or 29% of self storage revenue), respectively. Property operating expenses include the costs to operate our facilities including payroll expense, utilities, insurance, real estate taxes, and marketing. The increase in property operating expenses of approximately $3.4 million is largely attributable to the 10 operating self storage facilities acquired in connection with the SSGT II Merger (approximately $1.1 million), the effect of five other property acquisitions included in the three months ended September 30, 2022 which were not owned in the same period of the prior year, as well as increases in property taxes, payroll, and casualty losses of approximately $0.4 million related to Hurricane Ian. We expect property operating expenses to decrease as a percentage of revenue as revenues increase.

#### Managed REIT Platform Expenses

Managed REIT Platform expenses for the three months ended September 30, 2022 and 2021 were approximately $0.7 million and $0.6 million, respectively. Such expenses primarily consisted of expenses related to non-reimbursable costs associated with the operation of the Managed REIT Platform and the Administrative Services Agreement (as discussed in Note 9 – Related Party Transactions, of the notes to consolidated financial statements contained in this report). We expect Managed REIT Platform expenses to fluctuate in future periods commensurate with our level of activity related to the Managed REITs.

#### Reimbursable Costs from Managed REITs

Reimbursable costs from Managed REITs for the three months ended September 30, 2022 and 2021 were approximately $1.2 million and $1.0 million, respectively. Such expenses consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by our Managed REITs, pursuant to our related contracts with the Managed REITs. We expect reimbursable costs from Managed REITs to fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.

#### General and Administrative Expenses

General and administrative expenses for the three months ended September 30, 2022 and 2021 were approximately $7.3 million and $5.2 million, respectively. Such expenses consist primarily of compensation-related costs, legal expenses, accounting expenses, transfer agent fees, directors and officers’ insurance expense and board of directors related costs. The increase is primarily attributable to expenses recorded related to increased professional and legal costs, transfer agent costs and compensation-related expenses. We expect general and administrative expenses to decrease as a percentage of total revenues over time.

#### Depreciation and Amortization Expenses

Depreciation and amortization expenses for the three months ended September 30, 2022 and 2021 were approximately $18.1 million and $14.5 million, respectively. Depreciation expense consists primarily of depreciation on the buildings and site improvements at our properties. Amortization expense consists of the amortization of our in place lease intangible assets resulting from our self storage acquisitions and amortization of certain intangible assets acquired in the Self Administration Transaction. The increase in depreciation and amortization expense is primarily attributable to additional depreciation and amortization on the properties and intangible assets acquired in the SSGT II Merger.

#### Acquisition Expenses

Acquisition expenses for the three months ended September 30, 2022 and 2021 were approximately $0.1 million and $0.2 million, respectively. These acquisition expenses were incurred prior to acquisitions becoming probable in accordance with our capitalization policy.

#### Contingent Earnout Adjustment

The contingent earnout adjustments for the three months ended September 30, 2022 and 2021 reflects an increase in the contingent earnout liability of approximately $0.2 million and $0.7 million, respectively. The contingent earnout adjustment reflects the change in the liability based on an updated valuation and changes in the discounted probability weighted forecast of our projected assets under management (as defined in the Operating Partnership Agreement, as amended). The third and final tranche of the contingent earnout was earned during the three months ended September 30, 2022, and no future contingent earnout adjustments will be recorded.

#### Interest Expense

Interest expense for the three months ended September 30, 2022 and 2021 was approximately $11.8 million and $8.3 million, respectively. Interest expense includes interest expense on our debt, accretion of fair market value adjustments of our debt, amortization of debt issuance costs, and the impact of our interest rate hedging derivatives. The increase of approximately $3.5 million is primarily attributable to an increase in rates on our variable rate debt as well as an increase in our average outstanding principal balance, primarily as a result of the SSGT II Merger as well as four other self storage acquisitions that were funded by draws on the Credit Facility Revolver. We expect interest expense to fluctuate in future periods commensurate with our future debt levels and fluctuations in interest rates.

#### Other, Net

Other for the three months ended September 30, 2022 and 2021 was approximately $1.2 million of income and $1.1 million of expense, respectively. Other consists primarily of state franchise tax expense, foreign currency fluctuations, changes in value related to our foreign currency hedges not designated for hedge accounting, interest income from loans issued to our Managed REITs, and equity in earnings attributable to our unconsolidated joint ventures. The change of approximately $2.3 million is largely composed of foreign currency related adjustments and interest income from our loans to SSGT III and SST VI.

#### Income Tax (Expense) Benefit

Income tax for the three months ended September 30, 2022 and 2021 was approximately $0.1 million of expense and $0.3 million of income, respectively. Income tax consists primarily of adjustments to deferred tax liabilities, state, federal, and Canadian income tax.

### Same-Store Facility Results - Three Months Ended September 30, 2022 and 2021

The following table sets forth operating data for our same-store facilities (those properties included in the consolidated results of operations since January 1, 2021, excluding three lease-up properties we owned as of January 1, 2021) for the three months ended September 30, 2022 and 2021. We consider the following data to be meaningful as this allows for the comparison of results without the effects of acquisition, lease up, or development activity.

|  | Same-Store Facilities 2022 | 2021 | % Change | Non Same-Store Facilities 2022 | 2021 | % Change | Total 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | --- | ---: | ---: | ---: |
| Revenue (1) | $35,841,292 | $32,054,209 | 11.8% | $15,448,916 | $8,905,315 | N/M | $51,290,208 | $40,959,524 | 25.2% |
| Property operating expenses (2) | 10,390,555 | 9,662,993 | 7.5% | 5,593,464 | 2,930,198 | N/M | 15,984,019 | 12,593,191 | 26.9% |
| Net operating income | $25,450,737 | $22,391,216 | 13.7% | $9,855,452 | $5,975,117 | N/M | $35,306,189 | $28,366,333 | 24.5% |
| Number of facilities | 109 | 109 |  | 44 | 29 |  | 153 | 138 |  |
| Rentable square feet (3) | 8,036,285 | 8,034,200 |  | 3,758,445 | 2,459,600 |  | 11,794,730 | 10,493,800 |  |
| Average physical occupancy (4) | 94.5% | 95.9% |  | 93.4% | 94.7% |  | 94.2% | 95.6% |  |
| Annualized rent per occupied square foot (5) | $19.30 | $16.88 |  | N/M | N/M |  | $19.02 | $16.67 |  |

N/M Not meaningful

(1) Revenue includes rental revenue, certain ancillary revenue, administrative and late fees, and excludes Tenant Protection Program revenue.

(2) Property operating expenses excludes corporate general and administrative expenses, interest expense, depreciation, amortization expense, and acquisition expenses.

(3) Of the total rentable square feet, parking represented approximately 1,016,000 square feet and 937,000 square feet as of September 30, 2022 and 2021, respectively. On a same-store basis, for the same periods, parking represented approximately 680,000 square feet.

(4) Determined by dividing the sum of the month-end occupied square feet for the applicable group of facilities for each applicable period by the sum of their month-end rentable square feet for the period.

(5) Determined by dividing the aggregate realized rental income for each applicable period by the aggregate of the month-end occupied square feet for the period. Properties are included in the respective calculations in their first full month of operations, as appropriate. We have excluded the realized rental revenue and occupied square feet related to parking herein for the purpose of calculating annualized rent per occupied square foot.

Our same-store revenue increased by approximately $3.8 million, or approximately 11.8%, for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 due to higher annualized rent per occupied square foot, partially offset by an approximately 1% decrease in average occupancy.

The following table presents a reconciliation of net income (loss) as presented on our consolidated statements of operations to net operating income, as stated above, for the periods indicated:

|  | For the Three Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: |
| **Net income (loss)** | $2,246,524 | $1,059,242 |
| Adjusted to exclude: |  |  |
| Tenant Protection Program revenue(1) | (1,942,463) | (1,743,509) |
| Managed REIT Platform revenue | (2,055,224) | (1,263,029) |
| Managed REIT Platform expenses | 725,599 | 587,704 |
| General and administrative | 7,330,245 | 5,232,950 |
| Depreciation | 13,220,916 | 10,748,337 |
| Intangible amortization expense | 4,849,934 | 3,710,736 |
| Acquisition expenses | 77,813 | 211,985 |
| Contingent earnout adjustment | 200,626 | 700,000 |
| Interest expense | 11,752,656 | 8,288,215 |
| Income Tax | 102,233 | (276,592) |
| Other, net | (1,202,670) | 1,110,294 |
| **Total net operating income** | $35,306,189 | $28,366,333 |

(1) Approximately $1.3 million and $1.4 million of Tenant Protection Program revenue was earned at same-store facilities during the three months ended September 30, 2022 and 2021, respectively, with the remaining approximately $0.6 million and $0.4 million earned at non same-store facilities during the three months ended September 30, 2022 and 2021, respectively.

### Comparison of the nine months ended September 30, 2022 and 2021

#### Total Self Storage Revenues

Total self storage related revenues for the nine months ended September 30, 2022 and 2021 were approximately $146.8 million and $113.9 million, respectively. The increase in total self storage revenues of approximately $32.9 million, or approximately 29%, is largely attributable to an increase in same-store revenues of approximately $13.3 million, as well as the 10 and 24 operating self storage facilities acquired in connection with the SSGT II Merger and SST IV Merger, respectively, representing increased revenues over the prior periods of approximately $4.9 million and $9.7 million, respectively, and to a lesser extent, approximately $4.3 million from other non same-store self storage properties.

We expect self storage revenues to increase in future periods as our lease-up or newly acquired properties increase occupancy and rates, and to otherwise fluctuate based on the performance of our same-store pool, which will be influenced by the overall economic environment and increases in self storage supply, amongst other things. Additionally, we expect to see increases in self storage revenues from any future acquisitions and from the inclusion of the properties we acquired in the SSGT II Merger for a full period.

#### Managed REIT Platform Revenue

Managed REIT Platform revenue for the nine months ended September 30, 2022 and 2021 was approximately $5.9 million and $4.6 million, respectively. The increase in Managed REIT Platform revenue of approximately $1.3 million is primarily attributable to acquisition fee revenue growth of approximately $1.8 million from our Managed REITs. We expect Managed REIT Platform Revenue to fluctuate commensurate with our Managed REITs' increase in operations and assets under management.

#### Reimbursable Costs from Managed REITs

Reimbursable costs from Managed REITs for the nine months ended September 30, 2022 and 2021 were approximately $3.5 million and $3.3 million, respectively. Such revenues consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by our Managed REITs, pursuant to our related contracts with the Managed REITs. We expect Reimbursable Costs from Managed REITs to decline in future periods as a result of the SSGT II Merger as we will no longer receive reimbursement for providing such services. We further expect reimbursable costs from Managed REITs to generally fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.

#### Property Operating Expenses

Property operating expenses for the nine months ended September 30, 2022 and 2021 were approximately $42.7 million (or 29% of self storage revenue) and $35.4 million (or 31% of self storage revenue), respectively. Property operating expenses include the costs to operate our facilities including payroll expense, utilities, insurance, real estate taxes, and marketing. The increase in property operating expenses of approximately $7.3 million is largely attributable to the 24 and 10 operating self storage facilities acquired in connection with the SST IV Merger and the SSGT II Merger, respectively, and to a lesser extent increases in property taxes, payroll, and casualty losses related to Hurricane Ian. We expect property operating expenses to decrease as a percentage of revenue as revenues increase.

#### Managed REIT Platform Expenses

Managed REIT Platform expenses for the nine months ended September 30, 2022 and 2021 were approximately $1.7 million and $1.2 million, respectively. Such expenses primarily consisted of expenses related to non-reimbursable costs associated with the operation of the Managed REIT Platform and the Administrative Services Agreement (as discussed in Note 9 – Related Party Transactions, of the notes to consolidated financial statements contained in this report). We expect Managed REIT Platform expenses to fluctuate in future periods commensurate with our level of activity related to the Managed REITs.

#### Reimbursable Costs from Managed REITs

Reimbursable costs from Managed REITs for the nine months ended September 30, 2022 and 2021 were approximately $3.5 million and $3.3 million, respectively. Such expenses consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by our Managed REITs, pursuant to our related contracts with the Managed REITs. We expect reimbursable costs from Managed REITs to fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.

#### General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2022 and 2021 were approximately $21.1 million and $16.8 million, respectively. Such expenses consist primarily of compensation-related costs, legal expenses, accounting expenses, transfer agent fees, directors and officers’ insurance expense and board of directors related costs. Additionally, during the nine months ended September 30, 2022, we recorded expenses of approximately $1.5 million related to our filing of an S-11 registration statement and related costs in pursuit of a potential offering of our common stock. The remaining increase is primarily attributable to increased professional and legal costs, transfer agent costs and compensation-related expenses. We expect general and administrative expenses to decrease as a percentage of total revenues over time.

#### Depreciation and Amortization Expenses

Depreciation and amortization expenses for the nine months ended September 30, 2022 and 2021 were approximately $49.4 million and $38.7 million, respectively. Depreciation expense consists primarily of depreciation on the buildings and site improvements at our properties. Amortization expense consists of the amortization of our in place lease intangible assets resulting from our self storage acquisitions and amortization of certain intangible assets acquired in the Self Administration Transaction. The increase in depreciation and amortization expense is primarily attributable to additional depreciation and amortization on the properties and intangible assets acquired in the SST IV Merger and the SSGT II Merger.

#### Acquisition Expenses

Acquisition expenses for the nine months ended September 30, 2022 and 2021 were approximately $0.8 million and $0.5 million, respectively. These acquisition expenses were incurred prior to acquisitions becoming probable in accordance with our capitalization policy.

#### Contingent Earnout Adjustment

The contingent earnout adjustment for the nine months ended September 30, 2022 and 2021 reflects an increase in the contingent earnout liability of approximately $1.5 million and $3.2 million, respectively. The contingent earnout adjustment reflects the change in the liability based on an updated valuation and changes in the discounted probability weighted forecast of our projected assets under management (as defined in the Operating Partnership Agreement, as amended). The second and third tranches of the contingent earnout were earned during the nine months ended September 30, 2022, and no future contingent earnout adjustments will be recorded.

#### Write-off of equity interest and preexisting relationships upon acquisition of control

Write-off of equity interest and preexisting relationships upon acquisition of control for the nine months ended September 30, 2022 and 2021 was approximately $2.0 million and $8.4 million, respectively. Such expenses in 2022 represents the write-off of the intangible assets related to the SSGT II advisory agreement and property management contracts due to the termination of such contracts with the SSGT II Merger. Such expenses in 2021 primarily represents the write-off of the intangible assets related to the SST IV advisory agreement and property management contracts due to the termination of such contracts with the SST IV Merger, and to a lesser extent, the write-off of the SST IV special limited partnership interest we held in SST IV, which per the terms of the SST IV Merger, terminated without consideration.

#### Gain On Equity Interests Upon Acquisition

Gain on equity interests upon acquisition for the nine months ended September 30, 2022 and 2021 was approximately $16.1 million and none, respectively. The gain was related to recording the fair value of our preexisting special limited partnership interest in SSGT II in connection with the SSGT II Merger.

#### Gain on Sale of Real Estate

Gain on sale of real estate for the nine months ended September 30, 2022 and 2021 was none and approximately $0.2 million, respectively. The gain in 2021 was related to a sale of a parcel of excess land attached to the self storage facility we own in McKinney, Texas. The sale of this parcel did not affect the operations of our McKinney, Texas property.

#### Interest Expense

Interest expense for the nine months ended September 30, 2022 and 2021 was approximately $28.2 million and $25.3 million, respectively. Interest expense includes interest expense on our debt, accretion of fair market value adjustments of our debt, and amortization of debt issuance costs and the impact of our interest rate hedging derivatives. The increase of approximately $2.9 million is primarily attributable to higher interest rates on our variable rate debt and an increase in our average outstanding principal balance during the nine months ended September 30, 2022. The increase in the average outstanding principal balance was primarily the result of the SSGT II Merger, and four other acquisitions completed in 2022. We expect interest expense to fluctuate in future periods commensurate with our future debt levels and fluctuations in interest rates.

#### Net Loss on Extinguishment of Debt

Net loss on extinguishment of debt for the nine months ended September 30, 2022 and 2021 were approximately $2.4 million and $2.4 million, respectively. The net loss on debt extinguishment for the nine months ended September 30, 2022 is attributable to the write-off of unamortized debt issuance costs and debt defeasance costs for the Midland North Carolina CMBS Loan which was defeased on May 19, 2022. The net loss on debt extinguishment for the nine months ended September 30, 2021 is attributable to the write-off of unamortized debt issuance costs on loans that were paid off in connection with the Credit Facility that was obtained in conjunction with the SST IV Merger.

#### Other, Net

Other for the nine months ended September 30, 2022 and 2021 was approximately $0.2 million of income, and $1.3 million of expense, respectively. Other consists primarily of state franchise tax expense, foreign currency fluctuations, changes in value related to our foreign currency hedges not designated for hedge accounting, and equity in earnings attributable to our unconsolidated joint ventures. The change of approximately $1.6 million is largely composed of foreign currency related adjustments and interest income from our loans to SSGT III and SST VI.

#### Income Tax (Expense) Benefit

Income tax for the nine months ended September 30, 2022 and 2021 was approximately $0.4 million and $2.1 million of income, respectively. Income tax consists primarily of adjustments to deferred tax liabilities, state, federal, and Canadian income tax.

### Same-Store Facility Results - Nine Months Ended September 30, 2022 and 2021

The following table sets forth operating data for our same-store facilities (those properties included in the consolidated results of operations since January 1, 2021, excluding three lease-up properties we owned as of January 1, 2021) for the nine months ended September 30, 2022 and 2021. We consider the following data to be meaningful as this allows for the comparison of results without the effects of acquisition, lease up, or development activity.

|  | Same-Store Facilities 2022 | 2021 | % Change | Non Same-Store Facilities 2022 | 2021(6) | % Change | Total 2022 | 2021 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | --- | ---: | ---: | ---: |
| Revenue (1) | $103,860,238 | $90,606,377 | 14.6% | $37,440,152 | $18,496,288 | N/M | $141,300,390 | $109,102,665 | 29.5% |
| Property operating expenses (2) | 29,701,547 | 28,569,244 | 4.0% | 13,025,028 | 6,847,197 | N/M | 42,726,575 | 35,416,441 | 20.6% |
| Net operating income | $74,158,691 | $62,037,133 | 19.5% | $24,415,124 | $11,649,091 | N/M | $98,573,815 | $73,686,224 | 33.8% |
| Number of facilities | 109 | 109 |  | 44 | 30 |  | 153 | 139 |  |
| Rentable square feet (3) | 8,036,285 | 8,034,200 |  | 3,758,445 | 2,543,800 |  | 11,794,730 | 10,578,000 |  |
| Average physical occupancy (4) | 95.0% | 95.0% |  | 93.2% | 91.4% |  | 94.4% | 94.1% |  |
| Annualized rent per occupied square foot (5) | $18.51 | $16.06 |  | NM | NM |  | $18.28 | $15.89 |  |

N/M Not meaningful

(1) Revenue includes rental revenue, certain ancillary revenue, administrative and late fees, and excludes Tenant Protection Program revenue.

(2) Property operating expenses excludes corporate general and administrative expenses, interest expense, depreciation, amortization expense, and acquisition expenses.

(3) Of the total rentable square feet, parking represented approximately 1,016,000 square feet and 937,000 square feet as of September 30, 2022 and 2021, respectively. On a same-store basis, for the same periods, parking represented approximately 680,000 square feet.

(4) Determined by dividing the sum of the month-end occupied square feet for the applicable group of facilities for each applicable period by the sum of their month-end rentable square feet for the period.

(5) Determined by dividing the aggregate realized rental income for each applicable period by the aggregate of the month-end occupied square feet for the period. Properties are included in the respective calculations in their first full month of operations, as appropriate. We have excluded the realized rental revenue and occupied square feet related to parking herein for the purpose of calculating annualized rent per occupied square foot.

(6) Included in the non same-store data is a self storage facility consisting of approximately 84,000 square feet owned by SST VI OP, which was consolidated by us from March 10, 2021 until May 1, 2021.

Our same-store revenue increased by approximately $13.3 million, or approximately 14.6%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 due to higher annualized rent per occupied square foot.

The following table presents a reconciliation of net income (loss) as presented on our consolidated statements of operations to net operating income, as stated above, for the periods indicated:

|  | For the Nine Months Ended September 30, 2022 | 2021 |
| --- | ---: | ---: |
| **Net income (loss)** | $19,529,105 | $(12,555,062) |
| Adjusted to exclude: |  |  |
| Tenant Protection Program revenue(1) | (5,533,668) | (4,792,980) |
| Managed REIT Platform revenue | (5,877,454) | (4,609,060) |
| Managed REIT Platform expenses | 1,732,710 | 1,223,736 |
| General and administrative | 21,114,475 | 16,797,252 |
| Depreciation | 36,155,008 | 30,035,065 |
| Intangible amortization expense | 13,222,791 | 8,623,964 |
| Acquisition expenses | 780,684 | 548,083 |
| Contingent earnout adjustment | 1,514,447 | 3,219,744 |
| Write-off of equity interest and preexisting relationships upon acquisition of control | 2,049,682 | 8,389,573 |
| Gain on equity interest upon acquisition | (16,101,237) | — |
| Gain on sale of real estate | — | (178,631) |
| Interest expense | 28,181,026 | 25,320,635 |
| Net loss on extinguishment of debt | 2,393,475 | 2,444,788 |
| Income Tax | (402,242) | (2,081,288) |
| Other, net | (184,987) | 1,300,405 |
| **Total net operating income** | $98,573,815 | $73,686,224 |

(1) Approximately $4.1 million and $4.0 million of Tenant Protection Program revenue was earned at same-store facilities during the nine months ended September 30, 2022 and 2021, respectively, with the remaining approximately $1.5 million and $0.8 million earned at non same-store facilities during the nine months ended September 30, 2022 and 2021, respectively.

### Non-GAAP Financial Measures

#### Funds from Operations

Funds from operations ("FFO"), is a non-GAAP financial metric promulgated by the National Association of Real Estate Investment Trusts (NAREIT) that we believe is an appropriate supplemental measure to reflect our operating performance. We define FFO consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, or the White Paper. The White Paper defines FFO as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of property and real estate related asset impairment write downs, plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Additionally, gains and losses from change in control are excluded from the determination of FFO. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. Our FFO calculation complies with NAREIT’s policy described above.

#### FFO, as Adjusted

We use FFO, as adjusted, as an additional non-GAAP financial measure to evaluate our operating performance. FFO, as adjusted, provides investors with supplemental performance information that is consistent with the performance models and analysis used by management. In addition, FFO, as adjusted, is a measure used among our peer group, which includes publicly traded REITs. Further, we believe FFO, as adjusted, is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies.

In determining FFO, as adjusted, we make further adjustments to the NAREIT computation of FFO to exclude the effects of non-real estate related asset impairments and intangible amortization, acquisition related costs, other write-offs incurred in connection with acquisitions, contingent earnout expenses, accretion of fair value of debt adjustments, gains or losses from extinguishment of debt, adjustments of deferred tax liabilities, realized and unrealized gains/losses on foreign exchange transactions, gains/losses on foreign exchange and interest rate derivatives not designated for hedge accounting, and other select non-recurring income or expense items which we believe are not indicative of our overall long-term operating performance. We exclude these items from GAAP net income (loss) to arrive at FFO, as adjusted, as they are not the primary drivers in our decision-making process and excluding these items provides investors a view of our continuing operating portfolio performance over time, which in any respective period may experience fluctuations in such acquisition, merger or other similar activities that are not of a long-term operating performance nature. FFO, as adjusted, also reflects adjustments for unconsolidated partnerships and jointly owned investments. We use FFO, as adjusted, as one measure of our operating performance when we formulate corporate goals and evaluate the effectiveness of our strategies.

Presentation of FFO and FFO, as adjusted, is intended to provide useful information to investors as they compare the operating performance of different REITs. However, not all REITs calculate FFO and FFO, as adjusted, the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and FFO, as adjusted, are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance, as an alternative to cash flows from operations as an indication of our liquidity or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders. FFO and FFO, as adjusted, should be reviewed in conjunction with other measurements as an indication of our performance.

The following is a reconciliation of net loss, which is the most directly comparable GAAP financial measure, to FFO and FFO, as adjusted (attributable to common stockholders), for each of the periods presented below:

|  | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) (attributable to common stockholders) | $(1,270,207) | $(2,211,121) | $7,651,780 | $(20,000,969) |
| Add: |  |  |  |  |
| Depreciation of real estate | 12,938,956 | 10,556,270 | 35,420,113 | 29,455,038 |
| Amortization of real estate related intangible assets | 4,776,068 | 3,469,777 | 12,722,904 | 7,473,006 |
| Depreciation and amortization of real estate and intangible assets from unconsolidated entities | 411,257 | 256,233 | 1,069,986 | 487,229 |
| Deduct: |  |  |  |  |
| Gain on deconsolidation | — | — | — | (169,533) |
| Gain on sale of real estate | — | — | — | (178,631) |
| Gain on equity interests upon acquisition (1) | — | — | (16,101,237) | — |
| Adjustment for noncontrolling interests (2) | (1,973,133) | (1,545,084) | (3,514,091) | (4,162,008) |
| FFO (attributable to common stockholders) | **14,882,941** | **10,526,075** | **37,249,455** | **12,904,132** |
| Other Adjustments: |  |  |  |  |
| Intangible amortization expense - contracts (3) | 73,866 | 240,959 | 499,887 | 1,150,958 |
| Acquisition expenses (4) | 77,813 | 211,985 | 780,684 | 548,083 |
| Acquisition expenses and foreign currency losses, net from unconsolidated entities | 70,634 | 27,767 | 122,590 | 135,155 |
| Casualty loss due to hurricane | 350,000 | — | 350,000 | — |
| Contingent earnout adjustment (5) | 200,626 | 700,000 | 1,514,447 | 3,219,744 |
| Write-off of equity interest and preexisting relationships upon acquisition of control | — | — | 2,049,682 | 8,389,573 |
| Accretion of fair market value of secured debt | 3,230 | (29,228) | (38,968) | (92,344) |
| Net loss on extinguishment of debt (6) | — | — | 2,393,475 | 2,444,788 |
| Foreign currency and interest rate derivative (gains) losses, net (7) | (808,077) | 536,428 | (731,805) | 110,879 |
| Adjustment of deferred tax liabilities (3) | (116,213) | (290,942) | (915,336) | (2,220,688) |
| Offering related expenses (8) | 95,243 | — | 1,483,003 | — |
| Adjustment for noncontrolling interests (2) | 30,953 | (151,463) | (845,727) | (1,586,543) |
| FFO, as adjusted (attributable to common stockholders) | **$14,861,016** | **$11,771,581** | **$43,911,387** | **$25,003,737** |

77

The following is a reconciliation of FFO and FFO, as adjusted (attributable to common stockholders), to FFO and FFO, as adjusted (attributable to common stockholders and OP Unit holders), for each of the periods presented below:

|  | Three Months Ended September 30, 2022 | Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 |
| --- | ---: | ---: | ---: | ---: |
| FFO (attributable to common stockholders) | 14,882,941 | 10,526,075 | 37,249,455 | 12,904,132 |
| Net income (loss) attributable to the noncontrolling interests | 128,223 | 119,678 | 2,290,186 | (1,903,408) |
| Adjustment for noncontrolling interests(2) | 1,973,133 | 1,545,084 | 3,514,091 | 4,162,008 |
| FFO (attributable to common stockholders and OP unit holders) | **$16,984,297** | **$12,190,837** | **$43,053,732** | **$15,162,732** |
| **FFO, as adjusted (attributable to common stockholders and OP unit holders) Calculation:** |  |  |  |  |
| FFO, as adjusted (attributable to common stockholders) | $14,861,016 | $11,771,581 | $43,911,387 | $25,003,737 |
| Net income (loss) attributable to the noncontrolling interests | 128,223 | 119,678 | 2,290,186 | (1,903,408) |
| Adjustment for noncontrolling interests(2) | 1,942,180 | 1,696,547 | 4,359,818 | 5,748,551 |
| **FFO, adjusted (attributable to common stockholders and OP unit holders)** | **$16,931,419** | **$13,587,806** | **$50,561,391** | **$28,848,880** |

(1) This gain relates to recording the fair value of our preexisting equity interests in SSGT II as a result of our acquisition of control in the SSGT II Merger.

(2) This represents the portion of the above stated adjustments in the calculations of FFO and FFO, as adjusted, that are attributable to our noncontrolling interests.

(3) These items represent the amortization, accretion, or adjustment of intangible assets or deferred tax liabilities.

(4) This represents acquisition expenses associated with investments in real estate that were incurred prior to the acquisitions becoming probable and therefore not capitalized in accordance with our capitalization policy.

(5) The contingent earnout adjustment represents the adjustment to the fair value during the period of the Class A-2 Units issued in connection with the self administration transaction.

(6) The net loss associated with the extinguishment of debt includes prepayment penalties, defeasance costs, the write-off of unamortized deferred financing fees, and other fees incurred.

(7) This represents the mark-to-market adjustment for our derivative instruments not designated for hedge accounting and the ineffective portion of the change in fair value of derivatives recognized in earnings, as well as changes in foreign currency related to our foreign equity investments not classified as long term.

(8) Such costs relate to our filing of an S-11 registration statement and our pursuit of a potential offering of our common stock. As this item is non-recurring and not a primary driver in our decision-making process, FFO is adjusted for its effect to arrive at FFO, as adjusted, as a means of determining a comparable sustainable operating performance metric.

### Cash Flows

A comparison of cash flows for operating, investing and financing activities for the nine months ended September 30, 2022 and 2021 is as follows:

| Net cash flow provided by (used in): | Nine Months Ended September 30, 2022 | September 30, 2021 | Change |
| --- | ---: | ---: | ---: |
| Operating activities | $69,774,065 | $42,727,251 | $27,046,814 |
| Investing activities | (173,524,492) | (101,369,312) | (72,155,180) |
| Financing activities | 110,385,196 | 15,852,418 | 94,532,778 |

Cash flows provided by operating activities for the nine months ended September 30, 2022 and 2021 were approximately $69.8 million and $42.7 million, respectively, an increase of approximately $27.0 million. The increase in cash provided by our operating activities is primarily the result of an increase in net income when excluding the impact of non-cash items included in the determination of net income, which resulted in an increase in cash provided by operating activities of approximately $21.4 million, as well as an improvement of approximately $5.6 million resulting from changes in working capital accounts.

Cash flows used in investing activities for the nine months ended September 30, 2022 and 2021 were approximately $173.5 million and $101.4 million, respectively, an increase in the use of cash of approximately $72.2 million. The increase in cash used in investing activities primarily relates to funding the SSGT II Merger and four other property acquisitions, collectively representing cash outflows of approximately $138.0 million during the nine months ended September 30, 2022, compared to approximately $93.6 million of cash outflows during the nine months ended September 30, 2021 used to complete the SST IV Merger and one other property acquisition. Additionally, during the nine months ended September 30, 2022, we invested $18.2 million of cash in SST VI Mezzanine Loan debt, compared to a receipt of $13.5 million in cash during the same period of the prior year related to the redemption of our investment in SSGT II preferred equity.

Cash flows provided by financing activities for the nine months ended September 30, 2022 and 2021 were approximately $110.4 million and $15.9 million, respectively, a change of approximately $94.5 million. The change in financing activities is primarily attributable to the effect of debt borrowings net of paydowns of approximately $166.9 million during the nine months ended September 30, 2022 compared to the approximately $54.3 million during the nine months ended September 30, 2021; offsetting such net increase in cash flows from financing activities was an increase in cash distributions paid to common stockholders, as there were more shares outstanding, and due to the cessation of DRP.

### Liquidity and Capital Resources

### Short-Term Liquidity and Capital Resources

We generally expect that we will meet our short-term liquidity requirements from the combination of existing cash balances and net cash provided from property operations and the Managed REIT Platform and further supported by our Credit Facility. Alternatively, we may issue additional secured or unsecured financing from banks or other lenders, or we may enter into various other forms of financing.

Volatility in the debt and equity markets and continued and/or further impact of COVID-19, inflation and other economic events will depend on future developments, which are highly uncertain. While we do not expect such events to have a material impact upon our liquidity in the short-term, continued uncertainty or deterioration in the debt and equity markets over an extended period of time could potentially impact our liquidity over the long-term. Additionally, our Credit Facility contains a borrowing base requirement, which is impacted by treasury rates. Increases to treasury rates could negatively impact our borrowing base calculation and otherwise limit our ability to borrow pursuant to the Credit Facility.

### Distribution Policy and Distributions

#### Preferred Stock Dividends

The shares of Series A Convertible Preferred Stock rank senior to all other shares of our capital stock, including our common stock, with respect to rights to receive dividends and to participate in distributions or payments upon any voluntary or involuntary liquidation, dissolution or winding up of the Company. Dividends payable on each share of Series A Convertible Preferred Stock will initially be equal to a rate of 6.25% per annum, which accrues daily but is payable quarterly in arrears. If the Series A Convertible Preferred Stock has not been redeemed on or prior to the fifth anniversary date of the Initial Closing, the dividend rate will increase an additional 0.75% per annum each year thereafter to a maximum of 9.0% per annum until the tenth anniversary of the Initial Closing, at which time the dividend rate shall increase 0.75% per annum each year thereafter until the Series A Convertible Preferred Stock is either converted or repurchased in full.

#### Common Stock Distributions

On September 20, 2022, our board of directors declared a distribution rate for the month of October 2022 of approximately $0.00164 per day per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on each day of the period commencing on October 1, 2022 and ending October 31, 2022. Such distributions payable to each stockholder of record during a month will be paid the following month.

On October 25, 2022, our board of directors declared a distribution rate for the month of November 2022 of approximately $0.00164 per day per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on each day of the period commencing on November 1, 2022 and ending November 30, 2022. Such distributions payable to each stockholder of record during a month will be paid the following month.

#### Background and History of Common Stock Distributions

Since substantially all of our operations are performed indirectly through our Operating Partnership, our ability to pay distributions depends in large part on our Operating Partnership’s ability to pay distributions to its partners, including to us. In the event we do not have enough cash from operations to fund cash distributions, we may borrow, issue additional securities or sell assets in order to fund the distributions. The terms of the Series A Convertible Preferred Stock place certain restrictions on our ability to pay distributions to our common stockholders. In general, we are prohibited from paying distributions to our common stockholders other than regular cash dividends on a basis consistent with past practice and dividends payable in shares of common stock in connection with an initial listing of such shares. Accordingly, we are presently only permitted to pay cash distributions, which may be reinvested in stock pursuant to our DRP, unless otherwise approved by the holder of the Series A Convertible Preferred Stock. Absent the foregoing restrictions, our charter allows our board of directors to authorize payments to stockholders in cash or other assets of the Company or in stock, including in stock of one class payable to holders of stock of another class.

We may not be able to pay distributions from our cash flows from operations, in which case distributions may be paid in part from debt or other financing sources.

Distributions are paid to our common stockholders based on the record date selected by our board of directors. Such distributions are based on daily declaration and record dates. We expect to continue to regularly pay distributions unless our results of operations, our general financial condition, general economic conditions, or other factors inhibit us from doing so. Distributions are authorized at the discretion of our board of directors, which are directed, in substantial part, by its obligation to cause us to comply with the REIT requirements of the Code. Absent the restrictions noted above, our board of directors may increase, decrease or eliminate the distribution rate that is being paid on our common stock at any time. Distributions are made on all classes of our common stock at the same time. The funds that are available for distribution may be affected by a number of factors, including the following:

- our operating and interest expenses;
- our ability to keep our properties occupied;
- our ability to maintain or increase rental rates;
- construction defects or capital improvements;
- capital expenditures and reserves for such expenditures;
- the issuance of additional shares;
- financings and refinancings; and
- dividends with respect to the outstanding shares of our Series A Convertible Preferred Stock.

The following shows our distributions paid and the sources of such distributions for the respective periods presented:

|  | Nine Months Ended September 30, 2022 |  | Nine Months Ended September 30, 2021 |  |
| --- | ---: | ---: | ---: | ---: |
| Distributions paid in cash — common stockholders | $34,911,540 |  | $18,996,252 |  |
| Distributions paid in cash — Operating Partnership unitholders | 5,264,528 |  | 4,542,828 |  |
| Distributions paid in cash — preferred stockholders | 9,349,315 |  | 9,127,250 |  |
| Distributions reinvested | 5,243,398 |  | 14,237,983 |  |
| Total distributions | $54,768,781 |  | $46,904,313 |  |
| Source of distributions |  |  |  |  |
| Cash flows provided by operations | $54,768,781 | 100% | $42,727,251 | 91% |
| Cash on hand | — | 0% | — | 0% |
| Offering proceeds from distribution reinvestment plan | — | 0% | 4,177,062 | 9% |
| Total sources | $54,768,781 | 100% | $46,904,313 | 100% |

From our inception through September 30, 2022, we paid cumulative distributions of approximately $301 million, of which approximately $246 million were paid to common stockholders, as compared to cumulative FFO of approximately $56 million.

For the nine months ended September 30, 2022, we paid distributions of approximately $54.8 million, of which approximately $40.1 million were paid to common stockholders, as compared to FFO (attributable to common stockholders) of approximately $37.2 million, which reflects debt defeasance costs of approximately $2.4 million, a write-off of equity interest and preexisting relationships of approximately $2.0 million, and acquisition related expenses of approximately $0.8 million.

For the nine months ended September 30, 2021, we paid distributions of approximately $46.9 million, of which approximately $33.2 million were paid to common stockholders, as compared to FFO (attributable to common stockholders) of approximately $12.9 million, which reflects a write-off of equity interest and preexisting relationships of approximately $8.4 million and acquisition related expenses of approximately $0.5 million.

The payment of distributions from sources other than FFO may reduce the amount of proceeds available for investment and operations or cause us to incur additional interest expense as a result of borrowed funds.

We must distribute to our stockholders at least 90% of our taxable income each year in order to meet the requirements for being treated as a REIT under the Code. Our directors may authorize distributions in excess of this percentage as they deem appropriate. Because we may receive income from interest or rents at various times during our fiscal year, distributions may not reflect our income earned in that particular distribution period, but may be made in anticipation of cash flow that we expect to receive during a later period and may be made in advance of actual receipt of funds in an attempt to make distributions relatively uniform. To allow for such differences in timing between the receipt of income and the payment of expenses, and the effect of required debt payments, among other things, we could be required to borrow funds from third parties on a short-term basis, issue new securities, or sell assets to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT. We are not prohibited from undertaking such activities by our charter, bylaws or investment policies, and we may use an unlimited amount from any source to pay our distributions. These methods of obtaining funding could affect future distributions by increasing operating costs and decreasing available cash, which could reduce the value of our stockholders’ investment in our shares. In addition, such distributions may constitute a return of investors’ capital.

We may not be able to pay distributions from our cash flows from operations, in which case distributions may be paid in part from available funds or from debt financing and pursuant to our distribution reinvestment plan. The payment of distributions from sources other than cash flows from operations may reduce the amount of proceeds available for investment and operations or cause us to incur additional interest expense as a result of borrowed funds.

Over the long-term, we expect that a greater percentage of our distributions will be paid from cash flows from operations. However, our operating performance cannot be accurately predicted and may deteriorate in the future due to numerous factors, including our ability to raise and invest capital at favorable yields, the financial performance of our investments in the current real estate and financial environment and the types and mix of investments in our portfolio. As a result, future distributions declared and paid may exceed cash flow from operations.

### Indebtedness

As of September 30, 2022, our net debt was approximately $1,039 million, which included approximately $443 million in fixed rate debt and approximately $600 million in variable rate debt, less $0.1 million in debt discount and approximately $4.7 million in net debt issuance costs. See Note 5 – Debt, of the Notes to the Consolidated Financial Statements contained in this report for more information about our indebtedness.

Additionally, we are party to a master mortgage commitment agreement (the "SmartCentres Financing") with SmartCentres Storage Finance LP (the "SmartCentres Lender"). The SmartCentres Lender is an affiliate of SmartCentres Real Estate Investment Trust, an unaffiliated third party ("SmartCentres"), that owns the other 50% of our unconsolidated real estate joint ventures located in the Greater Toronto Area of Canada. As of September 30, 2022, approximately $111.5 million Canadian Dollars ("CAD") was outstanding on the SmartCentres Financing. The proceeds of the SmartCentres Financing have been and will be used to finance the development and construction of the SmartCentres joint venture properties. See Note 4 – Investments in Unconsolidated Real Estate Ventures, of the Notes to the Consolidated Financial Statements contained in this report for additional information regarding the SmartCentres Financing.

### Long-Term Liquidity and Capital Resources

On a long-term basis, our principal demands for funds will be for potential property acquisitions, either directly or through entity interests, for the payment of operating expenses and distributions, to fund the growth of our Managed REITs through investment in loans, and/or advances, and for the payment of principal and interest on our outstanding indebtedness.

Long-term potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, issuance of equity instruments, undistributed funds from operations, and additional public or private offerings. To the extent we are not able to secure requisite financing in the form of a credit facility or other debt, we will be dependent upon proceeds from the issuance of equity securities and cash flows from operating activities in order to meet our long-term liquidity requirements and to fund our distributions.

Our material cash requirements from contractual and other obligations primarily relate to our debt obligations. The expected timing of those outstanding principal payments are shown in the table below. The information in this section should be read in conjunction with Note 5 – Debt, and Note 11 – Commitments and Contingencies, of the Notes to the Consolidated Financial Statements contained within this report.

The table below presents our principal payments on our debt due during the years ending December 31:

|  | Principal payments due during the years ending December 31: |
| --- | ---: |
| 2022 | $646,985 |
| 2023 | 2,639,402 |
| 2024 | 352,761,308 |
| 2025 | 2,869,187 |
| 2026 | 341,916,098 |
| 2027 and thereafter | 342,605,557 |
| Total payments | $1,043,438,537 |

As of September 30, 2022, pursuant to various contractual relationships, we are required to make other non-cancellable payments in the amounts of approximately $2.4 million, and $2.5 million during the years ending December 31, 2023 and 2024, respectively.

As of September 30, 2022, pursuant to the SST VI Mezzanine Loan, we were potentially required to fund an additional $20.0 million in debt to SST VI, at their option.

As of September 30, 2022 pursuant to the SSGT III Mezzanine Loan Facility we were potentially required to fund an additional $8.0 million in debt to SSGT III, at their option.

See Note 9 – Related Party Transactions, of the Notes to the Consolidated Financial Statements for more information about our obligations under these agreements.

For cash requirements related to potential acquisitions currently under contract, please see Note 3 – Real Estate Facilities of the Notes to the Consolidated Financial Statements.

### Subsequent Events

Please see Note 13 – Subsequent Events of the Notes to the Consolidated Financial Statements contained in this report.

### Seasonality

We believe that we will experience minor seasonal fluctuations in the occupancy levels of our facilities, which we believe will be slightly higher over the summer months due to increased moving activity.

## Market risk

As filed, 4,302 characters.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business plan, we expect that the primary market risk to which we will be exposed is interest rate risk and to a lesser extent, foreign currency risk. We may be exposed to the effects of interest rate changes primarily as a result of borrowings used to maintain liquidity and fund acquisition, expansion, and financing of our real estate investment portfolio and operations. Our interest rate risk management objectives will be to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve our objectives, we may borrow at fixed rates or variable rates. We may also enter into derivative financial instruments such as interest rate swaps and caps in order to mitigate our interest rate risk on a related financial instrument. We will not enter into derivative or interest rate transactions for speculative purposes.

As of September 30, 2022, our net debt was approximately $1,039 million, which included approximately $443 million in fixed rate debt and approximately $600 million in variable rate debt, less $0.1 million in debt discount and approximately $4.7 million in net debt issuance costs. As of December 31, 2021, our net debt was approximately $874 million, which included approximately $341 million in fixed rate debt, $537 million in variable rate debt and approximately $0.2 million in net debt premium less approximately $3.9 million in net debt issuance costs. Our debt instruments were entered into for other than trading purposes.

Changes in interest rates have different impacts on the fixed and variable debt. A change in interest rates on fixed rate debt impacts its fair value but has no impact on interest incurred or cash flows. A change in interest rates on variable debt could impact the interest incurred and cash flows and its fair value. If the underlying rate of the related index on our variable rate debt were to increase by 100 basis points, the increase in interest would decrease future earnings and cash flows by approximately $3.8 million annually.

Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

The following table summarizes annual debt maturities and average interest rates on our outstanding debt as of September 30, 2022:

|  | Year Ending December 31, 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Fixed rate debt | $646,985 | $2,639,402 | $2,734,895 | $2,869,187 | $91,916,098 | $342,605,557 | $443,412,124 |
| Average interest rate(1) | 4.43% | 4.43% | 4.43% | 4.43% | 4.49% | 4.51% |  |
| Variable rate debt | $— | $— | $350,026,413 | $— | $250,000,000 | $— | $600,026,413 |
| Average interest rate(1) | 4.64% | 4.64% | 4.61% | 4.58% | 4.58% | - |  |

(1) Interest expense for fixed rate debt was calculated based upon the contractual rate and the interest expense on variable rate debt was calculated based on the rate in effect on September 30, 2022, excluding the impact of interest rate derivatives. Debt denominated in foreign currency has been converted based on the rate in effect as of September 30, 2022.

Currently, our only foreign exchange rate risk comes from our Canadian properties and the Canadian Dollar (“CAD”). Our existing foreign currency hedges mitigate most of our foreign currency exposure of our net CAD denominated investments; however, we generate all of our revenues and expend essentially all of our operating expenses and third party debt service costs related to our Canadian Properties in CAD. As a result of fluctuations in currency exchange, our cash flows and results of operations could be affected.

## Controls and procedures

As filed, 1,361 characters.

### Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

### Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 7,318 characters.

The following should be read in conjunction with the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021. With the exception of the risk factors set forth below, there have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021.

***We have incurred and intend to continue to incur, mortgage indebtedness and other borrowings, which may increase our business risks.***

We have placed, and intend to continue to place, permanent financing on our properties and we may obtain additional credit facilities or other similar financing arrangements in order to acquire additional properties. We are a party to various debt arrangements, including our Credit Facility with KeyBank, National Association of up to $700 million, consisting of a term loan of up to $250 million and a revolver of up to $450 million. As of September 30, 2022, approximately $338 million was borrowed of the $450 million current capacity revolver and all $250 million was borrowed of the $250 million current capacity of the term loan. The Credit Facility may be increased by an additional $350 million, for an aggregate amount of up to $1.05 billion, subject to certain conditions. We are also party to a note purchase agreement, whereby we issued to the purchasers named therein an aggregate of $150 million of secured notes payable. The notes are subject to a series of financial and other covenants substantially similar to the Credit Facility.

The notes are pari passu with the Credit Facility and share in the existing pool of collateral. Both the notes and Credit Facility are currently secured by a pledge of equity interests, but can become unsecured at our election and upon the achievement of certain security interest termination conditions. We may also decide to later further leverage our properties. We may incur mortgage debt and pledge all or some of our real properties as security for that debt to obtain funds to acquire real properties. If we default on our secured indebtedness, the lender may foreclose and we could lose our entire investment in the properties securing such loan, which could adversely affect distributions to our stockholders. To the extent lenders require us to cross-collateralize our properties, or our loan agreements contain cross-default provisions, a default under a single loan agreement could subject multiple properties to foreclosure.

In addition, we may borrow if we need funds to pay a desired distribution rate to our stockholders. We may also borrow if we deem it necessary or advisable to assure that we maintain our qualification as a REIT for federal income tax purposes. If there is a shortfall between the cash flow from our properties and the cash flow needed to service mortgage debt, then the amount available for distribution to our stockholders may be reduced.

***If we or the other parties to our loans or secured notes payable, as applicable, breach covenants thereunder, such loan or loans or secured notes payable could be deemed in default, which could accelerate our repayment date and materially adversely affect the value of our stockholders’ investment in us.***

Certain of our loans are secured by first mortgages on some of our properties, and other loans and our secured notes payable are secured by pledges of equity interests in the entities that own certain of our properties. Such loans and our secured notes payable also impose a number of financial or other covenant requirements on us. If we, or the other parties to these loans or notes, should breach certain of those financial or other covenant requirements, or otherwise default on such loans or notes, then the respective lenders or noteholders, as the case may be, could accelerate our repayment dates. If we do not have sufficient cash to repay the applicable loan or note at that time, such lenders or noteholder could foreclose on the property securing the applicable loan or note or take control of the pledged collateral, as the case may be. Such foreclosure could result in a material loss for us and would adversely affect the value of our stockholders’ investment in us. In addition, certain of our loans are cross-collateralized and cross-defaulted with each other such that a default under one loan would cause a default under the other loans.

***We recently migrated to a new property management software platform, and if this new platform proves ineffective or we experience difficulties with the recent migration, we may experience disruptions to our business that may adversely affect our results from operations.***

We have completed our migration to a new property management software platform, which was recently developed by an established third party software company that focuses on the self storage space and provides such software to us and other storage operators. This new version of their software has a limited operating history. We may experience disruptions to our operations associated with the new platform. Such disruptions could include software defects or errors, system failures, technical or integration issues with specific features of the platform, technical or integration issues with other proprietary or third party technologies currently used in our business, or human error associated with the implementation of the platform, any of which could adversely affect our operations or financial reporting. Additionally, we could experience disruptions associated with capacity constraints as the new platform is utilized across our business. In the event such disruptions persist, or our personnel are unable to adequately respond to such disruptions, the ability of our employees to perform their duties could suffer, which may have an adverse effect on our results from operations.

***Our future results may suffer as a result of the effect of recent affiliated mergers, acquisitions and other strategic transactions.***

We consummated the SSGT Merger in January 2019, the SST IV Merger in March 2021 and the SSGT II Merger in June 2022. We will likely continue to expand our operations through additional mergers, acquisitions and other strategic transactions, including such transactions with affiliated real estate programs or Managed REITs, some of which may involve complex challenges. Our future success will depend, in part, upon the merger consideration negotiated by our special committees appointed by our board of directors in connection with these affiliated mergers, our ability to manage our expansion opportunities, integrate new operations into our existing business in an efficient and timely manner, successfully monitoring our operations, costs and service quality, and maintaining other necessary internal controls. There can be no assurance that our expansion or acquisition opportunities will be successful, or that we will realize our expected operating efficiencies, cost savings, revenue enhancements, synergies, or other benefits. Moreover, we assumed the liabilities of SSGT, SST IV and SSGT II in connection with the respective mergers. These liabilities could have a material adverse effect on our business to the extent we have not identified such liabilities or have underestimated the amount of such liabilities.

Filed Nov 10, 2022.
Source: SEC EDGAR, the filing index for accession 0000950170-22-024314. Last ingested by Listed: Oct 24, 2026, 15:14 ET. No prices; not investment advice.