Business Context and Reporting Period
SmartStop Self Storage REIT, Inc. filed this Form 8-K on December 6, 2022, to disclose the determination of its Estimated Per Share Net Asset Value (NAV). The valuation was calculated as of September 30, 2022, and approved by the Board of Directors to assist broker-dealers in meeting FINRA Rule 2231 obligations for customer account statements.
Key Financial Metrics
The filing details the estimated asset and liability values used to derive the NAV, rather than reporting GAAP revenue or earnings for a specific period.
| Metric | As of 9/30/2022 | As of 6/30/2021 |
|---|---|---|
| Total Assets | $3,009,939,984 | $2,629,069,918 |
| Real Estate Properties | $2,713,719,123 | $2,447,983,782 |
| Total Liabilities | $1,045,914,649 | $906,758,939 |
| Debt | $1,043,438,537 | $852,742,137 |
| Cash and Restricted Cash | $49,867,101 | $33,857,213 |
| Net Asset Value (Common) | $1,964,025,335 | $1,722,310,979 |
| Estimated Value Per Share (Class A & T) | $15.21 | $15.08 |
Material Changes Versus Prior Period
- Asset Growth: Total assets increased by approximately $381 million from June 30, 2021, to September 30, 2022. Real estate property values rose by roughly $266 million.
- Debt Increase: Total debt increased by approximately $191 million, reflecting portfolio expansion or refinancing activities.
- NAV Appreciation: The estimated value per share increased from $15.08 to $15.21, representing a mid-point increase of approximately 0.86%.
- Managed REIT Platform: The estimated value of the Managed REIT Platform grew from $86.3 million to $124.8 million.
Guidance, Outlook, and Valuation Methodology
The filing does not provide forward-looking financial guidance regarding revenue or earnings. Instead, it outlines the methodology for the NAV calculation performed by independent valuation firm Robert A. Stanger & Co., Inc. ("Stanger").
- Valuation Range: Stanger determined an estimated value range per share of $14.15 to $16.38. The Board adopted the mid-point of $15.21.
- Real Estate Valuation: Stanger used the income approach (direct capitalization) for 156 wholly-owned properties and six joint venture properties. The weighted average direct capitalization rate was 4.95% (range 4.25% to 5.75%).
- Debt Valuation: Debt was valued using a discounted cash flow analysis with a weighted-average discount rate of approximately 5.39%.
- Sensitivity Analysis: A 25 basis point increase in capitalization rates would lower the NAV to $14.15, while a 25 basis point decrease would raise it to $16.38.
- Limitations: The Estimated Per Share NAV is not audited, does not represent GAAP fair value, and does not reflect liquidation value or potential disposition costs.
Important Facts for Investor Verification
- Non-GAAP Measure: The $15.21 per share value is an estimate for regulatory reporting (FINRA Rule 2231) and is not a guarantee of resale price or liquidation proceeds.
- Valuation Assumptions: The NAV is highly sensitive to capitalization rates and interest rate assumptions; small changes in these inputs significantly alter the per-share value.
- Share Count: The calculation is based on 129,109,448 fully diluted shares, including the assumed conversion of Series A Preferred Stock.
- Independent Review: The valuation was overseen by a committee of independent directors and performed by Stanger, who has previously provided financial advisory services to the Company.
- Future Updates: The Company anticipates publishing a new estimated share value on an annual basis.