SmartStop Self Storage REIT Inc

Previous wording

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 Canada. Based on the Inside Self Storage Top-Operators List ranking for 2023, and after accounting for recent market transactions, we are the 10th largest owner and operator of self storage properties in the United States based on number of properties, units, and rentable square footage. As of March 31, 2024, our wholly-owned portfolio consisted of 154 operating self storage properties diversified across 19 states and Canada comprising approximately 104,000 units and 11.9 million net rentable square feet. Additionally, we owned a 50% equity interest in eleven unconsolidated real estate ventures located in Canada, which included nine operating self storage properties. 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 REIT (“SSGT III” and together with SST VI, the “Managed REITs”), and manage one additional self storage property, all of which pay us fees to manage these programs and manage their 32 operating self storage properties (as of March 31, 2024).

Current wording

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 Canada. Based on the Inside Self Storage Top-Operators List ranking for 2023, and after accounting for recent market transactions, we are the 10th largest owner and operator of self storage properties in the United States based on number of properties, units, and rentable square footage. As of June 30, 2024, our wholly-owned portfolio consisted of 155 operating self storage properties diversified across 19 states and Canada comprising approximately 104,300 units and 12.0 million net rentable square feet. Additionally, we owned a 50% equity interest in eleven unconsolidated real estate ventures located in Canada, which included ten operating self storage properties. 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 REIT (“SSGT III” and together with SST VI and any future sponsored REITs, the “Managed REITs”), and manage one additional self storage property, all of which pay us fees to manage these programs and manage their 32 operating self storage properties (as of June 30, 2024).

Previous wording

Includes all rentable units, consisting of storage units and parking (approximately 3,350 units).

Current wording

Includes all rentable units, consisting of storage units and parking (approximately 3,450 units).

Previous wording

Includes all rentable square feet, consisting of storage units and parking (approximately 1,017,000 square feet).

Current wording

Includes all rentable square feet, consisting of storage units and parking (approximately 1,042,000 square feet).

Previous wording

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 qualitative impairment assessment as of December 31 for goodwill; 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. No impairment charges were recognized during the three months ended March 31, 2024 and 2023.

Current wording

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 qualitative impairment assessment as of December 31 for goodwill; 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. No impairment charges were recognized during the six months ended June 30, 2024 and 2023.

Previous wording

We made an election under Section 856(c) of the Internal Revenue Code of 1986, as amended (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 U.S. 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 U.S. 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 wording

We made an election under Section 856(c) of 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 U.S. 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 U.S. 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.

Previous wording

Certain property operating expenses have experienced elevated pressures to date, namely property insurance, property taxes and payroll have seen above average increases, primarily due to inflation and natural disasters. We have experienced a year-over-year decrease in gross margins as a result for the full year 2023 and the first quarter of 2024.

Current wording

Certain property operating expenses have experienced elevated pressures to date, namely property insurance, property taxes and payroll have seen above average increases, primarily due to inflation and natural disasters. We have experienced a year-over-year decrease in gross margins as a result for the full year 2023 and the first half of 2024.

Previous wording

As of March 31, 2024 and 2023, we wholly-owned 154 and 153 operating self storage facilities, respectively. Our operating results for the three months ended March 31, 2024 included full quarter results for 154 self storage facilities. Our operating results for the three months ended March 31, 2023 included full quarter results for 153 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.

Current wording

As of June 30, 2024 and 2023, we wholly-owned 155 and 153 operating self storage facilities, respectively. Our operating results for the three months ended June 30, 2024 included full quarter results for 154 self storage facilities. Our operating results for the three months ended June 30, 2023 included full quarter results for 153 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.

Previous wording

Managed REIT Platform revenues for the three months ended March 31, 2024 and 2023 were approximately $2.7 million and $2.3 million, respectively. The increase in Managed REIT Platform revenues of approximately $0.5 million is primarily attributable to increased property management and asset management fees which are the result of increased assets under management. Such increased revenues were partially offset by reduced acquisition fees, and the effect of sponsor funding reductions recorded. We expect Managed REIT Platform Revenue to fluctuate commensurate with our Managed REITs' increase in operations and assets under management, as well as reductions to such revenue in connection with the Sponsor Funding Agreement as SST VI continues to sell shares in its public offering.

Current wording

Managed REIT Platform revenues for the three months ended June 30, 2024 and 2023 were approximately $2.7 million and $4.3 million, respectively. The decrease in Managed REIT Platform revenues of approximately $1.7 million is primarily attributable to decreased acquisition fees as compared to the same period in the prior year. We earned approximately $1.9 million in acquisition fees from SST VI in June 2023 as a result of a multi-property portfolio acquisition. Managed REIT Platform revenues were reduced to a lesser extent as compared to the prior year by the effect of sponsor funding reductions recorded. Such decrease in Managed REIT Platform revenues was partially offset by increased Tenant Protection Program fees, property management and asset management fees as a result of increased assets under management. We expect Managed REIT Platform Revenue to fluctuate commensurate with our Managed REITs' increase in operations and assets under management, as well as reductions to such revenue in connection with the Sponsor Funding Agreement as SST VI continues to sell shares in its public offering.

Previous wording

Reimbursable costs from Managed REITs for the three months ended March 31, 2024 and 2023 were approximately $1.6 million and $1.4 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 the Managed REITs, pursuant to our related contracts with the Managed REITs. The increase in reimbursable costs from Managed REITs is primarily related to the growth in the Managed REITs' assets under management. We expect reimbursable costs from Managed REITs to increase in future periods as a result of additional acquisitions by our Managed REITs. 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.

Current wording

Reimbursable costs from Managed REITs for the three months ended June 30, 2024 and 2023 were approximately $1.5 million and $1.4 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 the Managed REITs, pursuant to our related contracts with the Managed REITs. The increase in reimbursable costs from Managed REITs is primarily related to the growth in the Managed REITs' assets under management. We expect reimbursable costs from Managed REITs to increase in future periods as a result of additional acquisitions by our Managed REITs. 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.

Previous wording

Property operating expenses for the three months ended March 31, 2024 and 2023 were approximately $17.4 million (or 33% of self storage revenue) and $16.5 million (or 31% of self storage revenue), respectively. Property operating expenses include the costs to operate our facilities including compensation related expenses, utilities, insurance, real estate taxes, and property related marketing. The increase in property operating expenses of approximately $0.9 million is largely attributable to increased compensation related expenses, property insurance costs, and repairs and maintenance expenses. We expect property operating expenses to fluctuate commensurate with inflationary pressures and any future acquisitions.

Current wording

Property operating expenses for the three months ended June 30, 2024 and 2023 were approximately $17.7 million (or 32% of self storage revenue) and $16.5 million (or 31% of self storage revenue), respectively. Property operating expenses include the costs to operate our facilities including compensation related expenses, utilities, insurance, real estate taxes, and property related marketing. The increase in property operating expenses of approximately $1.2 million is largely attributable to increased property insurance costs, property taxes, advertising expenses and repairs and maintenance expenses. We expect property operating expenses to fluctuate commensurate with inflationary pressures and any future acquisitions.

Previous wording

Reimbursable costs from Managed REITs for the three months ended March 31, 2024 and 2023 were approximately $1.6 million and $1.4 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 the Managed REITs, pursuant to our related contracts with the Managed REITs. We expect reimbursable costs from the Managed REITs to fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.

Current wording

Reimbursable costs from Managed REITs for the three months ended June 30, 2024 and 2023 were approximately $1.5 million and $1.4 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 the Managed REITs, pursuant to our related contracts with the Managed REITs. The increase in reimbursable costs from Managed REITs is primarily related to the growth in the Managed REITs' assets under management. We expect reimbursable costs from the Managed REITs to fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.

Previous wording

Depreciation and amortization expenses for the three months ended March 31, 2024 and 2023 were approximately $13.7 million and $15.2 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 decrease in depreciation and amortization expense is primarily attributable to the intangible amortization expense related to our in place lease intangible assets recorded in connection with the SSGT II Merger which became fully amortized in November 2023.

Current wording

Depreciation and amortization expenses for the three months ended June 30, 2024 and 2023 were approximately $13.8 million and $15.2 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 decrease in depreciation and amortization expense is primarily attributable to the intangible amortization expense related to our in place lease intangible assets recorded in connection with the SSGT II Merger which became fully amortized in November 2023.

Previous wording

Acquisition expenses for the three months ended March 31, 2024 and 2023 were approximately $71,000 and $31,000, respectively. These acquisition expenses were incurred prior to acquisitions becoming probable in accordance with our capitalization policy.

Current wording

Acquisition expenses for the three months ended June 30, 2024 and 2023 were approximately $12,000 and $11,000, respectively. These acquisition expenses were incurred prior to acquisitions becoming probable in accordance with our capitalization policy.

Previous wording

Losses from our equity method investments in the JV Properties for the three months ended March 31, 2024 and 2023 were approximately $0.3 million and $0.4 million, respectively. Losses from our equity method investments in the JV Properties consists of our allocation of earnings and losses from our joint ventures with SmartCentres.

Current wording

Losses from our equity method investments in the JV Properties for the three months ended June 30, 2024 and 2023 were approximately $0.4 million and $0.5 million, respectively, driven by improved performance of the underlying properties. Losses from our equity method investments in the JV Properties consists of our allocation of earnings and losses from our joint ventures with SmartCentres.

Previous wording

Losses from our equity method investments in the Managed REITs for the three months ended March 31, 2024 and 2023 were approximately $0.5 million and $0.2 million, respectively. Losses from our equity method investments in the Managed REITs consists primarily of our allocation of earnings and losses from our investments in SST VI and SSGT III.

Current wording

Losses from our equity method investments in the Managed REITs for the three months ended June 30, 2024 and 2023 were approximately $0.3 million and $0.2 million, respectively. Losses from our equity method investments in the Managed REITs consists primarily of our allocation of earnings and losses from our investments in SST VI and SSGT III.

Previous wording

Other, net for the three months ended March 31, 2024 and 2023 was approximately $0.5 million and $0.8 million of income, respectively. Other, net consists primarily of certain state tax expenses, foreign currency fluctuations, changes in value related to our foreign currency hedges not designated for hedge accounting, and interest income from loans issued to our Managed REITs, and other miscellaneous items. The decrease in income of approximately $0.3 million is primarily due to less financing fee income and interest income from loans to the Managed REITs of approximately $0.3 million, along with favorable foreign currency related adjustments as compared to the same period in the prior year. These changes were partially offset by increased franchise and other tax related expenses during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Other, net for the three months ended June 30, 2024 and 2023 was approximately $0.1 million of expense and $1.2 million of income, respectively. Other, net consists primarily of certain state tax expenses, foreign currency fluctuations, changes in value related to our foreign currency and interest rate hedges not designated for hedge accounting, and interest income from loans issued to our Managed REITs, and other miscellaneous items. The unfavorable variance of approximately $1.3 million is primarily due to unfavorable fair value adjustments associated with our SOFR interest rate hedges not designated for hedge accounting during the three months ended June 30, 2024, and to a lesser extent, less financing fee revenue as compared to the same period in the prior year. These changes were partially offset by increased interest income from loans issued to our Managed REITs.

Previous wording

Interest expense for the three months ended March 31, 2024 and 2023 was approximately $16.6 million and $14.7 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 $1.8 million is primarily attributable to an increase in rates on our variable rate debt. We expect interest expense to fluctuate in future periods commensurate with our future debt levels and fluctuations in interest rates.

Current wording

Interest expense for the three months ended June 30, 2024 and 2023 was approximately $17.3 million and $14.9 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 derivatives designated for hedge accounting. The increase of approximately $2.4 million is primarily attributable to an increase in net rates on our variable rate debt, inclusive of the impact of interest rate hedges, as applicable as well as increased borrowings compared to the same period in the prior year. The increase in net rates is primarily attributable to a beneficial interest rate hedge which capped SOFR at 1.75% for $125 million of our debt during the three months ended June 30, 2023, which expired on June 30, 2023, and did not provide any benefit during the three months ended June 30, 2024. We expect interest expense to fluctuate in future periods commensurate with our future debt levels and fluctuations in interest rates.

Previous wording

Income tax expense for the three months ended March 31, 2024 and 2023 was approximately $0.3 million and $0.3 million, respectively. Income tax consists primarily of state, federal, and Canadian income tax. We expect our income tax expense to increase in future periods primarily related to our operations in Canada.

Current wording

Income tax expense for the three months ended June 30, 2024 and 2023 was approximately $0.3 million of expense and $0.1 million of benefit, respectively. Income tax consists primarily of state, federal, and Canadian income tax. We expect our income tax expense to increase in future periods primarily related to our operations in Canada.

Previous wording

The following table sets forth operating data for our same-store facilities (stabilized and comparable properties that have been included in the consolidated results of operations since January 1, 2023, excluding four other properties) for the three months ended March 31, 2024 and 2023. 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.

Current wording

We consider the data below to be meaningful as this allows for the comparison of results without the effects of acquisition, lease up, or development activity. The following table sets forth operating data for our same-store facilities (stabilized and comparable properties that have been included in the consolidated results of operations since January 1, 2023, excluding four other properties) for the three months ended June 30, 2024 and 2023 (in thousands unless otherwise noted).

Previous wording

Of the total rentable square feet, parking represented approximately 1,017,000 square feet as of March 31, 2024 and 2023. On a same-store basis, for the same periods, parking represented approximately 989,000 square feet.

Current wording

Of the total rentable square feet, parking represented approximately 1,042,000 square feet as of June 30, 2024 and approximately 1,017,000 square feet as 2023, respectively. On a same-store basis, for the same periods, parking represented approximately 989,000 square feet. Amount not in thousands.

Previous wording

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.

Current wording

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. Amount not in thousands.

Previous wording

Our same-store revenue decreased by approximately $0.8 million, or approximately 1.7%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to lower annualized rent per occupied square foot of approximately 0.9%, as well as an approximately 0.4% decrease in average occupancy. The increase in property operating expenses is primarily attributable to compensation related expenses, property insurance, and repairs and maintenance.

Current wording

Our same-store revenue increased by approximately $0.6 million, or approximately 1.3%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due to higher annualized rent per occupied square foot of approximately 1.8%, partially offset by an approximately 1.1% decrease in average occupancy. The increase in property operating expenses is primarily attributable to property insurance, repairs and maintenance, advertising expense, and property taxes.

Previous wording

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:

Current wording

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 (in thousands):

Previous wording

(1) Included within ancillary operating revenue within our consolidated statements of operations, approximately $1.9 million and $1.9 million of Tenant Protection Program revenue was earned at same store facilities during the three months ended March 31, 2024 and 2023, respectively, with the remaining approximately $0.1 million and $0.1 million earned at non same-store facilities during the three months ended March 31, 2024 and 2023, respectively.

Current wording

(1) Included within ancillary operating revenue within our consolidated statements of operations, approximately $1.9 million and $1.8 million of Tenant Protection Program revenue was earned at same store facilities during the three months ended June 30, 2024 and 2023, respectively, with the remaining approximately $0.1 million and $0.1 million earned at non same-store facilities during the three months ended June 30, 2024 and 2023, respectively.

Previous wording

Total self storage related revenues for the three months ended March 31, 2024 and 2023 were approximately $52.7 million and $53.5 million, respectively. The decrease in total self storage revenues of approximately $0.8 million, or approximately 1.5%, is primarily attributable to a decrease in same-store revenues of approximately $0.8 million.

Current wording

Total self storage related revenues for the six months ended June 30, 2024 and 2023 were approximately $107.6 million and $107.3 million, respectively. The increase in total self storage revenues of approximately $0.3 million, or approximately 0.3%, is primarily attributable to an increase in non same-store revenues of approximately $0.4 million.

Previous wording

Managed REIT Platform expenses for the three months ended March 31, 2024 and 2023 were approximately $0.9 million and $0.5 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 10 – Related Party Transactions, of the notes to consolidated financial statements contained in this report). The increase in Managed REIT Platform Expenses is primarily related to growth in the Managed REITs' assets under management. We expect Managed REIT Platform expenses to fluctuate in future periods commensurate with our level of activity related to the Managed REITs.

Current wording

Managed REIT Platform expenses for the six months ended June 30, 2024 and 2023 were approximately $1.5 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 10 – Related Party Transactions, of the notes to consolidated financial statements contained in this report). The increase in Managed REIT Platform Expenses is primarily related to growth in the Managed REITs' assets under management. We expect Managed REIT Platform expenses to fluctuate in future periods commensurate with our level of activity related to the Managed REITs.

Previous wording

General and administrative expenses for the three months ended March 31, 2024 and 2023 were approximately $7.4 million and $6.5 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. During the three months ended March 31, 2024 and 2023, we recorded expenses of approximately $0.3 million and none, respectively, related to our filing of an amendment to our S-11 registration statement and related costs in pursuit of a potential offering of our common stock. The remaining increase in general and administrative expenses was primarily attributable to increased legal expenses, professional expenses, and compensation related costs incurred during the three months ended March 31, 2024. We expect general and administrative expenses to decrease as a percentage of total revenues over time.

Current wording

General and administrative expenses for the six months ended June 30, 2024 and 2023 were approximately $15.2 million and $13.7 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. During the six months ended June 30, 2024 and 2023, we recorded expenses of approximately $0.3 million and none, respectively, related to our filing of an amendment to our registration statement on Form S-11 and related costs in pursuit of a potential offering of our common stock. The remaining increase in general and administrative expenses was primarily attributable to increased legal expenses and compensation related costs incurred during the six months ended June 30, 2024. We expect general and administrative expenses to decrease as a percentage of total revenues over time.

Previous wording

Loss on debt extinguishment for the three months ended March 31, 2024 and 2023 was approximately $0.5 million, and none, respectively. Loss on debt extinguishment for the three months ended March 31, 2024 was related to certain unamortized debt issuance costs associated with the 2021 Credit Facility which were expensed in connection with the execution of the new 2024 Credit Facility. (See Note 5 – Debt, for additional information.)

Current wording

Loss on debt extinguishment for the six months ended June 30, 2024 and 2023 was approximately $0.5 million, and none, respectively. Loss on debt extinguishment for the six months ended June 30, 2024 was related to certain unamortized debt issuance costs associated with the 2021 Credit Facility which were expensed in connection with the execution of the new 2024 Credit Facility. (See Note 5 – Debt, for additional information.)

Previous wording

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

Current wording

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

Previous wording

(8)Our calculation of FFO, as adjusted was modified in the period ended March 31, 2024, to add back the amortization of debt issuance costs. Accordingly, the prior period has been presented here based on the current calculation, which differs from what was previously reported for such period. This modification was made to reflect what management believes is a more appropriate calculation in light of recently completed debt refinancings.

Current wording

(8)Our calculation of FFO, as adjusted was modified in the period ended June 30, 2024, to add back the amortization of debt issuance costs. Accordingly, the prior periods have been presented here based on the current calculation, which differs from what was previously reported for such periods. This modification was made to reflect what management believes is a more appropriate calculation in light of recently completed debt refinancings.

Previous wording

FFO, as adjusted declined compared to the same period in the prior year primarily as a result of the effects of increased interest expense on net income, and to a lesser extent, a reduction in property net operating income. The reduction was partially offset by increased fees from our Managed REITs and increased interest income from loans to our Managed REITs.

Current wording

FFO, as adjusted declined compared to the same period in the prior year primarily as a result of the effects of increased interest expense on net income, and to a lesser extent, a reduction in property net operating income.

Previous wording

A comparison of cash flows for operating, investing and financing activities for the three months ended March 31, 2024 and 2023 is as follows:

Current wording

A comparison of cash flows for operating, investing and financing activities for the six months ended June 30, 2024 and 2023 is as follows (in thousands):

Previous wording

Cash flows provided by operating activities for the three months ended March 31, 2024 and 2023 were approximately $14.4 million and $15.9 million, respectively, a decrease of approximately $1.5 million. The decrease in cash provided by our operating activities is primarily the result of a decrease of approximately $4.5 million in net income when excluding the impact of non-cash items, partially offset by less reductions to working capital as compared to the same period in the prior year.

Current wording

Cash flows provided by operating activities for the six months ended June 30, 2024 and 2023 were approximately $31.7 million and $45.3 million, respectively, a decrease of approximately $13.6 million. The decrease in cash provided by our operating activities is primarily the result of a decrease of approximately $7.2 million in net income when excluding the impact of non-cash items and a net decrease in operating cash flows due to changes in working capital of approximately $6.4 million as compared to the same period in the prior year. The change in net income was primarily as a result of increased property operating expenses and interest expense. The change in working capital was primarily a result of an increase in Managed REIT receivables.

Previous wording

Cash flows used in investing activities for the three months ended March 31, 2024 and 2023 were approximately $0.6 million and $20.9 million, respectively, a change of approximately $20.2 million. The reduction in cash used in investing activities primarily relates to a net change of $15.5 million in cash flows related to our investments in the Managed REITs. During the three months ended March 31, 2024, $3.0 million of cash was provided related to such investments, as compared to $12.5 million of cash outflows for the same period in the prior year. Additionally, there was approximately $2.9 million less cash outflows used during the three months ended March 31, 2024 related to real estate additions as compared to the same period in the prior year.

Current wording

Cash flows used in investing activities for the six months ended June 30, 2024 were approximately $13.2 million and cash flows provided by investing activities for the six months ended June 30, 2023 were approximately $18.2 million, respectively, a change of approximately $31.4 million. The net change in cash used in investing activities primarily relates to a net change of approximately $25.5 million in cash flows related to our investments in the Managed REITs. During the six months ended June 30, 2024, $4.0 million of cash was received from the repayment of such investments, as compared to approximately $29.5 million of net cash received related to such investments for the same period in the prior year.

Previous wording

Cash flows used in financing activities for the three months ended March 31, 2024 and 2023 were approximately $20.7 and $7.7 million, respectively, a change of approximately $13.0 million. The change in cash used in financing activities is primarily attributable to debt issuance costs of approximately $9.0 million paid during the three months ended March 31, 2024, as compared to none during the same period in the prior year. Additionally, debt borrowings, net of paydowns provided approximately $5.2 million less during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

Cash flows used in financing activities for the six months ended June 30, 2024 and 2023 were approximately $29.1 million and $67.1 million, respectively, a change of approximately $38.0 million. The change in cash used in financing activities is primarily attributable to net debt proceeds, inclusive of debt issuance costs, received of approximately $12.4 million during the six months ended June 30, 2024, as compared to net debt cash outflows of approximately $28.3 million during the six months ended June 30, 2023.

Previous wording

Our 2024 Credit Facility contains a borrowing base requirement, which is impacted by treasury yields. Increases to treasury yields could negatively impact our borrowing base calculation and limit our ability to borrow pursuant to the 2024 Credit Facility. Volatility in the debt and equity markets and continued and/or further impact of rising treasury yields, interest rates, inflation and other economic events will depend on future developments, which are highly uncertain. Such events may have an impact on our current liquidity in the short-term. If such events were to occur in the short-term we would expect to take certain steps, including but not limited to refinancing certain of our current loans, and adding additional properties onto our 2024 Credit Facility. Moreover, continued uncertainty or deterioration in the debt and equity markets, or continued increases in treasury yields and interest rates, over an extended period of time, could also potentially impact our liquidity over the long-term. If such events were to occur in the long-term, we would expect to take other additional steps, including but not limited to other sources of capital such as proceeds from secured or unsecured financings from banks or other lenders, issuance of equity instruments, and additional public or private offerings.

Current wording

Our 2024 Credit Facility contains a borrowing base requirement, which is impacted by treasury yields. Increases to treasury yields could negatively impact our borrowing base calculation and limit our ability to borrow pursuant to the 2024 Credit Facility. Volatility in the debt and equity markets and continued and/or further impact of rising treasury yields, interest rates, inflation and other economic events will depend on future developments, which are highly uncertain. Such events may have an impact on our current liquidity in the short-term. If such events were to occur in the short-term we would expect to take certain steps, including but not limited to refinancing certain of our current loans, and adding additional properties onto our 2024 Credit Facility, each of which we expect would increase our borrowing availability. Moreover, continued uncertainty or deterioration in the debt and equity markets, or continued increases in treasury yields and interest rates, over an extended period of time, could also potentially impact our liquidity over the long-term. If such events were to occur in the long-term, we would expect to take other additional steps, including but not limited to other sources of capital such as proceeds from secured or unsecured financings from banks or other lenders, issuance of equity instruments, and additional public or private offerings.

Previous wording

On March 28, 2024, our board of directors declared a distribution rate for the month of April 2024 of approximately $0.0492 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 April 30, 2024. Such distributions payable to each stockholder of record will be paid the following month.

Current wording

On July 26, 2024, our board of directors declared a distribution rate for the month of August 2024 of approximately $0.0508 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 August 31, 2024. Such distributions payable to each stockholder of record will be paid the following month.

Previous wording

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

Current wording

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

Previous wording

From our inception through March 31, 2024, we paid cumulative distributions of approximately $420.2 million, of which approximately $333.2 million were paid to common stockholders, as compared to cumulative FFO (attributable to common stockholders) of approximately $127.5 million.

Current wording

From our inception through June 30, 2024, we paid cumulative distributions of approximately $440.2 million, of which approximately $347.8 million were paid to common stockholders, as compared to cumulative FFO (attributable to common stockholders) of approximately $136.0 million.

Previous wording

For the three months ended March 31, 2024, we paid distributions of approximately $20.1 million, of which approximately $14.5 million were paid to common stockholders, as compared to FFO (attributable to common stockholders) of approximately $7.5 million.

Current wording

For the six months ended June 30, 2024, we paid distributions of approximately $40.0 million, of which approximately $29.1 million were paid to common stockholders, as compared to FFO (attributable to common stockholders) of approximately $16.1 million.