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 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).

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 2024, 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 September 30, 2024, our wholly-owned portfolio consisted of 157 operating self storage properties diversified across 19 states and Canada comprising approximately 106,300 units and 12.2 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 35 operating self storage properties (as of September 30, 2024).

Previous wording

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, which together with one other self storage property we manage consist of, as of June 30, 2024, 32 operating properties and approximately 25,400 units and approximately 2.8 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.

Current wording

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, which together with one other self storage property we manage consist of, as of September 30, 2024, 35 operating properties and approximately 27,500 units and approximately 3.0 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.

Previous wording

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

Current wording

Includes all rentable square feet, consisting of storage units and parking (approximately 1,040,000 square feet).

Previous wording

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 June 30, 2024.

Current wording

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 nine months ended September 30, 2024.

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 six months ended June 30, 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 nine months ended September 30, 2024 and 2023.

Previous wording

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 broader shift of people working from home, elevated migration patterns and strength in the housing market helped drive growth in self storage demand, which generally contributed to our results since the onset of COVID-19, and through calendar year 2022. In addition to the sector's numerous historical demand drivers, one demand driver that developed and has continued as a result of the COVID-19 pandemic is the trend towards working from home, or a hybrid work environment.

Current wording

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 broader shift of people working from home, elevated migration patterns and strength in the housing market helped drive growth in self storage demand, which generally contributed to our results since the onset of COVID-19, and through calendar year 2022. In addition to the sector's numerous historical demand drivers, one demand driver that developed and has continued as a result of the COVID-19 pandemic is the trend towards working from home, or a hybrid work environment. While the work from home environment remains elevated over pre-COVID-19 pandemic levels, this trend began to wane in 2023, which we believe led to elevated move-outs. As a result, occupancy, same-store growth and overall results began normalizing.

Previous wording

Further, the broader economy has been experiencing elevated levels of inflation, higher interest rates, tightening monetary and fiscal policies and a slowdown in home sales. This could result in less discretionary spending, weakening consumer balance sheets and reduced demand for self storage. Additionally, a prolonged period of elevated inflation and/or higher interest rates could result in a further contraction of self storage demand. 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.

Current wording

Further, the broader economy has been experiencing elevated levels of inflation, higher interest rates, tightening monetary and fiscal policies and a slowdown in home sales and population mobility. This could result in less discretionary spending, weakening consumer balance sheets and reduced demand for self storage. Additionally, a prolonged period of elevated inflation and/or higher interest rates could result in a further contraction of self storage demand. 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. Additionally, the broader interest rate and inflationary environment has moderated since the beginning of 2024. These factors could lead to increasing levels of population mobility, specifically amongst single family home buyers and sellers, which could increase demand for self storage. 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. As a result, we have experienced a year-over-year decrease in gross margins for the year ended December 31, 2023 and the first three quarters of 2024.

Previous wording

In 2022, the Federal Reserve began increasing its targeted range for the federal funds rate, leading to increased interest rates. This approach to monetary policy was mirrored by other central banks across the world, to similar effect. We currently have fixed or capped interest rates of varying durations for the majority 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 make accretive acquisitions of self storage properties, negatively impact our profitability, and affect our ability to comply with certain financial covenants.

Current wording

In 2022, the Federal Reserve began increasing its targeted range for the federal funds rate, leading to increased interest rates. This approach to monetary policy was mirrored by other central banks across the world, to similar effect. We currently have fixed or capped interest rates of varying durations for the majority 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 did not increase at the same magnitude as interest rates increased in 2022 and 2023, which limited our ability make accretive acquisitions of self storage properties. However, with anticipation of the Federal Reserve lowering its target range for the federal funds rate, interest rates across the curve began to decrease in the first half of 2024. In September of 2024, the Federal Reserve lowered its targeted range for the federal funds rate by 50 basis points. In November 2024, the Federal Reserve lowered its targeted range for the federal funds rate by an additional 25 basis points.

Previous 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.

Current wording

As of September 30, 2024 and 2023, we wholly-owned 157 and 153 operating self storage facilities, respectively. Our operating results for the three months ended September 30, 2024 included full quarter results for 155 self storage facilities. Our operating results for the three months ended September 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 may acquire in the future.

Previous 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.

Current wording

Total self storage related revenues for the three months ended September 30, 2024 and 2023 were approximately $55.4 million and $54.8 million, respectively. The increase in total self storage revenues of approximately $0.6 million, or approximately 1.1%, is primarily attributable to an increase in non same-store revenues of approximately $0.6 million, largely as a result of three property acquisitions during 2024.

Previous wording

Managed REIT Platform revenues for the six months ended June 30, 2024 and 2023 were approximately $5.4 million and $6.6 million, respectively. The decrease in Managed REIT Platform revenues of approximately $1.2 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 as compared to the prior year to a lesser extent 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.

Current wording

Managed REIT Platform revenues for the three months ended September 30, 2024 and 2023 were approximately $2.9 million and $2.5 million, respectively. The increase in Managed REIT Platform revenues of approximately $0.4 million is primarily attributable to increased property management fees of approximately $0.2 million and increased Tenant Protection Program fees at our Managed REITs' properties of approximately $0.1 million as compared to the same period in the prior year. Such increases in Managed REIT Platform revenues were partially offset as compared to the prior year by the effect of sponsor funding reductions recorded to revenue only in the current year.

Previous 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.

Current wording

Reimbursable costs from Managed REITs for the three months ended September 30, 2024 and 2023 were approximately $1.9 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 six months ended June 30, 2024 and 2023 were approximately $35.1 million (or 33% of self storage revenue) and $33.0 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 $2.1 million is largely attributable to increased compensation related expenses, 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.

Current wording

Property operating expenses for the three months ended September 30, 2024 and 2023 were approximately $18.2 million (or 33% of self storage revenue) and $16.3 million (or 30% 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 $1.9 million is largely attributable to increased property operating expenses of approximately $1.0 million related to our non same-store properties and the balance related to increased property insurance costs, payroll costs, repairs and maintenance expenses, and advertising expenses on our same-store properties. We expect property operating expenses to fluctuate commensurate with inflationary pressures and any future acquisitions.

Previous wording

Managed REIT Platform expenses for the three months ended June 30, 2024 and 2023 were approximately $0.6 million and $0.7 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). 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 three months ended September 30, 2024 and 2023 were approximately $1.1 million and $1.3 million, respectively. Such expenses primarily consisted of expenses related to non-reimbursable costs associated with the operation of the Managed REIT Platform incurred directly and indirectly through the Administrative Services Agreement (as discussed in Note 10 – 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.

Previous 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.

Current wording

Reimbursable costs from Managed REITs for the three months ended September 30, 2024 and 2023 were approximately $1.9 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

General and administrative expenses for the three months ended June 30, 2024 and 2023 were approximately $7.8 million and $7.2 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 in general and administrative expenses was primarily attributable to increased legal expenses and compensation related costs incurred during the three months ended June 30, 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 three months ended September 30, 2024 and 2023 were approximately $7.2 million and $6.3 million, respectively. Such expenses consist primarily of compensation related costs, marketing related costs, legal expenses, accounting expenses, transfer agent fees, directors and officers’ insurance expense and board of directors related costs. The increase in general and administrative expenses was primarily attributable to increased legal expenses, marketing related expenses, and compensation related costs incurred during the three months ended September 30, 2024. We expect general and administrative expenses to decrease as a percentage of total revenues over time.

Previous 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.

Current wording

Depreciation and amortization expenses for the three months ended September 30, 2024 and 2023 were approximately $14.1 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 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.

Current wording

Acquisition expenses for the three months ended September 30, 2024 and 2023 were approximately $38,000 and $76,000, 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 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.

Current wording

Losses from our equity method investments in our joint ventures for the three months ended September 30, 2024 and 2023 were approximately $0.4 million and $0.3 million, respectively. Losses from our equity method investments in our joint ventures 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 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.

Current wording

Losses from our equity method investments in the Managed REITs for the three months ended September 30, 2024 and 2023 were approximately $0.2 million and $0.4 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 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.

Current wording

Other, net for the three months ended September 30, 2024 and 2023 was approximately $2.0 million and $0.3 million of expense, 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 other miscellaneous items. The unfavorable variance of approximately $1.7 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 September 30, 2024.

Previous 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.

Current wording

Interest expense for the three months ended September 30, 2024 and 2023 was approximately $19.1 million and $15.9 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 $3.2 million as compared to the same period in the prior year is primarily attributable to increased borrowings, increases to our net effective interest rates, as well as increased amortization of debt issuance costs of approximately $0.5 million primarily due to increased debt issuance costs associated with the 2024 Credit Facility. The increase in net effective interest rates as compared to the same period in the prior year is attributable to a beneficial interest rate hedge which capped SOFR at 2.0% for $125 million of our debt during the three months ended September 30, 2023, which expired on June 28, 2024 and did not provide any benefit during the three months ended September 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 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.

Current wording

Income tax (expense) benefit for the three months ended September 30, 2024 and 2023 was approximately $0.4 million of expense and $1.1 million of benefit, respectively. Income tax consists primarily of state, federal, and Canadian income tax. The change is primarily due to the release of a valuation allowance during the three months ended September 30, 2023 on certain of our deferred tax assets related to our non-capital losses at some of our Canadian properties, resulting in a net income tax benefit for such period. We expect our income tax expense to increase in future periods primarily related to our operations in Canada.

Previous 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).

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 five other properties) for the three months ended September 30, 2024 and 2023 (in thousands unless otherwise noted).

Previous 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.

Current wording

Of the total rentable square feet, parking represented approximately 1,040,000 square feet as of September 30, 2024 and approximately 1,017,000 square feet as 2023, respectively. On a same-store basis, parking represented approximately 960,000 square feet. Amount not in thousands.

Previous wording

Our same-store revenue decreased by approximately $0.2 million, or approximately 0.2%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 due to an approximately 0.8% decrease in average occupancy, partially offset by an approximately 0.5% increase in annualized rent per occupied square foot. The increase in property operating expenses is primarily attributable to compensation related expenses, property insurance, property taxes, repairs and maintenance, and advertising expense.

Current wording

Our same-store revenue decreased by approximately $0.2 million, or approximately 0.4%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to an approximately 0.7% decrease in average occupancy, partially offset by an approximately 0.5% increase in annualized rent per occupied square foot. The increase in property operating expenses is primarily attributable to increased property insurance costs, payroll costs, repairs and maintenance expenses, and advertising expenses.

Previous 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.

Current wording

(1) Included within ancillary operating revenue within our consolidated statements of operations, approximately $2.0 million and $1.9 million of Tenant Protection Program revenue was earned at same store facilities during the three months ended September 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 September 30, 2024 and 2023, respectively.

Previous wording

Total self storage related revenues for the three months ended June 30, 2024 and 2023 were approximately $55.0 million and $53.9 million, respectively. The increase in total self storage revenues of approximately $1.1 million, or approximately 2.1%, is primarily attributable to an increase in same-store revenues of approximately $0.6 million, and an increase in non same-store revenues of approximately $0.3 million, as well as increases in our tenant protection program revenues.

Current wording

Total self storage related revenues for the nine months ended September 30, 2024 and 2023 were approximately $163.0 million and $162.1 million, respectively. The increase in total self storage revenues of approximately $0.9 million, or approximately 0.6%, is primarily attributable to an increase in non same-store revenues of approximately $1.0 million, largely as a result of three property acquisitions during the nine months ended September 30, 2024.

Previous 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.

Current wording

Managed REIT Platform revenues for the nine months ended September 30, 2024 and 2023 were approximately $8.3 million and $9.1 million, respectively. The decrease in Managed REIT Platform revenues of approximately $0.8 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 also reduced as compared to the prior year to a lesser extent by the effect of sponsor funding reductions recorded to revenue only in the current year. Such decreases in Managed REIT Platform revenues were partially offset by increased Tenant Protection Program fees, property management and asset management fees as a result of increased assets under management.

Previous wording

Reimbursable costs from Managed REITs for the six months ended June 30, 2024 and 2023 were approximately $3.2 million and $2.8 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 nine months ended September 30, 2024 and 2023 were approximately $5.0 million and $4.2 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 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.

Current wording

Property operating expenses for the nine months ended September 30, 2024 and 2023 were approximately $53.3 million (or 33% of self storage revenue) and $49.3 million (or 30% 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 $4.0 million is largely attributable to increased property operating expenses of approximately $1.5 million related to our non same-store properties and the balance related to increased insurance costs, payroll costs, repairs and maintenance expenses, and advertising expenses on our same-store properties. We expect property operating expenses to fluctuate commensurate with inflationary pressures and any future acquisitions.

Previous 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.

Current wording

Managed REIT Platform expenses for the nine months ended September 30, 2024 and 2023 were approximately $2.6 million and $2.5 million, respectively. Such expenses primarily consisted of expenses related to non-reimbursable costs associated with the operation of the Managed REIT Platform incurred directly and indirectly through 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

Reimbursable costs from Managed REITs for the six months ended June 30, 2024 and 2023 were approximately $3.2 million and $2.8 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.

Current wording

Reimbursable costs from Managed REITs for the nine months ended September 30, 2024 and 2023 were approximately $5.0 million and $4.2 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

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.

Current wording

General and administrative expenses for the nine months ended September 30, 2024 and 2023 were approximately $22.4 million and $20.0 million, respectively. Such expenses consist primarily of compensation related costs, marketing related costs, legal expenses, accounting expenses, transfer agent fees, directors and officers’ insurance expense and board of directors related costs. During the nine months ended September 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, marketing related expenses, and compensation related costs incurred during the nine months ended September 30, 2024. We expect general and administrative expenses to decrease as a percentage of total revenues over time.

Previous wording

Depreciation and amortization expenses for the six months ended June 30, 2024 and 2023 were approximately $27.5 million and $30.4 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 nine months ended September 30, 2024 and 2023 were approximately $41.5 million and $45.6 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 six months ended June 30, 2024 and 2023 were approximately $83,000 and $42,000, respectively. These acquisition expenses were incurred prior to acquisitions becoming probable in accordance with our capitalization policy.

Current wording

Acquisition expenses for the nine months ended September 30, 2024 and 2023 were approximately $121,000 and $118,000, 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 six months ended June 30, 2024 and 2023 were approximately $0.7 million and $0.9 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.

Current wording

Losses from our equity method investments in our joint ventures for the nine months ended September 30, 2024 and 2023 were approximately $1.1 million and $1.2 million, respectively. Losses from our equity method investments in our joint ventures 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 six months ended June 30, 2024 and 2023 were approximately $0.7 million and $0.4 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 nine months ended September 30, 2024 and 2023 were approximately $1.0 million and $0.9 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 six months ended June 30, 2024 and 2023 was approximately $0.4 million and $1.9 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 $1.5 million is primarily due to unfavorable fair value adjustments associated with our SOFR interest rate hedges not designated for hedge accounting during the six 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.

Current wording

Other, net for the nine months ended September 30, 2024 and 2023 was approximately $2.9 million and $0.2 million of expense, 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 other miscellaneous items. The unfavorable variance of approximately $2.7 million is primarily due to unfavorable fair value adjustments associated with our SOFR interest rate hedges not designated for hedge accounting during the nine months ended September 30, 2024.

Previous wording

Interest expense for the six months ended June 30, 2024 and 2023 was approximately $33.8 million and $29.6 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 $4.2 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 six months ended June 30, 2023, which expired on June 30, 2023, and did not provide any benefit during the six 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.

Current wording

Interest expense for the nine months ended September 30, 2024 and 2023 was approximately $52.9 million and $45.5 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 $7.4 million as compared to the same period in the prior year is primarily attributable to increased borrowings, increases to our net effective interest rates, as well as increased amortization of debt issuance costs of approximately $0.9 million primarily due to increased debt issuance costs associated with the 2024 Credit Facility. The increase in net effective interest rates as compared to the same period in the prior year is attributable to two beneficial interest rate hedges which capped SOFR at 1.75% and 2.0% for $125 million of our debt, each, which expired on June 30, 2023 and June 28, 2024, respectively. We expect interest expense to fluctuate in future periods commensurate with our future debt levels and fluctuations in net effective interest rates.