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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-55617

SmartStop Self Storage REIT, Inc.

(Exact name of Registrant as specified in its charter)

Maryland | 46-1722812
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.)

10 Terrace Road

Ladera Ranch, California 92694

(Address of principal executive offices)

(877) 327-3485

(Registrant’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered
None | None | None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ |  | Accelerated filer | ☐
Non-accelerated filer | ☒ |  | Smaller reporting company | ☐
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2023 there were 89,002,144 outstanding shares of Class A common stock and 8,098,641 outstanding shares of Class T common stock of the registrant.

FORM 10-Q

SMARTSTOP SELF STORAGE REIT, INC.

TABLE OF CONTENTS

|  |  | Page No.
| Cautionary Note Regarding Forward-Looking Statements |  | 3
PART I. | FINANCIAL INFORMATION |  | 5
Item 1. | Consolidated Financial Statements: |  | 5
| Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022 |  | 6
| Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022 (unaudited) |  | 7
| Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2023 and 2022 (unaudited) |  | 8
| Consolidated Statements of Equity and Temporary Equity for the Three Months Ended March 31, 2023 and 2022 (unaudited) |  | 9
| Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (unaudited) |  | 11
| Notes to Consolidated Financial Statements (unaudited) |  | 12
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 53
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |  | 69
Item 4. | Controls and Procedures |  | 70
PART II. | OTHER INFORMATION |  | 71
Item 1. | Legal Proceedings |  | 71
Item 1A. | Risk Factors |  | 71
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |  | 71
Item 3. | Defaults Upon Senior Securities |  | 71
Item 4. | Mine Safety Disclosures |  | 71
Item 5. | Other Information |  | 71
Item 6. | Exhibits |  | 71

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q of SmartStop Self Storage REIT, Inc., other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “seek,” “continue,” or other similar words.

Any such forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, our management and involve uncertainties that could significantly affect our financial results. Such statements include, but are not limited to: (i) statements about our plans, strategies, initiatives, and prospects; and (ii) statements about our future results of operations, capital expenditures, and liquidity. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation:

•
Adverse changes in economic conditions in the real estate industry and in the markets in which we own and operate self storage properties;
•
Market trends in our industry, interest rates, inflation, the debt and lending markets or the general economy;
•
Failure to realize the benefits from affiliated mergers, acquisitions and other strategic transactions;
•
The current concentration of our rental income in Florida, California and the Greater Toronto Area of Canada
•
The effect of competition at our self storage properties or from other storage alternatives, which could cause rents and occupancy rates to decline;
•
The impact of our outstanding Series A Convertible Preferred Stock, which ranks senior to all common stock and grants the holder superior rights compared to common stockholders, and may have the effect of diluting our stockholders’ interests in us and discouraging a takeover or other similar transaction;
•
Impacts on our business due to certain of our officers and key personnel facing competing demands relating to their time and conflicts of interest as a result of the positions they hold with affiliated entities;
•
The impact of investments in or loans to our Managed REITs;
•
Revenue and earnings from the Managed REIT Platform;
•
Increases in property taxes;
•
The impact of and changes in national, state, and local laws and regulations including, without limitation, those governing real estate investment trusts, environmental matters, taxes, insurance, accounting guidance and other aspects of our business;
•
Impacts of changes in the Canadian Dollar/USD exchange rate, which could have a material adverse effect on our operating results;
•
The degree to which our hedging strategies may or may not protect us from interest rate volatility;
•
Risks associated with data breaches, including cybersecurity attacks or other unauthorized access or misuse of information, any of which could adversely affect our business and results;
•
Potential environmental or other liabilities;
•
Risks related to or a consequence of natural disasters or acts of violence, pandemics, terrorism, insurrection or war that affect the markets in which we operate;
•
Failure to continue to qualify as a REIT for U.S. federal income tax purposes.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the Securities and Exchange Commission and are not intended to be a guarantee of our performance in future periods. We cannot guarantee the accuracy of any such forward-looking statements contained in this Form 10-Q, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

3

For further information regarding risks and uncertainties associated with our business, and important factors that could cause our actual results to vary materially from those expressed or implied in such forward-looking statements, please refer to the factors listed and described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Risk Factors” sections of the documents we file from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission, as supplemented by the risk factors included in Part II, Item 1A of this Form 10-Q, copies of which may be obtained from our website at www.investors.smartstopselfstorage.com.

4

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The information furnished in the accompanying unaudited consolidated balance sheets and related consolidated statements of operations, comprehensive income (loss), equity and temporary equity, and cash flows reflects all adjustments (consisting of normal and recurring adjustments) that are, in management’s opinion, necessary for a fair and consistent presentation of the aforementioned consolidated financial statements.

The accompanying consolidated financial statements should be read in conjunction with the notes to our consolidated financial statements included in this report on Form 10-Q. The accompanying consolidated financial statements should also be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022. Our results of operations for the three months ended March 31, 2023 are not necessarily indicative of the operating results expected for the full year.

5

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|  | March 31, 2023 (Unaudited) |  |  | December 31, 2022 |
ASSETS |  |  |  |  |  |
Real estate facilities: |  |  |  |  |  |
Land |  | $ | 420,577,635 |  |  | $ | 420,522,591 |
Buildings |  |  | 1,379,865,260 |  |  |  | 1,377,311,421 |
Site improvements |  |  | 90,018,705 |  |  |  | 89,371,633 |
|  |  | 1,890,461,600 |  |  |  | 1,887,205,645 |
Accumulated depreciation |  |  | (215,774,078 | ) |  |  | (202,682,688 | )
|  |  | 1,674,687,522 |  |  |  | 1,684,522,957 |
Construction in process |  |  | 4,952,854 |  |  |  | 4,490,926 |
Real estate facilities, net |  |  | 1,679,640,376 |  |  |  | 1,689,013,883 |
Cash and cash equivalents |  |  | 25,538,687 |  |  |  | 39,486,588 |
Restricted cash |  |  | 7,848,794 |  |  |  | 6,551,803 |
Investments in unconsolidated real estate ventures (Note 4) |  |  | 31,315,374 |  |  |  | 28,522,082 |
Investments in and advances to Managed REITs |  |  | 78,222,349 |  |  |  | 62,371,167 |
Other assets, net |  |  | 32,452,631 |  |  |  | 34,131,543 |
Intangible assets, net of accumulated amortization |  |  | 13,670,521 |  |  |  | 15,553,303 |
Trademarks, net of accumulated amortization |  |  | 15,876,470 |  |  |  | 15,911,765 |
Goodwill |  |  | 53,643,331 |  |  |  | 53,643,331 |
Debt issuance costs, net of accumulated amortization |  |  | 1,618,182 |  |  |  | 2,031,922 |
Total assets |  | $ | 1,939,826,715 |  |  | $ | 1,947,217,387 |
LIABILITIES, TEMPORARY EQUITY, AND EQUITY |  |  |  |  |  |
Debt, net |  | $ | 1,081,009,099 |  |  | $ | 1,068,371,956 |
Accounts payable and accrued liabilities |  |  | 30,943,559 |  |  |  | 28,151,741 |
Due to affiliates |  |  | 421,980 |  |  |  | 409,730 |
Distributions payable |  |  | 8,984,429 |  |  |  | 9,324,453 |
Deferred tax liabilities |  |  | 6,334,275 |  |  |  | 6,205,620 |
Total liabilities |  |  | 1,127,693,342 |  |  |  | 1,112,463,500 |
Commitments and contingencies (Note 12) |  |  |  |  |  |
Redeemable common stock |  |  | 71,863,018 |  |  |  | 76,578,073 |
Preferred stock, $0.001 par value; 200,000,000 shares authorized: |  |  |  |  |  |
Series A Convertible Preferred Stock, $0.001 par value; 200,000 shares authorized; 200,000 and 200,000 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively, with aggregate liquidation preferences of $203,082,192 and $203,150,685 at March 31, 2023 and December 31, 2022, respectively |  |  | 196,356,107 |  |  |  | 196,356,107 |
Equity: |  |  |  |  |  |
SmartStop Self Storage REIT, Inc.: |  |  |  |  |  |
Class A common stock, $0.001 par value; 350,000,000 shares authorized; 88,882,544 and 88,853,454 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively |  |  | 88,882 |  |  |  | 88,853 |
Class T common stock, $0.001 par value; 350,000,000 shares authorized; 8,085,550 and 8,085,550 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively |  |  | 8,085 |  |  |  | 8,085 |
Additional paid-in capital |  |  | 894,354,657 |  |  |  | 894,283,954 |
Distributions |  |  | (280,412,501 | ) |  |  | (266,151,517 | )
Accumulated deficit |  |  | (165,914,552 | ) |  |  | (164,524,595 | )
Accumulated other comprehensive income |  |  | 2,477,861 |  |  |  | 3,654,682 |
Total SmartStop Self Storage REIT, Inc. equity |  |  | 450,602,432 |  |  |  | 467,359,462 |
Noncontrolling interests in our Operating Partnership |  |  | 93,279,401 |  |  |  | 94,405,766 |
Other noncontrolling interests |  |  | 32,415 |  |  |  | 54,479 |
Total noncontrolling interests |  |  | 93,311,816 |  |  |  | 94,460,245 |
Total equity |  |  | 543,914,248 |  |  |  | 561,819,707 |
Total liabilities, temporary equity and equity |  | $ | 1,939,826,715 |  |  | $ | 1,947,217,387 |

See notes to consolidated financial statements.

6

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

|  | Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Revenues: |  |  |  |  |  |
Self storage rental revenue |  | $ | 51,276,898 |  |  | $ | 43,056,872 |
Ancillary operating revenue |  |  | 2,190,622 |  |  |  | 1,974,320 |
Managed REIT Platform revenue |  |  | 2,276,535 |  |  |  | 1,809,096 |
Reimbursable costs from Managed REITs |  |  | 1,391,210 |  |  |  | 1,143,573 |
Total revenues |  |  | 57,135,265 |  |  |  | 47,983,861 |
Operating expenses: |  |  |  |  |  |
Property operating expenses |  |  | 16,533,452 |  |  |  | 13,105,325 |
Managed REIT Platform expenses |  |  | 549,936 |  |  |  | 389,265 |
Reimbursable costs from Managed REITs |  |  | 1,391,210 |  |  |  | 1,143,573 |
General and administrative |  |  | 6,536,626 |  |  |  | 5,837,647 |
Depreciation |  |  | 13,272,271 |  |  |  | 11,107,986 |
Intangible amortization expense |  |  | 1,919,705 |  |  |  | 3,900,884 |
Acquisition expenses |  |  | 31,190 |  |  |  | 417,774 |
Contingent earnout adjustment |  |  | — |  |  |  | 513,821 |
Total operating expenses |  |  | 40,234,390 |  |  |  | 36,416,275 |
Income from operations |  |  | 16,900,875 |  |  |  | 11,567,586 |
Other income (expense): |  |  |  |  |  |
Equity in earnings (losses) from investments in JV Properties |  |  | (405,111 | ) |  |  | (233,294 | )
Equity in earnings (losses) from investments in Managed REITs |  |  | (233,025 | ) |  |  | (139,294 | )
Other, net |  |  | 750,978 |  |  |  | (28,627 | )
Interest expense |  |  | (14,703,897 | ) |  |  | (7,575,784 | )
Income tax expense |  |  | (277,220 | ) |  |  | (321,128 | )
Net income |  |  | 2,032,600 |  |  |  | 3,269,459 |
Net (income) attributable to noncontrolling interests |  |  | (340,365 | ) |  |  | (403,822 | )
Less: Distributions to preferred stockholders |  |  | (3,082,192 | ) |  |  | (3,082,192 | )
Net loss attributable to SmartStop Self Storage REIT, Inc. common stockholders |  | $ | (1,389,957 | ) |  | $ | (216,555 | )
Net loss per Class A & Class T share – basic and diluted |  | $ | (0.02 | ) |  | $ | (0.00 | )
Weighted average Class A shares outstanding – basic and diluted |  |  | 88,735,173 |  |  |  | 76,946,796 |
Weighted average Class T shares outstanding – basic and diluted |  |  | 8,085,550 |  |  |  | 8,070,949 |

See notes to consolidated financial statements.

7

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

|  | Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Net income |  | $ | 2,032,600 |  |  | $ | 3,269,459 |
Other comprehensive income (loss): |  |  |  |  |  |
Foreign currency translation adjustment |  |  | 253,576 |  |  |  | 937,962 |
Foreign currency hedge contract losses |  |  | (91,616 | ) |  |  | (834,436 | )
Interest rate swap and cap contract gains (losses) |  |  | (1,493,341 | ) |  |  | 506,515 |
Other comprehensive income (loss) |  |  | (1,331,381 | ) |  |  | 610,041 |
Comprehensive income |  |  | 701,219 |  |  |  | 3,879,500 |
Comprehensive income attributable to noncontrolling interests: |  |  |  |  |  |
Comprehensive income attributable to noncontrolling interests |  |  | (185,805 | ) |  |  | (469,633 | )
Comprehensive income attributable to SmartStop Self Storage REIT, Inc. stockholders |  | $ | 515,414 |  |  | $ | 3,409,867 |

See notes to consolidated financial statements.

8

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY AND TEMPORARY EQUITY

(Unaudited)

|  | Common Stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Class A |  |  | Class T |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Number of Shares |  |  | Common Stock Par Value |  |  | Number of Shares |  |  | Common Stock Par Value |  |  | Additional Paid-in Capital |  |  | Distributions |  |  | Accumulated Deficit |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Total SmartStop Self Storage REIT, Inc. Equity |  |  | Noncontrolling Interests |  |  | Total Equity |  |  | Preferred Stock |  |  | Redeemable Common Stock |
Balance as of December 31, 2021 |  |  | 77,057,743 |  |  | $ | 77,058 |  |  |  | 8,056,198 |  |  | $ | 8,056 |  |  | $ | 724,739,872 |  |  | $ | (210,964,464 | ) |  | $ | (170,846,475 | ) |  | $ | (279,975 | ) |  | $ | 342,734,072 |  |  | $ | 64,643,317 |  |  | $ | 407,377,389 |  |  | $ | 196,356,107 |  |  | $ | 71,334,675 |
Offering costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (53,949 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (53,949 | ) |  |  | — |  |  |  | (53,949 | ) |  |  | — |  |  |  | — |
Tax withholding (net settlement) related to vesting of restricted stock |  |  | (8,098 | ) |  |  | (8 | ) |  |  | — |  |  |  | — |  |  |  | (74,487 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (74,495 | ) |  |  | — |  |  |  | (74,495 | ) |  |  | — |  |  |  | — |
Issuance of Class A-1 Units in our Operating Partnership in connection with the contingent earnout related to the Self Administration Transaction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 15,513,821 |  |  |  | 15,513,821 |  |  |  | — |  |  |  | — |
Issuance of noncontrolling interest in SST VI Advisor |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,000 |  |  |  | 1,000 |  |  |  | — |  |  |  | — |
Changes to redeemable common stock |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,243,398 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (5,243,398 | ) |  |  | — |  |  |  | (5,243,398 | ) |  |  | — |  |  |  | 5,243,398 |
Redemptions of common stock |  |  | (106,502 | ) |  |  | (107 | ) |  |  | (4,696 | ) |  |  | (5 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (112 | ) |  |  | — |  |  |  | (112 | ) |  |  | — |  |  |  | — |
Issuance of restricted stock |  |  | 45,170 |  |  |  | 45 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 45 |  |  |  | — |  |  |  | 45 |  |  |  | — |  |  |  | — |
Distributions |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (12,427,305 | ) |  |  | — |  |  |  | — |  |  |  | (12,427,305 | ) |  |  | — |  |  |  | (12,427,305 | ) |  |  | — |  |  |  | — |
Distributions to noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,679,314 | ) |  |  | (1,679,314 | ) |  |  | — |  |  |  | — |
Issuance of shares for distribution reinvestment plan |  |  | 313,658 |  |  |  | 314 |  |  |  | 34,048 |  |  |  | 34 |  |  |  | 5,243,050 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,243,398 |  |  |  | — |  |  |  | 5,243,398 |  |  |  | — |  |  |  | — |
Equity based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 403,252 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 403,252 |  |  |  | 768,685 |  |  |  | 1,171,937 |  |  |  | — |  |  |  | — |
Net loss attributable to SmartStop Self Storage REIT, Inc. common stockholders |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (216,555 | ) |  |  | — |  |  |  | (216,555 | ) |  |  | — |  |  |  | (216,555 | ) |  |  | — |  |  |  | — |
Net income attributable to the noncontrolling interests in our Operating Partnership |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 355,978 |  |  |  | 355,978 |  |  |  | — |  |  |  | — |
Net income attributable to other noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 47,844 |  |  |  | 47,844 |  |  |  | — |  |  |  | — |
Foreign currency translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 836,775 |  |  |  | 836,775 |  |  |  | 101,187 |  |  |  | 937,962 |  |  |  | — |  |  |  | — |
Foreign currency hedge contract loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (744,417 | ) |  |  | (744,417 | ) |  |  | (90,019 | ) |  |  | (834,436 | ) |  |  | — |  |  |  | — |
Interest rate hedge contract gain |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 451,872 |  |  |  | 451,872 |  |  |  | 54,643 |  |  |  | 506,515 |  |  |  | — |  |  |  | — |
Balance as of March 31, 2022 |  |  | 77,301,971 |  |  | $ | 77,302 |  |  |  | 8,085,550 |  |  | $ | 8,085 |  |  | $ | 725,014,340 |  |  | $ | (223,391,769 | ) |  | $ | (171,063,030 | ) |  | $ | 264,255 |  |  | $ | 330,909,183 |  |  | $ | 79,717,142 |  |  | $ | 410,626,325 |  |  | $ | 196,356,107 |  |  | $ | 76,578,073 |

See notes to consolidated financial statements.

9

|  | Common Stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Class A |  |  | Class T |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Number of Shares |  |  | Common Stock Par Value |  |  | Number of Shares |  |  | Common Stock Par Value |  |  | Additional Paid-in Capital |  |  | Distributions |  |  | Accumulated Deficit |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Total SmartStop Self Storage REIT, Inc. Equity |  |  | Noncontrolling Interests |  |  | Total Equity |  |  | Preferred Stock |  |  | Redeemable Common Stock |
Balance as of December 31, 2022 |  |  | 88,853,454 |  |  | $ | 88,853 |  |  |  | 8,085,550 |  |  | $ | 8,085 |  |  | $ | 894,283,954 |  |  | $ | (266,151,517 | ) |  | $ | (164,524,595 | ) |  | $ | 3,654,682 |  |  | $ | 467,359,462 |  |  | $ | 94,460,245 |  |  | $ | 561,819,707 |  |  | $ | 196,356,107 |  |  | $ | 76,578,073 |
Tax withholding (net settlement) related to vesting of restricted stock |  |  | (14,786 | ) |  |  | (15 | ) |  |  | — |  |  |  | — |  |  |  | (211,951 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (211,966 | ) |  |  | — |  |  |  | (211,966 | ) |  |  | — |  |  |  | — |
Redemptions of common stock |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (4,715,055 | )
Issuance of restricted stock, net of forfeitures |  |  | 43,876 |  |  |  | 44 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 44 |  |  |  | — |  |  |  | 44 |  |  |  | — |  |  |  | — |
Distributions |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (14,260,984 | ) |  |  | — |  |  |  | — |  |  |  | (14,260,984 | ) |  |  | — |  |  |  | (14,260,984 | ) |  |  | — |  |  |  | — |
Distributions to noncontrolling interests in our Operating Partnership |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,028,207 | ) |  |  | (2,028,207 | ) |  |  | — |  |  |  | — |
Distributions to other noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (129,486 | ) |  |  | (129,486 | ) |  |  | — |  |  |  | — |
Equity based compensation expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 282,654 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 282,654 |  |  |  | 823,459 |  |  |  | 1,106,113 |  |  |  | — |  |  |  | — |
Net income attributable to SmartStop Self Storage REIT, Inc. common stockholders |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,389,957 | ) |  |  | — |  |  |  | (1,389,957 | ) |  |  | — |  |  |  | (1,389,957 | ) |  |  | — |  |  |  | — |
Net income attributable to the noncontrolling interests in our Operating Partnership |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 232,943 |  |  |  | 232,943 |  |  |  | — |  |  |  | — |
Net income attributable to other noncontrolling interests |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 107,422 |  |  |  | 107,422 |  |  |  | — |  |  |  | — |
Foreign currency translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 224,139 |  |  |  | 224,139 |  |  |  | 29,437 |  |  |  | 253,576 |  |  |  | — |  |  |  | — |
Foreign currency hedge contract loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (80,980 | ) |  |  | (80,980 | ) |  |  | (10,636 | ) |  |  | (91,616 | ) |  |  | — |  |  |  | — |
Interest rate hedge contract loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,319,980 | ) |  |  | (1,319,980 | ) |  |  | (173,361 | ) |  |  | (1,493,341 | ) |  |  | — |  |  |  | — |
Balance as of March 31, 2023 |  |  | 88,882,544 |  |  | $ | 88,882 |  |  |  | 8,085,550 |  |  | $ | 8,085 |  |  | $ | 894,354,657 |  |  | $ | (280,412,501 | ) |  | $ | (165,914,552 | ) |  | $ | 2,477,861 |  |  | $ | 450,602,432 |  |  | $ | 93,311,816 |  |  | $ | 543,914,248 |  |  | $ | 196,356,107 |  |  | $ | 71,863,018 |

See notes to consolidated financial statements.

10

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

|  | Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Cash flows from operating activities: |  |  |  |  |  |
Net income |  | $ | 2,032,600 |  |  | $ | 3,269,459 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |
Depreciation and amortization |  |  | 15,191,976 |  |  |  | 15,008,869 |
Change in deferred tax liability |  |  | 120,287 |  |  |  | 241,588 |
Accretion of fair market value adjustment of secured debt |  |  | 3,230 |  |  |  | (34,642 | )
Amortization of debt issuance costs |  |  | 710,351 |  |  |  | 594,521 |
Equity based compensation expense |  |  | 1,106,163 |  |  |  | 1,171,940 |
Contingent earnout adjustment |  |  | — |  |  |  | 513,821 |
Non-cash adjustment from equity method investments in JV Properties |  |  | 405,111 |  |  |  | 258,718 |
Non-cash adjustment from equity method investments in Managed REITs |  |  | 423,237 |  |  |  | 143,834 |
Accretion of financing fee revenues |  |  | (63,177 | ) |  |  | (17,000 | )
Unrealized foreign currency and derivative (gains) losses |  |  | 406,298 |  |  |  | (159,358 | )
Increase (decrease) in cash from changes in assets and liabilities: |  |  |  |  |  |
Other assets, net |  |  | 645,445 |  |  |  | (1,794,330 | )
Accounts payable and accrued liabilities |  |  | (2,471,540 | ) |  |  | (2,136,923 | )
Managed REITs receivables |  |  | (2,628,287 | ) |  |  | (1,436,953 | )
Due to affiliates |  |  | 12,250 |  |  |  | (42,241 | )
Net cash provided by operating activities |  |  | 15,893,944 |  |  |  | 15,581,303 |
Cash flows from investing activities: |  |  |  |  |  |
Purchase of real estate |  |  | — |  |  |  | (18,816,115 | )
Additions to real estate |  |  | (4,256,788 | ) |  |  | (1,373,376 | )
Deposits on acquisition of real estate |  |  | (939,994 | ) |  |  | (1,188,410 | )
Investments in unconsolidated JV Properties, net |  |  | (3,162,306 | ) |  |  | (213,893 | )
SST VI Mezzanine Loan funding |  |  | (15,000,000 | ) |  |  | — |
SST VI Preferred equity investment |  |  | (15,000,000 | ) |  |  | — |
SSGT III Mezzanine Loan repayment |  |  | 17,500,000 |  |  |  | — |
Net proceeds from the sale of real estate |  |  | — |  |  |  | 228,146 |
Net cash used in investing activities |  |  | (20,859,088 | ) |  |  | (21,363,648 | )
Cash flows from financing activities: |  |  |  |  |  |
Proceeds from issuance of revolver debt |  |  | 60,000,000 |  |  |  | 19,000,000 |
Repayment of revolver debt |  |  | (35,000,000 | ) |  |  | — |
Repayment of non-revolver debt |  |  | (12,016,875 | ) |  |  | — |
Scheduled principal payments on non-revolver debt |  |  | (670,707 | ) |  |  | (628,984 | )
Debt issuance costs |  |  | — |  |  |  | (2,050 | )
Offering costs |  |  | — |  |  |  | (156,500 | )
Redemption of common stock |  |  | — |  |  |  | (1,751,436 | )
Restricted stock withholding for payroll taxes |  |  | (211,972 | ) |  |  | — |
Gross proceeds from issuance of equity in other noncontrolling interests |  |  | — |  |  |  | 1,000 |
Distributions paid to preferred stockholders |  |  | (3,150,685 | ) |  |  | (3,150,685 | )
Distributions paid to common stockholders |  |  | (14,684,560 | ) |  |  | (7,180,866 | )
Distributions paid to noncontrolling interests in our OP |  |  | (2,005,649 | ) |  |  | (1,597,751 | )
Net cash provided by (used in) financing activities |  |  | (7,740,448 | ) |  |  | 4,532,728 |
Impact of foreign exchange rate changes on cash and restricted cash |  |  | 54,682 |  |  |  | 55,024 |
Change in cash, cash equivalents, and restricted cash |  |  | (12,650,910 | ) |  |  | (1,194,593 | )
Cash, cash equivalents, and restricted cash beginning of year |  |  | 46,038,391 |  |  |  | 44,686,361 |
Cash, cash equivalents, and restricted cash end of year |  | $ | 33,387,481 |  |  | $ | 43,491,768 |
Supplemental disclosures and non-cash transactions: |  |  |  |  |  |
Cash paid for interest |  | $ | 11,384,685 |  |  | $ | 7,225,122 |
Supplemental disclosure of noncash activities: |  |  |  |  |  |
Redemption of common stock included in accounts payable and accrued liabilities |  | $ | 4,715,055 |  |  | $ | — |
Issuance of shares pursuant to distribution reinvestment plan |  | $ | — |  |  | $ | 5,243,398 |
Distributions payable |  | $ | 8,984,429 |  |  | $ | 8,248,313 |
Conversion of A-2 Units into A-1 Units |  | $ | — |  |  | $ | 15,513,821 |
Deposit applied to the purchase of real estate |  | $ | — |  |  | $ | 190,000 |
Earnest deposits on acquisitions assigned to the Managed REITs, amounts reclassified to Managed REITs receivables |  | $ | 1,082,916 |  |  | $ | — |
Real estate and construction in process included in accounts payable and accrued liabilities |  | $ | 202,020 |  |  | $ | — |

See notes to consolidated financial statements.

11

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Note 1. Organization

SmartStop Self Storage REIT, Inc., a Maryland corporation (the “Company”), is a self-managed and fully-integrated self storage real estate investment trust (“REIT”), formed on January 8, 2013 under the Maryland General Corporation Law. Our year end is December 31. As used in this report, “we,” “us,” “our,” and “Company” refer to SmartStop Self Storage REIT, Inc. and, each of our subsidiaries.

We acquire and own self storage facilities; we also operate self storage facilities owned by us as well as those owned by the entities sponsored by us. As of March 31, 2023, we wholly-owned 153 self storage facilities located in 19 states (Alabama, Arizona, California, Colorado, Florida, Illinois, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Nevada, North Carolina, Ohio, South Carolina, Texas, Virginia, Washington, and Wisconsin) and the Greater Toronto Area of Ontario, Canada.

As discussed herein, we, through our subsidiaries, currently serve as the sponsor of Strategic Storage Trust VI, Inc., a publicly-registered non-traded REIT (“SST VI”), and Strategic Storage Growth Trust III, Inc., a private company that intends to elect to qualify as a REIT (“SSGT III” and together with SST VI , the "Managed REITs"). 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, the dates on which we closed on the mergers of SST IV (the "SST IV Merger") and SSGT II (the "SSGT II Merger"), respectively, as defined in Note 3 – Real Estate Facilities. Prior to March 17, 2021 and June 1, 2022, SST IV and SSGT II, respectively, were also included in the “Managed REITs.”

We operate the properties owned by the Managed REITs, consisting of, as of March 31, 2023, 21 operating properties and approximately 16,300 units and 1.9 million rentable square feet. Through our Managed REIT Platform (as defined below), we originate, structure, and manage additional self storage investment products.

SmartStop OP, L.P., (the "Operating Partnership") owns, directly or indirectly through one or more subsidiaries, all of the self storage properties that we own. As of March 31, 2023, we owned approximately 88.4% of the common units of limited partnership interests of our Operating Partnership. The remaining approximately 11.6% of the common units are owned by current and former employees, members of our executive management team, board members, or indirectly by Strategic Asset Management I, LLC (f/k/a SmartStop Asset Management, LLC) ("SAM"), its affiliates, and affiliates of Select Capital Corporation, the former dealer manager of our offering (the "Former Dealer Manager"). As the sole general partner of our Operating Partnership, we have the exclusive power to manage and conduct the business of our Operating Partnership.

We commenced our initial public offering in January 2014, in which we offered a maximum of $1.0 billion in common shares for sale to the public (the “Primary Offering”) and $95.0 million in common shares for sale pursuant to our distribution reinvestment plan (collectively, the “Offering”). At the termination of our Offering in January 2017, we had sold approximately 48 million Class A Shares and approximately 7 million Class T Shares for approximately $493 million and $73 million respectively.

In November 2016, we filed with the Securities Exchange Commission ("SEC") a Registration Statement on Form S-3, which registered up to an additional $100.9 million in shares under our distribution reinvestment plan (our “DRP Offering”). The DRP Offering may be terminated at any time upon 10 days’ prior written notice to stockholders.

On December 6, 2022, our board of directors (the "Board"), upon recommendation of our Nominating and Corporate Governance Committee, approved an Estimated Per Share Net Asset Value ("NAV") of our common stock of $15.21 for our Class A Shares and Class T Shares based on the estimated value of our assets less the estimated value of our liabilities, or net asset value, divided by the number of shares outstanding on a fully diluted basis, calculated as of September 30, 2022.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC.

12

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Unaudited Information

The square footage, unit count, and occupancy percentage data and related disclosures included in these notes to the consolidated financial statements are outside the scope of our independent registered accounting firm's review.

Principles of Consolidation

Our financial statements, and the financial statements of our Operating Partnership, including its wholly-owned subsidiaries, are consolidated in the accompanying consolidated financial statements. The portion of these entities not wholly-owned by us is presented as noncontrolling interests. All intercompany accounts and transactions have been eliminated in consolidation.

Consolidation Considerations

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

Our Operating Partnership is deemed to be a VIE and is consolidated by the Company as we are currently the primary beneficiary. Our sole significant asset is our investment in our Operating Partnership; as a result, substantially all of our assets and liabilities represent those assets and liabilities of our Operating Partnership and its wholly-owned subsidiaries.

On March 1, 2022, Pacific Oak Holding Group, LLC, the parent company of Pacific Oak Capital Markets, LLC, the dealer manager for the public offering of SST VI, became a 10% non-voting member of Strategic Storage Advisor VI, LLC, our advisor to SST VI (the "SST VI Advisor"). We continue to be the primary beneficiary of SST VI Advisor, and their operations therefore continue to be consolidated by us.

As of March 31, 2023 and December 31, 2022, we were not a party to any other material contracts or interests that would be deemed variable interests in VIEs other than our joint ventures with SmartCentres and our equity investments in the Managed REITs, which are all accounted for under the equity method of accounting (see Note 4 – Investments in Unconsolidated Real Estate Ventures and Note 10 – Related Party Transactions for additional information), and our joint venture programs through which we offer our tenant insurance, tenant protection plans or similar programs (the “Tenant Protection Programs”) with SST VI, SSGT III, and SSGT II (through June 1, 2022) which are consolidated.

Equity Investments

Under the equity method, our investments are stated at cost and adjusted for our share of net earnings or losses and reduced by distributions and impairments, as applicable. Equity in earnings will generally be recognized based on our ownership interest in the earnings of each of the unconsolidated investments and recorded within our consolidated statements of operations. Our share of earnings and losses from our equity method investments in the JV Properties (as defined in Note 4 – Investments in Unconsolidated Real Estate Ventures) was previously included in Other, net within our consolidated statements of operations, but has been reclassified to Equity in earnings (losses) from investments in JV Properties within the current consolidated statements of operations included herein.

Investments in and Advances to Managed REITs

13

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

As of March 31, 2023 and December 31, 2022, we owned equity and debt investments in the Managed REITs; such amounts are included in Investments in and advances to Managed REITs within our consolidated balance sheets. We account for the equity investments using the equity method of accounting as we have the ability to exercise significant influence, but not control, over the Managed REITs’ operating and financial policies through our advisory and property management agreements with the respective Managed REITs. The equity method of accounting requires the investment to be initially recorded at cost and subsequently adjusted for our share of equity in the respective Managed REIT’s earnings and reduced by distributions. Our share of earnings and losses from our equity method investments in the Managed REITs was previously included in Other, net within our consolidated statements of operations, but has been reclassified to Equity in earnings (losses) from investments in Managed REITs within our current consolidated statements of operations included herein.

We record the interest on our debt investments on the accrual basis and such income is included in Other, net, within Other income (expense) of our consolidated statements of operations.

See Note 10 – Related Party Transactions for additional information.

Noncontrolling Interests in Consolidated Entities

We account for the noncontrolling interests in our Operating Partnership and the noncontrolling interests in SST VI Advisor and our Tenant Protection Programs joint ventures with SST VI, SSGT III, and SSGT II (prior to the SSGT II Merger on June 1, 2022) in accordance with the related accounting guidance.

Due to our control through our general partnership interest in our Operating Partnership and the limited rights of the limited partners, our Operating Partnership, including its wholly-owned subsidiaries, are consolidated with the Company and the limited partner interests are reflected as noncontrolling interests in the accompanying consolidated balance sheets. We also consolidate our interests in the SSGT III and SST VI Tenant Protection Programs and present the minority interests as noncontrolling interests in the accompanying consolidated balance sheets. The noncontrolling interests shall be attributed their share of income and losses, even if that attribution results in a deficit noncontrolling interests balance.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions. Management will adjust such estimates when facts and circumstances dictate. Actual results could materially differ from those estimates. The most significant estimates made include that of real estate acquisition valuation and the allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed at relative fair value, the evaluation of potential impairment of indefinite and long-lived assets and goodwill, and the estimated useful lives of real estate assets and intangibles.

Cash and Cash Equivalents

We consider all short-term, highly liquid investments that are readily convertible to cash with a maturity of three months or less at the time of purchase to be cash equivalents.

We may maintain cash and cash equivalents in financial institutions in excess of insured limits. In an effort to mitigate this risk, we only invest in or through major financial institutions.

Restricted Cash

Restricted cash consists primarily of impound reserve accounts for property taxes, insurance and capital improvements in connection with the requirements of certain of our loan agreements.

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SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Real Estate Purchase Price Allocation and Treatment of Acquisition Costs

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

The value of the tangible assets, consisting of land and buildings, is determined as if vacant. Substantially all of the leases in place at acquired properties are at market rates, as the majority of the leases are month-to-month contracts. We also consider whether in-place, market leases represent an intangible asset. We recorded no ne and approximately $0.8 million in intangible assets to recognize the value of in-place leases related to our acquisitions during the three months ended March 31, 2023 and 2022, respectively. We do not expect, nor to date have we recorded, intangible assets for the value of customer relationships because we expect we will not have concentrations of significant customers and the average customer turnover will be fairly frequent.

Allocation of purchase price to acquisitions of portfolios of facilities are allocated to the individual facilities based upon an income approach or a cash flow analysis using appropriate risk adjusted capitalization rates which take into account the relative size, age, and location of the individual facility along with current and projected occupancy and rental rate levels or appraised values, if available.

Acquisitions that do not meet the definition of a business, as defined under current GAAP, are accounted for as asset acquisitions. During the three months ended March 31, 2023 and 2022, our property acquisitions did not meet the definition of a business because substantially all of the fair value was concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) and because the acquisitions did not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay. As a result, once an acquisition is deemed probable, acquisition related transaction costs are capitalized rather than expensed.

During the three months ended March 31, 2023 and 2022, we expensed approximately $0.1 million and $0.4 million, respectively, of acquisition-related transaction costs that did not meet our capitalization policy during the respective periods.

Evaluation of Possible Impairment of Real Property Assets

Management monitors events and changes in circumstances that could indicate that the carrying amounts of our real property assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of the assets may not be recoverable, we will assess the recoverability of the assets by determining whether the carrying value of the real property assets will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying value, we will adjust the value of the real property assets to the fair value and recognize an impairment loss. For the three months ended March 31, 2023 and 2022, no real property asset impairment losses were recognized.

Goodwill Valuation

We initially recorded goodwill as a result of the Self Administration Transaction (as defined in Note 10 – Related Party Transactions), which occurred in 2019. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible assets and other intangible assets acquired. Goodwill is allocated to various reporting units, as applicable, and is not amortized. We perform an annual impairment test for goodwill, and between annual tests, we evaluate the recoverability of goodwill whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be fully recoverable. In our impairment test of goodwill, we perform a quantitative analysis 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.

See Note 10 – Related Party Transactions for additional information.

Trademarks

In connection with the Self Administration Transaction, we recorded the fair value associated with the two primary trademarks acquired therein.

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SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

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

As of March 31, 2023 and December 31, 2022, $15.7 million was recorded related to the SmartStop® Self Storage trademark, which is an indefinite lived trademark. As of March 31, 2023 and December 31, 2022, approximately $0.2 million was recorded to the “Strategic Storage®” trademark, which is a definite lived trademark. The total estimated future amortization expense of the “Strategic Storage®” trademark asset for the years ending December 31, 2023, 2024, and thereafter is approximately $105,000, $71,000, and no ne, respectively.

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

Revenue Recognition

Self Storage Operations

Management believes that all of our leases are operating leases. Rental income is recognized in accordance with the terms of the leases, which generally are month-to-month. Revenues from any long-term operating leases are recognized on a straight-line basis over the term of the lease. The excess of rents received over amounts contractually due pursuant to the underlying leases is included in accounts payable and accrued liabilities in our consolidated balance sheets, and contractually due but unpaid rent is included in other assets.

In accordance with ASC 842, we review the collectability of lease payments on an ongoing basis. We consider collectability indicators when analyzing accounts receivable and historical bad debt levels, current economic trends, all of which assist in evaluating the probability of outstanding and future rental income collections.

Additionally, we earn ancillary revenue by selling tenant insurance or tenant protection plans to customers at our properties through our Tenant Protection Programs, and to a lesser extent, through the sale of various moving and packing supplies such as locks and boxes. We recognize such revenue in the Ancillary operating revenue line within our consolidated statements of operations as the services are performed and as the goods are delivered.

Managed REIT Platform

We earn property management and asset management revenue, pursuant to the respective property management and advisory agreement contracts, in connection with providing services to the Managed REITs. We have determined under ASC 606 – Revenue from Contracts with Customers (“ASC 606”), that the performance obligation for the property management services and asset management services are satisfied as the services are rendered. While we are compensated for our services on a monthly basis, these services represent a series of distinct daily services in accordance with ASC 606. Such revenue is recorded in the Managed REIT Platform revenue line within our consolidated statements of operations.

The Managed REITs’ advisory agreements also provide for reimbursement to us of our direct and indirect costs of providing administrative and management services to the Managed REITs. These reimbursements include costs incurred in relation to organization and offering services provided to the Managed REITs and the reimbursement of salaries, bonuses, and other expenses related to benefits paid to our employees while performing services for the Managed REITs. The Managed REITs’ property management agreements also provide reimbursement to us for the property manager’s costs of managing the properties. Reimbursable costs include wages and salaries and other expenses that arise in operating, managing and maintaining the Managed REITs’ properties.

Under ASC 606, direct reimbursement of such costs does not represent a separate performance obligation from our obligation to perform property management and asset management services. The reimbursement income is considered variable consideration, and is recognized as the costs are incurred, subject to limitations on the Managed REIT Platform’s ability to incur offering costs or limitations imposed by the advisory agreements. We have elected to separately record such revenue in the Reimbursable costs from Managed REITs line within our consolidated statements of operations.

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SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Additionally, we earn revenue in connection with our Tenant Protection Programs joint ventures with our Managed REITs. We also earn development and construction management revenue from services we provide in connection with the project design, coordination and oversite of development and certain capital improvement projects undertaken by the Managed REITs. We recognize such revenue in the Managed REIT Platform revenue line within our consolidated statements of operations as the services are performed or delivered. See Note 10 – Related Party Transactions, for additional information regarding revenue generated from our Managed REIT Platform.

Allowance for Doubtful Accounts

Tenant accounts receivable is reported net of an allowance for doubtful accounts. Management records this general allowance estimate based upon a review of the current status of accounts receivable. It is reasonably possible that management’s estimate of the allowance will change in the future. As of March 31, 2023 and December 31, 2022, approximately $0.6 million and $0.7 million, respectively, were recorded to allowance for doubtful accounts and are included within other assets in the accompanying consolidated balance sheets.

Advertising Costs

Advertising costs are expensed in the period in which the cost is incurred and are included in property operating expenses and general and administrative lines within our consolidated statements of operations, depending on the nature of the expense. The Company incurred advertising costs of approximately $1.2 million and $1.0 million for the three months ended March 31, 2023 and 2022, respectively, within property operating expenses, and approximately $0.5 million and $0.1 million for the three months ended March 31, 2023, and 2022, respectively, within general and administrative.

Real Estate Facilities

We capitalize costs incurred to develop, construct, renovate and improve properties, including interest and property taxes incurred during the construction period. The construction period begins when expenditures for the real estate assets have been made and activities that are necessary to prepare the asset for its intended use are in progress. The construction period ends when the asset is substantially complete and ready for its intended use.

Depreciation of Real Property Assets

Our management is required to make subjective assessments as to the useful lives of our depreciable assets. We consider the period of future benefit of the asset to determine the appropriate useful lives.

Depreciation of our real property assets is charged to expense on a straight-line basis over the estimated useful lives
as follows:

Description |  | Standard Depreciable Life
Land |  | Not Depreciated
Buildings |  | 30-40 years
Site Improvements |  | 7-10 years

Depreciation of Personal Property Assets

Personal property assets consist primarily of furniture, fixtures and equipment and are depreciated on a straight-line basis over the estimated useful lives, generally ranging from 3 to 5 years, and are included in other assets on our consolidated balance sheets.

Intangible Assets

We have allocated a portion of our real estate purchase price to in-place lease intangibles, which amortize on a straight-line basis over the estimated future benefit period. Additionally, we have intangible assets related to management contracts and one purchase and sale contract, which is not amortized, for a self storage property. As of March 31, 2023, the gross amount of the intangible assets was approximately $88.5 million, and accumulated amortization was approximately $74.8

17

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

million. As of December 31, 2022, the gross amount of the intangible assets was approximately $88.5 million, and accumulated amortization was approximately $72.9 million. In connection with the SSGT II Merger, we wrote-off the carrying value of the intangible assets related to the SSGT II property management and advisory agreements. See Note 10 – Related Party Transactions for additional information.

The total estimated future amortization expense related to the intangible asset for the years ending December 31, 2023, 2024, 2025, 2026, 2027, and thereafter is approximately $4.5 million, $0.2 million, $0.1 million, $0.1 million, $0.1 million, and $0.7 million thereafter, respectively.

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

Debt Issuance Costs

The net carrying value of costs incurred in connection with obtaining non revolving debt are presented on the balance sheet as a deduction from debt; amounts incurred related to obtaining revolving debt are included in the debt issuance costs line on our consolidated balance sheet (see Note 5 - Debt). Debt issuance costs are amortized using the effective interest method.

As of March 31, 2023 the gross amount of debt issuance costs related to our revolving credit facility totaled approximately $4.5 million and accumulated amortization of debt issuance costs related to our revolving credit facility totaled approximately $2.8 million. As of December 31, 2022, the gross amount of debt issuance costs related to our revolving credit facility totaled approximately $4.5 million, and accumulated amortization of debt issuance costs related to our revolving credit facility totaled approximately $2.4 million.

As of March 31, 2023, the gross amount allocated to debt issuance costs related to non-revolving debt totaled approximately $6.8 million and accumulated amortization of debt issuance costs related to non-revolving debt totaled approximately $2.6 million. As of December 31, 2022, the gross amount allocated to debt issuance costs related to non-revolving debt totaled approximately $7.0 million and accumulated amortization of debt issuance costs related to non-revolving debt totaled approximately $2.5 million.

Organizational and Offering Costs

Through March 31, 2022, we paid our Former Dealer Manager an ongoing stockholder servicing fee that was payable monthly and accrued daily in an amount equal to 1/365th of 1% of the purchase price per share of the Class T Shares sold in the Primary Offering. In accordance with the selling agreements we entered into with respect to the sale of Class T Shares, we ceased paying the stockholder servicing fee with respect to the Class T Shares sold in the Primary Offering on the fifth anniversary of the last day of the fiscal quarter in which our Primary Offering (i.e., excluding our distribution reinvestment plan offering) terminated (March 31, 2022). Our Former Dealer Manager entered into participating dealer agreements with certain other broker dealers which authorized them to sell our shares. Upon sale of our shares by such broker-dealers, our Former Dealer Manager re-allowed all of the sales commissions and, subject to certain limitations, the stockholder servicing fees paid in connection with sales made by these broker-dealers. Our Former Dealer Manager was also permitted to re-allow to these broker-dealers a portion of their dealer manager fee as marketing fees, reimbursement of certain costs and expenses of attending training and education meetings sponsored by our Former Dealer Manager, payment of attendance fees required for employees of our Former Dealer Manager or other affiliates to attend retail seminars and public seminars sponsored by these broker-dealers, or to defray other distribution-related expenses. We recorded a liability within due to affiliates for the future estimated stockholder servicing fees at the time of sale of Class T Shares as an offering cost.

Foreign Currency Translation

For non-U.S. functional currency operations, assets and liabilities are translated to U.S. dollars at current exchange rates, as of the reporting date. Revenues and expenses are translated at the average rates for the period. All adjustments related to amounts classified as long term net investments are recorded in accumulated other comprehensive income (loss) as a separate component of equity. Transactions denominated in a currency other than the functional currency of the related operation are recorded at rates of exchange in effect at the date of the transaction. Changes in investments not classified as long term are recorded in other income (expense) and represented a gain of approximately $35,000 and a gain of approximately $2.0 million for the three months ended March 31, 2023 and 2022, respectively.

18

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Redeemable Common Stock

We adopted a share redemption program (“SRP”) that enables stockholders to sell their shares to us in limited circumstances.

We have evaluated the terms of our SRP, and we classify amounts that are redeemable under the SRP as redeemable common stock in the accompanying consolidated balance sheets. The maximum amount of redeemable shares under our SRP is limited to the net proceeds from the distribution reinvestment plan. However, accounting guidance states that determinable amounts that can become redeemable should be presented as redeemable when such amount is known. Therefore, the net proceeds from the distribution reinvestment plan are considered to be temporary equity and are presented as redeemable common stock in the accompanying consolidated balance sheets.

In addition, current accounting guidance requires, among other things, that financial instruments that represent a mandatory obligation of us to repurchase shares be classified as liabilities and reported at settlement value. When we determine we have a mandatory obligation to repurchase shares under the SRP, we reclassify such obligations from temporary equity to a liability based upon their respective settlement values.

See Note 12 – Commitments and Contingencies for additional information on our SRP.

Accounting for Equity Awards

We issue equity based awards in two forms: (1) restricted stock awards consisting of shares of our common stock and (2) long-term incentive plan units of our Operating Partnership (“LTIP Units”), both of which may be issued subject to either time based vesting criteria or performance based vesting criteria restrictions. For time based awards granted which contain a graded vesting schedule, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. For performance based awards, compensation cost is recognized over the requisite service period if and when we determine the performance condition is probable of being achieved. We record the cost of such equity based awards based on the grant date fair value, and have elected to record forfeitures as they occur.

Employee Benefit Plan

The Company terminated its relationship with a professional employer organization and began maintaining its own retirement savings plan during the year ended December 31, 2021 under Section 401(k) of the Internal Revenue Code under which eligible employees can contribute up to 100% of their annual salary, subject to a statutory prescribed annual limit. For the three months ended March 31, 2023 and 2022, the Company made matching contributions to such plan of approximately $0.2 million and $0.2 million, respectively, based on a company match of 100% on the first 4% of an employee’s compensation.

Fair Value Measurements

Under GAAP, we are required to measure certain financial instruments at fair value on a recurring basis. In addition, we are required to measure other financial instruments and balances at fair value on a non-recurring basis. Fair value is defined by the accounting standard for fair value measurements and disclosures as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels. The following summarizes the three levels of inputs and hierarchy of fair value we use when measuring fair value:

•
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access;
•
Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as interest rates and yield curves that are observable at commonly quoted intervals; and
•
Level 3 inputs are unobservable inputs for the assets or liabilities that are typically based on an entity’s own assumptions as there is little, if any, related market activity.

19

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the fair value measurement will fall within the lowest level that is significant to the fair value measurement in its entirety.

The accounting guidance for fair value measurements and disclosures provides a framework for measuring fair value and establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In determining fair value, we will utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment will be necessary to interpret Level 2 and 3 inputs in determining fair value of our financial and non-financial assets and liabilities. Accordingly, there can be no assurance that the fair values we will present will be indicative of amounts that may ultimately be realized upon sale or other disposition of these assets.

Financial and non-financial assets and liabilities measured at fair value on a non-recurring basis in our consolidated financial statements consist of real estate and related liabilities assumed related to our acquisitions along with the assets and liabilities described in Note 3 – Real Estate Facilities. The fair values of these assets and liabilities were determined as of the acquisition dates using widely accepted valuation techniques, including (i) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (ii) income capitalization approach, which considers prevailing market capitalization rates, and (iii) comparable sales activity. Additionally, certain such assets and liabilities are required to be fair valued periodically or valued pursuant to ongoing fair value requirements and impairment analyses and have been valued subsequently utilizing the same techniques noted above. In general, we consider multiple valuation techniques when measuring fair values. However, in certain circumstances, a single valuation technique may be appropriate. All of the fair values of the assets and liabilities as of the acquisition dates were derived using Level 3 inputs.

The carrying amounts of cash and cash equivalents, restricted cash, other assets, accounts payable and accrued liabilities, distributions payable and amounts due to affiliates approximate fair value.

The table below summarizes the carrying amounts and fair values of financial instruments that are not carried at fair value as of March 31, 2023 and December 31, 2022. The estimated fair value of financial instruments is subjective in nature and is dependent on a number of important assumptions, including discount rates and relevant comparable market information associated with each financial instrument. The fair value of our fixed and variable rate debt was estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities (categorized within Level 2 of the fair value hierarchy). The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. As of March 31, 2023 and December 31, 2022, we believe the carrying amounts of our variable rate debt are reasonably estimated at their notional amounts as there have been minimal changes to the fixed spread portion of interest rates for similar loans observed in the market, and as the variable portion of our interest rates fluctuate with the associated market indices.

|  | March 31, 2023 |  |  | December 31, 2022 |
|  | Fair Value |  |  | Carrying Value |  |  | Fair Value |  |  | Carrying Value |
Fixed Rate Secured Debt |  | $ | 424,500,000 |  |  | $ | 442,004,515 |  |  | $ | 410,600,000 |  |  | $ | 442,672,020 |

During the three months ended March 31, 2023 and 2022, we held interest rate cash flow hedges and foreign currency net investment hedges to hedge our interest rate and foreign currency exposure (See Notes 5 – Debt and 7 – Derivative Instruments). The valuations of these instruments were determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. The analyses reflect the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The fair value of the interest rate swaps were determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash payments. Our fair values of our net investment hedges are based primarily on the change in the spot rate at the end of the period as compared with the strike price at inception.

To comply with GAAP, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the

20

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

fair value of derivative contracts for the effect of non-performance risk, we consider the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although we had determined that the majority of the inputs used to value our derivatives were within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilized Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties. However, through March 31, 2023, we had assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we determined that our derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.

Derivative Instruments and Hedging Activities

We record all derivatives on our balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. We may enter into derivative contracts that are intended to economically hedge certain of our risks, even though hedge accounting does not apply or we elect not to apply hedge accounting.

For derivatives designated as net investment hedges, the effective portion of changes in the fair value of the derivatives are reported in accumulated other comprehensive income (loss). The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts are reclassified out of other comprehensive (loss) income ("OCI") into earnings (loss) when the hedged net investment is either sold or substantially liquidated.

Income Taxes

We made an election to be taxed as a Real Estate Investment Trust (“REIT”), under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2014. To qualify as a REIT, we must continue to meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the REIT’s taxable income to stockholders (which is computed without regard to the dividends paid deduction or net capital gains and which does not equal net income as calculated in accordance with GAAP).

For income tax purposes, distributions to common stockholders are characterized as ordinary dividends, capital gain dividends, or as nontaxable distributions. To the extent that we make a distribution in excess of our current or accumulated earnings and profits, the distribution will be a non-taxable return of capital, reducing the tax basis in each U.S. stockholder’s shares, and the amount of each distribution in excess of a U.S. stockholder’s tax basis in its shares will be taxable as gain realized from the sale of its shares.

As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will then be subject to U.S. federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year during which qualification is lost unless the IRS grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders. However, we believe that we are organized and operate in such a manner as to qualify for treatment as a REIT and intend to operate in the foreseeable future in such a manner that we will remain qualified as a REIT for U.S. federal income tax purposes.

Even if we continue to qualify for taxation as a REIT, we may be subject to certain state, local, and foreign taxes on our income and property, and federal income and excise taxes on our undistributed income.

We filed an election to treat our Taxable REIT subsidiaries ("TRS") as a taxable REIT subsidiary effective January 1, 2014. In general, our TRS performs additional services for our customers and provides the advisory and property management services to the Managed REITs and otherwise generally engages in any real estate or non-real estate related business. The TRS is subject to corporate federal and state income tax.

21

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

We account for deferred income taxes using the asset and liability method and recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Any increase or decrease in the deferred tax liability that results from a change in circumstances, and that causes a change in our judgment about expected future tax consequences of events, is included in the tax provision when such changes occur. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards. A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. Any increase or decrease in the valuation allowance that results from a change in circumstances, and that causes a change in our judgment about the realizability of the related deferred tax asset, is included in the tax provision when such changes occur.

Uncertain tax positions may arise where tax laws may allow for alternative interpretations or where the timing of recognition of income is subject to judgment. Under ASC Topic 740, tax positions are evaluated for recognition using a more–likely–than–not threshold, and those tax positions requiring recognition are measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Interest and penalties relating to uncertain tax positions will be recognized in income tax expense when incurred. As of March 31, 2023 and December 31, 2022, the Company had no uncertain tax positions. As of March 31, 2023 and December 31, 2022, the Company had no interest or penalties related to uncertain tax positions. Income taxes payable are classified within accounts payable and accrued liabilities in the consolidated balance sheets. The tax years 2018-2021 remain open to examination by the major taxing jurisdictions to which we are subject.

Concentration

No single self storage customer represents a significant concentration of our revenues. For the month of March 2023, approximately 23.1%, 20.2%, and 9.9% of our rental income was concentrated in Florida, California, and the Greater Toronto Area of Canada, respectively. Our properties within the aforementioned geographic areas are dispersed therein, operating in multiple different regions and sub-markets.

Segment Reporting

Our business is composed of two reportable segments: (i) self storage operations and (ii) the Managed REIT Platform business. Please see Note 9 – Segment Disclosures for additional detail.

Convertible Preferred Stock

We classify our Series A Convertible Preferred Stock (as defined in Note 6 – Preferred Equity) on our consolidated balance sheets using the guidance in ASC 480‑10‑S99. Our Series A Convertible Preferred Stock can be redeemed by us on or after the fifth anniversary of its issuance, or if certain events occur, such as the listing of our common stock on a national securities exchange, a change in control, or if a redemption would be required to maintain our REIT status. Additionally, if we do not maintain our REIT status the holder can require redemption. As the shares are contingently redeemable, and under certain circumstances not solely within our control, we have classified our Series A Convertible Preferred Stock as temporary equity.

We have analyzed whether the conversion features in our Series A Convertible Preferred Stock should be bifurcated under the guidance in ASC 815‑10 and have determined that bifurcation is not necessary.

Per Share Data

Basic earnings per share attributable to our common stockholders for all periods presented are computed by dividing net income (loss) attributable to our common stockholders by the weighted average number of common shares outstanding during the period, excluding unvested restricted stock.

22

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Diluted earnings per share is computed by including the dilutive effect of the conversion of all potential common stock equivalents (which includes unvested restricted stock, Series A Convertible Preferred Stock, Class A and Class A-1 OP Units, and LTIP Units) and accordingly, as applicable, adjusting net income to add back any changes in earnings that reduce earnings per common share in the period associated with the potential common stock equivalents.

The computation of earnings per common share is as follows for the periods presented:

|  | For the Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Net income |  | $ | 2,032,600 |  |  | $ | 3,269,459 |
Net income attributable to noncontrolling interests |  |  | (340,365 | ) |  |  | (403,822 | )
Net income attributable to SmartStop Self Storage REIT, Inc. |  |  | 1,692,235 |  |  |  | 2,865,637 |
Less: Distributions to preferred stockholders |  |  | (3,082,192 | ) |  |  | (3,082,192 | )
Less: Distributions to participating securities |  |  | (92,343 | ) |  |  | (71,368 | )
Net loss attributable to common stockholders - basic: |  |  | (1,482,300 | ) |  |  | (287,923 | )
Net loss attributable to common stockholders - diluted: |  | $ | (1,482,300 | ) |  | $ | (287,923 | )
Weighted average common shares outstanding: |  |  |  |  |  |
Average number of common shares outstanding- basic |  |  | 96,820,723 |  |  |  | 85,017,745 |
Average number of common shares outstanding - diluted |  |  | 96,820,723 |  |  |  | 85,017,745 |
Earnings per common share: |  |  |  |  |  |
Basic |  | $ | (0.02 | ) |  | $ | (0.00 | )
Diluted |  | $ | (0.02 | ) |  | $ | (0.00 | )

The following table presents the weighted average Series A Convertible Preferred Stock, Class A and Class A-1 OP Units, unvested LTIP Units, and unvested restricted stock awards, that were excluded from the computation of diluted earnings per share above as their effect would have been antidilutive for the respective periods, and was calculated using the two-class, treasury stock or if-converted method, as applicable:

|  | For the Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
|  | Equivalent Shares (if converted) |  |  | Equivalent Shares (if converted) |
Series A Convertible Preferred Stock |  |  | 18,761,726 |  |  |  | 18,761,726 |
Class A and Class A-1 OP Units |  |  | 12,773,507 |  |  |  | 10,416,211 |
Unvested LTIP Units |  |  | 333,106 |  |  |  | 304,762 |
Unvested restricted stock awards |  |  | 81,554 |  |  |  | 126,037 |
|  |  | 31,949,893 |  |  |  | 29,608,736 |

Recently Adopted Accounting Guidance

23

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

In December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform (Topic 848)." ASU 2022-06 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. We elected to apply expedients related to contract modifications, changes in critical terms, and our assessments of effectiveness for designated hedged risks as qualifying changes are made to applicable debt and derivative contracts. Application of these expedients on such qualifying changes maintains the consistency of our presentation of debt and derivative contracts.

Note 3. Real Estate Facilities

The following summarizes the activity in real estate facilities during the three months ended March 31, 2023:

Real estate facilities |  |  |
Balance at December 31, 2022 |  | $ | 1,887,205,645 |
Impact of foreign exchange rate changes |  |  | 262,495 |
Improvements and additions |  |  | 2,993,460 |
Balance at March 31, 2023 |  | $ | 1,890,461,600 |
Accumulated depreciation |  |  |
Balance at December 31, 2022 |  | $ | (202,682,688 | )
Depreciation expense |  |  | (13,056,494 | )
Impact of foreign exchange rate changes |  |  | (34,896 | )
Balance at March 31, 2023 |  | $ | (215,774,078 | )

SSGT II Merger

On June 1, 2022, we closed on our merger with SSGT II (the "SSGT II Merger"). On such date, (the "SSGT II Merger Date"), each share of SSGT II’s common stock, $0.001 par value per share (“SSGT II Common Stock”), issued and outstanding immediately prior to the effective time of the Merger (other than shares owned by us, any subsidiary of ours, or any subsidiary of SSGT II) was automatically converted into the right to receive 0.9118 shares of our Class A Shares, subject to the treatment of fractional shares in accordance with the SSGT II merger agreement (the “SSGT II Merger Consideration”).

As a result, we acquired all of the real estate owned by SSGT II, consisting of (i) 10 wholly-owned self storage facilities located in seven states comprising approximately 7,740 self storage units and approximately 853,900 net rentable square feet, and (ii) SSGT II’s 50% equity interest in three unconsolidated real estate ventures located in the Greater Toronto Area of Ontario, Canada. As of the merger date, the unconsolidated real estate ventures (collectively, the "SSGT II JV Properties") consisted of one operating self storage property and two parcels of land being developed into self storage facilities, with subsidiaries of SmartCentres Real Estate Investment Trust, an unaffiliated third party ("SmartCentres") owning the other 50% of such entities. Additionally, we obtained SSGT II's rights to acquire (i) one parcel of land being developed into a self storage facility in an unconsolidated joint venture with SmartCentres, and (ii) a self storage property located in Southern California. On January 12, 2023, we acquired the aforementioned parcel of land in an unconsolidated joint venture that we and SmartCentres intend to develop into a self storage facility in the future. As of March 31, 2023, one of the development joint venture properties had been completed and had begun operations.

The following table reconciles the total consideration transferred in the SSGT II Merger:

Fair value of consideration: |  |  |
Common stock issued |  | $ | 168,791,577 |
Cash(1) |  |  | 76,300,006 |
Preexisting investments in and advances to SSGT II(2) |  |  | 16,066,930 |
Total consideration |  | $ | 261,158,513 |

(1) The approximately $76.3 million in cash was primarily used to pay off approximately $75.1 million of SSGT II's debt that we did not assume in the SSGT II Merger, as well as approximately $1.2 million in transaction costs.

24

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

(2) Upon our acquisition of SSGT II, we recorded a gain of approximately $16.1 million to record the then fair market value of our special limited partnership interest in SSGT II operating partnership.

We issued approximately 11.5 million Class A Shares to the former SSGT II stockholders in connection with the SSGT II Merger. The estimated fair value of our common stock issued was determined by third party valuation specialists primarily based on an income approach to value our properties as well as our Managed REIT Platform, adjusted for market related adjustments and illiquidity discounts, less the estimated fair value of our debt and other liabilities.

These fair value measurements are based on significant inputs not observable in the market and thus represent a Level 3 measurement as discussed in Note 2 – Summary of Significant Accounting Policies. The key assumptions used in estimating the fair value of our common stock included a marketability discount of 6%, projected annual net operating income, land sales comparisons, growth rates, discount rates, and capitalization rates.

The following table summarizes the relative fair values of the assets acquired and liabilities assumed in the SSGT II

Merger:

Assets Acquired: |  |  |
Land |  | $ | 21,111,616 |
Buildings |  |  | 201,026,974 |
Site improvements |  |  | 6,221,128 |
Construction in process |  |  | 252,925 |
Intangible assets (1) |  |  | 15,688,002 |
Investments in real estate joint ventures |  |  | 7,394,539 |
Cash and cash equivalents, and restricted cash |  |  | 10,759,283 |
Other assets |  |  | 847,359 |
Total assets acquired |  | $ | 263,301,826 |
Liabilities assumed: |  |  |
Total liabilities assumed (2) |  | $ | 2,143,313 |
Total net assets acquired |  | $ | 261,158,513 |

(1) Approximately $8.0 million of the intangible assets acquired relates to the value of a purchase and sale agreement for the acquisition of a property in San Gabriel, CA that we assumed in the SSGT II Merger. The remainder of the intangible asset relates to value ascribed to the in-place leases on the properties acquired.

(2) Liabilities assumed represents accounts payable and other liabilities.

As a result of our acquiring SSGT II and terminating the preexisting advisory and property management agreements with SSGT II, we expensed approximately $2.0 million related to such assets on the acquisition date.

SST IV Merger

On March 17, 2021, we closed on our merger with SST IV (the “SST IV Merger”). On such date, (the "SST IV Merger Date"), we acquired all of the real estate owned by SST IV, consisting of (i) 24 self storage facilities located in nine states comprising approximately 18,000 self storage units and approximately 2.0 million net rentable square feet, and (ii) SST IV’s 50% equity interest in six unconsolidated real estate ventures located in the Greater Toronto Area of Ontario, Canada (collectively the “SST IV JV Properties”). The SST IV JV Properties consisted of three operating self storage properties and three parcels of land in various stages of development into self storage facilities as of the merger date, jointly owned with subsidiaries of SmartCentres. As of March 31, 2023 the three development joint venture properties had been completed and had begun operations.

As a result of the SST IV Merger, approximately 23.1 million Class A Shares were issued in exchange for approximately 10.6 million shares of SST IV common stock.

Self Storage Facility Acquisitions

25

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

There were no self storage facility acquisitions during the three months ended March 31, 2023.

Potential Acquisitions

Subsequent to March 31, 2023, we, through our wholly-owned subsidiaries were party to two purchase and sale agreements with unaffiliated third parties for the acquisition of self storage facilities in the United States. The total purchase price for the properties was approximately $33.4 million, plus closing costs. There can be no assurance that we will complete these acquisitions. If we fail to acquire these properties, in addition to the incurred acquisition costs, we may also forfeit earnest money as a result.

We may assign the above purchase and sale agreement to one of our Managed REITs.

Note 4. Investments in Unconsolidated Real Estate Ventures

As a result of the SST IV Merger, we acquired six self storage real estate joint ventures located in the Greater Toronto Area of Ontario, Canada, all of which were operating properties as of March 31, 2023. As a result of the SSGT II Merger, we acquired three self storage real estate joint ventures located in the Greater Toronto Area of Ontario, Canada, two of which were operating properties and one of which was under development as of March 31, 2023.

On May 25, 2022, we, as 50% owner and SmartCentres as the other 50% owner of a joint venture subsidiary, purchased a single tenant industrial building located in the city of Burnaby, British Columbia (the “Regent Property”), that we and SmartCentres intend to develop into a self storage facility in the future. Our 50% of the total purchase price for the Regent Property was approximately $3.5 million CAD (or approximately $2.7 million USD), plus closing costs.

On January 12, 2023, we as 50% owner and SmartCentres as the other 50% owner of a joint venture subsidiary, purchased a parcel of land in Whitby, Ontario, that we and SmartCentres intend to develop into a self storage facility in the future. Our 50% of the total purchase price for the North Whitby Property was approximately $2.7 million CAD (or approximately $2.0 million USD), plus closing costs.

These joint venture agreements are with a subsidiary of SmartCentres, an unaffiliated third party, to acquire, develop, and operate self storage facilities. In accordance with such agreements, we intend to fund development costs of approximately two million dollars during 2023 and an additional three million dollars, primarily during 2026 and 2027.

We account for these investments using the equity method of accounting and they are stated at cost and adjusted for our share of net earnings or losses and reduced by distributions and increased for contributions. Equity in earnings (loss) will generally be recognized based on our ownership interest in the earnings (loss) of each of the unconsolidated investments, and is recorded in the accompanying consolidated statements of operations. For the three months ended March 31, 2023 and 2022, we recorded net aggregate loss of approximately $0.4 million and $0.2 million respectively, from our equity in earnings related to our unconsolidated real estate ventures in Canada.

The following table summarizes our 50% ownership interests in investments in unconsolidated real estate ventures in Canada (the "JV Properties"):

JV Property |  | Date Real Estate Venture Became Operational |  | Carrying Value of Investment as of March 31, 2023 |  |  | Carrying Value of Investment as of December 31, 2022 |
Dupont (1) |  | October 2019 |  | $ | 4,165,843 |  |  | $ | 4,245,434 |
East York (2) |  | June 2020 |  |  | 6,053,558 |  |  |  | 6,039,951 |
Brampton (2) |  | November 2020 |  |  | 2,153,385 |  |  |  | 2,166,186 |
Vaughan (2) |  | January 2021 |  |  | 2,588,556 |  |  |  | 2,625,089 |
Oshawa (2) |  | August 2021 |  |  | 1,478,252 |  |  |  | 1,506,798 |
Scarborough (2) |  | November 2021 |  |  | 2,329,895 |  |  |  | 2,364,175 |
Aurora (1) |  | December 2022 |  |  | 2,413,304 |  |  |  | 2,546,407 |
Kingspoint (2) |  | March 2023 |  |  | 3,625,055 |  |  |  | 3,342,969 |
Markham (1) |  | Under Development |  |  | 1,193,093 |  |  |  | 1,038,541 |
Regent (3) |  | Under Development |  |  | 2,657,661 |  |  |  | 2,646,532 |
North Whitby |  | Under Development |  |  | 2,656,772 |  |  |  | - |
|  |  |  | $ | 31,315,374 |  |  | $ | 28,522,082 |

26

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

(1)
These joint venture properties were acquired through the SSGT II Merger.
(2)
These joint venture properties were acquired through the SST IV Merger.
(3)
This property is currently leased as a single tenant industrial lease. The joint venture plans to develop this property into a self storage facility in the future.

We as 50% owner and SmartCentres as the other 50% owner of a joint venture subsidiary were party to two purchase and sale agreements for the acquisition of land in Canada intended to be developed into self storage facilities which had not yet closed. Our 50% portion of the total purchase price for these properties was approximately USD $7.7 million, plus closing costs. There can be no assurance that we will complete these acquisitions. Additionally, we may assign some or all of such purchase and sale agreements to the Managed REITs. If we fail to acquire these properties, in addition to the incurred acquisition costs, we may also forfeit earnest money as a result.

Financing Agreement

In connection with the SST IV Merger, we, through our acquisition of the Oshawa, East York, Brampton, Vaughan, and Scarborough joint venture partnerships, also became party to a master mortgage commitment agreement (the “MMCA I”) with SmartCentres Storage Finance LP (the “SmartCentres Lender”) (collectively, the “SmartCentres Loan I”). The SmartCentres Lender is an affiliate of SmartCentres.

On August 18, 2021, the Kingspoint property was added to the MMCA I, increasing the available capacity. The SmartCentres Loan I includes an accordion feature such that borrowings pursuant thereto may be increased up to approximately $120 million CAD subject to certain conditions set forth in the MMCA I.

On June 1, 2022, in connection with the SSGT II Merger, we assumed another loan with the SmartCentres Lender. SSGT II had previously entered into a master mortgage commitment agreement on April 30, 2021, which was subsequently modified on October 22, 2021 (the "MMCA II"), with the SmartCentres Lender in the amount of up to approximately $34.3 million CAD (the “SmartCentres Loan II”) (collectively with SmartCentres Loan I, the "SmartCentres Financings"). The borrowers under the SmartCentres Loan II are the joint venture entities in which we (SSGT II prior to June 1, 2022), and SmartCentres each hold a 50% limited partnership interest with respect to the Dupont and Aurora joint venture properties. In connection with the SmartCentres Loan II assumption, we became a recourse guarantor for 50% of the SmartCentres Financings.

On September 13, 2022, the Markham property was added to the MMCA II, increasing the available capacity. The SmartCentres Loan II includes an accordion feature such that borrowings pursuant thereto may be increased up to approximately $120 million CAD subject to certain conditions set forth in the MMCA II.

As of March 31, 2023, approximately $119.2 million CAD or approximately $88.0 million in USD, was outstanding on the SmartCentres Financings. As of December 31, 2022, approximately $116.7 million CAD or approximately $86.1 million USD was outstanding on the SmartCentres Financings. The proceeds of the SmartCentres Financings have been and will generally be used to finance the acquisition, development, and construction of the JV Properties.

The SmartCentres Financings are secured by first mortgages on each of the JV Properties, excluding the Regent and North Whitby Properties. Interest on the SmartCentres Financings is a variable annual rate equal to the aggregate of: (i) the BA Equivalent Rate, plus: (ii) a margin based on the External Credit Rating, plus (iii) a margin under the Senior Credit Facility, each as defined and described further in the MMCA I and MMCA II. As of March 31, 2023, the total interest rate was approximately 7.1%.

The SmartCentres Financings, as amended, have a maturity date of May 11, 2024, and each contain two one year extension options. Monthly interest payments are initially capitalized on the outstanding principal balance. Upon a JV Property generating sufficient Net Cash Flow (as defined in the MMCA I and MMCA II), the SmartCentres Financings provide for the commencement of quarterly payments of interest. As of March 31, 2023, Dupont, East York, Brampton, and Vaughan were generating sufficient net cash flow and therefore were required to and were making such interest payments. The borrowings advanced pursuant to the SmartCentres Financings may be prepaid without penalty, subject to certain conditions set forth in the MMCA I and MMCA II.

The SmartCentres Financings contain customary affirmative and negative covenants, agreements, representations, warranties and borrowing conditions (including a loan to value ratio of no greater than 70% with respect to each JV Property)

27

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

and events of default, all as set forth in the MMCA I and MMCA II. We serve as a full recourse guarantor with respect to 50% of the SmartCentres Financings. As of March 31, 2023, we were in compliance with all such covenants.

Note 5. Debt

Our debt is summarized as follows:

Loan |  | March 31, 2023 |  |  | December 31, 2022 |  |  | Interest Rate |  |  | Maturity Date
KeyBank CMBS Loan(1) |  | $ | 92,342,830 |  |  | $ | 92,784,412 |  |  |  | 3.89 | % |  | 8/1/2026
KeyBank Florida CMBS Loan(2) |  |  | 51,349,523 |  |  |  | 51,555,279 |  |  |  | 4.65 | % |  | 5/1/2027
CMBS Loan(3) |  |  | 104,000,000 |  |  |  | 104,000,000 |  |  |  | 5.00 | % |  | 2/1/2029
SST IV CMBS Loan (4) |  |  | 40,500,000 |  |  |  | 40,500,000 |  |  |  | 3.56 | % |  | 2/1/2030
Credit Facility Term Loan - USD |  |  | 250,000,000 |  |  |  | 250,000,000 |  |  |  | 6.57 | % |  | 3/17/2026
Credit Facility Revolver - USD |  |  | 393,201,288 |  |  |  | 368,201,288 |  |  |  | 6.62 | % |  | 3/17/2024
2032 Private Placement Notes |  |  | 150,000,000 |  |  |  | 150,000,000 |  |  |  | 5.28 | % | (5) | 4/19/2032
Oakville III BMO Loan (6) (7) |  |  | — |  |  |  | 11,992,500 |  |  |  |  |  | 5/16/2024
Ladera Office Loan |  |  | 3,902,079 |  |  |  | 3,925,448 |  |  |  | 4.29 | % |  | 11/1/2026
Discount on secured debt, net |  |  | (89,917 | ) |  |  | (93,147 | ) |  |  |  |  |
Debt issuance costs, net |  |  | (4,196,704 | ) |  |  | (4,493,824 | ) |  |  |  |  |
Total debt |  | $ | 1,081,009,099 |  |  | $ | 1,068,371,956 |  |  |  |  |  |

(1)
This fixed rate loan encumbers 29 properties (Whittier, La Verne, Santa Ana, Upland, La Habra, Monterey Park, Huntington Beach, Chico, Lancaster I, Riverside, Fairfield, Lompoc, Santa Rosa, Federal Heights, Aurora, Littleton, Bloomingdale, Crestwood, Forestville, Warren I, Sterling Heights, Troy, Warren II, Beverly, Everett, Foley, Tampa, Boynton Beach, and Lancaster II) with monthly interest only payments until September 2021, at which time both interest and principal payments became due monthly. The separate assets of these encumbered properties are not available to pay our other debts.
(2)
This fixed rate loan encumbers five properties (Pompano Beach, Lake Worth, Jupiter, Royal Palm Beach, and Delray) with monthly interest only payments until June 2022, at which time both interest and principal payments became due monthly. The separate assets of these encumbered properties are not available to pay our other debts.
(3)
This fixed rate, interest only loan encumbers 10 properties (Myrtle Beach I, Myrtle Beach II, Port St. Lucie, Plantation, Sonoma, Las Vegas I, Las Vegas II, Las Vegas III, Ft Pierce, Nantucket Island). The separate assets of these encumbered properties are not available to pay our other debts.
(4)
On March 17, 2021, in connection with the SST IV Merger, we assumed a $40.5 million fixed rate CMBS financing with KeyBank as the initial lender pursuant to a mortgage loan (the “SST IV CMBS Loan”). This fixed rate loan encumbers seven properties owned by us (Jensen Beach, Texas City, Riverside, Las Vegas IV, Puyallup, Las Vegas V, and Plant City). The separate assets of these encumbered properties are not available to pay our other debt. The loan has a maturity date of February 1, 2030. Monthly payments due under the loan agreement are interest only, with the full principal amount becoming due and payable on the maturity date.
(5)
This note accrued interest at a rate of 4.53% for the three months ended March 31, 2023. As of March 31, 2023, a Total Leverage Ratio Event (as defined below) had occurred, and the interest rate on such Note increased to 5.28% prospectively. For additional information regarding this loan, see below.
(6)
On April 15, 2021, we purchased the Oakville III Property. We partially financed the Oakville III property acquisition with a loan from Bank of Montreal (the “Oakville III BMO Loan”), which was secured by a first lien on the Oakville III property. The loan was denominated in Canadian dollars and the proceeds from the loan were approximately $16.3 million CAD. The interest only loan was prepayable at any time without penalty, and bore interest at a rate of 2.25% + CDOR. On March 24, 2023, we fully paid off this loan, including all outstanding accrued interest.
(7)
The amounts shown above are in USD based on the foreign exchange rate in effect as of the date presented.

28

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

The weighted average interest rate on our consolidated debt, excluding the impact of our interest rate hedging activities, as of March 31, 2023 was approximately 5.82%. We are subject to certain restrictive covenants relating to the outstanding debt, and as of March 31, 2023, we were in compliance with all such covenants.

2032 Private Placement Notes

On April 19, 2022, we as guarantor, and our Operating Partnership as issuer, entered into a note purchase agreement ("The Note Purchase Agreement") which provides for the private placement of $150 million of 4.53% Senior Notes due April 19, 2032 (the "2032 Private Placement Notes"). The sale and purchase of the 2032 Private Placement Notes occurred in two closings, with the first of such closings having occurred on April 19, 2022 with $75 million aggregate principal amount of the 2032 Private Placement Notes having been issued on such date (the “First Closing”) and the second of such closings having occurred on May 25, 2022 with $75 million aggregate principal amount of the 2032 Private Placement Notes having been issued on such date (the “Second Closing”). Interest on each series of the 2032 Private Placement Notes will be payable semiannually on the nineteenth day of April and October in each year.

Interest Payable on the Notes was originally subject to a prospective 75 basis points increase, if, as of March 31, 2023, the ratio of total indebtedness to EBITDA (the “Total Leverage Ratio”) of the Company and its subsidiaries, on a consolidated basis, was greater than 7.00 to 1.00 (a “Total Leverage Ratio Event”).

As of March 31, 2023, such Total Leverage Ratio Event had occurred, and our 2032 Private Placement Notes began accruing interest at a rate of 5.28%. The interest accruing on the 2032 Private Placement Notes will continue to accrue at 5.28% until such time as the Total Leverage Ratio is less than or equal to 7.00 to 1.00 for two consecutive fiscal quarters, upon such achievement, the applicable fixed interest rate will revert to 4.53%.

We are permitted to prepay at any time all, or from time to time, any part of the Notes in amounts not less than 5% of the 2032 Private Placement Notes then outstanding at (i) 100% of the principal amount so prepaid and (ii) the make-whole amount. The “Make-Whole Amount” is equal to the excess, if any, of the discounted value of the remaining scheduled payments with respect to the 2032 Private Placement Notes being prepaid over the amount of such 2032 Private Placement Notes. In addition, in connection with a change of control, the Operating Partnership is required to offer to prepay the 2032 Private Placement Notes at 100% of the principal amount plus accrued and unpaid interest thereon, but without the Make Whole Amount or any other prepayment premium or penalty of any kind. The Company must also maintain a debt rating of the 2032 Private Placement Notes by a rating agency.

The Note Purchase Agreement contains certain customary representations and warranties, affirmative, negative and financial covenants, and events of default that are substantially similar to our existing Credit Facility (defined below). The 2032 Private Placement Notes have been issued on a pari passu basis with the Credit Facility, and as such, the Company and certain of its subsidiaries (the "Subsidiary Guarantors") fully and unconditionally guarantee the Operating Partnership's obligations under the 2032 Private Placement Notes. The 2032 Private Placement Notes are initially secured by a pledge of equity interests in the Subsidiary Guarantors on similar terms as the Credit Facility.

The proceeds from the 2032 Private Placement Notes were used primarily to pay off existing debt and to pay off certain existing indebtedness of SSGT II in connection with the SSGT II Merger.

Credit Facility

On March 17, 2021, we, through our Operating Partnership (the “Borrower”), entered into a credit facility with KeyBank, National Association, as administrative agent, KeyBanc Capital Markets, Inc., Wells Fargo Securities, Citibank, N.A., and BMO Capital Markets, Corp., as joint book runners and joint lead arrangers, and certain other lenders party thereto (the “Credit Facility”).

The initial aggregate amount of the Credit Facility was $500 million, which consisted of a $250 million revolving credit facility (the “Credit Facility Revolver”) and a $250 million term loan (the “Credit Facility Term Loan”). The Borrower had the right to increase the amount available under the Credit Facility by an additional $350 million (the “Accordion Feature”), for an aggregate amount of $850 million, subject to certain conditions. The Credit Facility also includes sublimits of (a) up to $25 million for letters of credit and (b) up to $25 million for swingline loans; each of these sublimits are part of, and not in addition to, the amounts available under the Credit Facility Revolver. Borrowings under the Credit Facility may be in either U.S. dollars or Canadian dollars.

29

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

The maturity date of the Credit Facility Revolver is March 17, 2024, subject to a one-year extension option, at our election. The maturity date of the Credit Facility Term Loan is March 17, 2026, which cannot be extended. The Credit Facility may be prepaid or terminated at any time without penalty; provided, however, that the lenders shall be indemnified for certain breakage costs.

On October 7, 2021, the Borrower and lenders who were party to the Credit Facility amended the Credit Facility to increase the commitment on the Credit Facility Revolver by $200 million for a total commitment of $450 million. In connection with the increased commitments, additional lenders were added to the Credit Facility. The commitments on the Credit Facility Term Loan remain unchanged. As a result of this amendment, the aggregate commitment on the Credit Facility is now $700 million. In addition, the Accordion Feature was also amended such that Borrower has the right to increase the aggregate amount of the Credit Facility by an additional $350 million, for an aggregate amount of up to $1.05 billion, subject to certain conditions.

On April 19, 2022, we amended the Credit Facility (the “Credit Facility Amendment”). The primary purpose of the Credit Facility Amendment was to: (i) facilitate the issuance of the 2032 Private Placement Notes, (ii) make conforming changes between the Note Purchase Agreement and the Credit Facility, and (iii) modify the Credit Facility to reflect a transition from London Interbank Offer Rate ("LIBOR") to secured overnight financing rate ("SOFR") for floating rate borrowings.

As of March 31, 2023, advances under the Credit Facility Term Loan incurred interest at 180 basis points spread over daily simple SOFR plus an additional 10 basis points (the "SOFR Index Adjustment") or 30-day Canadian dollar offered rate ("CDOR"), while advances under the Credit Facility Revolver incurred interest at 185 basis points spread over Daily Simple SOFR plus an additional 10 basis points (the SOFR Index Adjustment) or 30-day CDOR. The Credit Facility is also subject to an annual unused fee based upon the average amount of the unused portion of the Credit Facility Revolver, which varies from 15 bps to 25 bps, depending on the size of the unused amount, as well as whether a Security Interest Termination Event (defined below) has occurred.

The rate spreads above Daily Simple SOFR plus the SOFR Index Adjustment or CDOR at which the Credit Facility incurs interest are subject to increase based on the consolidated leverage ratio. There are five leverage tiers under the Credit Facility, with the top tier limited to a maximum leverage of 60% and maximum spreads of 225 basis points and 230 basis points on the Term Loan and the Credit Facility Revolver, respectively. As of March 31, 2023, the consolidated leverage ratio was within the second leverage tier.

The Credit Facility is fully recourse, jointly and severally, to us, our Operating Partnership, and certain of our subsidiaries (the “Subsidiary Guarantors”). In connection with this, we, our Operating Partnership, and our Subsidiary Guarantors executed guarantees in favor of the lenders. The Credit Facility is also cross-defaulted to (i) any recourse debt of ours, our Operating Partnership, or the Subsidiary Guarantors and (ii) any non-recourse debt of ours, our Operating Partnership, or the Subsidiary Guarantors of at least $75 million.

The Credit Facility is initially secured by a pledge of equity interests in the Subsidiary Guarantors. However, upon the achievement of certain security interest termination conditions, the pledges shall be released and the Credit Facility shall become unsecured.

The Credit Facility contains certain customary representations and warranties, affirmative, negative and financial covenants, borrowing conditions, and events of default. In particular, the financial covenants imposed include: a maximum leverage ratio, a minimum fixed charge coverage ratio, a minimum tangible net worth, certain limits on both secured debt and secured recourse debt, certain payout ratios of dividends paid to core funds from operations, limits on unhedged variable rate debt, and minimum liquidity. If an event of default occurs and continues, the Borrower is subject to certain actions by the administrative agent, including, without limitation, the acceleration of repayment of all amounts outstanding under the Credit Facility.

During the year ended December 31, 2022, the borrowing base was expanded to include the two properties acquired in May 2022, the 10 wholly-owned operating properties acquired in the SSGT II Merger, the 11 properties previously encumbered by the Midland North Carolina CMBS Loan, and the five properties previously encumbered by a loan with TCF Bank, such that as of March 31, 2023, 99 of our wholly owned properties were encumbered by the Credit Facility.

30

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

The availability of the Credit Facility is subject to certain calculations, including a debt service coverage ratio (“DSCR”) calculation which utilizes prevailing treasury rates within the calculation. As of March 31, 2023, the Borrower had borrowed approximately $393 million of the $450 million current capacity of the Credit Facility Revolver and all $250 million of the $250 million current capacity of the Credit Facility Term Loan. As of March 31, 2023, we have the full ability to draw on the remaining balance of the revolver.

The following table presents the future principal payment requirements on outstanding debt as of March 31, 2023:

2023 |  | $ | 1,968,696 |
2024 |  |  | 395,936,183 |
2025 |  |  | 2,869,187 |
2026 |  |  | 341,916,098 |
2027 |  |  | 48,105,556 |
2028 and thereafter |  |  | 294,500,000 |
Total payments |  |  | 1,085,295,720 |
Discount on secured debt |  |  | (89,917 | )
Debt issuance costs, net |  |  | (4,196,704 | )
Total |  | $ | 1,081,009,099 |

Note 6. Preferred Equity

Series A Convertible Preferred Stock

On October 29, 2019 (the “Commitment Date”), we entered into a preferred stock purchase agreement (the “Purchase Agreement”) with Extra Space Storage LP (the “Investor”), a subsidiary of Extra Space Storage Inc. (NYSE: EXR), pursuant to which the Investor committed to purchase up to $200 million in preferred shares (the aggregate shares to be purchased, the “Preferred Shares”) of our new Series A Convertible Preferred Stock (the “Series A Convertible Preferred Stock”), in one or more closings (each, a “Closing,” and collectively, the “Closings”). The initial closing (the “Initial Closing”) in the amount of $150 million occurred on the Commitment Date, and the second and final closing in the amount of $50 million occurred on October 26, 2020. We incurred approximately $3.6 million in issuance costs related to the Series A Convertible Preferred Stock, which were recorded as a reduction to Series A Convertible Preferred stock on our consolidated balance sheets.

The shares of Series A Convertible Preferred Stock rank senior to all other shares of our capital stock, including our common stock, with respect to rights to receive dividends and to participate in distributions or payments upon any voluntary or involuntary liquidation, dissolution or winding up of the Company. Dividends payable on each share of Series A Convertible Preferred Stock will initially be equal to a rate of 6.25% per annum. If the Series A Convertible Preferred Stock has not been redeemed on or prior to the fifth anniversary date of the Initial Closing, the dividend rate will increase an additional 0.75% per annum each year thereafter to a maximum of 9.0% per annum until the tenth anniversary of the Initial Closing, at which time the dividend rate shall increase 0.75% per annum each year thereafter until the Series A Convertible Preferred Stock is redeemed or repurchased in full. The dividends are payable in arrears for the prior calendar quarter on or before the 15th day of March, June, September and December of each year.

Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of Series A Convertible Preferred Stock will be entitled to receive a payment equal to the greater of (i) aggregate purchase price of all outstanding Preferred Shares, plus any accrued and unpaid dividends (the “Liquidation Amount”) and (ii) the amount that would have been payable had the Preferred Shares been converted into common stock pursuant to the terms of the Purchase Agreement immediately prior to such liquidation.

Subject to certain additional redemption rights, as described herein, we have the right to redeem the Series A Convertible Preferred Stock for cash at any time following the fifth anniversary of the Initial Closing. The amount of such redemption will be equal to the Liquidation Amount. Upon the listing of our common stock on a national securities exchange (the “Listing”), we have the right to redeem any or all outstanding Series A Convertible Preferred Stock at an amount equal to the greater of (i) the amount that would have been payable had such Preferred Shares been converted into common stock pursuant to the terms of the Purchase Agreement immediately prior to the Listing, and then all of such Preferred Shares were

31

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

sold in the Listing, or (ii) the Liquidation Amount, plus a premium amount (the “Premium Amount”) of 10%, 8%, 6%, 4%, or 2% if redeemed prior to the first, second, third, fourth, or fifth anniversary dates of issuance, respectively, or 0% if redeemed thereafter, as set forth in the Articles Supplementary. Upon a change of control event, we have the right to redeem any or all outstanding Series A Convertible Preferred Stock at an amount equal to the greater of (i) the amount that would have been payable had the Preferred Shares been converted into common stock pursuant to the terms of the Purchase Agreement immediately prior to such change of control or (ii) the Liquidation Amount, plus the Premium Amount, as set forth in the Articles Supplementary. In addition, subject to certain cure provisions, if we fail to maintain our status as a real estate investment trust, the holders of Series A Convertible Preferred Stock have the right to require us to repurchase the Series A Convertible Preferred Stock at an amount equal to the Liquidation Amount with no Premium Amount.

Subject to our redemption rights in the event of a listing or change of control described above, upon the earlier to occur of (i) the second anniversary of the Initial Closing or (ii) 180 days after a Listing, the holders of Series A Convertible Preferred Stock have the right to convert any or all of the Series A Convertible Preferred Stock held by such holders into common stock at a rate per share equal to the quotient obtained by dividing the Liquidation Amount by the conversion price. The conversion price is $10.66, as may be adjusted in connection with stock splits, stock dividends and other similar transactions.

The holders of Series A Convertible Preferred Stock are not entitled to vote on any matter submitted to a vote of our stockholders, except that in the event that the dividend for the Series A Convertible Preferred Stock has not been paid for at least four quarters (whether or not consecutive), the holders of Series A Convertible Preferred Stock have the right to vote together with our stockholders on any matter submitted to a vote of our stockholders, upon which the holders of the Series A Convertible Preferred Stock and holders of common stock shall vote together as a single class. The number of votes applicable to a share of Series A Convertible Preferred Stock will be equal to the number of shares of common stock a share of Series A Convertible Preferred Stock could have been converted into as of the record date set for purposes of such stockholder vote. This foregoing limited voting right shall cease when all past dividend periods have been paid in full. In addition, the affirmative vote of the holders of a majority of the outstanding shares of Series A Convertible Preferred Stock is required in certain customary circumstances, as well as other circumstances, such as (i) our real estate portfolio exceeding a leverage ratio of 60% loan-to-value, (ii) entering into certain transactions with our Executive Chairman as of the Commitment Date, or his affiliates, (iii) effecting a merger (or similar) transaction with an entity whose assets are not at least 80% self storage related and (iv) entering into any line of business other than self storage and ancillary businesses, unless such ancillary business represents revenues of less than 10% of our revenues for our last fiscal year.

In connection with the issuance of the Series A Convertible Preferred Stock, we and the Investor also entered into an investors’ rights agreement (the “Investors’ Rights Agreement”) which provides the Investor with certain customary protections, including demand registration rights and “piggyback” registration rights with respect to our common stock issued to the Investor upon conversion of the Preferred Shares.

As of March 31, 2023, there were 200,000 Preferred Shares outstanding with an aggregate liquidation preference of approximately $203.1 million, which consists of $150 million from the Initial Closing, $50 million from a closing on October 26, 2020 and approximately $3.1 million of accumulated and unpaid distributions. As of December 31, 2022, there were 200,000 Preferred Shares outstanding with an aggregate liquidation preference of approximately $203.2 million, which consists of $150 million from the Initial Closing, $50 million from a closing on October 26, 2020 and approximately $3.2 million of accumulated and unpaid distributions.

Note 7. Derivative Instruments

Interest Rate Derivatives

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we have used interest rate swaps and caps as part of our interest rate risk management strategy. For derivatives designated and qualified as a hedge, the change in the fair value of the effective portion of the derivative is recorded in accumulated other comprehensive income (loss) (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on our variable rate debt. In addition, we classify cash flows from qualifying cash flow hedging relationships in the same category as the cash flows from the hedged items in our consolidated statements of cash flows.

32

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

We do not use interest rate derivatives for trading or speculative purposes. Derivatives not designated as hedges are not speculative and are used to manage our exposure to interest rate movements and other identified risks but we have elected not to apply hedge accounting. Changes in the fair value of interest rate derivatives not designated in hedging relationships are recorded in other income (expense) within our consolidated statements of operations.

Foreign Currency Hedges

Our objectives in using foreign currency derivatives are to add stability to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar and to manage our exposure to exchange rate movements. To accomplish this objective, we have used foreign currency forwards and foreign currency options as part of our exchange rate risk management strategy. A foreign currency forward contract is a commitment to deliver a certain amount of currency at a certain price on a specific date in the future. By entering into the forward contract and holding it to maturity, we are locked into a future currency exchange rate in an amount equal to and for the term of the forward contract. A foreign currency option contract is a commitment by the seller of the option to deliver, solely at the option of the buyer, a certain amount of currency at a certain price on a specific date. For derivatives designated as net investment hedges, the changes in the fair value of the derivatives are reported in accumulated other comprehensive income. Amounts are reclassified out of accumulated other comprehensive income (loss) into earnings when the hedged net investment is either sold or substantially liquidated.

The following table summarizes the terms of our derivative financial instruments as of March 31, 2023:

|  | Notional Amount |  |  | Strike |  |  | Effective Date or Date Assumed |  | Maturity Date
Interest Rate Derivatives: |  |  |  |  |  |  |  |  |  |
SOFR Cap |  | $ | 125,000,000 |  |  |  | 1.75 | % |  | June 1, 2022 |  | June 30, 2023
SOFR Cap |  | $ | 125,000,000 |  |  |  | 2.00 | % |  | June 1, 2022 |  | June 28, 2024
SOFR Cap |  | $ | 100,000,000 |  |  |  | 4.75 | % |  | December 1, 2022 |  | December 1, 2025
SOFR Cap |  | $ | 100,000,000 |  |  |  | 4.75 | % |  | December 1, 2022 |  | December 2, 2024
SOFR Cap |  | $ | 100,000,000 |  |  |  | 4.75 | % |  | December 1, 2022 |  | December 2, 2024
Foreign Currency Forwards: |  |  |  |  |  |  |  |  |  |
Denominated in CAD (1) |  | $ | 125,925,000 |  |  | 1.2593 |  |  | April 12, 2021 |  | April 12, 2023(2)
Denominated in CAD (1) |  | $ | 137,680,000 |  |  |  | 1.3768 |  |  | October 12, 2022 |  | October 12, 2023

(1)
Notional amounts shown are denominated in CAD.
(2)
On April 12, 2023, we settled this foreign currency forward and received approximately USD $6.4 million, and simultaneously entered into a new approximately $134.4 million CAD currency forward with a settlement date of July 6, 2023.

On April 12, 2021, we settled a previously existing foreign currency forward, paying a net settlement of approximately $4.5 million, and simultaneously entered into a new approximately $125.9 million CAD currency forward with a settlement date of April 12, 2023.

On May 6, 2021, we entered into a second currency forward, for approximately $122 million CAD, with a settlement date of April 12, 2022. On April 12, 2022, we settled this foreign currency forward, receiving a net settlement of approximately USD $3.2 million, and simultaneously entered into a new $126.2 million CAD currency forward with a settlement date of October 12, 2022. On October 12, 2022, we settled this foreign currency forward, receiving a net settlement of approximately $8.7 million, and simultaneously entered into a new $137.7 million CAD currency forward with a settlement date of October 12, 2023.

The designated portion of our gain (loss) from our settled and unsettled foreign currency hedges is recorded net in foreign currency hedge contract gain (loss) in our consolidated statements of comprehensive income (loss), the other portion, a loss of approximately $0.4 million and $1.8 million related to the portion that is not designated for hedge accounting, was

33

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

recorded in other income (expense) within our consolidated statements of operations for the three months ended March 31, 2023 and 2022, respectively.

The following table summarizes the terms of our derivative financial instruments as of December 31, 2022:

|  | Notional Amount |  |  | Strike |  |  | Effective Date or Date Assumed |  | Maturity Date
Interest Rate Derivatives: |  |  |  |  |  |  |  |  |  |
SOFR Cap |  | $ | 125,000,000 |  |  |  | 1.75 | % |  | June 1, 2022 |  | June 30, 2023
SOFR Cap |  | $ | 125,000,000 |  |  |  | 2.00 | % |  | June 1, 2022 |  | June 28, 2024
SOFR Cap |  | $ | 100,000,000 |  |  |  | 4.75 | % |  | December 1, 2022 |  | December 1, 2025
SOFR Cap |  | $ | 100,000,000 |  |  |  | 4.75 | % |  | December 1, 2022 |  | December 2, 2024
SOFR Cap |  | $ | 100,000,000 |  |  |  | 4.75 | % |  | December 1, 2022 |  | December 2, 2024
Foreign Currency Forwards: |  |  |  |  |  |  |  |  |  |
Denominated in CAD (1) |  | $ | 125,925,000 |  |  | 1.2593 |  |  | April 12, 2021 |  | April 12, 2023
Denominated in CAD (1) |  | $ | 137,680,000 |  |  |  | 1.3768 |  |  | October 12, 2022 |  | October 12, 2023

(1)
Notional amount shown is denominated in CAD.

The following table presents a gross presentation of the fair value of our derivative financial instruments as well as their classification on our consolidated balance sheets as of March 31, 2023 and December 31, 2022:

|  | Asset/Liability Derivatives |
|  | Fair Value |
Balance Sheet Location |  | March 31, 2023 |  |  | December 31, 2022 |
Interest Rate Derivatives |  |  |  |  |  |
Other assets |  | $ | 7,608,231 |  |  | $ | 9,681,298 |
Foreign Currency Hedges |  |  |  |  |  |
Other assets |  | $ | 6,802,846 |  |  | $ | 6,971,265 |
Accounts payable and accrued liabilities |  | $ | (2,119,608 | ) |  | $ | (1,776,371 | )

The following table presents the effect of our derivative financial instruments on our consolidated statements of operations for the periods presented:

| Gain (loss) recognized in OCI for the three months ended March 31, |  |  | Location of amounts reclassified from OCI into income |  | Gain (loss) reclassified from OCI for the three months ended March 31, |
Type | 2023 |  |  | 2022 |  |  |  |  | 2023 |  |  | 2022 |
Interest Rate Swaps | $ | - |  |  | $ | (2,793 | ) |  | Interest expense |  | $ | 45,546 |  |  | $ | (446,106 | )
Interest Rate Caps |  | (526,318 | ) |  |  | - |  |  | Interest expense |  |  | 921,477 |  |  |  | (73,796 | )
Foreign Currency Forwards |  | (91,616 | ) |  |  | (834,436 | ) |  | N/A |  |  | - |  |  |  | - |
| $ | (617,934 | ) |  | $ | (837,229 | ) |  |  |  | $ | 967,023 |  |  | $ | (519,902 | )

Based on the forward rates in effect as of March 31, 2023, we estimate that approximately $2.2 million related to

our qualifying cash flow hedges will be reclassified to reduce interest expense during the next 12 months.

Note 8. Income Taxes

As a REIT, we generally will not be subject to U.S. federal income tax on taxable income that we distribute to our stockholders. We have filed an election to treat our TRS as a taxable REIT subsidiary effective January 1, 2014. In general, our TRS performs additional services for our customers and provides the advisory and property management services to the Managed REITs and otherwise generally engages in any real estate or non-real estate related business. The TRS is subject to corporate U.S. federal and state income tax. Additionally, we own and operate a number of self storage properties located

34

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

throughout Canada, the income of which is generally subject to income taxes under the laws of Canada.

The following is a summary of the Company's income tax expense (benefit) for the three months years ended March 31, 2023 and 2022:

|  | For the three months ended March 31, 2023 |
|  | Federal |  |  | State |  |  | Canadian |  |  | Total |
Current |  | $ | 51,557 |  |  | $ | 9,277 |  |  | $ | 96,099 |  |  | $ | 156,933 |
Deferreds |  |  | (2,619 | ) |  |  | (399 | ) |  |  | 123,305 |  |  |  | 120,287 |
Total |  | $ | 48,938 |  |  | $ | 8,878 |  |  | $ | 219,404 |  |  | $ | 277,220 |
|  | For the three months ended March 31, 2022 |
|  | Federal |  |  | State |  |  | Canadian |  |  | Total |
Current |  | $ | 67,090 |  |  | $ | 12,450 |  |  | $ | - |  |  | $ | 79,540 |
Deferreds |  |  | (37,519 | ) |  |  | (5,717 | ) |  |  | 284,824 |  |  |  | 241,588 |
Total |  | $ | 29,571 |  |  | $ | 6,733 |  |  | $ | 284,824 |  |  | $ | 321,128 |

The major sources of temporary differences that give rise to the deferred tax effects are shown below:

|  | March 31, 2023 |  |  | December 31, 2022 |
Deferred tax liabilities: |  |  |  |  |  |
Intangible contract assets |  | $ | (27,166 | ) |  | $ | (30,184 | )
Canadian real estate |  |  | (10,230,229 | ) |  |  | (10,123,376 | )
Total deferred tax liability |  |  | (10,257,395 | ) |  |  | (10,153,560 | )
Deferred tax assets: |  |  |  |  |  |
Other |  |  | 77,437 |  |  |  | 90,563 |
Canadian non-capital losses |  |  | 7,800,094 |  |  |  | 7,935,309 |
Total deferred tax assets |  |  | 7,877,531 |  |  |  | 8,025,872 |
Valuation allowance |  |  | (3,954,411 | ) |  |  | (4,077,932 | )
Net deferred tax liabilities |  | $ | (6,334,275 | ) |  | $ | (6,205,620 | )

The Canadian non-capital losses expire between 2032 and 2042. The valuation allowance is associated with the Canadian non-capital losses.

Note 9. Segment Disclosures

We operate in two reportable business segments: (i) self storage operations and (ii) our Managed REIT Platform business.

Management evaluates performance based upon net operating income (“NOI”). For our self storage operations, NOI is defined as leasing and related revenues, less property level operating expenses. NOI for the Company’s Managed REIT Platform business represents Managed REIT Platform revenues less Managed REIT Platform expenses.

35

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

The following tables summarize information for the reportable segments for the periods presented:

|  | Three Months Ended March 31, 2023 |
|  |  |  |  | Managed REIT |  |  | Corporate |  |  |  |
|  | Self Storage |  |  | Platform |  |  | and Other |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
Self storage rental revenue |  | $ | 51,276,898 |  |  | $ | — |  |  | $ | — |  |  | $ | 51,276,898 |
Ancillary operating revenue |  |  | 2,190,622 |  |  |  | — |  |  |  | — |  |  |  | 2,190,622 |
Managed REIT Platform revenue |  |  | — |  |  |  | 2,276,535 |  |  |  | — |  |  |  | 2,276,535 |
Reimbursable costs from Managed REITs |  |  | — |  |  |  | 1,391,210 |  |  |  | — |  |  |  | 1,391,210 |
Total revenues |  |  | 53,467,520 |  |  |  | 3,667,745 |  |  |  | — |  |  |  | 57,135,265 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Property operating expenses |  |  | 16,533,452 |  |  |  | — |  |  |  | — |  |  |  | 16,533,452 |
Managed REIT Platform expense |  |  | — |  |  |  | 549,936 |  |  |  | — |  |  |  | 549,936 |
Reimbursable costs from Managed REITs |  |  | — |  |  |  | 1,391,210 |  |  |  | — |  |  |  | 1,391,210 |
General and administrative |  |  | — |  |  |  | — |  |  |  | 6,536,626 |  |  |  | 6,536,626 |
Depreciation |  |  | 13,085,836 |  |  |  | — |  |  |  | 186,435 |  |  |  | 13,272,271 |
Intangible amortization expense |  |  | 1,870,775 |  |  |  | 48,930 |  |  |  | — |  |  |  | 1,919,705 |
Acquisition expenses |  |  | 31,190 |  |  |  | — |  |  |  | — |  |  |  | 31,190 |
Contingent earnout expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total operating expenses |  |  | 31,521,253 |  |  |  | 1,990,076 |  |  |  | 6,723,061 |  |  |  | 40,234,390 |
Income (loss) from operations |  |  | 21,946,267 |  |  |  | 1,677,669 |  |  |  | (6,723,061 | ) |  |  | 16,900,875 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |
Equity in earnings (losses) from investments in JV Properties |  |  | — |  |  |  | — |  |  |  | (405,111 | ) |  |  | (405,111 | )
Equity in earnings (losses) from investments in Managed REITs |  |  | — |  |  |  | (233,025 | ) |  |  | — |  |  |  | (233,025 | )
Other, net |  |  | (415,297 | ) |  |  | 1,142,964 |  |  |  | 23,311 |  |  |  | 750,978 |
Interest expense |  |  | (14,661,959 | ) |  |  | — |  |  |  | (41,938 | ) |  |  | (14,703,897 | )
Income tax (expense) benefit |  |  | (144,596 | ) |  |  | — |  |  |  | (132,624 | ) |  |  | (277,220 | )
Net income (loss) |  | $ | 6,724,415 |  |  | $ | 2,587,608 |  |  | $ | (7,279,423 | ) |  | $ | 2,032,600 |

|  | Three Months Ended March 31, 2022 |
|  |  |  |  | Managed REIT |  |  | Corporate |  |  |  |
|  | Self Storage |  |  | Platform |  |  | and Other |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
Self storage rental revenue |  | $ | 43,056,872 |  |  | $ | — |  |  | $ | — |  |  | $ | 43,056,872 |
Ancillary operating revenue |  |  | 1,974,320 |  |  |  | — |  |  |  | — |  |  |  | 1,974,320 |
Managed REIT Platform revenue |  |  | — |  |  |  | 1,809,096 |  |  |  | — |  |  |  | 1,809,096 |
Reimbursable costs from Managed REITs |  |  | — |  |  |  | 1,143,573 |  |  |  | — |  |  |  | 1,143,573 |
Total revenues |  |  | 45,031,192 |  |  |  | 2,952,669 |  |  |  | — |  |  |  | 47,983,861 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Property operating expenses |  |  | 13,105,325 |  |  |  | — |  |  |  | — |  |  |  | 13,105,325 |
Managed REIT Platform expense |  |  | — |  |  |  | 389,265 |  |  |  | — |  |  |  | 389,265 |
Reimbursable costs from Managed REITs |  |  | — |  |  |  | 1,143,573 |  |  |  | — |  |  |  | 1,143,573 |
General and administrative |  |  | — |  |  |  | — |  |  |  | 5,837,647 |  |  |  | 5,837,647 |
Depreciation |  |  | 10,878,956 |  |  |  | — |  |  |  | 229,030 |  |  |  | 11,107,986 |
Intangible amortization expense |  |  | 2,663,825 |  |  |  | 1,237,059 |  |  |  | — |  |  |  | 3,900,884 |
Acquisition expenses |  |  | 417,774 |  |  |  | — |  |  |  | — |  |  |  | 417,774 |
Contingent earnout adjustment |  |  | — |  |  |  | 513,821 |  |  |  | — |  |  |  | 513,821 |
Total operating expenses |  |  | 27,065,880 |  |  |  | 3,283,718 |  |  |  | 6,066,677 |  |  |  | 36,416,275 |
Income (loss) from operations |  |  | 17,965,312 |  |  |  | (331,049 | ) |  |  | (6,066,677 | ) |  |  | 11,567,586 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |
Equity in earnings (losses) from investments in JV Properties |  |  | — |  |  |  | — |  |  |  | (233,294 | ) |  |  | (233,294 | )
Equity in earnings (losses) from investments in Managed REITs |  |  | — |  |  |  | (139,294 | ) |  |  | — |  |  |  | (139,294 | )
Other, net |  |  | 158,528 |  |  |  | 98,737 |  |  |  | (285,892 | ) |  |  | (28,627 | )
Interest expense |  |  | (7,532,887 | ) |  |  | — |  |  |  | (42,897 | ) |  |  | (7,575,784 | )
Income tax (expense) benefit |  |  | (323,434 | ) |  |  | — |  |  |  | 2,306 |  |  |  | (321,128 | )
Net income (loss) |  | $ | 10,267,519 |  |  | $ | (371,606 | ) |  | $ | (6,626,454 | ) |  | $ | 3,269,459 |

36

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

The following table summarizes our total assets by segment:

Segments |  | March 31, 2023 |  |  | December 31, 2022 |
Self Storage(1) |  | $ | 1,801,942,160 |  |  | $ | 1,820,922,309 |
Managed REIT Platform(2) |  |  | 81,248,895 |  |  |  | 65,433,006 |
Corporate and Other |  |  | 56,635,660 |  |  |  | 60,862,072 |
Total assets(3) |  | $ | 1,939,826,715 |  |  | $ | 1,947,217,387 |

(1)
Included in the assets of the Self Storage segment as of March 31, 2023 and December 31, 2022 was approximately $52.2 million and $52.2 million of goodwill, respectively. Additionally, as of March 31, 2023 and December 31, 2022, there were no accumulated impairment charges to goodwill within the Self Storage segment.
(2)
Included in the assets of the Managed REIT Platform segment as of March 31, 2023 and December 31, 2022 is approximately $1.4 million and $1.4 million of goodwill, respectively. Such goodwill is net of accumulated impairment charges in the Managed REIT Platform segment of approximately $24.7 million, which relates to the impairment charge recorded during the quarter ended March 31, 2020.

(3)
Other than our investments in and advances to Managed REITs, substantially all of our investments in real estate facilities and intangible assets as of December 31, 2022 and March 31, 2023, respectively, were associated with our self storage platform.

As of March 31, 2023 and December 31, 2022, approximately $179 million and $170 million, respectively, of our assets in the self storage segment related to our operations in Canada. For the three months ended March 31, 2023 and 2022, approximately $5.3 million and $5.1 million, respectively, of our revenues in the self storage segment related to our operations in Canada. Substantially all of our operations related to the management fees we generate through our management contracts with the Managed REITs are performed in the U.S.; accordingly substantially all of our assets and revenues related to our Managed REIT segment are based in the U.S. as well. As of March 31, 2023 and December 31, 2022, approximately $31.3 million and $28.5 million, respectively, of our assets in the Corporate and Other segment in the table above relate to our JV Properties which operate in Canada. For the three months ended March 31, 2023 and 2022, approximately $0.4 million and $0.2 million of losses, respectively, relate to these JV Properties' operations in Canada.

Note 10. Related Party Transactions

Self Administration Transaction

On June 28, 2019, we, our Operating Partnership and SmartStop TRS entered into a series of transactions, agreements, and amendments to our existing agreements and arrangements with our then-sponsor, SAM, and SmartStop OP Holdings, LLC (“SS OP Holdings”), a subsidiary of SAM, pursuant to which, effective June 28, 2019, we acquired the self storage advisory, asset management and property management businesses and certain joint venture interests of SAM, along with certain other assets of SAM (collectively, the "Self Administration Transaction").

As a result of the Self Administration Transaction, SAM is no longer our sponsor, and we became self-managed and succeeded to the advisory, asset management and property management businesses and certain joint ventures previously in place for us, SST IV (until the SST IV Merger Date), and SSGT II (until the SSGT II Merger Date), and we acquired the internal capability to originate, structure and manage additional future self storage investment products which would be sponsored by SmartStop REIT Advisors, LLC (“SRA”), our indirect subsidiary. The transfer agent agreement described below was not impacted by the Self Administration Transaction.

Our Chief Executive Officer, who is also the Chairman of our board of directors, holds ownership interests in and is an officer of SAM, and other affiliated entities. Our Chief Executive Officer also previously indirectly held an ownership interest in our former dealer manager. Previously, certain of our executive officers and another member of our board of directors held ownership interests in and/or were officers of SAM, and other affiliated entities. Accordingly, any agreements or transactions we have entered into with such entities may present a conflict of interest. None of SAM and its affiliates or our directors or executive officers receive any compensation, fees or reimbursements from our Managed REITs, other than

37

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

with respect to fees and reimbursements in accordance with the Administrative Services Agreement and the transfer agent agreement, or as otherwise described in this section.

Former Dealer Manager Agreement

In connection with our Primary Offering, our Former Dealer Manager received a sales commission of up to 7.0% of gross proceeds from sales of Class A Shares and up to 2.0% of gross proceeds from the sales of Class T Shares in the Primary Offering and a dealer manager fee of up to 3.0% of gross proceeds from sales of both Class A Shares and Class T Shares in the Primary Offering under the terms of the Former Dealer Manager Agreement. In addition, our Former Dealer Manager received an ongoing stockholder servicing fee as discussed in Note 2 – Summary of Significant Accounting Policies – Organization and Offering Costs.

Transfer Agent Agreement

SAM owns 100% of the membership interests of Strategic Transfer Agent Services, LLC, our transfer agent (“Transfer Agent”), which is a registered transfer agent with the SEC. Pursuant to our transfer agent agreement, our Transfer Agent provides transfer agent and registrar services to us. These services are substantially similar to what a third party transfer agent would provide in the ordinary course of performing its functions as a transfer agent, including, but not limited to: providing customer service to our stockholders, processing the distributions and any servicing fees with respect to our shares and issuing regular reports to our stockholder. Our Transfer Agent may retain and supervise third party vendors in its efforts to administer certain services. We believe that our Transfer Agent, through its knowledge and understanding of the direct participation program industry which includes non-traded REITs, is particularly suited to provide us with transfer agent and registrar services. Our Transfer Agent also conducts transfer agent and registrar services for our Managed REITs and other affiliates.

Fees paid to our Transfer Agent include a fixed quarterly fee, one-time account setup fees, monthly open account fees and fees for investor inquiries. In addition, we will reimburse our Transfer Agent for all reasonable expenses or other changes incurred by it in connection with the provision of its services to us, and we will pay our Transfer Agent fees for any additional services we may request from time to time, in accordance with its rates then in effect. Upon the request of our Transfer Agent, we may also advance payment for substantial reasonable out-of-pocket expenditures to be incurred by it.

The initial term of the transfer agent agreement was three years, which term is automatically renewed for one year successive terms, but either party may terminate the transfer agent agreement upon 90 days’ prior written notice. In the event that we terminate the transfer agent agreement, other than for cause, we will pay our transfer agent all amounts that would have otherwise accrued during the remaining term of the transfer agent agreement; provided, however, that when calculating the remaining months in the term for such purposes, such term is deemed to be a 12 month period starting from the date of the most recent annual anniversary date.

Pursuant to the terms of the agreements described above, the following table summarizes related party costs incurred and paid by us for the year ended December 31, 2022 and the three months ended March 31, 2023, as well as any related amounts payable as of December 31, 2022 and March 31, 2023:

|  | Year Ended December 31, 2022 |  |  | Three Months Ended March 31, 2023 |
|  | Incurred |  |  | Paid |  |  | Payable |  |  | Incurred |  |  | Paid |  |  | Payable |
Expensed |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfer Agent fees |  | $ | 1,242,655 |  |  | $ | 1,260,896 |  |  | $ | 68,751 |  |  | $ | 365,330 |  |  | $ | 353,080 |  |  | $ | 81,001 |
Additional paid-in capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Transfer Agent expenses |  |  | 100,000 |  |  |  | 100,000 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Stockholder servicing fee |  |  | 53,660 |  |  |  | 209,980 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other |  |  | — |  |  |  | — |  |  |  | 340,979 |  |  |  | — |  |  |  | — |  |  |  | 340,979 |
Total |  | $ | 1,396,315 |  |  | $ | 1,570,876 |  |  | $ | 409,730 |  |  | $ | 365,330 |  |  | $ | 353,080 |  |  | $ | 421,980 |

38

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Acquisition of Self Storage Platform from SAM and Other Transactions

As a result of the Self Administration Transaction, we acquired the self storage sponsorship platform of SAM. Accordingly, the advisor and property manager entities of SST IV and SSGT II became our indirect subsidiaries, and we became entitled to receive various fees and expense reimbursements under the terms of the SST IV and SSGT II advisory and property management agreements as described below. In addition, we now also own the advisor and property manager entities of SST VI and SSGT III and are entitled to receive various fees and expense reimbursements under the terms of the SST VI and SSGT III advisory and property management agreements as described below.

Advisory Agreement Fees

Our indirect subsidiaries, SS Growth Advisor II, LLC, the advisor to SSGT II (the “SSGT II Advisor”), the SST VI Advisor, and the SSGT III Advisor are or were entitled to receive various fees and expense reimbursements under the terms of the SSGT II, SST VI, and SSGT III advisory agreements.

SSGT II Advisory Agreement

The SSGT II Advisor provided acquisition and advisory services to SSGT II pursuant to an advisory agreement (the “SSGT II Advisory Agreement”) with SSGT II up until the SSGT II Merger on June 1, 2022.

The SSGT II Advisor received a monthly asset management fee equal to 0.1042%, which is one-twelfth of 1.25%, of SSGT II’s aggregate asset value, as defined. The SSGT II Advisor was potentially entitled to various subordinated distributions under SSGT II’s operating partnership agreement pursuant to the special limited partnership interest and its cash flow participation distribution rights.

Effective June 1, 2022, in connection with the SSGT II Merger, the SSGT II Advisory Agreement was terminated and pursuant to the SSGT II operating partnership agreement, a subordinated distribution of approximately $16.1 million was otherwise due. As a result, we recorded a gain of approximately $16.1 million related to our special limited partnership interest and recorded this within gain on preexisting equity interests upon acquisition of control in our consolidated statements of operations. As a result of our acquisition of SSGT II and terminating the SSGT II Advisory Agreement, we recorded a write-off of approximately $1.4 million related to the carrying value of the SSGT II Advisory Agreement contract.

As a result of the Self Administration Transaction, we recorded a deferred tax liability, which was the result of the difference between the GAAP carrying value of the SSGT II Advisory Agreement and its carrying value for tax purposes. As we reduced the GAAP carrying value of such intangible asset, as noted above, we adjusted the corresponding value of our related deferred tax liability by approximately $0.3 million on June 1, 2022, and recorded such benefit to the income tax (expense) benefit line-item in our consolidated statements of operations.

SST VI Advisory Agreement

The SST VI Advisor provides acquisition and advisory services to SST VI pursuant to an advisory agreement (the “SST VI Advisory Agreement”). In connection with the SST VI private placement offering, SST VI was required to reimburse the SST VI Advisor for organization and offering costs from the SST VI private offering pursuant to the SST VI private offering advisory agreement.

Pursuant to the SST VI Advisory Agreement, the SST VI Advisor receives acquisition fees equal to 1.00% of the contract purchase price of each property SST VI acquires plus reimbursement of any acquisition expenses that SST VI Advisor incurs. The SST VI Advisor also receives a monthly asset management fee equal to 0.0625%, which is one-twelfth of 0.75%, of SST VI’s aggregate asset value, as defined.

A subsidiary of our Operating Partnership may also be potentially entitled to a subordinated distribution through its ownership of a special limited partnership in SST VI’s operating partnership agreement if SST VI (1) lists its shares of common stock on a national exchange, (2) terminates the SST VI Advisory Agreement, (3) liquidates its portfolio, or (4) merges with another entity or enters into an Extraordinary Transaction, as defined in the SST VI operating partnership agreement.

The SST VI Advisory Agreement provides for reimbursement of the SST VI Advisor’s direct and indirect costs of providing administrative and management services to SST VI. Beginning four fiscal quarters after commencement of SST VI's public offering, which was declared effective March 17, 2022, the SST VI Advisor will be required to pay or reimburse

39

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

SST VI the amount by which SST VI’s aggregate annual operating expenses, as defined, exceed the greater of 2% of SST VI’s average invested assets or 25% of SST VI’s net income, as defined, unless a majority of SST VI’s independent directors determine that such excess expenses were justified based on unusual and non-recurring factors.

On March 1, 2022, Pacific Oak Holding Group, LLC, became a 10% non-voting member of the SST VI Advisor. Pacific Oak Capital Markets, LLC (a subsidiary of Pacific Oak Holding Group, LLC) is SST VI's dealer manager, and as such, is responsible for the marketing of SST VI shares being offered pursuant to SST VI's private offering, and subsequent to March 17, 2022, SST VI's public offering. On October 25, 2022, we, through one of our subsidiaries also agreed to pay SST VI’s dealer manager an amount equal to 1.5% of the gross offering proceeds from the sale of Class W shares sold in their public offering. As such, for the three months ended March 31, 2023 and 2022, we had paid SST VI's dealer manager approximately $23,000 and no ne, respectively associated with the Class W Shares in their public offering.

Additionally, in connection with the commencement of SST VI's public offering, the SST VI Advisor or its affiliates agreed that it will fund on behalf of SST VI, an amount equal to 1% of the gross offering proceeds from the sale of Class W shares sold in their initial public offering, which amount shall be used by SST VI towards the payment of its offering expenses. For the three months ended March 31, 2023 and 2022, the SST VI Advisor or its affiliates had incurred such reimbursable costs in the amount of approximately $31,000 and no ne, respectively.

SSGT III Advisory Agreement

The SSGT III Advisor provides acquisition and advisory services to SSGT III pursuant to an advisory agreement (the “SSGT III Advisory Agreement”). In connection with the SSGT III private placement offering, which became effective on May 18, 2022, SSGT III is required to reimburse the SSGT III Advisor for organization and offering costs from the SSGT III private offering pursuant to the SSGT III Advisory Agreement.

Pursuant to the SSGT III Advisory Agreement, the SSGT III Advisor will receive acquisition fees equal to 1.00% of the contract purchase price of each property SSGT III acquires plus reimbursement of acquisition expenses that SSGT III Advisor incurs, provided, however, that no reimbursement shall be made for costs of personnel to the extent that such personnel perform services in transactions for which the Advisor receives the Acquisition Fee. The SSGT III Advisor also receives a monthly asset management fee equal to 0.0625%, which is one-twelfth of 0.75%, of SSGT III’s aggregate asset value, as defined. The SSGT III Advisor is also entitled to receive a disposition fee equal to 1.5% of the contract sale price for any properties sold inclusive of any real estate commissions paid to third party real estate brokers. Through a separate agreement, Pacific Oak Holding Group, LLC, the parent company of Pacific Oak Capital Markets, LLC, the dealer manager for the SSGT III private offering, is entitled to receive 10% of the acquisition fees, asset management fees and disposition fees SSGT III Advisor earns pursuant to the SSGT III Advisory Agreement.

A subsidiary of our Operating Partnership may also be potentially entitled to various subordinated distributions through its ownership of a special limited partnership in SSGT III’s operating partnership agreement if SSGT III (1) lists its shares of common stock on a national exchange, (2) terminates the SSGT III Advisory Agreement, (3) liquidates its portfolio, or (4) merges with another entity or enters into an Extraordinary Transaction, as defined in the SSGT III operating partnership agreement.

The SSGT III Advisory Agreement provides for reimbursement of the SSGT III Advisor’s direct and indirect costs of providing administrative and management services to SSGT III.

40

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Managed REIT Property Management Agreements

Our indirect subsidiaries, SS Growth Property Management II, LLC, Strategic Storage Property Management VI, LLC, and SS Growth Property Management III, LLC, (collectively the “Managed REITs Property Managers”), are entitled to receive fees for their services in managing the properties owned by the Managed REITs pursuant to property management agreements entered into between the owner of the property and the applicable Managed REIT’s Property Manager.

The Managed REITs’ Property Managers will receive a property management fee equal to 6% of the gross revenues from the properties, generally subject to a monthly minimum of $3,000 per property, plus reimbursement of the costs of managing the properties, and a one-time fee of $3,750 for each property acquired that would be managed by the Managed REITs’ Property Managers. Reimbursable costs and expenses include wages and salaries and other expenses of employees engaged in operating, managing and maintaining such properties. Pursuant to the property management agreements, we through our Operating Partnership employ the on-site staff for the Managed REITs’ properties.

The SST VI, and SSGT III property managers are or were entitled to a construction management fee equal to 5% of the cost of a related construction or capital improvement work project in excess of $10,000.

Effective June 1, 2022, in connection with the SSGT II Merger, the SSGT II property management contracts were terminated. As a result of us acquiring SSGT II and terminating such contracts, we recorded a write-off of approximately $0.6 million related to the carrying value of the SSGT II property management contracts.

In connection with the Self Administration Transaction, we previously recorded a deferred tax liability, which was the result of the difference between the GAAP carrying value of the SSGT II property management contract and the carrying value for tax purposes. As we reduced the GAAP carrying value of such intangible asset, we adjusted the value of our deferred tax liability on a pro-rata basis, reducing the deferred tax liability by approximately $0.2 million during the three months ended June 30, 2022 related to the SSGT II Merger and the related aforementioned write-offs, and recorded such benefits within the income tax (expense) benefit line-item in our consolidated statements of operations.

41

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Summary of Fees and Revenue Related to the Managed REITs

Pursuant to the terms of the various agreements described above for the Managed REITs, the following summarizes the related party fees for the three months ended March 31, 2023 and 2022:

|  | Three Months Ended |
|  | March 31, |
Managed REIT Platform Revenues |  | 2023 |  |  | 2022 |
Asset Management: |  |  |  |  |  |
SSGT II(1) |  | $ | — |  |  | $ | 471,526 |
SST VI |  |  | 592,122 |  |  |  | 155,332 |
SSGT III |  |  | 171,407 |  |  |  | — |
|  |  | 763,529 |  |  |  | 626,858 |
Property Management: |  |  |  |  |  |
SSGT II(1) |  |  | — |  |  |  | 190,402 |
SST VI |  |  | 231,222 |  |  |  | 79,050 |
SSGT III |  |  | 54,315 |  |  |  | — |
JV Properties |  |  | 171,895 |  |  |  | 103,163 |
|  |  | 457,432 |  |  |  | 372,615 |
Tenant Protection Program: |  |  |  |  |  |
SSGT II(1) |  |  | — |  |  |  | 160,205 |
SST VI |  |  | 142,596 |  |  |  | 49,444 |
SSGT III |  |  | 14,708 |  |  |  | — |
JV Properties |  |  | 58,329 |  |  |  | 44,228 |
|  |  | 215,633 |  |  |  | 253,877 |
Acquisition Fees: |  |  |  |  |  |
SST VI |  |  | 542,681 |  |  |  | 400,000 |
SSGT III |  |  | 157,000 |  |  |  | — |
|  |  | 699,681 |  |  |  | 400,000 |
Other Managed REIT revenue(2) |  |  | 140,260 |  |  |  | 155,746 |
Total Managed REIT Platform Revenue |  | $ | 2,276,535 |  |  | $ | 1,809,096 |

(1)
On June 1, 2022, we acquired SSGT II and no longer earn such fees. Additionally, the Tenant Protection Program revenue for SSGT II is now included in ancillary operating revenue in our consolidated statements of operations.
(2)
Such revenue primarily includes other property management related fees, construction management fees, development fees, and other miscellaneous revenues.

We offer tenant insurance or tenant protection programs to customers at our Managed REITs' properties pursuant to which we, as the property manager and majority shareholder of the Tenant Protection Program joint ventures, are entitled to substantially all of the net revenue attributable to the sale of such tenant programs.

In order to protect our interest in receiving these revenues in light of the fact that the Managed REITs control the properties, we and the Managed REITs transferred our respective rights in such arrangements to a joint venture entity owned 99.9% by us through a TRS subsidiary and 0.1% by the Managed REIT. Under the terms of the operating agreements of the joint venture entities, we receive 99.9% of the net revenues generated from such Tenant Protection Programs and the Managed REIT receives the other 0.1% of such net revenues. Subsequent to the SSGT II Merger, the SSGT II Tenant Protection Program joint venture is wholly owned by us and such revenue is generated at our now wholly-owned self storage properties and is recorded within ancillary operating revenue in our consolidated statements of operations.

42

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Reimbursable costs from Managed REITs includes reimbursement of SST IV (until the SST IV Merger Date), SSGT II (until the SSGT II Merger Date), SST VI and SSGT III's Advisors’ direct and indirect costs of providing administrative and management services to the Managed REITs. Additionally, reimbursable costs includes reimbursement pursuant to the property management agreements for reimbursement of the costs of managing the Managed REITs’ properties, including wages and salaries and other expenses of employees engaged in operating, managing and maintaining such properties.

As of March 31, 2023 and December 31, 2022 we had receivables due from the Managed REITs totaling approximately $6.0 million and $2.0 million, respectively. Such amounts are included in investments in and advances to the Managed REITs line-item in our consolidated balance sheets. Such amounts included unpaid amounts relative to the above table, in addition to other direct routine expenditures of the Managed REITs that we directly funded.

Investments in and advances to SST VI OP

Equity Investments

On March 10, 2021, SmartStop OP made an investment of $5.0 million in SST VI OP, in exchange for common units of limited partnership interest in SST VI OP. Additionally, a subsidiary of SmartStop OP owns a special limited partnership interest (the “SST VI SLP”) in SST VI OP.

For the three months ended March 31, 2023, we recorded a loss related to our equity interest in SST VI OP of approximately $0.2 million, and received distributions in the amount of approximately $84,000.

On January 30, 2023, a subsidiary of SmartStop made a preferred investment of 600,000 Series A Cumulative Redeemable Preferred units of limited partnership interest in SST VI OP for an aggregate of $15 million. Upon closing of the preferred investment, an investment fee equal to 1% of the investment amount was owed and paid by SST VI OP. SmartStop, through its subsidiary, will receive distributions, payable monthly in arrears, at a rate of 7.0% per annum from the date of issuance until the second anniversary of the date of issuance, 8.0% per annum commencing thereafter until the third anniversary of the date of issuance, 9.0% per annum commencing thereafter until the fourth anniversary of the date of issuance, and 10% per annum thereafter, payable monthly and calculated on an actual/360 basis. The proceeds of the Preferred Investment may be used by SST VI OP to finance self-storage storage acquisition, development, and improvement activities, and working capital or other general partnership purposes. The preferred units may be redeemed, in whole or in part, at the option of SST VI OP at any time or from time to time following the second anniversary of the initial date of issuance.

Debt Investments

On December 30, 2021, in connection with SST VI's acquisition of two self storage facilities, SmartStop OP entered into a mezzanine loan agreement with a wholly-owned subsidiary of SST VI OP for up to $45 million (the “SST VI Mezzanine Loan”). The SST VI Mezzanine Loan required a commitment fee equal to 1.0% of the amount drawn at closing of the SST VI Mezzanine Loan, and each subsequent draw. Interest on this loan accrued at LIBOR plus 3.0%.

The SST VI Mezzanine Loan was amended on December 20, 2022, such amendment increased the principal borrowing amount from a maximum of $45 million to $55 million. Pursuant to this amendment, the interest rate on the SST VI Mezzanine Loan converted to a variable rate equal to SOFR plus 3.0%. Additionally, in such amendment, SST VI exercised the existing extension option, payments on the SST VI Mezzanine Loan are interest only until December 30, 2023. The SST VI Mezzanine Loan may be prepaid in whole or in part at any time without fees or penalty and, in certain circumstances, equity interests securing the SST VI Mezzanine Loan may be released from the pledge of collateral. The SST VI Mezzanine Loan is secured by a pledge of the equity interest in the indirect, wholly-owned subsidiaries of SST VI that collectively owned 17 operating self storage facilities as of March 31, 2023. SST VI OP also serves as a non-recourse guarantor.

As of March 31, 2023 and December 31, 2022, a wholly-owned subsidiary of SST VI OP had $50.0 million and $35.0 million outstanding, respectively, pursuant to the SST VI Mezzanine Loan.

43

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

The following table summarizes the carrying value of our investments in and advances to SST VI as of March 31, 2023 and December 31, 2022:

Receivables: |  | As of March 31, 2023 |  |  | As of December 31, 2022 |
Receivables and advances due |  | $ | 5,736,245 |  |  | $ | 1,828,989 |
Debt: |  |  |  |  |  |
SST VI Mezzanine Loan(1) |  |  | 50,000,000 |  |  |  | 35,000,000 |
Equity: |  |  |  |  |  |
SST VI OP Units and SST VI SLP |  |  | 2,784,604 |  |  |  | 3,221,410 |
Preferred Units in SST VI OP(2) |  |  | 15,000,000 |  |  |  | — |
Total investments in and advances |  | $ | 73,520,849 |  |  | $ | 40,050,399 |

(1) As of March 31, 2023 and December 31, 2022, $5.0 million and $20.0 million, respectively, was available to be drawn on the SST VI Mezzanine Loan. On May 2, 2023, SST VI fully repaid the outstanding principal, plus all applicable accrued interest due on the SST VI Mezzanine Loan as of such date for a total amount of approximately $51.7 million.

(2) On May 2, 2023, SST VI fully redeemed SmartStop's preferred investment of 600,000 Series A Cumulative Redeemable Preferred units of limited partnership interest in SST VI OP, and repaid accrued distributions due as of the date of redemption for a total amount of approximately $15.1 million.

Investments in and advances to SSGT III OP

Equity Investments

On August 29, 2022, SmartStop OP made an investment of $5.0 million in SS Growth Operating Partnership III, L.P., the operating partnership of SSGT III ("SSGT III OP"), in exchange for common units of limited partnership interest in SSGT III OP. Additionally, a subsidiary of SmartStop OP owns a special limited partnership interest (the "SSGT III SLP") in SSGT III OP.

For the three months ended March 31, 2023, we recorded a loss related to our equity interest in SSGT III OP of approximately $0.2 million, and received distributions in the amount of approximately $54,000.

Debt Investments

On August 9, 2022, in connection with SSGT III's acquisition of two self storage facilities, SmartStop OP, L.P. entered into a mezzanine loan agreement with a wholly-owned subsidiary of SSGT III, for up to $50.0 million (the "SSGT III Mezzanine Loan"), of which $42.0 million was funded as an initial draw at the time of closing. The SSGT III Mezzanine Loan requires a commitment fee equal to 1.0% of the amount drawn at closing of the SSGT III Mezzanine Loan, and subsequent draws.

The SSGT III Mezzanine Loan was amended on December 20, 2022, such amendment increased the principal borrowing amount from up to $50 million to $77 million. Pursuant to this amendment, the interest rate on the SSGT III Mezzanine Loan became a variable rate equal to SOFR plus 3.0%. Payments on the SSGT III Mezzanine Loan are interest only until August 9, 2023, which is the initial maturity date of the SSGT III Mezzanine Loan . SSGT III may, in certain

44

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

circumstances, extend the ultimate maturity date of the SSGT III Mezzanine Loan until August 9, 2024 upon written notice to us, in which event the interest rate of the SSGT III Mezzanine Loan will increase to SOFR plus 4.0% per annum, pursuant to the December 20, 2022 amendment. The SSGT III Mezzanine Loan may be prepaid in whole or in part at any time without fees or penalty and, in certain circumstances, equity interests securing the SSGT III Mezzanine Loan may be released from the pledge of collateral. The SSGT III Mezzanine Loan is secured by a pledge of the equity interest in the indirect, wholly-owned subsidiaries of SSGT III, that owned four operating self storage facilities as of March 31, 2023. SSGT III OP, also serves as a non-recourse guarantor.

As of March 31, 2023 and December 31, 2022, a wholly-owned subsidiary of SSGT III OP had no ne and $17.5 million outstanding pursuant to the SSGT III Mezzanine Loan, respectively.

The following table summarizes the carrying value of our investments in and advances to SSGT III OP as of March 31, 2023 and December 31, 2022:

Receivables: |  | As of March 31, 2023 |  |  | As of December 31, 2022 |
Receivables and advances due |  | $ | 299,156 |  |  | $ | 156,081 |
Debt: |  |  |  |  |  |
SSGT III Mezzanine Loan(1) |  |  | - |  |  |  | 17,500,000 |
Equity: |  |  |  |  |  |
SSGT III OP Units and SSGT III SLP |  |  | 4,402,344 |  |  |  | 4,664,687 |
Total investments in and advances |  | $ | 4,701,500 |  |  | $ | 22,320,768 |

(1) As of March 31, 2023 and December 31, 2022, $17.5 million was available to be drawn on the SSGT III Mezzanine Loan.

Administrative Services Agreement

On June 28, 2019, we along with our Operating Partnership, SmartStop TRS and SmartStop Storage Advisors, LLC (collectively, the “Company Parties”) entered into an Administrative Services Agreement with SAM (the “Administrative Services Agreement”), which, as amended, requires that the Company Parties will be reimbursed for providing certain operational and administrative services to SAM which may include, without limitation, accounting and financial support, IT support, HR support, advisory services and operations support, and administrative support as set forth in the Administrative Services Agreement and SAM will be reimbursed for providing certain operational and administrative services to the Company Parties which may include, without limitation, due diligence support, marketing, fulfillment and offering support, events support, insurance support, and administrative and facilities support. SAM and the Company Parties will reimburse one another based on the actual costs of providing their respective services. Additionally, SAM paid the Company Parties an allocation of rent and overhead for the portion of the Ladera Office that it occupied. Such agreement had an initial term of three years, with automatic one-year renewals, and is subject to certain adjustments as defined in the agreement.

For the three months ended March 31, 2023 and 2022, we incurred reimbursements payable to SAM under the Administrative Services Agreement of approximately $65,000 and $16,000, respectively, which were recorded in the Managed REIT Platform expenses line item in our consolidated statements of operations.

We recorded reimbursements from SAM of approximately $40,000 and $140,000 during the three months ended March 31, 2023, and 2022, respectively, related to services provided to SAM as well as reimbursements of rent and overhead for the portion of the Ladera Office occupied by SAM, which were included in Managed REIT Platform revenue in our consolidated statements of operations.

As of March 31, 2023 and December 31, 2022, a receivable of approximately $15,000 was due from SAM related to the Administrative Services Agreement, respectively.

45

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Note 11. Equity Based Compensation

Prior to June 15, 2022, we issued equity based compensation pursuant to the Company’s Employee and Director Long-Term Incentive Plan (the “Prior Plan”). On June 15, 2022, our stockholders approved the 2022 Long-Term Incentive Plan (the “Plan”) and we no longer issue equity under the Prior Plan. Pursuant to the Plan, we are able to issue various forms of equity based compensation. Through March 31, 2023, we have generally issued equity based awards in two forms: (1) restricted stock awards consisting of shares of our common stock and (2) long-term incentive plan units of our Operating Partnership (“LTIP Units”).

Through March 2020, we had only issued restricted stock, which shares are subject to a time based vesting period. In April 2020, the Compensation Committee of the board of directors approved awards for our executive officers, which include (1) performance based awards, and (2) time based awards. For both such type of awards, the recipient can choose either LTIP Units or restricted stock consisting of shares of our common stock. Effective June 2022, certain other recipients of time based awards were also allowed to choose either LTIP Units or restricted stock shares of our common stock.

The fair value of restricted stock is determined on the grant date based on an estimated value per share, adjusted for an illiquidity discount due to the illiquid nature of the underlying equity. The fair value of LTIP Units are further adjusted by applying an additional discount as the LTIP Units are not initially economically equivalent to our restricted stock. For performance based awards, a fair value was determined for each performance ranking scenario, with stock compensation expense recorded using the fair value of the scenario determined to be probable of achievement as of the end of the respective period.

Time Based Awards

We have granted various time based awards, which generally vest ratably over either one, three, or four years commencing in the year of grant, subject to the recipient’s continued employment or service through the applicable vesting date. All grants of time based restricted stock have limitations on transferability during the vesting period, and the grantee does not have the ability to vote any unvested shares. Transferability during the vesting period depends upon when the grant was made, as follows (i) with respect to grants of time based restricted stock made prior to April 2020, the restriction on transfers applies to the entirety of the grant, regardless of vesting, and (ii) with respect to grants of time based restricted stock made in or subsequent to April 2020, the restriction on transfer applies only to the unvested portion of the restricted stock.

With respect to grants of time based LTIP Units, distributions accrue based on the effective date of each grant, and are payable as distributions are paid on our Class A Shares without regard to whether the underlying awards have vested. With respect to time based restricted stock issued to our board of directors in or after June 2022, distributions accrue as of the effective date of each grant and are payable as distributions are paid on our Class A Shares without regard to whether the underlying awards have vested. With respect to all other existing time based restricted stock, distributions accrue on non-vested shares granted and are paid when the underlying restricted shares vest.

Holders of time based LTIP Units receive allocations of profits and losses with respect to the LTIP Units as of the effective date, distributions from the effective date in an amount equivalent to the distributions declared and paid on our Class A Shares, and the same voting rights as holders of common units, voting as a class with each LTIP Unit holder having one vote per LTIP Unit held. Prior to vesting, time based LTIP Units generally may not be transferred, other than by laws of descent and distribution.

46

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

The following table summarizes the activity related to our time based awards:

|  | Restricted Stock |  |  | LTIP Units |
Time Based Award Grants |  | Shares |  |  | Weighted-Average Grant-Date Fair Value |  |  | Units |  |  | Weighted-Average Grant-Date Fair Value |
Unvested at December 31, 2021 |  |  | 219,946 |  |  | $ | 9.64 |  |  |  | 274,196 |  |  | $ | 9.22 |
Granted |  |  | 60,032 |  |  |  | 14.33 |  |  |  | 181,664 |  |  |  | 13.23 |
Vested |  |  | (129,498 | ) |  |  | 9.64 |  |  |  | (165,219 | ) |  |  | 10.21 |
Forfeited |  |  | (4,630 | ) |  |  | 11.76 |  |  |  | — |  |  |  | — |
Unvested at December 31, 2022 |  |  | 145,850 |  |  |  | 11.50 |  |  |  | 290,641 |  |  |  | 11.16 |
Granted |  |  | 38,125 |  |  |  | 14.30 |  |  |  | 297,867 |  |  |  | 13.30 |
Vested |  |  | (42,522 | ) |  |  | 11.22 |  |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unvested at March 31, 2023 |  |  | 141,453 |  |  | $ | 12.34 |  |  |  | 588,508 |  |  | $ | 12.24 |

Performance Based Awards

With respect to performance based awards, the number of shares of restricted stock granted as of the grant date equaled 100% of the targeted award, whereas the number of LTIP Units granted as of the grant date equaled 200% of the targeted amount of the award. The targeted award for each executive was determined and approved by the Compensation Committee of our board of directors. The actual number of shares of restricted stock or LTIP Units, as applicable, to be issued upon vesting may range from 0% to 200% of the targeted award, such determination being based upon the results of the performance measure. Performance based awards vest based upon our performance as ranked amongst a peer group of self storage related companies. This comparison will be conducted using a performance measure of average annual same-store revenue growth, analyzed over a three-year period. Earned awards for the 2021, 2022 and 2023 grants will vest, as applicable, no later than March 31, 2024, 2025, and 2026, respectively.

Recipients of performance based restricted stock accrue distributions during the performance period, and such distributions will only be payable on the date that any such shares of restricted stock vest, based upon the performance level attained. Recipients of performance based LTIP Units are issued LTIP Units at 200% of the targeted award and are entitled to receive distributions and allocations of profits and losses with respect to the performance based LTIP Units as of the effective date of each award in an amount equal to 10% of the distributions and allocations available to such LTIP Units, until the Distribution Participation Date (as defined in the Operating Partnership Agreement). The remaining 90% of distributions will accrue and will be payable on the Distribution Participation Date based upon the performance level attained and number of performance based LTIP Units that vest. Following the Distribution Participation Date, recipients will be entitled to receive the full amount of distributions and allocations of profits and losses with respect to the vested performance-based LTIP Units, such amount being equivalent to distributions declared and paid on our Class A Shares.

The following table summarizes our activity related to our performance based awards:

|  | Restricted Stock |  |  | LTIP Units |
Performance Based Award Grants |  | Shares |  |  | Weighted-Average Grant-Date Fair Value |  |  | Units |  |  | Weighted-Average Grant-Date Fair Value |
Unvested at December 31, 2021 |  |  | 5,752 |  |  | $ | 9.78 |  |  |  | 267,107 |  |  | $ | 9.21 |
Granted |  |  | — |  |  |  | — |  |  |  | 113,429 |  |  |  | 13.18 |
Vested |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unvested at December 31, 2022 |  |  | 5,752 |  |  |  | 9.78 |  |  |  | 380,536 |  |  |  | 10.39 |
Granted |  |  | 5,752 |  | (1) |  | 9.78 |  |  |  | 271,199 |  |  |  | 13.30 |
Vested |  |  | (11,504 | ) |  |  | 9.78 |  |  |  | (118,720 | ) |  |  | 9.09 |
Forfeited |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unvested at March 31, 2023 |  |  | — |  |  | $ | — |  |  |  | 533,015 |  |  | $ | 12.16 |

47

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

(1) On March 2, 2023 the Compensation Committee of the board of directors approved the vesting of the 2020 performance grant at 200% of the targeted award. Accordingly, individuals who elected to receive performance based restricted stock were issued and immediately vested additional shares to equal 200% of their targeted award.

Holders of performance based restricted stock do not have any rights as a stockholder with respect to the unvested portion of such restricted stock awards. Prior to vesting, shares of performance based restricted stock generally may not be transferred, other than by laws of descent and distribution.

Holders of performance based LTIP Units have the same voting rights as holders of common units, voting as a class with each LTIP Unit holder having one vote per LTIP Unit held. Prior to vesting, performance based LTIP Units generally may not be transferred, other than by laws of descent and distribution.

LTIP Units are designed to qualify as “profits interests” in the Operating Partnership for federal income tax purposes. The profits interests’ characteristics of the LTIP Units mean that initially they will not be treated as economically equivalent in value to a common unit and the issuance of LTIP Units will not be a taxable event to the Operating Partnership or the recipient. If and when certain events occur pursuant to applicable tax regulations and in accordance with the Operating Partnership Agreement, LTIP Units may become economically equivalent to common units of limited partnership interest of our Operating Partnership on a one-for-one basis.

As of March 31, 2023, 9,380,165 shares of stock were available for issuance under the Plan.

We recorded approximately $1.1 million of equity based compensation expense in general and administrative expense during the three months ended March 31, 2023, respectively, compared to approximately $1.2 million during the three months ended March 31, 2022. We recorded approximately $0.1 million of equity based compensation expense in property operating expenses, within our consolidated statements of operations for the three months ended March 31, 2023, compared to approximately $0.1 million during the three months ended March 31, 2022. As of March 31, 2023, there was approximately $10.0 million of total unrecognized compensation expense related to non-vested equity awards, with such cost expected to be recognized over a weighted-average period of approximately 2.8 years. As of December 31, 2022, there was approximately $4.8 million of total unrecognized compensation expense related to non-vested equity awards, with such cost expected to be recognized over a weighted-average period of approximately 2.1 years.

In February 2023, the compensation committee of our board of directors approved the 2023 executive compensation terms for our executives, which included (1) performance-based equity grants in the form of either, at the election of the executive, restricted stock awards or LTIP Units, and (2) time-based equity grants in the form of either, at the election of the executive, restricted stock awards or LTIP Units.

In February 2023, an aggregate of 271,199 performance-based LTIP Units and approximately 275,308 time-based LTIP Units were issued to our executive officers. The performance-based LTIP Units vest after the three year performance period, based upon the performance level attained. The time-based LTIP Units vest ratably over four years, with the first tranche vesting on December 31, 2023, subject to the recipient’s continued employment through the applicable vesting date.

Note 12. Commitments and Contingencies

Contingent Earnout

On June 28, 2019, in relation to the Self Administration Transaction, 3,283,302 Class A-2 limited partnership units of the Operating Partnership ("Class A-2 Units"), were issued to SS OP Holdings as consideration. Class A-2 Units could convert into Class A-1 Units as earnout consideration, as described below. The Class A-2 Units were not entitled to cash distributions or the allocation of any profits or losses in the Operating Partnership until the Class A-2 Unit into Class A-1 Units.

The conversion features of the Class A-2 Units were as follows: (A) the first time the aggregate incremental assets under management, as amended (“AUM”) (as defined in the Operating Partnership Agreement) of the Operating Partnership equals or exceeds $300,000,000, one-third of the Class A-2 Units would automatically convert into Class A-1 Units, (B) the first time the incremental AUM of the Operating Partnership equaled or exceeded $500,000,000, an additional one-third of

48

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

the Class A-2 Units would automatically convert into Class A-1 Units, and (C) the first time the incremental AUM equals or exceeds $700,000,000, the remaining one-third of the Class A-2 Units would automatically convert into Class A-1 Units (each an “Earnout Achievement Date”). On each Earnout Achievement Date, the Class A-2 Units would automatically convert into Class A-1 Units based on an earnout exchange ratio, which is equal to $10.66 divided by the then current value of our Class A-1 Units, as provided in the Operating Partnership Agreement.

On March 24, 2021, we, as the general partner of our Operating Partnership, entered into Amendment No. 3 (the “Amendment”) to the Operating Partnership Agreement, to make certain revisions to Exhibit D (Description of Class A-2 Units) to the Operating Partnership Agreement.

The Amendment (i) revised the definition of “AUM” in connection with the earnout of the Class A-2 Units so that it (A) included assets acquired by us and our affiliates and (B) included 100% of any joint venture assets, rather than a pro rata percentage, and (ii) clarifies that the Class A-2 Units may be transferred after the two-year holding period.

On March 24, 2021, 1,094,434 Class A-2 Units held by SS OP Holdings, were converted into 1,121,795 Class A-1 Units pursuant to the achievement of the first tier of earnout consideration. The fair value of the contingent earnout liability was reduced as the Class A-2 Units were converted into Class A-1 Units in our Operating Partnership and the fair value of such units was reclassified to the noncontrolling interest in our Operating Partnership line in the equity section of our consolidated balance sheet.

On October 19, 2021, the Nominating and Corporate Governance Committee of our board of directors and our board of
directors approved resolutions providing that the denominator in the calculation of the earnout exchange ratio will be $10.66
(the value of the Class A common stock at the time of the Self Administration Transaction, pursuant to which the earnout was established) for the subsequent 12 months, until October 19, 2022. Thereafter the denominator in the calculation of the earnout exchange ratio would be as provided in the Operating Partnership Agreement.

On March 29, 2022, 1,094,434 Class A-2 Units were converted into 1,094,434 Class A-1 Units pursuant to the achievement of the second tier of earnout consideration. The fair value of the contingent earnout liability was reduced as the Class A-2 Units were converted into Class A-1 Units in our Operating Partnership and the fair value of such units was reclassified to the noncontrolling interest in our Operating Partnership line in the equity section of our consolidated balance sheet.

On August 9, 2022, pursuant to the revised definition of AUM as described above, we reached the incremental assets under management threshold of $700 million, and 1,094,434 Class A-2 Units were converted into 1,094,434 Class A-1 Units pursuant to the achievement of the third and final tier of earnout consideration. The fair value of the contingent earnout liability was eliminated as the Class A-2 Units were converted into Class A-1 Units in our Operating Partnership and the fair value of such units was reclassified to the noncontrolling interest in our Operating Partnership line in the equity section of our consolidated balance sheet.

Distribution Reinvestment Plan

We have adopted an amended and restated distribution reinvestment plan (our "DRP") that allows both our Class A and Class T stockholders to have distributions otherwise distributable to them invested in additional shares of our Class A and Class T Shares, respectively. Under our DRP, the Board may amend, modify, suspend or terminate our plan for any reason upon 10 days’ written notice to the participants. The purchase price per share pursuant to our DRP is equivalent to the estimated value per share approved by our board of directors and in effect on the date of purchase of shares under the plan. In conjunction with the board of directors’ declaration of a new estimated value per share of our common stock on December 6, 2022, any shares sold pursuant to our distribution reinvestment plan will be sold at our new estimated value per share of $15.21 per Class A Share and Class T Share. Please see the section below titled “Suspension and Partial Resumption of DRP and SRP” for additional information.

Share Redemption Program

As described in "Note 2 – Summary of Significant Accounting Policies – Redeemable Common Stock," we have an SRP. Please refer to that section for additional details. Pursuant to the SRP, we may redeem the shares of stock presented for redemption for cash to the extent that such requests comply with the below terms of our SRP and we have sufficient funds available to fund such redemption. All redemption requests received, and not withdrawn, on or prior to the last day of the

49

SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

applicable quarter are processed on the last business day of the month following the end of the quarter in which the redemption requests were received.

Our board of directors may amend, suspend or terminate the SRP with 30 days’ notice to our stockholders. We may provide this notice by including such information in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to our stockholders.

On August 20, 2020, our board of directors amended the terms of the SRP to revise the redemption price per share for all redemptions under the SRP to be equal to the most recently published estimated net asset value per share of the applicable share class (the “SRP Amendment”). Prior to the SRP Amendment, the redemption amount was the lesser of the amount the stockholders paid for their shares or the price per share in the current offering. On December 6, 2022, we declared a new estimated net asset value per share and the redemption price under our SRP immediately changed to $15.21 (our current estimated net asset value per share).

There are several limitations in addition to those noted above on our ability to redeem shares under the SRP including, but not limited to:

•
During any calendar year, we will not redeem in excess of 5% of the weighted-average number of shares outstanding during the prior calendar year.
•
The cash available for redemption is limited to the proceeds from the sale of shares pursuant to our distribution reinvestment plan, less any prior redemptions.
•
We have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

For the three months ended March 31, 2023, we received redemption requests totaling approximately $4.7 million (approximately 0.3 million shares), such amount was included in accounts payable and accrued liabilities as of March 31, 2023 and fulfilled in April 2023.

For the year ended December 31, 2022, we received redemption requests totaling approximately $2.4 million (approximately 0.2 million shares). Due to the complete suspension of our SRP at such time we were unable to honor redemption requests made during the year ended December 31, 2022.

Please see the section below titled “Suspension and Partial Resumption of DRP and SRP” for additional information.

Suspension and Partial Resumption of DRP and SRP

In connection with a review of liquidity alternatives by the Board, on March 7, 2022, the Board approved the full suspension of our DRP and SRP. However, on March 16, 2023, the DRP was fully reinstated and the SRP was partially reinstated to allow for redemptions solely sought in connection with a stockholder’s death, “qualifying disability” (as that term is defined in the SRP), confinement to a long-term care facility, or other exigent circumstances. All other redemptions remain suspended at this time. All previously received and reconfirmed redemption requests, along with such requests received during the three months ended March 31, 2023 that correctly met the eligibility criteria above, were redeemed in April 2023, in accordance with the SRP.

For those stockholders that had elected to participate in the DRP prior to its suspension in March 2022, distributions automatically reverted back to being reinvested through the DRP for the month of March 2023 (to the extent we are qualified to offer shares pursuant to the DRP in accordance with applicable state laws) which were paid or reinvested on or around April 15, 2023.

Prior to the most current suspension and resumption effective in March 2022 and March 2023, respectively, as described above, on August 26, 2019, our board of directors previously approved a partial suspension of our SRP, effective as of September 27, 2019, so that common shares were redeemable at the option of the holder only in connection with a stockholder’s death, “qualifying disability” (as that term is defined in the SRP), confinement to a long-term care facility, or other exigent circumstances. Additionally, in an effort to preserve cash in light of the uncertainty relating to COVID-19 and its potential impact on our overall financial results, on March 30, 2020, our board of directors approved the complete suspension of our SRP, effective on April 29, 2020. On August 20, 2020, our board of directors partially reinstated the SRP, effective as of September 23, 2020.

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SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Operating Partnership Redemption Rights

Generally, the limited partners of our Operating Partnership have the right to cause our Operating Partnership to redeem their limited partnership units for cash equal to the value of an equivalent number of our shares, or, at our option, we may purchase their limited partnership units by issuing one share of our common stock for each limited partnership unit redeemed. These rights may not be exercised under certain circumstances that could cause us to lose our REIT election. Furthermore, limited partners may exercise their redemption rights only after their limited partnership units have been outstanding for one year.

Additionally, the Class A-1 Units issued in connection with the Self Administration Transaction are subject to the general restrictions on transfer contained in the Operating Partnership Agreement. The Class A-1 Units are otherwise entitled to all rights and duties of the Class A limited partnership units in the Operating Partnership, including cash distributions and the allocation of any profits or losses in the Operating Partnership.

Other Contingencies and Commitments

We have severance arrangements which cover certain members of our management team; these provide for severance payments upon certain events, including after a change of control.

See Note 10 – Related Party Transactions related to our debt investments in the Managed REITs for more information about our contingent obligations under these agreements.

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

From time to time, we are party to legal, regulatory and other proceedings that arise in the ordinary course of our business. In accordance with applicable accounting guidance, management accrues an estimated liability when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. We are not aware of any such proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition.

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SMARTSTOP SELF STORAGE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

(Unaudited)

Note 13. Declaration of Distributions

On March 23, 2023, our board of directors declared a distribution rate for the month of April 2023 of approximately $0.00164 per day per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on each day of the period commencing on April 1, 2023 and ending April 30, 2023. Such distributions payable to each stockholder of record during a month will be paid the following month.

On April 26, 2023, our board of directors declared a distribution rate for the month of May 2023 of approximately $0.00164 per day per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on each day of the period commencing on May 1, 2023 and ending May 31, 2023. Such distributions payable to each stockholder of record during a month will be paid the following month.

Note 14. Subsequent Events

In addition to the subsequent events discussed elsewhere in the notes to the financial statements, the following events occurred subsequent to March 31, 2023:

On May 2, 2023, SST VI fully repaid the outstanding principal, plus all applicable accrued interest due on the SST VI Mezzanine Loan as of such date for a total amount of approximately $51.7 million.

On May 2, 2023, SST VI fully redeemed SmartStop's preferred investment of 600,000 Series A Cumulative Redeemable Preferred units of limited partnership interest in SST VI OP, and repaid accrued distributions due as of the date of redemption for a total amount of approximately $15.1 million.

On May 3, 2023, with the proceeds received from SST VI described above, SmartStop paid down $70.0 million on the Credit Facility Revolver.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our consolidated financial data contained elsewhere in this report. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should also be read in conjunction with our consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2022. See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I.

Overview

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

We focus on the acquisition, ownership, and operation of self storage properties located primarily within the top 100 metropolitan statistical areas, or MSAs, throughout the United States and Canada. According to the Inside Self Storage Top-Operators List for 2022, we are the 11th largest owner and operator of self storage properties in the United States based on number of properties, units, and rentable square footage. As of March 31, 2023, our wholly-owned portfolio consisted of 153 self storage properties diversified across 19 states and the Greater Toronto Area of Ontario, Canada comprising approximately 103,000 units and 11.8 million net rentable square feet. Additionally, we owned a 50% equity interest in eleven unconsolidated real estate ventures located in the Greater Toronto Area, which consisted of eight operating self storage properties, two parcels of land currently under development into self storage facilities, and one single tenant industrial building, which we plan to convert into a self storage property over the long term. Further, through our Managed REIT Platform (as defined below), we serve as the sponsor of Strategic Storage Trust VI, Inc., a publicly-registered non-traded REIT ("SST VI"), and Strategic Storage Growth Trust III, Inc., a private company that intends to elect to qualify as a REIT ("SSGT III" and together with SST VI, the "Managed REITs"), both of which pay us fees to manage these programs and manage their 21 operating self storage properties (as of March 31, 2023).

Our primary business model is focused on owning and operating high quality self storage properties in high growth markets in the United States and Canada. We finance our portfolio through a diverse capital strategy which includes cash generated from operations, borrowings under our syndicated revolving line of credit, secured and unsecured debt financing, equity offerings and joint ventures. Our business model is designed to maximize cash flow available for distribution to our stockholders and to achieve sustainable long-term growth in cash flow in order to maximize long-term stockholder value at acceptable levels of risk. We execute our organic growth strategy by pursuing revenue-optimizing and expense-minimizing opportunities in the operations of our existing portfolio. We execute our external growth strategy by developing, redeveloping, acquiring and managing self storage facilities in the United States and Canada both internally and through our Managed REITs, and we look to acquire properties that are physically stabilized, recently developed, in various stages of lease up or at certificate of occupancy. We seek to acquire undermanaged facilities that are not operated by institutional operators, where we can implement our proprietary management and technology to maximize net operating income.

As discussed herein, we, through our subsidiaries, currently serve as the sponsor of SST VI and SSGT III. We also served as the sponsor of Strategic Storage Trust IV, Inc., a public non-traded REIT (“SST IV”), through March 17, 2021, and Strategic Storage Growth Trust II, Inc., a private REIT (“SSGT II”), through June 1, 2022. Prior to March 17, 2021 and June 1, 2022, SST IV and SSGT II, respectively, were also included in the “Managed REITs.” We operate the properties owned by the Managed REITs, consisting of, as of March 31, 2023, 21 operating properties and approximately 16,300 units and 1.9 million rentable square feet. In addition, we have the internal capability to originate, structure and manage additional self storage investment programs (the “Managed REIT Platform”) which would be sponsored by SmartStop REIT Advisors, LLC (“SRA”), our indirect subsidiary. We generate asset management fees, property management fees, acquisition fees, and other fees and also receive substantially all of the tenant protection program revenue earned by our Managed REITs. For the property management and advisory services that we provide, we are reimbursed for certain expenses that otherwise helps to offset our net operating expense burden.

As of March 31, 2023, our wholly-owned self storage portfolio was comprised as follows:

State |  | No. of Properties |  |  | Units(1) |  |  | Sq. Ft. (net)(2) |  |  | % of Total Rentable Sq. Ft. |  |  | Physical Occupancy %(3) |  |  | Rental Income %(4) |
Alabama |  |  | 1 |  |  |  | 1,090 |  |  |  | 163,300 |  |  |  | 1.4 | % |  |  | 93.7 | % |  |  | 0.7 | %
Arizona |  |  | 4 |  |  |  | 3,130 |  |  |  | 329,100 |  |  |  | 2.8 | % |  |  | 91.4 | % |  |  | 2.6 | %
California |  |  | 29 |  |  |  | 19,195 |  |  |  | 2,030,300 |  |  |  | 17.2 | % |  |  | 92.0 | % |  |  | 20.2 | %
Colorado |  |  | 8 |  |  |  | 4,550 |  |  |  | 493,085 |  |  |  | 4.2 | % |  |  | 90.1 | % |  |  | 3.6 | %
Florida |  |  | 26 |  |  |  | 19,870 |  |  |  | 2,363,100 |  |  |  | 20.0 | % |  |  | 92.9 | % |  |  | 23.1 | %
Illinois |  |  | 6 |  |  |  | 3,785 |  |  |  | 429,500 |  |  |  | 3.6 | % |  |  | 91.6 | % |  |  | 2.9 | %
Indiana |  |  | 2 |  |  |  | 1,030 |  |  |  | 112,700 |  |  |  | 1.0 | % |  |  | 94.9 | % |  |  | 0.6 | %
Massachusetts |  |  | 1 |  |  |  | 840 |  |  |  | 93,200 |  |  |  | 0.8 | % |  |  | 94.5 | % |  |  | 1.9 | %
Maryland |  |  | 2 |  |  |  | 1,610 |  |  |  | 169,500 |  |  |  | 1.4 | % |  |  | 93.1 | % |  |  | 1.4 | %
Michigan |  |  | 4 |  |  |  | 2,220 |  |  |  | 266,100 |  |  |  | 2.3 | % |  |  | 93.2 | % |  |  | 1.8 | %
New Jersey |  |  | 2 |  |  |  | 2,350 |  |  |  | 205,100 |  |  |  | 1.7 | % |  |  | 91.0 | % |  |  | 1.7 | %
Nevada |  |  | 9 |  |  |  | 7,160 |  |  |  | 865,000 |  |  |  | 7.3 | % |  |  | 93.5 | % |  |  | 6.7 | %
North Carolina |  |  | 19 |  |  |  | 9,190 |  |  |  | 1,192,400 |  |  |  | 10.1 | % |  |  | 94.0 | % |  |  | 8.4 | %
Ohio |  |  | 5 |  |  |  | 2,310 |  |  |  | 279,700 |  |  |  | 2.4 | % |  |  | 93.9 | % |  |  | 1.5 | %
South Carolina |  |  | 3 |  |  |  | 1,940 |  |  |  | 246,000 |  |  |  | 2.1 | % |  |  | 94.0 | % |  |  | 1.6 | %
Texas |  |  | 12 |  |  |  | 6,960 |  |  |  | 919,300 |  |  |  | 7.8 | % |  |  | 93.4 | % |  |  | 6.7 | %
Virginia |  |  | 1 |  |  |  | 830 |  |  |  | 71,100 |  |  |  | 0.6 | % |  |  | 95.8 | % |  |  | 0.8 | %
Washington |  |  | 5 |  |  |  | 3,427 |  |  |  | 390,545 |  |  |  | 3.3 | % |  |  | 90.9 | % |  |  | 3.4 | %
Wisconsin |  |  | 1 |  |  |  | 780 |  |  |  | 83,400 |  |  |  | 0.7 | % |  |  | 92.4 | % |  |  | 0.5 | %
Ontario, Canada |  |  | 13 |  |  |  | 10,610 |  |  |  | 1,092,300 |  |  |  | 9.3 | % |  |  | 94.1 | % |  |  | 9.9 | %
Total |  |  | 153 |  |  |  | 102,877 |  |  |  | 11,794,730 |  |  |  | 100 | % |  |  | 92.9 | % |  |  | 100 | %

(1)
Includes all rentable units, consisting of storage units and parking (approximately 3,400 units).
(2)
Includes all rentable square feet, consisting of storage units and parking (approximately 1,017,000 square feet).
(3)
Represents the occupied square feet of all facilities in a state or province divided by total rentable square feet of all the facilities in such state or area as of March 31, 2023.
(4)
Represents rental income (excludes administrative fees, late fees, and other ancillary income) for all facilities we owned in a state or province divided by our total rental income for the month ended March 31, 2023.

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

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Critical Accounting Policies and Estimates

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

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

Real Estate Acquisition Valuation

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

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

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

Real Property Assets Valuation

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

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Intangible Assets Valuation

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

Goodwill Valuation

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible assets and other intangible assets acquired. Goodwill is allocated to various reporting units, as applicable, and is not amortized. We perform an annual impairment test 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, 2023 and 2022.

Trademarks Valuation

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

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

Estimated Useful Lives of Real Property Assets

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

Consolidation Considerations

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

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

REIT Qualification

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

Current Market and Economic Conditions

Our rental revenue and operating results depend significantly on the demand for self storage space. Since the beginning of the COVID-19 pandemic in late March 2020, the challenges associated with the pandemic were partially offset by other trends that helped maintain the demand for self storage. The broader shift of people working from home, elevated migration patterns and strength in the housing market helped drive growth in self storage demand, which generally contributed to our results since the onset of COVID-19, and into the first three months of 2023. However, occupancy, same-store growth and overall results have started to normalize and are expected to normalize further over the coming quarters as the comparable periods change.

Recently, the broader economy began experiencing increased levels of inflation, higher interest rates, tightening monetary and fiscal policies and a slowdown in home price appreciation and new home sales. This could result in less discretionary spending, weakening consumer balance sheets and reduced demand for self storage. However, demand for the self storage sector is dynamic with drivers that function in a multitude of economic environments, both cyclically and counter-cyclically. In addition to the sector's numerous historical demand drivers, one demand driver that increased substantially during the COVID-19 pandemic is the trend towards working from home, or hybrid work environment. Demand for self storage tends to be needs-based, with numerous factors that lead customers to renting and maintaining storage units.

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 interest rates 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 to acquire self storage properties in an as accretive manner going forward.

Results of Operations

Overview

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

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

As of March 31, 2023 and 2022, we wholly-owned 153 and 140 operating self storage facilities, respectively. Our operating results for the three months ended March 31, 2023 include full quarter results for 153 self storage facilities. Our

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operating results for the three months ended March 31, 2022 include full quarter results for 139 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.

As discussed below, the results of operations presented herein cover a period of time prior to the SSGT II Merger. Our 2022 and 2023 operating results have been and will continue to be significantly impacted by this merger as a result of acquiring 10 operating self storage facilities and 50% equity interests in three unconsolidated real estate ventures, as well as the elimination of management fees that we previously earned from SSGT II. Over time we expect the SSGT II Merger to be accretive to FFO, as adjusted, primarily as the former SSGT II properties eventually reach higher levels of either physical or economic occupancy or both.

Comparison of the three months ended March 31, 2023 and 2022

Total Self Storage Revenues

Total self storage related revenues for the three months ended March 31, 2023 and 2022 were approximately $53.5 million and $45.0 million, respectively. The increase in total self storage revenues of approximately $8.4 million, or approximately 19%, is primarily attributable to an increase in same-store revenues of approximately $3.7 million, an increase in revenue from the ten operating self storage facilities acquired on June 1, 2022 in connection with the SSGT II Merger (approximately $3.9 million), and approximately $0.8 million from other non same-store self storage properties.

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

Managed REIT Platform Revenue

Managed REIT Platform revenue for the three months ended March 31, 2023 and 2022 was approximately $2.3 million and $1.8 million, respectively. The increase in Managed REIT Platform revenue of approximately $0.5 million is primarily attributable to acquisition fee and property management fee revenue growth of approximately $0.3 million and $0.1 million, respectively, from our Managed REITs, partially offset by reduced SSGT II property management and asset management fees due to the SSGT II Merger. We expect Managed REIT Platform Revenue to fluctuate commensurate with our Managed REITs' increase in operations and assets under management.

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Reimbursable Costs from Managed REITs

Reimbursable costs from Managed REITs for the three months ended March 31, 2023 and 2022 were approximately $1.4 million and $1.1 million, respectively. Such revenues consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by our Managed REITs, pursuant to our related contracts with the Managed REITs. We expect Reimbursable costs from Managed REITs to 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.

Property Operating Expenses

Property operating expenses for the three months ended March 31, 2023 and 2022 were approximately $16.5 million (or 30.9 % of self storage revenue) and $13.1 million (or 29.1% 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 marketing. The increase in property operating expenses of approximately $3.4 million is largely attributable to the ten operating self storage facilities acquired in connection with the SSGT II Merger (approximately $1.3 million), compensation related expenses, property insurance costs, property tax, and to a lesser extent, advertising costs. We expect property operating expenses to increase from any future acquisitions.

Managed REIT Platform Expenses

Managed REIT Platform expenses for the three months ended March 31, 2023 and 2022 were approximately $0.5 million and $0.4 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.

Reimbursable Costs from Managed REITs

Reimbursable costs from Managed REITs for the three months ended March 31, 2023 and 2022 were approximately $1.4 million and $1.1 million, respectively. Such expenses consist of costs incurred by us as we provide property management and advisory services to the Managed REITs, which are reimbursed by our Managed REITs, pursuant to our related contracts with the Managed REITs. We expect reimbursable costs from Managed REITs to fluctuate commensurate with our Managed REITs' increase in operations as we receive reimbursement for providing such services.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2023 and 2022 were approximately $6.5 million and $5.8 million, respectively. Such expenses consist primarily of compensation related costs, legal expenses, accounting expenses, transfer agent fees, directors and officers’ insurance expense and board of directors related costs. The increase is primarily attributable to expenses recorded related to increased compensation related expenses and marketing costs. We expect general and administrative expenses to decrease as a percentage of total revenues over time.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for the three months ended March 31, 2023 and 2022 were approximately $15.2 million and $15.0 million, respectively. Depreciation expense consists primarily of depreciation on the buildings and site improvements at our properties. Amortization expense consists of the amortization of our in place lease intangible assets resulting from our self storage acquisitions and amortization of certain intangible assets acquired in the Self Administration Transaction. The increase in depreciation and amortization expense is primarily attributable to additional depreciation and amortization on the properties and intangible assets acquired in the SSGT II Merger.

Acquisition Expenses

Acquisition expenses for the three months ended March 31, 2023 and 2022 were approximately $31,000 and $0.4 million, respectively. These acquisition expenses were incurred prior to acquisitions becoming probable in accordance with our capitalization policy.

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Contingent Earnout Adjustment

There were no contingent earnout adjustments during the three months ended March 31, 2023. The contingent earnout adjustment for the three months ended March 31, 2022 reflects an increase in the contingent earnout liability of approximately $0.5 million. The contingent earnout adjustment reflected the change in the liability based on an updated valuation and changes in the discounted probability weighted forecast of our projected assets under management (as defined in the Operating Partnership Agreement, as amended). The third and final tranche of the contingent earnout was earned during the year ended December 31, 2022, and no future contingent earnout adjustments will be recorded.

Equity in earnings (losses) from investments in the JV Properties

Losses from our equity method investments in the JV Properties for the three months ended March 31, 2023 and 2022 were approximately $0.4 million and $0.2 million of loss, respectively. Earnings from our equity method investments in the JV Properties consists of our allocation of earnings and losses of our equity method joint ventures with SmartCentres.

Equity in earnings (losses) from investments in the Managed REITs

Losses from our equity method investments in Managed REITs for the three months ended March 31, 2023 and 2022 were approximately $0.2 million and $0.1 million of loss, respectively. Earnings from our equity method investments in Managed REITs consists primarily of our allocation of earnings and losses of our equity method investments in SST VI and SSGT III.

Other, Net

Other for the three months ended March 31, 2023 and 2022 was approximately $0.8 million of income and $0.1 million of expense, respectively. Other 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 change of approximately $0.8 million is largely composed of interest income from our loans to SSGT III and SST VI, partially offset by foreign currency related adjustments.

Interest Expense

Interest expense for the three months ended March 31, 2023 and 2022 was approximately $14.7 million and $7.6 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 hedging derivatives. The increase of approximately $7.1 million is primarily attributable to an increase in rates on our variable rate debt as well as an increase in our average outstanding principal balance, primarily as a result of the SSGT II Merger, as well as additional fundings for the SSGT III and SST VI Mezzanine Loans that were funded by draws on the Credit Facility Revolver. We expect interest expense to fluctuate in future periods commensurate with our future debt levels and fluctuations in interest rates.

Income Tax (Expense) Benefit

Income tax for the three months ended March 31, 2023 and 2022 was approximately $0.3 million of expense and $0.3 million of expense, respectively. Income tax consists primarily of adjustments to deferred tax liabilities, state, federal, and Canadian income tax. We expect our income tax expense to increase in future periods primarily related to our operations in Canada.

Same-Store Facility Results - Three Months Ended March 31, 2023 and 2022

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, 2022, excluding two other properties) for the

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three months ended March 31, 2023 and 2022. We consider the following data to be meaningful as this allows for the comparison of results without the effects of acquisition, lease up, or development activity.

|  | Same-Store Facilities |  |  | Non Same-Store Facilities |  | Total |
|  | 2023 |  |  | 2022 |  |  | % Change |  |  | 2023 |  |  | 2022 |  |  | % Change |  | 2023 |  |  | 2022 |  |  | % Change |
Revenue (1) |  | $ | 45,906,894 |  |  | $ | 42,172,541 |  |  |  | 8.9 | % |  | $ | 5,631,121 |  |  | $ | 1,104,153 |  |  | N/M |  | $ | 51,538,015 |  |  | $ | 43,276,694 |  |  |  | 19.1 | %
Property operating expenses (2) |  |  | 14,250,746 |  |  |  | 12,572,404 |  |  |  | 13.3 | % |  |  | 2,282,706 |  |  |  | 532,921 |  |  | N/M |  |  | 16,533,452 |  |  |  | 13,105,325 |  |  |  | 26.2 | %
Net operating income |  | $ | 31,656,148 |  |  | $ | 29,600,137 |  |  |  | 6.9 | % |  | $ | 3,348,415 |  |  | $ | 571,232 |  |  | N/M |  | $ | 35,004,563 |  |  | $ | 30,171,369 |  |  |  | 16.0 | %
Number of facilities |  |  | 137 |  |  |  | 137 |  |  |  |  |  |  | 16 |  |  |  | 3 |  |  |  |  |  | 153 |  |  |  | 140 |  |  |  |
Rentable square feet (3) |  |  | 10,366,585 |  |  |  | 10,366,585 |  |  |  |  |  |  | 1,428,145 |  |  |  | 330,200 |  |  |  |  |  | 11,794,730 |  |  |  | 10,696,785 |  |  |  |
Average physical occupancy (4) |  |  | 93.1 | % |  |  | 95.0 | % |  |  | -1.9 | % |  | N/M |  |  | N/M |  |  | N/M |  |  | 92.6 | % |  |  | 94.7 | % |  |  | -2.1 | %
Annualized rent per occupied square foot (5) |  | $ | 19.84 |  |  | $ | 17.76 |  |  |  | 11.7 | % |  | N/M |  |  | N/M |  |  | N/M |  | $ | 19.64 |  |  | $ | 17.74 |  |  |  | 10.7 | %

N/M Not meaningful

(1)
Revenue includes rental revenue, certain ancillary revenue, administrative and late fees, and excludes Tenant Protection Program revenue.
(2)
Property operating expenses excludes corporate general and administrative expenses, interest expense, depreciation, amortization expense, and acquisition expenses.
(3)
Of the total rentable square feet, parking represented approximately 1,017,000 square feet and 943,000 square feet as of March 31, 2023 and 2022, respectively. On a same-store basis, for the same periods, parking represented approximately 940,000 square feet.
(4)
Determined by dividing the sum of the month-end occupied square feet for the applicable group of facilities for each applicable period by the sum of their month-end rentable square feet for the period.
(5)
Determined by dividing the aggregate realized rental income for each applicable period by the aggregate of the month-end occupied square feet for the period. Properties are included in the respective calculations in their first full month of operations, as appropriate. We have excluded the realized rental revenue and occupied square feet related to parking herein for the purpose of calculating annualized rent per occupied square foot.

Our same-store revenue increased by approximately $3.7 million, or approximately 8.9%, for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 due to higher annualized rent per occupied square foot, partially offset by an approximately 1.9% decrease in average occupancy. The increase in property operating expenses is primarily attributable to compensation related expenses, property insurance, property tax, and to a lesser extent, advertising.

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

|  | For the Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Net income |  | $ | 2,032,600 |  |  | $ | 3,269,459 |
Adjusted to exclude: |  |  |  |  |  |
Tenant Protection Program revenue(1) |  |  | (1,929,505 | ) |  |  | (1,754,498 | )
Managed REIT Platform revenue |  |  | (2,276,535 | ) |  |  | (1,809,096 | )
Managed REIT Platform expenses |  |  | 549,936 |  |  |  | 389,265 |
General and administrative |  |  | 6,536,626 |  |  |  | 5,837,647 |
Depreciation |  |  | 13,272,271 |  |  |  | 11,107,986 |
Intangible amortization expense |  |  | 1,919,705 |  |  |  | 3,900,884 |
Acquisition expenses |  |  | 31,190 |  |  |  | 417,774 |
Contingent earnout adjustment |  |  | — |  |  |  | 513,821 |
Interest expense |  |  | 14,703,897 |  |  |  | 7,575,784 |
Other, net |  |  | (750,978 | ) |  |  | 28,627 |
Earnings from our equity method investments in the JV Properties |  |  | 405,111 |  |  |  | 233,294 |
Earnings from our equity method investments in Managed REITs |  |  | 233,025 |  |  |  | 139,294 |
Income Tax |  |  | 277,220 |  |  |  | 321,128 |
Total net operating income |  | $ | 35,004,563 |  |  | $ | 30,171,369 |

(1) Approximately $1.7 million and $1.7 million of Tenant Protection Program revenue was earned at same-store facilities during the three months ended March 31, 2023 and 2022, respectively, with the remaining approximately $0.2 million and $0.1 million earned at non same-store facilities during the three months ended March 31, 2023 and 2022, respectively.

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Non-GAAP Financial Measures

Funds from Operations

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

FFO, as Adjusted

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

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

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

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The following is a reconciliation of net 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:

|  | Three Months Ended March 31, 2023 |  |  | Three Months Ended March 31, 2022 |
Net loss (attributable to common stockholders) |  | $ | (1,389,957 | ) |  | $ | (216,555 | )
Add: |  |  |  |  |  |
Depreciation of real estate |  |  | 13,056,494 |  |  |  | 10,862,117 |
Amortization of real estate related intangible assets |  |  | 1,846,709 |  |  |  | 3,660,083 |
Depreciation and amortization of real estate and intangible assets from unconsolidated entities |  |  | 502,157 |  |  |  | 300,013 |
Deduct: |  |  |  |  |  |
Adjustment for noncontrolling interests in our Operating Partnership (1) |  |  | (1,788,059 | ) |  |  | (1,599,064 | )
FFO (attributable to common stockholders) |  | $ | 12,227,344 |  |  | $ | 13,006,594 |
Other Adjustments: |  |  |  |  |  |
Intangible amortization expense - contracts (2) |  |  | 72,996 |  |  |  | 240,801 |
Acquisition expenses (3) |  |  | 31,190 |  |  |  | 417,774 |
Acquisition expenses and foreign currency (gains) losses, net from unconsolidated entities |  |  | 52,501 |  |  |  | 20,496 |
Contingent earnout adjustment (4) |  |  | — |  |  |  | 513,821 |
Accretion of fair market value of secured debt |  |  | 3,230 |  |  |  | (34,642 | )
Foreign currency and interest rate derivative (gains) losses, net (5) |  |  | 384,747 |  |  |  | (175,532 | )
Adjustment of deferred tax liabilities (2) |  |  | 120,287 |  |  |  | 241,588 |
Adjustment for noncontrolling interests in our Operating Partnership (1) |  |  | (77,143 | ) |  |  | (131,971 | )
FFO, as adjusted (attributable to common stockholders) |  | $ | 12,815,152 |  |  | $ | 14,098,929 |
FFO (attributable to common stockholders) |  | $ | 12,227,344 |  |  | $ | 13,006,594 |
Net income attributable to the noncontrolling interests in our Operating Partnership |  |  | 232,943 |  |  |  | 403,822 |
Adjustment for noncontrolling interests in our Operating Partnership(1) |  |  | 1,788,059 |  |  |  | 1,599,064 |
FFO (attributable to common stockholders and OP unit holders) |  | $ | 14,248,346 |  |  | $ | 15,009,480 |
FFO, as adjusted (attributable to common stockholders) |  | $ | 12,815,152 |  |  | $ | 14,098,929 |
Net income attributable to the noncontrolling interests in our Operating Partnership |  |  | 232,943 |  |  |  | 403,822 |
Adjustment for noncontrolling interests in our Operating Partnership(1) |  |  | 1,865,202 |  |  |  | 1,731,035 |
FFO, as adjusted (attributable to common stockholders and OP unit holders) |  | $ | 14,913,297 |  |  | $ | 16,233,786 |

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

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

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

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

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

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

Cash Flows

A comparison of cash flows for operating, investing and financing activities for the three months ended March 31, 2023 and 2022 is as follows:

|  | Three Months Ended |  |  |  |
|  | March 31, 2023 |  |  | March 31, 2022 |  |  | Change |
Net cash flow provided by (used in): |  |  |  |  |  |  |  |  |
Operating activities |  | $ | 15,893,944 |  |  | $ | 15,581,303 |  |  | $ | 312,641 |
Investing activities |  | $ | (20,859,088 | ) |  | $ | (21,363,648 | ) |  | $ | 504,560 |
Financing activities |  | $ | (7,740,448 | ) |  | $ | 4,532,728 |  |  | $ | (12,273,176 | )

Cash flows provided by operating activities for the three months ended March 31, 2023 and 2022 were approximately $15.9 million and $15.6 million, respectively, an increase of approximately $0.3 million. The increase in cash provided by our operating activities is primarily the result of an improvement of approximately $1.0 million resulting from changes in working capital accounts, offset by a decrease of approximately $1.2 million in net income when excluding the impact of non-cash items included in the determination of net income.

Cash flows used in investing activities for the three months ended March 31, 2023 and 2022 were approximately $20.9 million and $21.4 million, respectively, a reduction in the use of cash of approximately $0.5 million. The reduction in cash used in investing activities primarily relates to net cash outflows of $12.5 million for investments in the Managed REITs during the three months ended March 31, 2023, compared to approximately $18.8 million of cash outflows during the three months ended March 31, 2022 used to purchase real estate.

Cash flows used in financing activities for the three months ended March 31, 2023 were approximately $7.7 million, and cash flows provided by financing activities for the three months ended March 31, 2022 were approximately $4.5 million, a change of approximately $12.3 million. The change in financing activities is primarily attributable to debt borrowings, net of paydowns which provided approximately $13.0 million during the three months ended March 31, 2023 compared to approximately $19.0 million during the three months ended March 31, 2022; offset by an increase in cash paid for distributions of approximately $7.9 million due to the cessation of our distribution reinvestment plan, and the additional shares outstanding as a result of the SSGT II Merger.

Liquidity and Capital Resources

Short-Term Liquidity and Capital Resources

Our liquidity needs consist primarily of our property operating expenses, general and administrative expenses, Managed REIT Platform expenses, debt service payments, capital expenditures, property acquisitions, investments in our Managed REITs, and distributions to our Series A Convertible Preferred stockholder, limited partners in our Operating Partnership, and our stockholders, as necessary to maintain our REIT qualification. We generally expect that we will meet our short-term liquidity requirements from the combination of existing cash balances and net cash provided from property operations and the Managed REIT Platform and further supported by our Credit Facility. Alternatively, we may issue additional secured or unsecured financing from banks or other lenders, or we may enter into various other forms of financing.

In April 2022, we received an investment grade credit rating of BBB- from Kroll Bond Rating Agency, Inc. In accordance with the Note Purchase Agreement, we intend to maintain a credit rating on an annual basis. This rating was reaffirmed by Kroll in April 2023.

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

Distribution Policy and Distributions

Preferred Stock Dividends

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

Common Stock Distributions

On March 23, 2023, our board of directors declared a distribution rate for the month of April 2023 of approximately $0.00164 per day per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on each day of the period commencing on April 1, 2023 and ending April 30, 2023. Such distributions payable to each stockholder of record during a month will be paid the following month.

On April 26, 2023, our board of directors declared a distribution rate for the month of May 2023 of approximately $0.00164 per day per share on the outstanding shares of common stock payable to Class A and Class T stockholders of record of such shares as shown on our books at the close of business on each day of the period commencing on May 1, 2023 and ending May 31, 2023. Such distributions payable to each stockholder of record during a month will be paid the following month.

Background and History of Common Stock Distributions

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

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

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

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

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

|  | Three Months Ended March 31, 2023 |  |  |  |  |  | Three Months Ended March 31, 2022 |  |  |  |
Distributions paid in cash — common stockholders |  | $ | 14,684,560 |  |  |  |  |  | $ | 7,180,866 |  |  |  |
Distributions paid in cash — Operating Partnership unitholders |  |  | 2,005,649 |  |  |  |  |  |  | 1,597,751 |  |  |  |
Distributions paid in cash — preferred stockholders |  |  | 3,150,685 |  |  |  |  |  |  | 3,150,685 |  |  |  |
Distributions reinvested |  |  | — |  |  |  |  |  |  | 5,243,398 |  |  |  |
Total distributions |  | $ | 19,840,894 |  |  |  |  |  | $ | 17,172,700 |  |  |  |
Source of distributions |  |  |  |  |  |  |  |  |  |  |  |
Cash flows provided by operations |  | $ | 15,893,944 |  |  |  | 80 | % |  | $ | 15,581,303 |  |  |  | 91 | %
Cash on hand |  |  | 3,946,950 |  |  |  | 20 | % |  |  | — |  |  |  | 0 | %
Offering proceeds from distribution reinvestment plan |  |  | — |  |  |  | 0 | % |  |  | 1,591,397 |  |  |  | 9 | %
Total sources |  | $ | 19,840,894 |  |  |  | 100 | % |  | $ | 17,172,700 |  |  |  | 100 | %

From our inception through March 31, 2023, we paid cumulative distributions of approximately $340.6 million, of which approximately $274.9 million were paid to common stockholders, as compared to cumulative FFO of approximately $80.7 million.

For the three months ended March 31, 2023, we paid distributions of approximately $19.8 million, of which approximately $14.7 million were paid to common stockholders, as compared to FFO (attributable to common stockholders) of approximately $12.2 million.

For the three months ended March 31, 2022, we paid distributions of approximately $17.2 million, of which approximately $12.4 million were paid to common stockholders, as compared to FFO (attributable to common stockholders) of approximately $13.0 million.

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

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

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

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

Indebtedness

As of March 31, 2023, our net debt was approximately $1,081 million, which included approximately $442 million in fixed rate debt and approximately $643 million in variable rate debt, less approximately $0.1 million in debt discount and approximately $4.2 million in net debt issuance costs. See Note 5 – Debt, of the Notes to the Consolidated Financial Statements contained in this report for more information about our indebtedness.

Additionally, we are party to a master mortgage commitment agreement (the "SmartCentres Financing") with SmartCentres Storage Finance LP (the "SmartCentres Lender"). The SmartCentres Lender is an affiliate of SmartCentres Real Estate Investment Trust, an unaffiliated third party ("SmartCentres"), that owns the other 50% of our unconsolidated real estate joint ventures located in the Greater Toronto Area of Canada. As of March 31, 2023, approximately $119.2 million CAD or approximately $88.0 million USD, was outstanding on the SmartCentres Financings. The proceeds of the SmartCentres Financing have been and will be used to finance the development and construction of the SmartCentres joint venture properties. See Note 4 – Investments in Unconsolidated Real Estate Ventures, of the Notes to the Consolidated Financial Statements contained in this report for additional information regarding the SmartCentres Financing.

Long-Term Liquidity and Capital Resources

On a long-term basis, our principal demands for funds will be for our property operating expenses, general and administrative expenses, Managed REIT Platform expenses, debt service payments, capital expenditures, property acquisitions, investments in our Managed REITs, and distributions to our Series A Convertible Preferred stockholder, limited partners in our Operating Partnership, and our stockholders, as necessary to maintain our REIT qualification.

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

Our material cash requirements from contractual and other obligations primarily relate to our debt obligations. The expected timing of those outstanding principal payments are shown in the table below. The information in this section should be read in conjunction with Note 5 – Debt, and Note 12 – Commitments and Contingencies, of the Notes to the Consolidated Financial Statements contained within this report.

The following table presents the future principal payment requirements on outstanding debt as of March 31, 2023:

2023 |  | $ | 1,968,696 |
2024 |  |  | 395,936,183 |
2025 |  |  | 2,869,187 |
2026 |  |  | 341,916,098 |
2027 |  |  | 48,105,556 |
2028 and thereafter |  |  | 294,500,000 |
Total payments |  | $ | 1,085,295,720 |

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

As of March 31, 2023, pursuant to the SST VI Mezzanine Loan, we were potentially required to fund an additional $5.0 million in debt to SST VI, at the option of the borrower. As of March 31, 2023 pursuant to the SSGT III Mezzanine Loan we were potentially required to fund an additional $17.5 million in debt to SSGT III, at the option of the borrower. See Note 10 – Related Party Transactions, of the Notes to the Consolidated Financial Statements for more information about our obligations under these agreements.

For cash requirements related to potential acquisitions currently under contract, please see Note 3 – Real Estate Facilities and Note 4 – Investments in Unconsolidated Real Estate Ventures of the Notes to the Consolidated Financial Statements.

Subsequent Events

Please see Note 14 – Subsequent Events of the Notes to the Consolidated Financial Statements contained in this report.

Seasonality

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

As of March 31, 2023, our net debt was approximately $1,081 million, which included approximately $442 million in fixed rate debt and approximately $643 million in variable rate debt, less approximately $0.1 million in debt discount and approximately $4.2 million in net debt issuance costs. As of December 31, 2022, our net debt was approximately $1,068 million, which included approximately $443 million in fixed rate debt, approximately $630 million in variable rate debt and approximately $0.1 million in net debt premium less approximately $4.5 million in net debt issuance costs. Our debt instruments were entered into for other than trading purposes.

Changes in interest rates have different impacts on the fixed and variable debt. A change in interest rates on fixed rate debt impacts its fair value but has no impact on interest incurred or cash flows. A change in interest rates on variable debt could impact the interest incurred and cash flows and its fair value. If the underlying rate of the related index on our variable rate debt were to increase by 100 basis points, the increase in interest, net of our interest rate derivatives, would decrease future earnings and cash flows by approximately $1.9 million annually.

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

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The following table summarizes annual debt maturities and average interest rates on our outstanding debt as of March 31, 2023:

|  | 2023 |  |  | 2024 |  |  | 2025 |  |  | 2026 |  |  | 2027 |  |  | Thereafter |  |  | Total |
Fixed rate debt |  | $ | 1,968,696 |  |  | $ | 2,734,895 |  |  | $ | 2,869,187 |  |  | $ | 91,916,098 |  |  | $ | 48,105,556 |  |  | $ | 294,500,000 |  |  | $ | 442,094,432 |
Average interest rate(1) |  |  | 4.69 | % |  |  | 4.69 | % |  |  | 4.69 | % |  |  | 4.77 | % |  |  | 4.93 | % |  |  | 5.07 | % |  |  |
Variable rate debt |  | $ | — |  |  | $ | 393,201,288 |  |  | $ | — |  |  | $ | 250,000,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 643,201,288 |
Average interest rate(1) |  |  | 6.60 | % |  |  | 6.58 | % |  |  | 6.57 | % |  |  | 6.57 | % |  |  | — |  |  |  | — |  |  |  |

(1) Interest expense for fixed rate debt was calculated based upon the contractual rate and the interest expense on variable rate debt was calculated based on the rate in effect on March 31, 2023, excluding the impact of interest rate derivatives. The interest rate used for the 2032 Private Placement Notes was 5.28%, which includes the 75 basis point increase due to the Total Leverage Event having occurred on March 31, 2023. (See Note 5 – Debt for additional information.) Debt denominated in foreign currency has been converted based on the rate in effect as of March 31, 2023.

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

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

The following should be read in conjunction with the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2022. With the exception of the risk factors set forth below, there have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)
None.
(b)
Not applicable.
(c)
Our share redemption program enabled our stockholders to have their shares redeemed by us, subject to the significant conditions and limitations described in our publicly filed documents. During the three months ended March 31, 2023, we redeemed shares as follows:

For the Month Ended |  | Total Number of Shares Redeemed |  |  | Average Price Paid per Share |  |  | Total Number of Shares Redeemed as Part of Publicly Announced Plans or Programs |  |  | Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs |  |
January 31, 2023 |  |  | — |  |  | $ | — |  |  |  | — |  |  |  | 4,596,959 |  | (1)
February 28, 2023 |  |  | — |  |  | $ | — |  |  |  | — |  |  |  | 4,596,959 |  | (1)
March 31, 2023 |  |  | — |  |  | $ | — |  |  |  | — |  |  |  | 4,596,959 |  | (1)

(1)
A description of the maximum number of shares that may be purchased under our share redemption program is included in Note 12 – Commitments and Contingencies, of the Notes to the Consolidated Financial Statements contained in this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits required to be filed with this report are set forth on the Exhibit Index hereto and incorporated by reference herein.

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EXHIBIT INDEX

The following exhibits are included in this report on Form 10-Q for the period ended March 31, 2023 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit No. |  | Description
2.1 |  | Agreement and Plan of Merger, dated as of February 24, 2022, by and among SmartStop Self Storage REIT, Inc., Strategic Storage Growth Trust II, Inc., and SSGT II Merger Sub, LLC, incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on February 24, 2022, Commission File No. 000-55617
3.1 |  | Second Articles of Amendment and Restatement of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on September 19, 2019, Commission File No. 000-55617
3.2 |  | Articles Supplementary for Series A Convertible Preferred Stock of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on October 30, 2019, Commission File No. 000-55617
3.3 |  | Articles of Amendment to the Second Articles of Amendment and Restatement of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 23, 2021, Commission File No. 000-55617
3.4 |  | Amended and Restated Bylaws of SmartStop Self Storage REIT, Inc., incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on September 19, 2019, Commission File No. 000-55617
31.1* |  | Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* |  | Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1* |  | Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
32.2* |  | Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
101* |  | The following SmartStop Self Storage REIT, Inc. financial information for the three months ended March 31, 2023 formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss) (iv) Consolidated Statements of Equity and Temporary Equity, (v) Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104* |  | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 has been formatted in Inline XBRL.

* Filed herewith.

Certain instruments defining rights of holders of long-term debt of the company and its consolidated subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. Upon request, the company agrees to furnish to the SEC copies of such instruments.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| SMARTSTOP SELF STORAGE REIT, INC. (Registrant)
Dated: May 11, 2023 | By: | /s/ James R. Barry
|  | James R. Barry
|  | Chief Financial Officer and Treasurer (Principal Financial Officer)

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