ITEM 7. 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 within this Form 10-K, and our accompanying consolidated financial statements and notes thereto. See also “Cautionary Note Regarding Forward Looking Statements” preceding Part I.
Overview
Strategic Storage Trust VI, Inc., a Maryland corporation (the “Company”), was formed on October 14, 2020 under the Maryland General Corporation Law for the purpose of engaging in the business of investing in self storage facilities and commenced formal operations on March 10, 2021. We made an election to be treated as a REIT under the Internal Revenue Code for federal income tax purposes beginning with our taxable year ended December 31, 2021.
On February 26, 2021, pursuant to a confidential private placement memorandum, we commenced a private offering (the "Private Offering") of up to $200,000,000 in shares of our common stock and $20,000,000 shares of common stock pursuant to our distribution reinvestment plan. Please see Note 1 of the Notes to the Consolidated Financial Statements contained elsewhere in this report for additional information. The primary portion of our Private Offering was terminated on March 17, 2022. We received approximately $100.7 million in offering proceeds from the sale of our common stock pursuant to the Private Offering. Through our distribution reinvestment plan, we have issued approximately 1.1 million Class P shares for gross proceeds of approximately $11.0 million.
In connection with the Public Offering, defined below, we filed articles of amendment to our Charter (the “Articles of Amendment”) and articles supplementary to our Charter (the “Articles Supplementary”). Following the filing of the Articles of Amendment and the Articles Supplementary, we authorized 30,000,000 shares of common stock designated as Class P shares, 300,000,000 shares of common stock designated as Class A shares, 300,000,000 shares of common stock designated as Class T shares, and 70,000,000 shares of common stock designated as Class W shares. Any common stock sold in the Private Offering were redesignated as Class P common stock upon the filing of the Articles of Amendment. On May 28, 2021, we filed a Registration Statement on Form S-11 (the “Registration Statement”), which was subsequently amended, with the U.S. Securities and Exchange Commission (“SEC”) to register a maximum of $1,000,000,000 in shares of Class A, Class T, and Class W common stock for sale to the public (the “Primary Offering”) and $95,000,000 in shares of Class A, Class T, and Class W common stock for sale pursuant to our distribution reinvestment plan. On March 17, 2022, the SEC declared our registration statement effective. On October 4, 2023, we filed a Post-Effective Amendment to our Registration Statement to register two new classes of common stock (Class Y shares and Class Z shares) with the SEC. On November 1, 2023, the Post-Effective Amendment to our Registration Statement became with the SEC. Also, on November 1, 2023, we filed articles supplementary to our Charter which reclassified 200,000,000 Class T shares as Class Y shares and 70,000,000 Class A shares as Class Z shares. November 1, 2023, we began offering Class Y shares and Class Z shares in our Primary Offering for $9.30 per share and are offering Class A shares, Class P shares, Class T shares, Class W shares, Class Y shares and Class Z shares pursuant to our distribution reinvestment plan for $9.30 per share (collectively, the “Public Offering”) and offering Class A shares, Class T shares or Class W shares in our Primary Offering.
On May 20, 2025, our board of directors approved the termination of the Primary Offering, effective as of May 30, 2025, based upon various factors, including the costs of maintaining a public registration of our common stock, the robust size of our portfolio of properties, and our shift in focus to continued portfolio stabilization and performance. The termination of the Primary Offering occurred on May 30, 2025. We sold approximately 2.9 million Class A shares for gross offering proceeds of approximately $30.3 million, approximately 4.8 million Class T shares for gross offering proceeds of approximately $48.1 million, approximately 0.7 million Class W shares for gross offering proceeds of approximately $6.3 million, approximately 5.2 million Class Y shares for gross offering proceeds of approximately $50.6 million, and approximately 0.6 million Class Z shares for gross offering proceeds of approximately $5.5 million in the Primary Offering.
We continue to offer Class P, Class A, Class T, Class W, Class Y, and Class Z shares pursuant to our distribution reinvestment plan. On July 18, 2025, we filed with the SEC a Registration Statement on Form S-3, which registered up to an additional $75.0 million in shares under our distribution reinvestment plan for all share classes (our “DRP Offering”). The DRP Offering may be terminated at any time upon 10 days’ prior written notice to stockholders.
As of December 31, 2025, we have issued approximately 1.1 million Class P shares, approximately 0.2 million Class A shares, approximately 0.4 million Class T shares, approximately 57,000 Class W shares, approximately 0.2 million Class Y shares and approximately 12,000 Class Z shares for gross proceeds of approximately $19.7 million through our distribution reinvestment plan.
We have invested the net proceeds from our offerings primarily in self storage facilities consisting of both income-producing and growth properties located in the United States and Canada. As of December 31, 2025, we owned 24 operating self storage properties located in seven states (Arizona, Delaware, Florida, Nevada, Oregon, Pennsylvania and Washington)
and three Canadian provinces (Alberta, British Columbia and Ontario), 50% equity interests in five unconsolidated real estate ventures located in two Canadian provinces (Ontario and Quebec). Our unconsolidated real estate ventures consist of four operating self storage properties in the lease-up phase and one parcel of land that is being developed into a self storage facility, with subsidiaries of SmartCentres owning the other 50% of such entity and two development properties in Florida and Ontario.
As of December 31, 2025, our self storage portfolio was comprised as follows:
State
Properties
Units (1)
(net) (2)
% of Total
Rentable
Physical
Occupancy
Rental
Income
Alberta
Arizona
British Columbia
Delaware
Florida
Nevada
Ontario
Oregon
Pennsylvania
Washington
Includes all rentable units, consisting of storage units and parking units (approximately 725 units).
Includes all rentable square feet consisting of storage units and parking units (approximately 209,320 square feet).
Represents the occupied square feet of all facilities we owned in a state divided by total rentable square feet of all the facilities we owned in such state as of December 31, 2025.
Represents rental income for all facilities we own in a state divided by our total rental income for the month ended December 31, 2025.
Development Properties
Bradenton Land
On February 16, 2023, we, through an indirect, wholly-owned subsidiary of our operating partnership, acquired a parcel of land adjacent to our property in Bradenton, Florida (the “Bradenton Land”) from an unaffiliated third party. The purchase price for the Bradenton Land was approximately $1.4 million, plus closing costs and an acquisition fee to our advisor. We are in the process of expanding our current self storage property on the Bradenton Land. As of December 31, 2025, estimated development cost to complete the expansion are approximately $2.1 million, which we expect to fund with a combination of net proceeds from our Series E Preferred Offering and/or potential future debt financing.
Etobicoke Land
On March 27, 2023, we, through an indirect, wholly-owned subsidiary of our operating partnership, acquired a parcel of land to be developed into a self storage facility located in Etobicoke, in the city of Toronto, Ontario (the “Etobicoke Land”) from an unaffiliated third party. The purchase price for the Etobicoke Land was approximately CAD $2.2 million, plus closing costs and an acquisition fee to our advisor. As of December 31, 2025, our cost to complete development is approximately CAD $5.3 million, which we expect to fund with a combination of net proceeds from our Primary offering and/or the Meridian financing, as described below.
On March 6, 2025, we through wholly-owned subsidiary of our operating partnership, entered into a credit agreement with Meridian Credit Union Limited ("Meridian") with a maximum borrowing capacity of CAD $16.0 million. As of December 31, 2025, we had drawn approximately CAD $10.4 million and have CAD $5.6 million available. Please see Note 5 - Debt of the Notes to the Consolidated Financial Statements contained elsewhere in this report for additional information.
In February 2026, we substantially completed development and commenced operations at the Etobicoke Property.
Investments in Unconsolidated Real Estate Ventures
We have entered into joint venture agreements with a subsidiary of SmartCentres, an unaffiliated third party, to acquire tracts of land and develop them into self storage facilities. We account for these investments using the equity method of accounting and they will be stated at cost and adjusted for our share of net earnings or losses and reduced by distributions. Equity in earnings (loss) will generally be recognized based on our ownership interest in the earnings of each of the unconsolidated investments.
The following table summarizes our 50% ownership interests in unconsolidated real estate ventures as of December 31, 2025:
Location
Date Real Estate
Venture Acquired
Land
Real Estate
Venture
Status
Completion Date or estimated completion
Units
Net Rentable Sq. Ft.
Toronto (1)
Toronto, Ontario
April 2021
Operational
June 2025
Toronto II (1)
Toronto, Ontario
December 2021
Operational
April 2025
Dorval (1)
Dorval, Quebec
February 2023
Operational
June 2025
Hamilton (1)
Hamilton, Ontario
November 2023
Operational
October 2024
Montreal (2)
Montreal, Quebec
January 2024
Under Development
First half of 2026
As of December 31, 2025, these four JV Properties were encumbered by first mortgages pursuant to the
SmartCentres Financing (defined below).
Approximate units and net rentable square feet at completion.
As of December 31, 2025, our 50% share of the costs to complete development were expected to be approximately CAD $0.2 million for the Toronto Property, approximately CAD $0.2 million for the Toronto II Property, approximately CAD $0.2 million for the Dorval Property and approximately CAD $6.0 million for the Montreal Property. Development costs for Toronto, Toronto II and Dorval properties are expected to be funded with the SmartCentres Financing. The development costs for the Montreal Property are expected to be funded with a combination of net proceeds from our Series E Preferred Offering and/or the SmartCentres Financing.
On August 30, 2024, we and SmartCentres, through the Toronto, Toronto II, Dorval and Hamilton joint venture partnerships (the “JV Properties”), entered into a master mortgage commitment agreement (the “MMCA”) with SmartCentres Storage Finance LP, an affiliate of SmartCentres (the “SmartCentres Lender”) (collectively, the “SmartCentres Financing”). The initial maximum amount available under the SmartCentres Financing is CAD $95.5 million and contains an accordion feature such that borrowings may be increased to CAD $120.0 million, subject to certain conditions set forth in the MMCA. The proceeds of the SmartCentres Financing will be used to finance the development and construction of self storage facilities on the Toronto, Toronto II, Dorval and Hamilton properties. On September 3, 2024 the JV Properties drew approximately CAD $46.3 million on the SmartCentres Financing and distributed approximately CAD $21.8 million to each partner. As of December 31, 2025, approximately CAD $90.7 million was outstanding on the SmartCentres Financing.
The SmartCentres Financing is secured by first mortgages on each of the Toronto, Toronto II, Dorval and Hamilton properties. Interest on the SmartCentres Financing is a variable annual rate equal to the aggregate of: (i) the Adjusted Daily Compounded Canadian Overnight Repo Rate Average (“CORRA”), plus (ii) an adjusted Daily Compounded CORRA adjustment of approximately 0.30%, plus (iii) a margin based on the External Credit Rating, plus (iv) a margin under the Senior Credit Facility, each as defined and described further in the MMCA. As of December 31, 2025, the total interest rate was approximately 5.24%.
The SmartCentres Financing matures on May 11, 2026, and may be extended annually as set forth in the MMCA. Monthly interest payments are initially capitalized on the outstanding principal balance. Upon any of the Toronto, Toronto II, Dorval and Hamilton properties generating sufficient Net Cash Flow (as defined in the MMCA), the SmartCentres Financing provides for the commencement of quarterly payments of interest. The borrowings advanced pursuant to the SmartCentres Financing may be prepaid without penalty, subject to certain conditions set forth in the MMCA.
On February 19, 2026, the JV Properties amended the SmartCentres Financing to: (i) extend the maturity date by one-year until May 11, 2027; (ii) added the Montreal Property as borrower under the SmartCentres Financing, and (iii) drew approximately CAD $17.5 million for a total outstanding balance of CAD $109.1 million. Subsequent to the draw, the JV Properties distributed approximately CAD $8.7 million to each partner.
The SmartCentres Financing contains 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 of the Toronto, Toronto II, Dorval and Hamilton properties) and events of default, all as set forth in the MMCA. We serve as a full recourse guarantor with respect to 50% of the SmartCentres Financing.
Critical Accounting Policies and Estimates
We have established accounting policies which conform to generally accepted accounting principles (“GAAP”) in the U.S. 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 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 and estimates include the following: real estate purchase price allocations; the evaluation of whether any of our long-lived assets have been impaired; 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 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.
Impairment of Long-Lived Assets
The majority of our assets, other than cash and cash equivalents, consist of long-lived real estate assets, including those held through joint ventures, as well as intangible assets related to our acquisitions. We evaluate such assets for impairment based on events and changes in circumstances that may arise in the future and that may impact the carrying amounts of our long-lived assets, including those held through joint ventures. When indicators of potential impairment are present, we will assess the recoverability of the particular asset by determining whether the carrying value of the asset will be recovered, through an evaluation of the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. This evaluation is based on a number of estimates and assumptions. Based on this evaluation, if the expected undiscounted future cash flows do not exceed the carrying value, we will adjust the value of the long-lived asset and recognize an impairment loss. Our evaluation of the impairment of long-lived 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 recognized, if any, may vary based on the estimates and assumptions we use.
Consolidation Considerations
Current accounting guidance provides a framework for identifying a variable interest entity (“VIE”) and determining when a company should include the assets, liabilities, noncontrolling interests, and results of activities of a VIE in its consolidated financial statements. In general, a VIE is an entity or other legal structure used to conduct activities or hold assets that either (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities, or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. Generally, a VIE should be consolidated if a party with an ownership, contractual, or other financial interest in the VIE (a variable interest holder) has the power to direct the VIE’s most significant activities and the obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and noncontrolling interest at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest.
We evaluate the consolidation of our investments in VIE's in accordance with relevant accounting guidance. This evaluation requires us to determine whether we have a controlling interest in a VIE through a means other than voting rights, and, if so, such VIE may be required to be consolidated in our financial statements. Our evaluation of our VIE's 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 VIE's 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, 2021. 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 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 federal income tax purposes.
Recent Tax Legislation
Effective July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. Certain provisions of OBBBA modified U.S. tax law and impact us and our stockholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code, (ii) permanently reinstated 100% bonus depreciation for certain property acquired after January 19, 2025, (iii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31, 2025, and (iv) increased the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of “adjusted taxable income” for taxable years beginning after December 31, 2024. We are currently evaluating the provisions of OBBBA, but do not expect it to have a material impact on our Consolidated Financial Statements.
Results of Operations
Overview
We derive revenues principally from: (i) rents received from tenants who rent storage units under month-to-month leases at each of our self storage facilities; and (ii) 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. Additionally, our operating results depend on our tenants making their required rental payments to us.
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.
On March 10, 2021, we commenced formal operations and we acquired our first six self storage properties during 2021. During 2022 and 2023, we acquired 18 self storage properties primarily in the lease-up phase. As of December 31, 2025 and 2024, we owned 24 operating self storage facilities.
Our operating results for the years ended December 31, 2025 and 2024 include full period results for 24 self storage properties. Operating results in future periods will depend on the results of operations of these properties and the real estate properties that we acquire in the future.
Comparison of the Years Ended December 31, 2025 and 2024
Total Revenues
Total revenues for the years ended December 31, 2025 and 2024 were approximately $30.7 million and approximately $28.2 million, respectively. The increase in total revenue of approximately $2.5 million, or 9%, is attributable to an increase in non same-store revenues of approximately $1.9 million due to the lease-up of our non-stabilized properties and an increase in same-store revenue of approximately $0.6 million primarily due to increased rates. We expect total revenues to increase in the future commensurate with our future acquisition activity and the lease-up of our non-stabilized properties.
Property Operating Expenses
Property operating expenses for the years ended December 31, 2025 and 2024 were approximately $11.5 million and approximately $11.0 million, respectively. Property operating expenses include the costs to operate our facilities including payroll, utilities, insurance, real estate taxes, repairs and maintenance, advertising, administrative and professional. The increase of approximately $0.5 million is primarily attributable to payroll and repairs & maintenance. We expect property operating expenses to increase in the future as our operational activity increases but decrease as a percentage of total revenues as we lease-up our non-stabilized properties.
Property Operating Expenses – Affiliates
Property operating expenses – affiliates for the years ended December 31, 2025 and 2024 were approximately $5.2 million and approximately $5.1 million, respectively. Property operating expenses – affiliates includes property management fees, asset management fees and advisory contract amortization. We expect property operating expenses – affiliates to increase in the future as our operational activity increases.
General and Administrative Expenses
General and administrative expenses for the years ended December 31, 2025 and 2024 were approximately $6.2 million and approximately $5.8 million, respectively. General and administrative expenses consist primarily of legal expenses, directors’ and officers’ insurance, transfer agent fees, an allocation of a portion of our Advisor’s payroll related costs, professional and accounting expenses, and board of directors related costs. The increase in general and administrative expenses of approximately $0.4 million is primarily attributable to an increase in marketing related costs. We expect general and administrative expenses to increase in the future as our operational activity increases, but decrease as a percentage of total revenue.
Depreciation and Amortization Expenses
Depreciation and amortization expenses for the years ended December 31, 2025 and 2024 were approximately $12.9 million and approximately $15.8 million, respectively. Depreciation expense consists primarily of depreciation on the buildings and site improvements at our properties. Amortization expense consists of the amortization of intangible assets resulting from our acquisitions. The decrease in depreciation and amortization expense of approximately $2.9 million is
primarily attributable to leases in place being fully amortized during 2024. We expect depreciation and amortization
expense to fluctuate in the future commensurate with our acquisition activity.
Acquisition Expenses – Affiliates
Acquisition expenses – affiliates for the years ended December 31, 2025 and 2024 were approximately $0.4 million and approximately $0.6 million, respectively. Acquisition expenses primarily relate to the costs associated with our potential acquisitions prior to the acquisitions becoming probable in accordance with our capitalization policy. We expect acquisition expenses - affiliates to fluctuate in the future commensurate with our acquisition activity.
Other Property Acquisition Expenses
Other property acquisition expenses for the years ended December 31, 2025 and 2024 were approximately $0.4 million and approximately $0.2 million, respectively. Acquisition expenses primarily relate to the costs associated with our potential acquisitions prior to the acquisitions becoming probable in accordance with our capitalization policy. We expect other property acquisition expenses to fluctuate in the future commensurate with our acquisition activity.
Interest Expense
Interest expense for the years ended December 31, 2025 and 2024 was approximately $16.8 million and approximately $18.0 million, respectively. Interest expense includes interest expense on our debt and the impact of our interest rate derivatives designated for hedge accounting. The decrease in interest expense of approximately $1.2 million is primarily attributable to lower interest rates on new debt entered into during the fourth quarter of 2024 and first quarter of 2025. We expect interest expense to fluctuate in the future commensurate with our debt level and interest rates.
Interest Expense – Debt Issuance Costs
Interest expense – debt issuance costs for the years ended December 31, 2025 and 2024 were approximately $1.1 million and approximately $1.3 million, respectively. The decrease is primarily related to the write off of approximately $0.2 million in debt issuance cost related to the 2024 refinance activity in accordance with GAAP. Interest expense – debt issuance costs reflects the amortization of fees incurred in connection with obtaining financing. We expect interest expense – debt issuance costs to increase commensurate with our financing activity.
Derivative fair value adjustment
Derivative fair value adjustment for the years ended December 31, 2025 and 2024 were approximately $0.5 million loss and approximately $0.2 million gain, respectively. Derivative fair value adjustment consists of fair market value adjustment of our interest rate derivatives we elected not to apply hedge accounting. We expect the derivative fair value adjustment to change in the future based upon changes in interest rates and our interest rate hedging activity.
Other Income
Other income for the years ended December 31, 2025 and 2024 were approximately $0.1 million and approximately $0.4 million, respectively. Other income consists primarily of interest income received on cash and restricted cash. We expect other income to change in the future based upon changes in interest rates and our invested cash balance.
Equity in loss of unconsolidated real estate ventures
Losses from our equity method investments in the JV Properties for the years ended December 31, 2025 and 2024 were approximately $2.1 million and none, respectively. Losses from our equity method investments in the JV Properties consists of our allocation of earnings and losses from our unconsolidated joint ventures. The increase in equity in loss of unconsolidated real estate ventures relates to the completion of construction and the start of property lease up of four JV Properties during 2025. We expect Equity in loss of unconsolidated real estate ventures to decrease in the future as our operational activity increases as we lease-up our unconsolidated real estate ventures.
Foreign currency adjustment
Foreign currency adjustment for the years ended December 31, 2025 and 2024 was approximately $2.2 million gain and approximately $6.5 million loss, respectively. Foreign currency adjustment consists of changes in foreign currency related to our net investments in unconsolidated real estate ventures, not classified as long term in accordance with GAAP. We expect foreign currency adjustment to change in the future based upon changes in exchange rates, as well as future net investments in real estate in currencies other than United States dollars.
Same-Store Facility Results - Years ended December 31, 2025 and 2024
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, 2024) for the years ended December 31, 2025 and 2024. 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
% Change
% Change
% Change
Revenues (1)
Property operating expenses (2)
Net operating income
Number of Facilities
Rentable square feet (3)
Average physical occupancy (4)
Annualized rent per occupied square foot (5)
N/M Not meaningful
Revenue includes rental revenue, ancillary revenue, administrative and late fees.
Property operating expenses excludes corporate general and administrative expenses, asset management fees, interest expense, depreciation, amortization expense and acquisition expenses, but includes property management fees.
Of the total rentable square feet, parking represented approximately 209,320 and 199,780 square feet, respectively as of December 31, 2025 and 2024. On a same-store basis, for the same periods, parking represented approximately 43,000 square feet.
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 year.
Determined by dividing the aggregate realized rental income for each applicable year by the aggregate of the month-end occupied square feet for the year. 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 increase in same-store revenue of approximately $0.6 million was primarily the result of an increase in revenue per occupied square foot of approximately 3.2% for the year ended December 31, 2025 over the year ended December 31, 2024 offset by a decrease in average physical occupancy of approximately 1.0%.
Our same-store property operating expenses decreased by approximately $60,000 or 1.1% for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Net operating income, or NOI, is a non-GAAP measure that we define as net income (loss), computed in accordance with GAAP, generated from properties before corporate general and administrative expenses, asset management fees, interest expense, depreciation, amortization, acquisition expenses, tenant protection economics, and other non-property related income and expense. We believe that NOI is useful for investors as it provides a measure of the operating performance of our operating assets because NOI excludes certain items that are not associated with the ongoing operation of the properties. Additionally, we believe that NOI (sometimes referred to as property operating income) is a widely accepted measure of comparative operating performance in the real estate community. However, our use of the term NOI may not be comparable to that of other real estate companies as they may have different methodologies for computing this amount. In addition, NOI is not a substitute for net income (loss), cash flows from operations, or other related financial measures, in evaluating our operating performance.
The following table presents a reconciliation of net loss as presented on our consolidated statements of operations to net operating income, as stated above, for the periods indicated:
Year Ended
December 31,
December 31,
Net Loss
Adjusted to exclude:
Asset management fees (1)(2)
General and administrative
Depreciation
Intangible amortization expense
Acquisition expenses—affiliates
Other property acquisition expenses
Interest expense
Interest expense—debt issuance costs
Derivative fair value adjustment
Other income (expense)
Equity in loss of unconsolidated joint ventures
Foreign currency adjustment
Total property net operating income
Asset management fees are included in Property operating expenses – affiliates in the consolidated statements of operations.
Includes amortization of Advisor contract of approximately $1.0 million and $0.8 million for the years ended December 31, 2025 and 2024, respectively.
Comparison of the Years Ended December 31, 2024 and 2023
The results of operations and cash flows for the years ended December 31, 2024 compared to December 31, 2023 were included in our Annual Report on Form 10-K for the year ended December 31, 2024 which was filed with the SEC on March 31, 2025.
Liquidity and Capital Resources
Cash Flows
A comparison of cash flows for operating, investing and financing activities for the years ended December 31, 2025 and 2024 is as follows:
Year Ended
December 31,
December 31,
Change
Net cash flow provided by (used in):
Operating activities
Investing activities
Financing activities
Cash flows used in operating activities for the years ended December 31, 2025 and 2024 were approximately $19.8 million and approximately $5.5 million, respectively, a change of approximately $14.3 million. The decrease in cash used in our operating activities is primarily the result of the lease up of our non stabilized properties and increase in payments made pursuant to due to affiliates.
Cash flows used in investing activities for the years ended December 31, 2025 and 2024 were approximately $21.1 million and approximately $12.5 million, respectively, a change of approximately $8.6 million. The decrease in cash used in our investing activities is primarily the result of a return of capital on investments in unconsolidated real estate ventures in 2024.
Cash flows provided by financing activities for the years ended December 31, 2025 and 2024 were approximately $33.0 million and approximately $11.2 million, respectively, a change of approximately $21.8 million. The increase in cash provided by our financing activities is primarily the result of an increase in net debt proceeds totaling $12.2 million, and net
proceeds raised from issuance of preferred units in our Operating Partnership $34.6 million, offset by a decrease in net proceeds from the issuance of common stock by $20.9 million.
Short-Term Liquidity and Capital Resources
Our liquidity needs consist primarily of our property operating expenses, general and administrative expenses, debt service payments, capital expenditures, property acquisitions, development costs for joint venture and wholly owned investments and distributions to our stockholders, preferred stockholders and limited partners in our Operating Partnership, as necessary to maintain our REIT qualification. We generally expect that we will meet our short-term liquidity requirements from the combination of cash on hand, proceeds from our issuance of equity instruments, proceeds from secured and unsecured financing from banks or other lenders and net cash provided from property operations.
Volatility in the debt and equity markets and continued and/or further impact of interest rates, 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.
Distribution Policy and Distributions
Series B Convertible Preferred Stock Dividends
The shares of Series B 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 B Convertible Preferred Stock will initially be equal to a rate of 8.35% per annum, which accrues daily but is payable quarterly in arrears. If the Series B 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 11.0% 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 B Convertible Preferred Stock is either converted or repurchased in full.
Series D Preferred Units Distributions
The shares of Series D Preferred Units rank senior to all other common 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. Distributions payable on each unit of Series D
Preferred Units will initially be equal to a rate of 6.0% per annum until the second anniversary after the date of issuance, 7%
per annum commencing the day following the second anniversary after the date of issuance, 8% per annum commencing the
day following the third anniversary until the 4th anniversary after the date of issuance, and 9% per annum thereafter. The
Series D Preferred Units accrue distributions daily but is payable monthly in arrears.
Series E Preferred Stock Dividends
The shares of Series E Preferred Stock rank senior to all classes of the Company's common stock, (b) on parity with all other preferred equity securities issued by us from time to time, the terms of which provide that such securities rank on parity with the Series E Preferred Stock; and (c) junior to the preferred equity securities issued by us from time to time, the terms of which expressly provide that it will rank senior to the Series E Preferred Stock (the “Senior Stock”), including the Series B Convertible Preferred Stock, and subject to payment of or provision for our corporate debts and other liabilities. Dividends payable on each share of Series E Preferred Stock will initially be equal to a rate of 8.0% per annum. Dividends payable on the Series E Preferred Stock will accrue and be paid on the basis of a 360-day year consisting of twelve 30-day months and will accrue whether or not (i) we have earnings, (ii) there are funds legally available for the payment of such dividends, and (iii) such dividends are authorized by our board or declared
Common Stock
We commenced paying distributions to our stockholders in March 2021 and intend to continue to pay regular distributions to our stockholders. From the commencement of paying cash distributions in March 2021, 100% of our cash distributions have been paid from the net proceeds of our offerings. Until we are generating operating cash flow sufficient to fund distributions to our stockholders, we may decide to make stock distributions or to make distributions using a combination of stock and cash, or to fund some or all of our distributions from the proceeds of our offerings or from borrowings in anticipation of future cash flow, which may reduce the amount of capital we ultimately invest in properties. Because substantially all of our operations will be 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 or make the distributions out of net proceeds from our offerings. Therefore, it is likely that some or all of the distributions that we make will represent a return of capital to stockholders, at least in the first few years of operation. Though we have no present intention to make in-kind distributions, we are authorized by our charter to make in-kind distributions of readily marketable securities, distributions of beneficial interests in a liquidating trust established for our dissolution and the liquidation of our assets in accordance with the terms of the charter or distributions that meet all of the following conditions: (a) our board of directors advises each stockholder of the risks associated with direct ownership of the property; (b) our board of directors offers each stockholder the election of receiving such in-kind distributions; and (c) in-kind distributions are only made to those stockholders who accept such offer.
Distributions will be paid to our stockholders as of the record date selected by our board of directors. We pay distributions monthly based on daily declaration and record dates so that investors may be entitled to distributions immediately upon purchasing our shares. 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 will be authorized at the discretion of our board of directors, which will be directed, in substantial part, by its obligation to cause us to comply with the REIT requirements of the Code. Our board of directors may increase, decrease or eliminate the distribution rate that is being paid at any time. Distributions will be made on all classes of our common stock at the same time. The per share amount of distributions on different classes of shares will likely differ because of different allocations of class-specific expenses. Specifically, distributions on Class T shares, Class W shares, Class Y shares and Class Z shares will likely be lower than distributions on Class A shares and Class P shares because Class T shares and Class Y shares are subject to ongoing stockholder servicing fees and Class W shares and Class Z shares are subject to ongoing dealer manager servicing fees. The funds we receive from operations that are available for distribution may be affected by a number of factors, including the following:
the amount of time required for us to invest the funds received in the offerings;
our operating and interest expenses;
the amount of distributions or dividends received by us from our indirect real estate investments;
our ability to keep our properties occupied;
our ability to maintain or increase rental rates;
the performance of our lease-up, development and redevelopment properties;
any significant delays in construction for development or redevelopment properties;
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 B Convertible Preferred Stock and our Series E Preferred Stock.
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' investments in our shares. In addition, such distributions may constitute a return of investors’ capital.
We have not been able to and may not be able to pay distributions from our cash flows from operations, in which case distributions may be paid in part from debt financing or from proceeds from the issuance of common stock in our offerings.
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.
The following shows our cash distributions and the sources of such cash distributions for the years ended December 31, 2025 and 2024:
Year Ended December 31, 2025
Year Ended December 31, 2024
Distributions paid in cash — common stockholders
Distributions paid in cash — preferred stockholders
Distributions paid in cash — preferred unitholders in our Operating Partnership
Distributions paid in cash — Operating Partnership unitholders
Distributions reinvested
Total distributions
Source of distributions
Cash flows provided by operations
Proceeds from offerings
Offering proceeds from distribution
reinvestment plan
Total sources
From our inception through December 31, 2025, we have paid cumulative distributions of approximately $78.6 million, as compared to cumulative net loss attributable to our common stockholders of approximately $148.0 million.
For the year ended December 31, 2025, we paid distributions of approximately $28.5 million, as compared to a net loss attributable to our common stockholders of approximately $36.6 million. Net loss attributable to our common stockholders for the year ended December 31, 2025, reflects non-cash depreciation of approximately $12.9 million and acquisition related expenses of approximately $0.7 million.
For the year ended December 31, 2024, we paid distributions of approximately $26.2 million, as compared to a net loss attributable to our common stockholders of approximately $47.3 million. Net loss attributable to our common stockholders for the year ended December 31, 2024, reflects non-cash depreciation and amortization of approximately $15.8 million and acquisition related expenses of approximately $0.8 million.
Indebtedness
As of December 31, 2025, our total indebtedness was approximately $292.9 million which included approximately $165.5 million of variable rate debt and approximately $129.3 million of fixed rate debt, less approximately $1.9 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.
Long-Term Liquidity and Capital Resources
On a long-term basis, our principal demands for funds will be for property acquisitions, either directly or through entity interests, for the payment of operating expenses and distributions, and for the payment of principal and interest on our outstanding indebtedness.
Our material cash requirements from known contractual and other obligations primarily relate to the following, for which information on both a short-term and long-term basis is provided in the indicated notes to the consolidated financial statements:
Debt — Refer to Note 5 of the Notes to the Consolidated Financial Statements. As of December 31, 2025, excluding the impact of our interest rate hedging activities, future cash payments for interest on debt over the next 12 months is approximately $17.8 million. As of December 31, 2025, future cash payments for maturing debt over the next 12 months is approximately $2.6 million. We expect to meet these future obligations with a combination of proceeds from our Primary Offering, operations and future debt financing.
Commitments and contingencies — Refer to Note 10 of the Notes to the Consolidated Financial Statements.
Potential acquisitions, investments in Joint Ventures — Refer to Note 3 and 4 of the Notes to the Consolidated Financial Statements.
Long-term potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, issuance of equity instruments and undistributed funds from operations. 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.
The following table presents the future principal payments required on outstanding debt as of December 31, 2025:
Total payments
Debt issuance costs, net
Total
Off Balance Sheet Arrangements
We have joint ventures with SmartCentres, which are accounted for using the equity method of accounting (Refer to Note 4 of the Notes to the Consolidated Financial Statements). Other than the foregoing, we do not currently have any relationships with unconsolidated entities or financial partnerships. Such entities are often referred to as structured finance or special purpose entities, which typically are established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Subsequent Events
Please see Note 13 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.
