KBRA Revises SmartStop OP, L.P. BBB- Issuer and Senior Note Ratings to Watch Upgrade

KBRA has revised the Watch Developing status for SmartStop OP, L.P.'s BBB- issuer and senior secured note ratings to Watch Upgrade. The Watch placement revision follows parent company SmartStop Self Storage REIT, Inc.'s (NYSE: SMA) completion of an initial public offering in early April, which raised approximately $874 million of net equity proceeds.

Proceeds from the offering were used to retire a $175 million bridge loan, pay down revolving credit facility borrowings, and redeem a $200 million preferred stock issue. KBRA estimates that net debt/EBITDA is now approximately 5x on a pro forma basis (reduced from over 9x at year-end 2024), with additional improvement noted in fixed charge coverage and dividend payout ratios. Usage under the company's $700 million revolving credit facility has been reduced below 30%, providing the company with improved liquidity and funding capacity for future growth.

KBRA expects to resolve the Watch placement upon review of SMA's first-quarter financials and review of SmartStop's acquisition-related growth plans as the company seeks to build on the $270 million of properties acquired over the last 12 months. KBRA will also consider the outlook for the storage sector's key spring leasing season.

Headquartered in Ladera Ranch, California, SmartStop Self Storage REIT, Inc. is a $3 billion equity REIT specializing in the ownership and management of over 200 storage properties in 23 states and Canada. The company is the 10th largest operator of storage facilities in the U.S. according to published sources and is among the largest operators in Canada.

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