KBRA Upgrades SmartStop OP, L.P. Issuer and Senior Note Ratings to BBB/Stable; Assigns BBB Rating to CAD$500 Million Senior Notes due 2028

KBRA has upgraded its issuer and senior unsecured note ratings for SmartStop OP, L.P. to BBB with a Stable Outlook from BBB- Watch Upgrade. The rating action follows parent company SmartStop Self Storage REIT, Inc.'s (NYSE: SMA) completion in April of an initial public offering (IPO), which raised approximately $874 million of net equity. KBRA has also assigned a BBB/Stable rating to SmartStop OP's recent issuance of CAD$500 million senior unsecured notes due 2028.

The ratings upgrade is based on a number of factors including an expected sustained improvement in SmartStop’s leverage metrics and coverage ratios following use of IPO proceeds to reduce debt and redeem a $200 million preferred stock issue. KBRA also notes that the recent repayment of several secured debt facilities combined with financing forward portfolio growth on an unsecured basis should contribute to a larger unencumbered asset base. Lastly, the ability to source incremental equity capital should help sustain SMA's external growth strategy as it seeks to increase scale in target markets.

SmartStop's financial metrics will likely remain above average for the BBB rating, tempered by an expectation that acquisitions over the balance of 2025 will be primarily debt-funded. Full-year 2025 acquisition guidance of $375 million (midpoint) is expected to bring SMA close to the top end of its 5x-6x range of net debt/EBITDA. Liquidity factors should also remain strong as a recently completed CAD$500 million senior note offering has reduced revolving credit facility balances, leaving ample capacity to fund acquisitions and address a modest $93 million of 2025-26 debt maturities.

Headquartered in Ladera Ranch, California, SmartStop Self Storage REIT, Inc. is a $3 billion equity REIT specializing in the ownership and management of over 225 self storage properties in 23 U.S. 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.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies