Thank you for standing by. My name is Kayla, and I will be the conference operator today. At this time, I'd like to welcome everyone to the SmartStop Self Storage REIT Second Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to David Corak, Senior Vice President of Corporate Finance and Strategy. You may begin.

Thank you, operator. Before we begin, I would like to remind everyone that certain statements made during today's call, including statements about our future plans, prospects and expectations may be considered forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act. These forward-looking statements are subject to numerous risks and uncertainties as described in our filings with the Securities and Exchange Commission, and these risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in our earnings release that we issued last night, along with the comments on this call, are made only as of today. The company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, we will also refer to certain non-GAAP financial measures. Information regarding our use of these measures and a reconciliation of these measures to GAAP measures can be found in our earnings release and supplemental disclosure that we issued last night and are available for download on our website at investors.smartstopselfstorage.com. In addition to myself, today, we have H. Michael Schwartz, Founder, Chairman and CEO; as well as James Barry, our CFO. Now I'll turn it over to Mike.

Thank you, David. Thank you for joining us today for our second quarter earnings call to discuss our inaugural quarter as a New York Stock Exchange-listed company. I'll start with some introductory remarks on SmartStop and the industry before I hand it over to James to discuss the quarter. After that, we'll open it up for Q&A with James, David and myself. Before we dive into high-level remarks, a few highlights of our second quarter results. We posted a strong second quarter with our same-store revenue growth of positive 40 basis points; average occupancy, 93.1%; and FFO as adjusted per share of $0.42, all largely in line with our expectations. We maintained our full year 2025 same-store NOI guidance of 1.1%, and raised our FFO as adjusted per share guidance by $0.01 on the midpoint. We had an exceptionally robust quarter, both in terms of performance and activity. We raised approximately $1.3 billion of capital during the quarter. First, we raised $931 million in April with our initial public offering. Second, we raised CAD 500 million with our inaugural Maple bond in June at a sub-4% coupon. These transactions dramatically improved our balance sheet, setting us up for future growth. In June, we received an inaugural rating from DBRS Morningstar of BBB Mid with a Stable trend. And in July, we received an upgrade from Kroll to BBB Flat with a stable outlook. During the quarter, we acquired approximately $150 million of Class A storage properties on balance sheet, another $75 million in the managed REITs and put under contract a CAD 97 million portfolio in Alberta. These on-balance sheet acquisitions are primary Class A properties located in top markets with going-in yields in the mid-5 range with management upside, while the deals into the managed REITs are more stabilized,…

Thank you, Michael. I'll remind everyone that the second quarter was our last partial quarter of being a nontraded REIT. So the impacts from the April IPO are not fully reflected in the financial results. Starting with our operating performance. We are pleased to report that our same-store pool posted year-over-year revenue growth of 40 basis points with operating expense growth of 3.5%, leading to an NOI decline of 1.1%. The FX impact from our 13 Canadian same-store assets was a headwind of approximately 10 basis points to our overall same-store pool as we posted constant currency revenue growth of positive 50 basis points with expense growth of 3.6% and an NOI decline of 1%. Revenue growth was slightly less than expected for the second quarter, driven by weaker-than-anticipated demand in June, but we accomplished positive growth for the quarter, utilizing less marketing dollars and less concessions while maintaining strong occupancy of over 93%. On the operating expense front, property taxes were up 7.8%, with property insurance up 5.9% and marketing expense down 6.3%. We saw muted or negative expense growth in utilities, professional and administrative expenses. The result was that same-store operating expenses were up 3.5% year-over-year, better than our expectation. This combination led to slightly better-than-expected NOI in the quarter. Our same-store pool ended the quarter at 93% occupancy, up 40 basis points year-over-year, while average occupancy was 93.1%, up 90 basis points year-over-year. Our web rates were up approximately 2.4% year-over-year, while our achieved move-in rates were down 2.5% on average for the second quarter as the stabilization of the REIT environment slowly but surely continues. For reference, the sequential deceleration in year-over-year revenue growth from the first quarter was expected and was reflected in our full year guidance, driven by comps from last year. Keep in…

[Operator Instructions] Your first question comes from the line of Jonathan Hughes with Raymond James.

Can you talk about the revenue growth volatility last year? And what drove that and how that impacted your management of REIT and occupancy in the quarter and into the back half of this year?

Yes. This is James. Thanks, Jonathan. Just to touch base and to kind of go back in time to 2024, keep in mind, as we said in our opening remarks that from a same-store perspective, we were cycling a much tougher comp here in the second quarter, and that was baked into our guidance that we would see that deceleration. That comp was positive 130 basis points in the second quarter of last year. The comps do get easier as we go through the rest of the year here.

Yes. Jonathan, it's Corak. I'll just add on a couple of things about the second quarter and sort of balancing the rate and the occupancy versus what we did last year. And I'd point you to the comments that we made on the last earnings call about this balance, right, and the optionality that we have to push rate in certain markets, right, where we saw the occupancy strength and what we saw the demand strength. And that's what we did during the quarter. And so when you break out the individual months, April had a really tough comp as we discussed on the last earnings call. May was a really strong month overall for us on various -- on pretty much every metric that we look at. And then we started strong in June, but then demand tapered off about 10 days in, and we pulled back on rates. We also did run a pretty successful 4th of July sale in late June. So you can see some of that in the rate data in June. But when you look at the quarter, move-in rates for the quarter were down about 2.5% year-over-year. Web rates were up about 2%. I will say our concession numbers are down very nicely from last year. That's one major change that's occurred over last year. Concessions were down roughly 20% and growing. So balancing the rate and occupancy during the quarter, pushing rate in certain markets where we saw the green light. The end result was obviously we grew occupancy both sequentially and over the year. And we did all that with advertising spend down 6%, over 6% year-over-year. The other thing I'd mention when you just look at the comps from last year, if we step back and look at year-to-date, right, first half of 2025, our move-in rates are down about 4% year-over-year. For comparison, the same period in 2024, they were down roughly 11% or 12% year-over-year. So still negative on a year-over-year basis, but a much easier negative to overcome than the previous 2 or 3 years.

Yes. I appreciate all that color. And then just one more. Could you kind of help us walk through or bridge the big moving pieces in guidance to get from the $0.42 per share of FFO in the second quarter to the implied guidance of $0.53 a share in 3Q and 4Q?

Yes, happy to. Let me walk through the major pieces, and I'll start on the capital side and then go to operations and management, et cetera. So on the capital side, the easiest thing to really point to is the Maple Bond transaction and the uses of proceeds on that deal. So we paid off a CAD-denominated loan that was priced at 6.42%, acquired $108 million portfolio with a 5% plus -- mid-5% going in yield. And then we paid down our revolver by over $200 million. That was -- that revolver was priced at 5.8% at the time in 2Q. So you add all that up with paying that off with 3.91% debt, that's about $2 million per quarter in accretion, right? And we did all that in very late June. So there's very little benefit of that in the second quarter results. Keeping on the capital side, the revolver will be priced at unsecured levels now, whereas in the first -- the second quarter of the year, we only got that benefit for about 2/3 of the quarter. And then SOFR is obviously expected to continue to drop based on the curve from the second quarter levels. We also took on 2 pieces of what I would call below-market debt in the quarter with a 5.15% loan, the Houston loan, and then the 3.45% BC loan. So both really attractive pieces of debt. We're also in the process of recapping the debt on the 10 joint venture properties. Those properties are underlevered, and the rates on the current debt are in the high 5s, I think 5.7% during the second quarter. I think given where the Maple Bond price, everyone has a sense of where Canadian interest rates are these days. So not only will there be proceeds…

And your next question comes from the line of Todd Thomas with KeyBanc Capital Markets.

First, I just wanted to see, are you able to share July occupancy and rent trends? Any color on July specifically?

Yes. Sure, Todd. It's Dave again. July ended the month occupancy 92.8%, that is up 80 basis points year-over-year. So that occupancy gap actually widened in July. As James mentioned, in-place rates were up slightly. The interesting thing about July, and I mentioned this earlier, is concessions are down. They're down about 25% year-over-year. So we continue to use that lever a lot less, and we're using the advertising lever a lot less. But when you add up all 3 of these data points, we're only 7 days into August here, but it looks like revenue growth in July on a year-over-year basis is pushing 2%, right? So when you look at that, the reacceleration is already taking effect. It looks like August is shaping up to be a better month than July. In terms of the move-in rates, because I know you're going to ask this as well, they were down about 11 -- 10% year-over-year in July, but are actually flat year-over-year to date in August. And the occupancy gap sitting here 7 days into August continues to be strong around 90 basis points year-over-year. So keep in mind that the comps are getting a little bit easier for us as we enter the second half of the year.

Okay. So I mean, it sounds like June was sort of the weaker month. It may have started off okay, but I think you said about 10 days in demand started to taper off. Sort of looking back, any sort of insight around more specifically what happened in June because it sounds like July trends have recovered some ground and maybe are holding a little bit here early on in August. So really a couple of weeks in June, any insight around that period specifically?

Yes, Todd, this is James. I'll jump in there and say, well, first of all, I think what we saw was just a little bit more competitive pressure on the pricing side. Obviously, we were still able to maintain strong occupancies over the course of June, but we had to get a little more competitive on the rate front. And obviously, it's a market-by-market analysis, but it's pretty consistent with what you've heard across the entire industry. What we feel strongly about and what we feel comfortable in terms of our outlook for the rest of the year is, as David mentioned, kind of the reacceleration that we're seeing on a year-over-year basis, also coupled with we're still seeing really strong activity, right? Some other metrics for the month of July, we were actually up 6.5% from a rental perspective. So we are still seeing that demand come in. And part of that is from the 4th of July sale, but we're still seeing a lot of activity. We're not having to push as hard on the marketing lever as we get more efficient on that front. And we are seeing reductions in the overall promotional dollars we're offering.

And Todd, I'll just add that, obviously, the housing market remains anemic. So there hasn't been any pickup there. And so I think one thing that's different this year is that rates have stabilized. And we've been able to hold rate and even drive it, as we've said, in certain markets without sacrificing occupancy. Last year, we would sacrifice occupancy when we started to push rates. In addition, we want to underscore that we are doing that today with lower discounts and promotions. And that's not something that we've been able to say for 2 years. So for an example, the first half 2025, our achieved rate is up 50 basis points at the 92.7% occupancy. Our second quarter occupancy is up at 93%. And that concession aspect that David talked about, I think, is incredibly important. That first half of the year, we're down 20%. The second quarter, we're down 25%. And so when we take a look at this competitive rate environment, we've been very clear that the market has bottomed. The market is recovering. It's slow, it's steady, it's methodical, and it's not a hockey stick. And I think we've been very, very clear with that. And so also just taking a look at our website traffic, which is something that is incredibly important. The second quarter traffic have been up mid-teens year-over-year. June and July, our traffic is up 32% and 45%. And so the reality is the demand is there, and it's just a matter of who's going to be capturing the demand. So we feel pretty comfortable from that perspective.

And your next question comes from the line of Wes Golladay with Baird.

I just going to make a big picture. I understand the comp story, but it does also sound like demand is picking up based on the commentary. And just curious if you think that we may have had like a soft patch just due to the uncertainty around the tariffs, the Big Beautiful Bill and now I think people are getting back to lives as normal, and we just had this little, call it, 2-month soft patch. Is that a -- does that have any factor in anything?

Yes. I mean, look, sorry, it's Corak. I do think that as we got through the summer months, you saw the volatility in demand, right? Certain months were good, certain months were not good, right? It just -- it was -- to use the hockey term, it was -- the puck hit -- going off the backboard. That's not a hockey term. All right. So the thing is that when we went into June, we felt good about where the rate environment was. We felt good about occupancy and pulled back, right? And so it's really hard to attribute exactly what happened to that demand. And right, we've been very clear on that from the get-go that it's really hard to say to point to one thing or another. But obviously, the beauty of self-storage is that there is a lot of different demand drivers out there. So I'd like to call it a soft patch, and we'll see where the rest of the year shakes out, but we are feeling better as we head into the back half of the year.

Yes. And I'd just say that from a tariff Beautiful Big Bill, I mean, from a customer standpoint, I can't say that at this point, we're seeing any impact to date in our key metrics that we follow, whether it's in U.S. or Canada. I think the demand is actually better now than it was last year, and it's actually better than 2019. And so consumer behavior, in terms of acceptance, ECRIs, bad debt, length of stay, I mean, all of these are -- there's no significant changes. And so I do think it's probably a little bit too early to tell. But as we've said before is that we do kind of see that people are adjusting to the new normal. The new normal is rates are not going back to 0. And so you talk to enough people. If, in fact, you live in Vegas and your grandkids are in North Carolina, you're not waiting until rates go back to 0 to go move back to spend time with your grandkids. And we're starting to see, I think, a little bit small signs of changes from a positive perspective of maybe people in motion again.

Okay. And then just one final one on the agreement with Orchard Securities. Can you talk about what that means for the company, I guess, versus original plans maybe 3 or 4 months ago? Do you anticipate raising more money, better terms? Just kind of a little bit more discussion on that.

Yes, absolutely. We felt it was a good time to kind of change partners. Specifically Orchard, I think it is a good fit for us with respect to some of the 1031 Delaware Statutory Trust programs that we currently have in the market. And I think to your point is we are also able to kind of negotiate a lower-cost deal that we believe will help our overall shareholders out. And so I think all in all, it's a good trend. You do take a few steps back in these types of transition to new firms. But nonetheless, we have launched our second Delaware Statutory Trust program. And we actually just started to see equity start to flow in this week. And obviously, July, August tend to be pretty slow month. So we feel pretty good about the relationship, pretty good about the positioning and the continued growth in that area of our business.

Yes. And Wes, just to speak -- to dive a little bit deeper into the managed REIT guidance in terms of what the update we did. Obviously, that transition to Orchard is a big part of the reason -- a good chunk of the reason as to why we moved up our EBITDA guidance. Because of that lower-cost deal that Michael talked about, we are saving and getting more efficient on that line item as a result of this transaction. That, coupled with us getting some acquisitions and opening up properties as we outlined in the second quarter and the underlying performance of the managed REIT properties driving incremental fees over the course of the rest of the year. All 3 of those components are a result of us kind of moving our managed REIT guidance higher the last night.

And your next question comes from the line of Nicholas Yulico with Scotiabank.

Sticking with the managed REIT business, can you just give us a feel for like at what point in the year you think you may have some more visibility on how to think about like the forward AUM of the business as we're thinking about potential impact in 2026?

Well, what I can tell you is, look, right now, we're at almost $1 billion of asset under management within those programs. And obviously, they're very beneficial with respect to additional economies of scale, property management fees, tenant insurance, asset management fees, some acquisition fees. The -- we achieved about $4 million in revenue in the second quarter, which was a little bit higher than I think we had guided. And I think that we're going to see how this year goes with respect to some of the macro volatility and any recycling event that may occur, which we think is more of a 2026. So I think it's a little too early for us to give any significant color. But as we move through the third and fourth quarter, I think we'll have a better picture.

Okay. And then second question is just going back to the guidance on same-store revenue. I know you guys just look at this sort of total revenue. But in terms of the components, is it right to think that the adjustment lower on same-store revenue growth was more of a rate than occupancy issue?

Yes. So if we take a step back on how did we arrive at our second quarter same-store revenue, the tightening of that range, right, we lowered the top end by about 75 basis points while also increasing the bottom end by 25 basis points. And a lot of that was in part by what we saw in the second quarter and what got baked into the second quarter because of that June that we talked about. I think it's safe to say, and while we don't guide and specifically partition out the attribution from occupancy and rate, because we're so dynamic in real time and across all of our markets, I think it's safe to say that we still feel really good about where we are from an occupancy perspective. And we did see a little bit of weakness on that move-in rate in the month of June. And so that's what's driving the change in the overall -- the tightening of that revenue range from our previous guidance.

And your next question comes from the line of Ki Bin Kim with Truist.

Can you just talk about the Toronto operations? I know you had some kind of volatile comps in that market, but your same-store revenue cadence dropped to like 2% from the prior quarter. Can you just talk about the comps and just overall, what your views are in the Toronto market and how -- which seems like a weak housing market might affect that market going forward?

So as you know, Canada is a very different environment than the U.S. from a storage perspective, different demand drivers, et cetera. But it's been a nice outperformer for us. On a constant currency basis, to your point, same-store revenue growth was up 2% in the second quarter and about 4%, 4.5% year-to-date. The comp was obviously much harder in the second quarter. It was 1.3% in 2Q 2024. So a lot harder to overcome that comp. But still the 2% was a solid print for us in the second quarter. If you look at our JV properties that would meet the definition of same-store, they actually did even better than that. So we always like to incorporate that as well. We're sitting here today in July with occupancy on our 13 same-store Toronto assets at 92.8%, down a little bit from last year. Move-in rates were down about 5% in the second quarter, but the overall demand remains pretty strong. I'm going to turn it over to Michael to give some higher-level thoughts on Canada.

Yes. I mean I want to kind of address kind of the economy and demand in Canada. So in terms of the economy, we have not seen any weakness with changes due to kind of the immigration policy, tariffs. When we -- from our boots on the ground, we're hearing that it feels like a recession up in Canada right now. And so despite that, our rentals have been up 10% in the second quarter, and they're up 17% in July. And so given our operational advantages up there and other positive storage-related trends, we feel pretty good about the short, medium and the long-term prospects of where we're at within the Canadian economy. In addition, if, in fact, the Canadian economy gets into a significant recession, we do believe that it's going to fundamentally react in the same way that it does in the U.S. You're going to probably cycle out of some people that are a little bit more price sensitive, but then you're going to be cycling in people that need that storage because of the recessionary environment. And so in addition to that, the demand is -- demand drivers, though, are exactly pretty much the same as the U.S. They are different. And they're different from the perspective that demand is more structurally rooted in space constraints, urban densification, immigration patterns, lifestyle needs. And so the weights on those compared to the U.S. are different. And so we believe and we see more stronger demand from life stages transitions in Canada, divorce, death, downsizing, seasonal needs because most Canada is still 4 seasons, and urban constraints, living in much smaller spaces and denser overall aggregate environments. And you still -- overall, you have a significantly undersupplied market. In concert with that, we were in Canada -- we were in Toronto for 13 years before we decided to bridge and outside of some of the other major metropolitan cities. And so we're starting to see, obviously, some really nice success in acquisitions, but also aggregate performance with that diversification.

Switching topics a little bit here. On your managed REIT platform, can you just kind of remind us and maybe walk us through what kind of KPIs you're setting for yourself for third-party equity growth, especially as we start to look at 2026? I do believe when we work on -- when we all collectively worked on our IPO, there was some growth that you expected in the fee business in that side. So how does that tie into like how much AUM you want to grow? And if you can just provide some simple KPIs for us.

Yes, Ki Bin, this is James. Just to speak to kind of some of the metrics, obviously, the metrics we are guiding to are 2 of the key ones we're focused on, right, whether that be managed REIT EBITDA, which we put out a range for, as well as the AUM growth. The equity is a leading indicator for that AUM growth. But remember, AUM sequencing versus equity raise, in a lot of cases, tends to be mismatched. Coupled with the fact that we've got some other events that are going to occur. David alluded to the lockup of the retail shareholders expiring on October 1, whatever recycle is going to occur as a result of that, which, again, is very difficult to forecast and foresee at this time. So we're going to be monitoring the equity raise. The DST programs, right, those are discrete programs that have defined overall equity raises. So we've got 3 programs in the market, one is $30 million, one is $62 million and one is $54 million. Once those are done, right, then the equity raise for that program stops and then we're trying to backfill with more product. But overall, we're trying to drive AUM growth because it's a very attractive business and a very accretive business to us to kind of supplement and scale our platform.

And your next question comes from the line of Michael Mueller with JPMorgan.

I guess following up on the distribution questions. Considering you switched the partner, should we look at that as a sign that you're kind of doubling down on the managed REIT platform and it's really kind of a vehicle that you want to be in the longer term, maybe compared to what you were thinking a year or so ago?

I think we've been very clear that we think that there's benefits to the managed REITs in the short and probably the mid term, the long term, I don't foresee us being in the managed REIT business over the long term. As you know, with the dislocation in the stock market a few years ago, the managed REIT business helped us continue to grow off balance sheet. And so no, I would say that it's just a transition to a partner to capitalize on some programs that we have on the market to get some additional economies of scale, which all then create some future growth for SmartStop in the future.

Got it. Okay. And then separately, I mean, how should we be thinking of -- and what's in the pipeline in terms of forward acquisitions, I guess, split between the buckets of being focused on building out scale in existing markets versus kind of moving into newer markets on a go-forward basis?

Well, all right. Well, let me just step back. Obviously, I want to emphasize that we were incredibly disciplined during kind of the increase in interest rates. We only bought one asset. In the past 6 or 9 months, we saw some, I think, a lot of great opportunities out there. And so in pricing and product. And so we bought approximately about $0.5 billion of high-quality self-storage properties since September of last year. We're still seeing a lot of attractive opportunities out there on the stabilized front, both the U.S. and Canada. The deals that we've closed and that we have in contracts are just great example of those. Those mid-5 cap rates with nice management upside. And you know what we're just encouraged by the pipeline, the consistent deal flow and sellers that are far more rational and reasonable than they were a few years ago. There are larger portfolios out there. But you know what, we've been primarily focusing on the onesies and twosies, which we believe we can create some additional value. And so we've acquired or have under contract about $300 million. Our guide was $375 million. So that's a really meaningful growth for us. It is enough for us to kind of move that needle. And that's obviously because of our size. And so deals in the pipeline, we haven't seen a lot of movement in the bid-ask spread. I think it's been pretty consistent. But we'll see how that occurs and shakes out in the next few months. And then from a Canadian perspective, I think that we're seeing a healthy amount of opportunities that would make sense for us. And obviously, lower interest rate environment there obviously helps out dramatically. But in addition, the buyer pools are much different than Canada and U.S. So I think overall, we feel pretty comfortable and confident about where we're at and fulfilling kind of our guide.

Yes. I'll just add to that. If you look at the -- what we've acquired, both kind of leading into the month of December, the back half of '24 and year-to-date here in '25, I think it's representative of the opportunities we're seeing and what we're going to target, right? So we are going to be focusing not exclusively, but we will be focusing on acquiring to build out the scale and add to the clusters that we've been talking about. So the Houston portfolio we acquired in June, that takes us up materially into double digits operating in that market. The Alberta portfolio that we've got under contract and we've disclosed, we already have 3 operating assets in the Edmonton market and have performed quite well. Our platform works in that market. And so we're excited to scale. And other opportunities to kind of add onesie-twosies in the markets that we already have some exposure to and want to increase and reach that critical mass.

And your next question comes from the line of Spenser Glimcher with Green Street.

I realize Alberta is a smaller market for you guys, but can you just provide a little color on the market just in terms of existing supply landscape? And then as you think about looking to expand any existing properties or look at additional acquisitions in the province, do you have any concerns over this being an economically sensitive market, just given its dependence on energy?

Yes, Spenser, great question. And first of all, we've been in the Edmonton market operating within the managed REITs for coming up on 3 years now. So we've experienced multiple busy seasons in that market. And our -- as I said earlier, our platform continues to work. I think what we're excited about is continue to expand in the major CMAs across Canada, right? So whether that's -- obviously, we have a strong and storied track record in the GTA. We're already operating within managed REITs in Vancouver and expanding our presence in the Alberta market. The supply story in both the major metros, Edmonton and Calgary, continues to be attractive, especially relative to the U.S. There is new supply in Calgary, but we're excited about entering that market. And Edmonton is actually relatively low. It's still sub-3 square foot per capita in that particular market. So we -- and more importantly, this gives us an opportunity to get to 8 operating assets all within a reasonable drive time, which will help us be much more efficient in terms of operating.

And I think you just have to also add that with less sophisticated operators and leveraging our platform, I think it's a recipe for some really nice growth in those markets in various economic times.

Okay. Great. And then have there been any deal opportunities or underwriting in terms of the maritime provinces? I just know that there is a substantial amount of supply in those markets, especially on the residential side. So potentially a good indicator for future demand.

Yes. What I'll say is we see everything in Canada, and our major focus is the top 6 CMAs, right? We want to be in those top 6 markets, which is the GTA, Vancouver, Montreal, Edmonton, Calgary and Ottawa, right? That's our focus. We still look at those and they come across our desk. But to your point, if there's not the population density, then it's going to -- we're not going to be penciling those deals and looking to acquire them. There's a lot of ripe opportunities for us to grow in the major markets in Canada first.

And your next question comes from the line of Matt Kornack with National Bank.

Sorry to keep on the Canada theme here. But there's been some pretty sizable transactions in Toronto as well as West at ridiculously low cap rates, it looks like. Does that make it more difficult for you to acquire? And have you thought of maybe kind of doing some capital recycling within the existing portfolio given where some of those assets have traded?

Well, I think that's good news, bad news, right? Good news is I saw the opportunity in 2010, and we've built upon it, and we've created an amazing portfolio. I think the bad news is that the cap rates in some of those deals were incredibly low. I believe one of them was a 2.5% cap rate. However, from my understanding, that buyer is not trying to buy anymore, they're trying to just figure out day-to-day operations with what they're doing. So I think from our perspective, Canada is really a marathon. It's not a sprint. And I think we've built just a high-quality portfolio in Toronto, and we're now starting to build a high-quality portfolio in the major metropolitan cities. I think that there's just a tremendous amount of additional growth that I think that we can achieve in undersupplied markets that have a lack of, I think, some sophisticated institutional markets. And so I think from our perspective, we're in a growth mode. We have a very strong pipeline of development deals, primarily it will probably go on our managed REITs because they'd be dilutive to SmartStop. And so I think that there will always be certain times in cycles where you can point to was that a potential recycling event. I can now look back and say, you know what, you look back and say, if you had recycled, you would have probably sold a lot less than what the value of that real estate and the additional cash flow on a go-forward basis.

I think the other thing, as it relates to this question that's important to keep in mind is, in a way, we did capital recycle. We levered up in Canadian dollars through the Maple bond. We leveraged the portfolio that we've created thus far in the GTA at very attractive financing, and we brought it back across border and deployed it at mid- to high 5 cap rate deals that we acquired in the States, right? So that is an attractive opportunity for us to, in essence, retail capital without actually selling assets.

Makes sense. Maybe switching to the states. As we think of kind of a rebound in the space, is there a single kind of forward-looking indicator or catalyst, whether it's housing market transactions or something to that effect that we should be looking for to kind of give us comfort that we are, in fact, inflecting and that demand is going to pick up?

Well, I mean, look, I don't want to beat a dead horse, but I think the first thing is you got to focus on supply, okay? We had a 10-year cycle supply. It should have been a 5 year, then COVID hit, and it became 10 years. And so I think that we're first focusing on supply. And we're starting to see, obviously, real absorption accruing. It's going slow. We all want it to happen now. We all want it to be a hockey stick, but it's not. And the good news with that is it's going to keep developers on the sideline for a much longer period of time. So as we get through this choppiness, I can see some better days ahead for storage because of that supply being, I think, going to be more muted than maybe we all think in the future. And so first, I want to focus on supply. In addition, yes, it would be nice to have a robust full housing recovery in the U.S. And so I think they're -- we're all waiting for it. We're all prepared. But I find what's interesting, without the housing recovery, how we've actually performed. Storage operators now have better technology, better sophistication, better access to data. I think in our just small portfolio, we're making now 3 million pricing changes on a monthly basis. We are modifying our approach based on supply and overall aggregate demand. So one, we're going to focus on supply. Two, we're going to focus on our portfolio and optimize the best we can. We showed that we would focus more on rate than promotions and discounts. And yes, when that next driver, whatever that is, is it housing rentals? Is it COVID, too? Is it hurricanes, earthquakes, whatever that additional driver for storage, SmartStop Storage is prepared to capture the upside in those environments.

And there are no further questions at this time. H. Michael Swartz, I turn the call back over to you.

Thank you, operator. It's been an amazing first 4 months as a publicly traded company. We look forward to the next 2 quarters in 2026. Thank you for your time and your interest in SmartStop Self Storage, the smarter way to store. Have a great day.