SmartStop Self Storage REIT (SMA) Q2 2026 earnings call transcript

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 meeting 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-GAP financial measures. Information regarding our use of these measures and a reconciliation of these measures to GAP 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. smartstopsellstorriage. com. In addition to myself, today we have H. Michael Schwartz, founder, chairman, and CEO, as well as James Berry, our CFO.

Now, I'll turn it over to Michael.

Thank you, David. Thank you for joining us today for our second-quarter earnings call. Smart Stop Self-Storage had a strong quarter of results, and we further reinforced our vision by communicating our long-term strategy for shareholder value creation with the announcement of our DECA initiative in July. Let me first touch on our results for the second-quarter. We posted strong same-store revenue growth of 1.3 percent, and operating expense decreased to 3.4 percent in an NOI growth of a positive 3.7 percent, and maintained average occupancy of 92.5 percent. Operationally, 10 of our top 15 markets posted positive same-store NOI growth. Our strong focus on expense control led to 150 basis point year over year growth in our same-store operating margin.

This is our second quarter in a row of improved margins. This operational performance, coupled with overall efficiencies, resulted in reported FFO as adjusted per share of 49 cents, up 17.6 year over year. With these results and better than expected momentum into the second half of the year, we raised the midpoint of our same-store revenue and same-store NOI guidance as well as our FFO as adjusted per share guidance. In July, we introduced the DECA initiative, which is our multi-year strategic framework that guides our decision making as a management team.

The DECA initiative stands for disciplined execution, compounding appreciation through six defined pillars for outside long-term value creation. This value creation is driven by relative outperformance, margin expansion, and outside FFO as adjusted per share growth. This is the true goal of our DECA initiative. I communicated a $10 billion capitalization level, which will be the output of executing in a disciplined fashion on those goals.

And that level is also the size that we think smart stops platform can begin to recognize its full potential. Our results in activity this quarter are a perfect reflection of this initiative. Strong, same-store results driven by our revenue management platform, talented operations, and store level teams, growing efficiencies as we scale, and deliberate expense control. Same-store operating margins of 67.3% up 150 basis points year over year, and a wide growth of 9.4% in our Canadian joint venture properties year over year.

14% growth of the reoccurring revenue stream for our managed REIT platform, the acquisition of a three-property portfolio of high-quality self-storage properties at a high 5% cap rate, the deployment of approximately $16.3 million of bridge capital at a double-digit yield. An organic reduction to our cash flow leverage to 6.2 times, and finally, sector-leading FFO as adjusted for share growth of 17.6% year over year. Sitting here, 16 months post-IPO, we are encouraged by the sector's momentum and our successful execution of the plans we laid out at the IPO. We are excited to articulate and communicate the DECA initiative with all of you, and while the pillars we outline were on display in the second quarter, we've just begun to scratch the surface of this company's full potential.

As I wrote in the letter, the DECA initiative is the future. The foundation is laid, progress has been made, and the work is underway. Now I'm going to turn it over to James.

Thank you, Michael. Starting with our operating performance, our same store pool posted year over year revenue growth of 1.3% with a 3.4% decrease in operating expenses, leading to an NOI increase of 3.7% with quarter ending occupancy of 92.4%. These results were slightly better on a constant currency basis. We were very pleased with our operating expenses, with a year-of-a-year decrease of 3.4% in the same store pool in the second quarter. This expense control led to an increase in our same store margins of 150 basis points. We saw a decrease in payroll, property insurance, repairs and maintenance, and utilities with relatively flat growth in property taxes. Our web rates were down 3.8% during the quarter. Our achieved move in rates per square foot were down 4.4% on average.

Occupancy in July was 92.1% down 65 basis points a year over year. We felt more comfortable holding our asking rates heading into Q3, as our web rates were actually up 1.2% year over year for the month of July, slightly better than we anticipated. Our seven properties that were impacted by LA County Fire ECRI restrictions posted negative 2% same store revenue growth in the second quarter. However, with the list of these restrictions, we are anticipating those returning to positive same store revenue growth for the remainder of the year. On the external growth front, we acquired three properties on balance sheet in Spartanburg, South Carolina for approximately $30 million. We also closed on a preferred investment on a property in Galita, California for $16.3 million, which we assumed property management of that asset at the end of June.

The result of all of this for the second quarter of 2026 is that we posted fully deluded FFOs adjust per share and unit of 49 cents. Turning to guidance, we raised our same store revenue guidance from a range of negative 0.25% to 1.75% to a range of 0.5% to 1.5%. The list of the LA fire restrictions accounts for about a quarter of that raise or five to seven basis points. The remainder comes from a combination of better than expected second quarter paired with better than expected momentum into the second half.

Additionally, we are reducing our overall operating expense growth range from 1.75% to 3.75% to a range of 0.25% to 1.25%. Driven by a combination of controllable expenses and property insurance. The result is an increase of our NOI growth midpoint from negative 0.25% to a positive 1.15%.

Lastly, we raised our guidance on FFOs adjusted per share from $1.94 to $2.04 to $1.98 to $2.04. And with that operator, we will open it up to questions.

Well, the answer, I think, is yes. I think that's kind of what our target is. I think if I step back, I want to kind of reinforce that we do believe this is a solid acquisition cycle it is here. And it's driven by primarily individuals that have built or bought during COVID heyday. And now a lot of them are quite frankly over their skis. And so this result is a wave of high quality properties that are coming up for sale because owners are effectively out of options. And so today we are seeing a lot of attractive opportunities out there on the stabilized front, US and Canada, US kind of at that mid five and a half and it's more between a four to five, I would say, in a lot of the Canadian markets.

Pricing though, I think in broker market acquisitions are still a little high. I think there are deals out there. I think a lot of off market deals seem to be the most attractive right now if you can find those. Given where we sit and leverage, which I think is incredibly important to kind of address with respect to that question, you know, we did reduce our cash flow leverage again this quarter even while deploying capital. And so we have raised our full year capital deployment guidance to between 55 and 75 million range. And we definitely have room to be more active if the right opportunities, you know, present themselves. And so I do want to be clear that, you know, we're not going to just chase focusing on acquisitions that can be accretive to the platform.

And as we have said before, we want to reemphasize, you know, $300 million of acquisitions actually move our market cap by about 10%. So that's meaningful growth for smart stock, smart stock self-storage, which, you know, is much different than our peers. They have to chase much larger asset sizes. And so it's an overall, I think, very solid acquisition environment.

Hey, Wes, it's Corac. Yeah. So that'll be included in the managed REIT guidance, which falls under the managed platform. And I would expect that to hit in the fourth quarter. And that, and for what, of course, that was a consideration in the initial guidance as well.

Yeah. Thanks, Victor.

This is James. I'll jump in there. So just to touch on some of the savings we saw from an operating expense perspective in the second quarter, as we mentioned, it was on a number of line items. So payroll was there, repairs and maintenance, property, insurance, and utilities as well. So in terms of what's structurally happening in those operating expense savings, obviously we had our property insurance renewal that occurred in April. And so that's part of a just general softening in that particular market. And that's going to carry forward through the rest of this year. In addition, repairs and maintenance, that was largely a comp consideration, although we are doing a good job of inspecting and expecting those dollars.

I think the larger story is in the payroll section, right, where we were down about 2.3% for the quarter. And we believe that's part of the overall clustering story that we've been talking about pretty consistently about margins approving as we add. So one of the examples we like to talk about is in the Denver market in particular, our operating expenses were down substantially. It was almost entirely attributable to payroll. And if you notice, when we took over the Argus platform in October of last year, we increased our overall presence in that market by about four times, right? And so going from nine properties to over 50 between owned and managed is really helping drive some of those economies of scale and clustering that we've originally talked about.

Hey, Victor, it's correct. So I'll just kind of talk through some of the operating assumptions, not too dissimilar from what we talked about last quarter. So in terms of the move in rent trends and web trends, some markets, as you can see, have already turned positive. Other supply markets are still a little bit negative. We still think by the end of the year, by the end of rental season, you know, in that fourth quarter, I think we're going to start to see a broader inflection from an occupancy standpoint, you know, slightly negative relative to 25 based on where we're sitting today. And ECRIs, you know, add are better than 2025 levels, right? Given the strength and the health of the existing customer, you know, our length of stay continues to increase and our bad debts are relatively muted.

And then, of course, from a supply perspective, we've talked about this, but you know, the supply impact continues to decrease through the rest of the year and into 27 and 28. In terms of, you know, the talking about the hitting the top end of our guidance, I'm just going to start on the revenue growth side because that's obviously the most material piece to the overall AFFO. So if you look back to 2025, and I'm going to talk a little bit about the cadence and then talk about the magnitude there, if you look back to 2025, our 3Q revenue growth was 2.5%, while 4Q was only up about 40 basis points. So a fairly lumpy year over year comp that we have in the second half of the year, which wouldn't itself dictate, you know, the fourth quarter growth would be higher than third quarter.

The other pieces that work there, of course, the Asheville occupancy comp, which laps on October 1st and the California ECRI restriction lift that'll have a more positive impact on the fourth quarter than third quarter. So again, those data points, just from a modeling perspective, would support a higher growth rate in the fourth quarter versus the third quarter. When you think about, you know, kind of the deceleration that you would calculate baked into the midpoint of guidance in terms of same store revenue growth, I think one of the lessons that we've learned over the past 24 to 36 months in storage is that periods of volatility or coppiness can pop up, right? It happened a few times in 2025.

It happened in March and April of this year with some geopolitical noise, right? This summer, we've been relatively unscathed, you know, knock on wood, of course. So if you think about, you know, our guidance this year, we're assuming, you know, that there is going to be some more periods of some volatility as we have into slow season here. We're assigning a probability that there could be some choppiness in the back half of the year, but I think if we don't get that volatility and we see a more normal off-season, I think we feel pretty good about hitting the top end of that revenue range. Again, that's the biggest, you know, piece of the overall FFO story.

I think if you go down the individual line items, right, there's probably, if we get some acquisitions in the management, that can help out as well. But right now, we're pretty comfortable with the midpoint of the guidance.

Thanks, Richard.

Absolutely. Let me kind of talk a little bit about the Asheville market and then I'll flip it over to James, talk about the kind of eminent domain and new development that we have. Many of you know, we've been in the Asheville market for a pretty long time. It's been about 10 years. So we know that market incredibly well. And as you said, the Asheville was our best performing market in 2025 with a 6% same store revenue growth. We're obviously facing some tough occupancy comps in 2026, but the year over year occupancy gap has narrowed dramatically since December. And it's averaging down, as we've said, about 230 bases point to year over year in the second quarter.

And so, occupancy currently is a solid 91.8%. The web rates in the market have been stronger than we've anticipated at the beginning of the year, and they're actually now a positive year over year as we've moved into July. And so I think what we're seeing is a fairly traditional cadence of occupancy for a natural disaster, you know, of this kind. And now we've moved into kind of the post-natural disaster, stabilize, you know, occupancy level. Overall, we still expect Asheville to be a relative underperformer in 2026, specifically through the end of the third quarter. Now, that said, the portfolio is performing slightly better than expected currently in July.

James? Yeah, Eric, as you mentioned, we did have two properties, and we disclosed this in our earnings release. We had two properties that were subject to eminent domain proceedings in Asheville. There was a large portion of one property about 80% of that asset that was taken in the second quarter, and a small portion of the second property that was taken subsequent quarter, and that was about 20% of that property. The way these proceedings work is that you receive an initial payment, and then there is a legal process to determine the final value for those pieces of land that are taken. In addition, the North Carolina Department of Transportation is coordinating with us to relocate existing customers in the affected buildings.

And so some of that supply is coming offline. The other thing that we wanted to note is, you know, as you may recall, we did have a loss of a property as a result of the flooding that occurred, but we were excited to announce that in early 2027, we will be breaking ground to rebuild that asset. And this property will be about 83% larger than the original property that was destroyed.

It's likely late 2027, early 2028 delivery. So, you know, we are reinvesting back into this market with some of the supply that's coming offline as a result of the flood and these eminent domain proceedings.

Yeah, great question. Again, a lot of those questions. So, let me first just start by, you know, talking about our same store portfolio. Our Canadian's self-storage, same store portfolio, it consists of 13 season-stabilized properties, but they're all in the greater Toronto area. And as we, you know, say the GTA, it represents about 1.1 million square feet. The same store revenue for this pool was down 1% on a constant currency basis in the second quarter, but we did have a tough comp at 2%. However, that was meaningful, tougher than the United States. And so, when you take a look at our joint venture properties with smart centers, we have 10 properties, 900 square feet. They're currently at 92.3%.

And these skew towards more recently stabilized assets. Well, we were able to grow revenues at 6.7% and NOI growth of 9.4% in the quarter. So, at the end of July, the GTA's same store occupancy was 92.2%. Yes, it was down 60 basis points year over year, but it actually compares favorably to the US. And so, for the full year, we do expect that the GTA will run modestly below the US portfolio, primarily a function of tougher comps for 2025. The GTA delivered approximately 2.7% same store revenue growth last year, and about 100 basis points ahead of the US. So, part of what we believe looks like relative softness this year is a flip side of the GTA's outperformance for last year.

And quite frankly, the revenue growth in our GTA portfolio has been about 3 times that of the US portfolio over the last 36 months. New supply, we have to talk about in the GTA, we think it's peaked, and we'll moderate over the next 2 plus years. We know that pretty well because SmartStop is the single largest developer in the market, and which will certainly strengthen, I think, our foothold on the GTA. Now, in terms of demand, as you brought up, the Canadian consumer is pretty healthy. You know, our Canadian bad debt is currently less than half of the US levels and improving year over year. Now, macro uncertainty tied to events like the war, tariffs have caused some hesitation and delay in the rental decision.

And you concentrate that in only certain pockets. It's not throughout the GTA, there's certain pockets, but other Canadian markets are showing steadier trends. So, for an instance, our Alberta portfolio has grown occupancy by 15% in the past two quarters. And so, the structural demand drivers, such as aging and downsizing population, shrinking home sizes, and continued urban densification, it remains intact.

Population growth, we believe, is expected to resume as the immigration policy normalizes. And we're also seeing, I think, a very unique environment as a window for disciplined external growth. We're evaluating currently numerous acquisitions and joint venture opportunities in this market. And so, look, we remain absolutely committed to GTA and our growing Canadian portfolio. And I will also say that I'm going to emphasize, our GTA portfolio is irreplaceable real estate that has been built over the past 16 years.

Now, having said that, there's no question, we're getting a lot of questions with public storage and their acquisition of P. S. Canada. And so, I think my comments are that that having another competitor like Public of Canada, I think it really just underscores, and it's a true testament to our Canadian vision and strategy. And it certainly validates why we entered this market 16 years ago. And so, we've been competing with them in the U. S. now for the last 22 years. And so, there's no question, it's going to be a more competitive environment. But we welcome it. And that's one thing I think you can guarantee on smart-stop self-storage is that we're competitors. And so, I think we'll rise to the occasion.

Yeah, RJ, James, I'll jump in there. So, as we've consistently said, you know, since our IPO, in pockets and in markets, MSA is where we have those 10 or more properties. We tend to have margins that are about, that we see an improvement of about 300 basis points. And so, you know, for example, with the Argus transaction, because I mentioned the Denver expansion, you know, there were three markets where we tipped over that 10 property mark when we transitioned from September 30 to October 1st of last year with that onboarding. And so, we still believe that there's a lot of margin expansion to be realized as those programs and those platforms continue to integrate. And as we continue to grow both on balance sheet within joint ventures and within third party management.

And so, and that coupled with items such as, you know, property insurance renewals that are favorable, our solar initiative, which is ongoing and producing results in reduced utilities. So, we continue to be driving on all aspects.

Well, I would just add, if we continue to perform and outperform on our same store pool, that will naturally contribute to additional margin expansion.

Hey, RJ, it's Korek. First of all, great to have you back in the world of self storage. The lending access kind of pipeline for us remains very attractive. We've talked previously about a pipeline in excess of $100 million with target yields in the 10 to 14% range, typically structured as mezzanine or preferred, that pipeline remains. As of June 30th, we have a book of about $20 million, all prepped at this point on six properties, all of which we have property management on. We close another $3 million prepped after the quarter end, and the blended yield of everything we have today is just under 11%. So, we're actively also working on an A note, B note approach or a stretch senior type approach, where we would sell off a 50 to 60% LTVA note to another party.

So, really, a broad array of arrows in the quiver for us at this point, as the pipeline is really dictating both approaches. As we saw again this quarter, the platform tends to generate third-party management assignments on the underlying property. So, really, semiotic relationship there, creating really strong, attractive returns on a capital-like basis. Additionally, the program we expect will inherently create a natural pipeline for future acquisitions at some point.

We like the risk-adjusted returns on these deals a lot. The deals we're going after, but are certainly sensitive to the quality of the underlying properties and the sponsor, and the impact on leverage and, of course, overall earnings quality. But I think you'll see us take a more balanced approach to building out this program.

Thanks, Arder.

Yeah, I'll touch on the U. S. in particular. I mean, obviously, we don't have any direct exposure to the New York City areas that were affected by the recent, some of the recent movements and from a political perspective there. However, it's a topic we're consistently monitoring and evaluating and working with local self-storage association groups and task force to make sure we're staying abreast of everything going on.

And that being said, I think it is important to note that everyone has their own proprietary pricing systems, right? And so, our algorithms are different than other publicly traded peers, as well as private operators. And so, we're making decisions on our own with our own systems that are constantly evolving and changing. And so, and at the end of the day, this is still a month-to-month business structurally. And I would also just add that I think there's probably some more risk with organizations using off-the-shelf pricing software that's aggregating a lot of different owners. I think that was one of the issues with respect that we saw kind of in the multi-family side. And so, our overall pricing side is just taking new accounts, supplying demand factors, not taking new accounts, personal data from individuals that can be and are highly sensitive.

In concert with that, we've seen in areas, let's say in Montreal, where there were some regulatory concerns with respect to how rentals were being offered up and their discounts and promotions. But as we went through that, what we've found, it was more or less about just making sure that you were transparent to the consumer with respect to you're presenting what your price is, that the price can go up, and being clear on any additional fees in the first month, and clear what the ongoing overall expense is going to be in the second and third month. And so, I think as an industry, I think what I've seen, and I think it's been amazing, is that they're adapting to being as transparent as possible.

And more importantly, as you have individuals that may have questions or concerns, is having the proper culture, people, and environment to deal with that on a one-on-one basis, and not allowing people to not have a voice. And I think that the industry is doing a great job from that perspective.

You know, as we said from an AI perspective, it's one of our pillars within the DEC initiative. And that is something that's obviously continually evolving within our organization. There is no question that there are areas where I think we can enhance revenue. And I think there's areas that we can see some cost savings. I think that we're kind of in the early stages of addressing and developing the technology to do that. So I can't say that right now that we have implemented some of the AI strategies yet with respect to cost savings. And some of those have to do with, you know, from an accounting perspective that you have to do with our call center.

I think some of that is some of the low hanging fruit. In addition, you know, kind of having an analysis of employees and hours and being able to kind of move individuals around appropriately, you know, within, you know, an AI kind of focused structure. And so I think some of those cost savings we're going to see, you know, over more of a, you know, midterm type of time frame versus the short term. We've got to be very thoughtful. It's in, you know, we believe and we're all in on artificial intelligence, but we've just seen too often that some of these companies are just trying to sell, you know, axes and picks and shovels to people that are trying to find gold.

And what we're trying to do is have a very thoughtful approach and making sure that every dollar that we spend, that we can follow it through to the ultimate savings and or revenue enhancement that we believe it can achieve.

Hey, Todd, it's Corax. So I'll answer the first question about the overlap. It's the primarily all of our GTA portfolio, both in the same store and the joint venture pools there. So it's a decent amount of over less so in the in the Alberta pools, but certainly in the in the GTA. In terms of strategy, Todd, I mean, it's really tough for us to sit here and comment on another company's strategy. We can learn from history, but we also, you know, don't know, it's a new market for P. S. So we're not going to sit. I can't sit here and confidently, you know, call out what they're going to do or what the impacts may be.

Yeah, sure, Todd. I'll start with the second quarter and then go into July. So the second quarter, we were able to hold web rates fairly steady. We were down about three and a half percent year over year for the course of the entirety of the second quarter. We do have some new disclosure in the sub as I'm sure you've seen. So you can see the moving rates per square foot for the quarter, we're down about 4.4 percent year over year. That is an apples to apples stat with the rent top that we disclose in the sub. And so that was an improvement from the first quarter.

Concessions were up, honestly, in the first quarter, in the second quarter, I'm sorry. So we continue to use that tool a little bit more. As we move into July, July ended up being a pretty good overall month for us. We went a very successful 4th of July in Canada Day Sale. Web reservations were up 6.7 percent, rentals were up 7.2 percent. And again, this is across both the US and Canada.

Our concession usage actually declined year over year. And as you probably heard, web rates were actually up 1 percent year over year in July. The move and rents were down a little bit, down about 5 percent year over year. But at the end of July, we were at an occupancy of 92.1 down 65ish basis points year over year. But our in-place rates were up over 2 percent year over year. So it's a fairly consistent theme with you in terms of balancing the rate and occupancy. So I think we're fairly encouraged as we enter the shoulder seasons.

Yeah, Todd. It's a good observation because you're right. Our occupancy has been pretty steady, and that's been a target of ours is to be at that 92 percent physical occupancy level give or take. And so moving into this second quarter, there was a bit of a shift in our pricing systems in the way we were approaching things on a shift towards rate, as David alluded to with some of the web rates and the reduced promotions and things like that. So our annualized rent per octavec where foot was up 1.9 percent to kind of counteract the occupancy. To your point, there are market dynamics going on, most notably Asheville. And so if you strip out Asheville out of our same store pool for the second quarter, we were only down 45 basis points in occupancy, right?

So there is some dilution going on and some giz and some takes as we go. But overall, we still feel good about our approach into this busy season, as we've consistently said, we want to be highly occupied, you know, 92 percent plus so that we can drive rate during busy season, which we've been doing. And then coming out of business season, we do want to maintain a good base of occupancy. And so we are going to see some seasonal effects, but to your point, we're going to try and keep tenants in our storage units.

Okay, so it sounds like a more gradual return to seasonality, but perhaps still a little bit more muted in the back half of the year than what we would expect historically. Is that sound about right?

Yeah, I think that's how we're approaching the tail off of the busy season. That being said, our systems are dynamic, right? And if we see opportunities, they're going to respond to them. But yeah, I think that's how we're thinking about it today.

Hey, Mike, when we laid out the sort of building blocks to the guidance as it stands today, we're looking at move-in rate kind of the inflection point later this year, right? So between the end of rental season and the end of the year, somewhere in that range.

Yeah, I'd say it's probably the majority of our customers get a rate increase at least once during the season. That being said, you know, as our most valuable customers are the ones that are going to be staying the longest. And so as they evolve in their customer journey, they are less likely to actually be receiving one of those ECRIs. And just as a reminder, you know, we're always testing, we're always monitoring our ECRI approach. We really haven't changed the cadence over the course of this year. And we continue to be in that on average sort of low 20s per cent on a blended basis over the course of 26.

Thanks, Mike.

Yeah, thank you. I would say the following. And we've been pretty consistent kind of with our communication. We are having numerous conversations. They're ongoing. And we feel pretty good, you know, about the direction we're heading, the conversations we have. We do not have anything definitive to announce today. But if and when we have something announced on that front, you know, we'll do so. And it's going to represent incremental capacity on top of what's already embedded in the updated, you know, guidance.

I think what we're finding is there are a lot of organizations in the U. S. and Canada that are very, very, you know, interested in allocating to storage. So it's not if from a smart stop perspective, it just went.

Absolutely. Well, so far, you know, we're very happy with the Argus third-party management platform. We think the receptivity thus far to the smart stock and the current owner's base and the potential new owners remain strong. Now, with any acquisition, you know, you have, you know, different phases of integration to our platform. So, you know, phase one for us was understanding the people and the entrepreneurial owners at Argus. Two, phase two was introducing, you know, our people, you know, the smart stock people, smart stock culture, the smart stop platform. And then three, as some of those private label Argus individuals, entrepreneurial individuals moved over to smart stop, getting those testimonials for the strength of the smart stop and or the smart stop legacy platform.

And so overall, owners have been very impressed with the top of the funnel. I think that's one of the biggest comments that we get. And in addition to our communication, our tech platform and not losing sight of those entrepreneurial owners. And so, the property performance had materially improved with those owners that have moved on to our platform. So, we're kind of in phase four now. It's that broader migration onto the smart stock platform. But, you know, we still want to provide options to meet the entrepreneurial spirit, you know, of our owners. And so, we're currently coming out of phase three into phase four. And I think September will start to kickstart phase four as we kind of roll off of the rental season.

We move into, you know, the SSA Las Vegas meeting. Now, having said that, we do continue to see new contracts being signed across the spectrum of options. And we're encouraged by the adoption of the smart stop branded and legacy platforms. Now, the broader pattern that we've called out this last quarter, private label owners are seeing stronger lead flow once they're on the smart stop platform. And they're gradually migrating towards either the legacy of the full smart stop brand. And this is continuing. And we're, you know, at this time, I wouldn't move up any kind of timeline when the full margin synergies will show up in our P&L. I think that's been more of a 2027 story as the technology migration and the rebranding work works its way through the portfolio.

But we're starting to see some early signs of this. In addition, the underlying signs of owner satisfaction, lead generation are consistent with what gives us confidence in the longer, you know, dated, you know, payoff with respect to Argus 3PM. And so we did have some off-boards on the private label platform. But we're seeing improvement in the overall quality of the managed portfolio. And so the average square feet of storage for each on-board store with approximately 73% larger than our off-boards. And so we had 90,000 net rentable square feet of on-boards as compared to 52,000 net rentable square feet for the off-board. So the larger stores plus the stronger demographics mean these on-boarded stores will have higher overall revenues than the off-boards.

In addition, as we've announced, we've on-boarded our first third-party management property in Canada in Q2. And that's obviously one small step with respect to our expansion and the third-party in Canada. But you know, interesting enough, we do have some Canadian owners of U. S. properties that are actually so happy with what we're doing for them in the U. S. There are discussions with respect to their Canadian properties. And so six of the properties that we've on-boarded, which I think is important, our current bridge legend customers. And I think that demonstrates the symbiotic relationship between our bridge program and also this in our third-party management. And lastly, I think one of the biggest benefits that we're seeing out of Argus is the benefit of scale in terms of margin.

And so we kind of talked about that through the call with respect to the Denver presence and how that has impacted not only our entrepreneurial owners, but also, you know, our own same store margins. And so, you know, the year to date, just want to reinforce that those Denver margins are up 430 basis points. So I think overall, you know, we're far along within the integration. We still have a lot of work to do, but we're very, very happy about the progress thus far.

Thanks, Rob.

Thank you, operator. Well, SmartStop's self-storage had a phenomenal two-second quarter. I want to thank you for your time and interest in SmartStop's self-storage, a smarter way to store. Have a great day.