SmartStop Self Storage REIT (SMA) Prices Follow On Offering, Is Fair Value Still Higher?

SmartStop Self Storage REIT (SMA) has completed a US$301.55 million follow-on equity offering at US$37 per share, increasing the deal size to 8,150,000 common shares from the earlier plan of 7,000,000 shares.

SmartStop Self Storage REIT’s follow on deal lands after a strong run, with a 30 day share price return of 20.9% and a year to date share price return of 29.03%. The 1 year total shareholder return of 25.47% suggests momentum has been building rather than fading ahead of the recent earnings update and dividend announcement.

Compare SmartStop Self Storage REIT’s latest move with hand-picked real estate peers by scanning list of solid balance sheet and fundamentals (25 results) that have kept their finances on steady footing while raising fresh capital.

SmartStop Self Storage REIT priced new shares at US$37, while the stock last closed at US$39.69 and some estimates cluster lower again. Where does a reasonable fair value range actually sit in that spread?

Most Popular Narrative: 9.9% Overvalued

SmartStop Self Storage REIT last closed at $39.69, while the analyst consensus Narrative on Simply Wall St anchors fair value at $36.10 and applies an 8.38% discount rate to its cash flow outlook.

The Argus third party management acquisition nearly doubles the operating footprint, expands the data set for dynamic pricing and creates a captive pipeline of off market deals, which should support higher revenue growth and fee income as the platform scales.

See why 1 investors see SmartStop Self Storage REIT as 10% overvalued.

Result: Fair Value of $36.10 (OVERVALUED)

Still, the self storage thesis for SmartStop Self Storage REIT can unravel quickly if new supply lingers in key markets or if occupancy-protecting discounts drag on margins.

Find out about the key risks to this SmartStop Self Storage REIT narrative.

Another View: Cash Flow Signals A Different Story For SmartStop Self Storage REIT

While the analyst-led fair value Narrative pegs SmartStop Self Storage REIT at $36.10 and tags the shares as 9.9% overvalued, the SWS DCF model points the other way. On that approach, SMA at $39.69 trades about 28% below an estimated future cash flow value of $55.13. Which lens do you trust more when price and cash flow disagree by this much?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out SmartStop Self Storage REIT for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 33 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Mixed messages on SmartStop Self Storage REIT so far. If you want to move fast rather than wait for consensus, carefully weigh the potential upside and downside yourself with 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond SmartStop Self Storage REIT?

If this SmartStop Self Storage REIT update has sharpened your thinking, do not stop here. Broaden your watchlist with fresh ideas that match your risk and income goals.

• Target resilient balance sheets and steadier cash profiles by reviewing our list of solid balance sheet and fundamentals (25 results) that could help anchor your portfolio.
• Hunt for mispriced opportunities and potential value upside by scanning 33 high quality undervalued stocks that may be trading below their fundamentals.
• Lock in potential income streams while still keeping an eye on quality by checking out 6 dividend fortresses that offer higher dividend yields.

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