Self-Storage REITs Release Financial Results for Fourth-Quarter 2016

Update 2/28/17 – National Storage Affiliates Trust (NSAT), a Maryland REIT specializing in self-storage, has released its financial statement for the quarter that ended Dec. 31, 2016, showing gains in key areas including core FFO, NOI and occupancy. "2016 was an exceptional year on all fronts for NSAT, reflecting the continued execution of our strategic internal and external growth initiatives,” said CEO Arlen Nordhagen.

The REIT reported core FFO per share of $0.30 during the third quarter, a 25 percent year-over-year increase. Its net income was $6.1 million during the quarter, a 12.96 percent gain compared to the $5.4 million it reported for the same period in 2015. Same-store NOI was $22.2 million, up 9.2 percent.

Same-store revenue was $32.3 million during the quarter, a 6.3 percent increase from a year ago. This was driven by a 6.7 percent increase in average annualized rental revenue per occupied square foot and partially offset by a decrease of 30 basis points in average occupancy, according to the release. Average occupancy was 89.1 percent as of Dec. 31, down from 89.4 percent last year. For all of 2016, average occupancy was 90 percent, an increase from 87.9 percent in 2015.

The company acquired 31 self-storage properties during the quarter for $228 million. The facilities are in eight states and comprise about 2.1 million rentable square feet in more than 16,600 units. In addition, NSAT’s joint venture with a state pension fund completed its acquisition of the iStorage portfolio and property-management platform for $630 million.

NSAT also announced it has agreed to add Personal Mini Storage of Orlando, Fla., as its latest participating regional operator (PRO). “The mark of adding our eighth PRO combined with our recently completed iStorage joint venture enhances NSAT’s competitive advantage in the public self-storage space,” Nordhagen said. “As we move forward into 2017, we look to further expand our platform, drive strong core FFO growth and create value for our shareholders over the long-term.”

On Feb. 23, the company declared a quarterly dividend of $0.24 per common share, which will be paid on March 30 to holders of record on March 15.

Headquartered in Greenwood, Colo., NSAT is a self-administered and -managed REIT focused on the acquisition, operation and ownership of self-storage properties within the top 100 U.S. Metropolitan Statistical Areas throughout the United States. The company has ownership interest in 453 storage facilities in 23 states. Its portfolio comprises approximately 28 million net rentable square feet. It's owned by its affiliate operators, who are contributing their interests in their self-storage assets over the next few years as their current mortgage debt matures.

2/23/17 – The four largest publicly traded, U.S.-based self-storage real estate investment trusts (REITs)—CubeSmart, Extra Space Storage Inc., Life Storage Inc. and Public Storage Inc.—have released financial statements for the quarter that ended Dec. 31, 2016. In general, all four entities showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI), while also achieving increases in occupancy.

“2016 was another strong year for Extra Space,” said Joseph D. Margolis, CEO of Extra Space Storage. “Same-store revenue and NOI growth for the year were among the highest in our history, and earnings and FFO per share increases were among the best of all public real estate companies. We continued to grow our national portfolio with over $1 billion in acquisitions and the addition of over 60 third-party managed stores. Industry fundamentals continue to be sound, and while growth rates have moderated from all-time highs, we anticipate solid revenue, NOI and FFO growth in 2017.”

Christopher P. Marr, CEO of CubeSmart, expressed similar sentiments regarding the REIT’s performance. “Our strong 2016 performance marks the fourth consecutive year of FFO growth exceeding 15 percent and same-store NOI growth exceeding 9 percent, demonstrating the strength of our operating platform, the dedication and daily focus of our teammates across the country, and the benefit of owning one of the highest-quality portfolios in the industry," he said. “Demand for storage continues to be steady and broad-based, and the impact from new supply is in line with our expectations. Looking forward to 2017, we remain focused on executing our internal and external growth strategies and generating attractive risk-adjusted returns for shareholders by maintaining a disciplined approach to capital allocation.”

CubeSmart

CubeSmart reported FFO per share of $0.38 during the quarter, a 15.2 percent year-over-year increase. Same-store NOI at its 407 facilities grew 8.1 percent year over year. The company attributed this to a 5.8 percent growth in revenue and a 0.2 percent increase in property operating expenses. Same-store locations contributed 89.2 percent of the REIT’s property NOI during the quarter.

The operation gained 20 basis points in physical occupancy compared with the same quarter the previous year. The same-store physical occupancy was 91.8 percent as of Dec. 31. The company’s total-owned portfolio, representing 475 facilities and comprising 32.9 million square feet of rentable space, had a physical occupancy of 89.7 percent at the end of the fourth quarter.

CubeSmart acquired four storage facilities for $52.8 million during the quarter. The properties are spread across three states, with two in Nevada and one each in Arizona and North Carolina. On Dec. 15, the company also established a 10 percent ownership stake in a joint venture that acquired 13 facilities comprising 700,000 square feet for $87.5 million. The properties will be managed under the CubeSmart brand.

At the end of the quarter, the REIT also had four facilities under certificate-of-occupancy agreements for a total price of $61.1 million. Two of the facilities are in Illinois and two are in Florida. The REIT also has five joint-venture and two wholly owned projects under development.

On Dec. 15, the company declared a dividend of 27 cents per common share, which was a 28.6 percent increase compared to the dividend issued the previous quarter. The dividend was paid on Jan. 17 to common shareholders of record on Jan. 3.

CubeSmart owns or manages 791 self-storage facilities across the United States. Its operating portfolio comprises 52.6 million square feet.

Extra Space Storage Inc.

Same-store revenue increased 5.2 percent and NOI rose 7.9 percent compared to the same period in 2015. FFO was $1.03 per diluted share, resulting in 18.4 percent growth compared to the fourth quarter the previous year.

Same-store occupancy was 92 percent as of Dec. 31, which was a 0.86 percent decrease compared to the same period in 2015.

During the quarter, the company acquired 24 wholly owned facilities and three properties at the completion of construction for approximately $316 million. It also acquired two facilities at the completion of construction through a joint venture for about $19 million.

The company paid a quarterly dividend of 78 cents per common share, which was equal to the previous quarter. It was paid on Dec. 31 to common shareholders of record on Dec. 15.

Headquartered in Salt Lake City, Extra Space owns or operates 1,427 self-storage properties in 38 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 960,000 units and 107 million square feet of rentable space.

Life Storage Inc. (Formerly Sovran Self Storage Inc.)

Total revenue increased 35.4 percent over the previous year, while operating costs increased 39.9 percent, resulting in an NOI increase of 33.3 percent. Same-store NOI increased 3.7 percent year over year. FFO for the quarter was $1.28 per fully diluted common share, compared to $1.26 for the same period in 2015. Adjusted FFO was $1.31, a 2.3 percent increase.

Net income attributable to common shareholders for the fourth quarter was $18.2 million, or $0.39 per fully diluted share. For the same period in 2015, net income attributable to common shareholders was $30 million, or 83 cents per fully diluted common share.

Revenue for the company’s 417 wholly owned facilities increased 4 percent year over year, helped by an increase in average occupancy of 50 basis points and a 2.9 percent increase in rental rates and other income. Average overall occupancy for the full year was 90.9 percent, with units renting for an average of $13.31 per square foot.

The REIT acquired two properties during the quarter comprising 139,000 square feet for $18.55 million. One of the properties is in Chicago and was acquired at certificate of occupancy. The other is in Orlando, Fla. and was previously managed by Life Storage.

Subsequent to the end of the quarter, the company approved a quarterly dividend of 95 cents per common share, which is equal to the previous quarter.

Based in Buffalo, N.Y., Life Storage operates more than 650 self-storage facilities in 29 states under the Life Storage and Uncle Bob’s brands. Its portfolio of owned and managed facilities comprises more than 45 million square feet.

Public Storage Inc.

Revenue for same-store facilities increased 4.6 percent, or $23.5 million, in the quarter, as compared to the same period in 2015, primarily because of higher realized annual rent per occupied square foot. Cost of operations for the same-store facilities increased 2.7 percent, or $2.9 million, during the period compared to the previous year.

FFO was $2.77 per diluted common share, compared to $2.46 for the same period the previous year. NOI increased $32 million compared to the same period in 2015, including $20.6 million for same-store facilities.

The company acquired 23 self-storage facilities during the quarter for $159 million. Thirteen of the properties are in Oklahoma, with four each in Ohio and Tennessee, and one each in California and Texas. Together they comprise 1.8 million net rentable square feet. It also completed six new development and various expansion projects that added 800,000 net rentable square feet to its portfolio for $107 million.

The company reported a regular common quarterly dividend of $2 per common share, which was equal to the previous quarter. It also declared dividends with respect to various series of preferred shares. All the dividends are payable on March 30 to shareholders of record as of March 15.

Based in Glendale, Calif., Public Storage has interests in 2,348 self-storage facilities in 38 states, with approximately 154 million net rentable square feet. Operating under the Shurgard brand name, the company also has 219 facilities in seven European countries, with approximately 12 million net rentable square feet.