The five largest publicly traded, U.S.-based self-storage real estate investment trusts (REITs)—CubeSmart, Extra Space Storage Inc., Life Storage Inc., National Storage Affiliates Trust and Public Storage Inc.—have released financial statements for the quarter that ended June 30. In general, the companies showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI). Occupancy figures tended to stay about equal or showed slight declines.
“We had a very active and productive second quarter,” said Christopher P. Marr, president and CEO of CubeSmart. “We remain focused on maintaining a disciplined approach to capital allocation and generating attractive risk-adjusted returns for shareholders.”
“We are pleased to have completed the planned recycling of selective assets from mature, lower-rental-rate stores into facilities in lease-up with higher rental rates and growth prospects,” added Joseph Saffire, CEO of Life Storage. “Our acquisition pipeline remains strong, with the inclusion of stores under contract in new strategic markets with attractive demographics. Second-quarter results were solid operationally, having achieved the high end of our adjusted FFO guidance range, and we remain diligent in continuing to drive revenue growth and control costs as our markets absorb new supply.”
CubeSmart
CubeSmart reported FFO per share of $0.42 during the quarter, a 2.4 percent year-over-year increase. Same-store NOI at its 467 facilities grew 1.3 percent year over year. The company attributed this to a 2 percent growth in revenue and a 3.8 percent increase in operating expenses. Same-store locations contributed 94.2 percent of the REIT’s property NOI during the quarter.
Same-store physical occupancy was 93.7 percent as of June 30, down from 94.1 percent last year. The company’s total-owned portfolio, representing 516 facilities and comprising 36 million square feet of rentable space, had a physical occupancy of 91.6 percent at the end of the second quarter.
CubeSmart acquired 21 properties during the quarter for $148.8 million, with seven each in Massachusetts and South Carolina, two each in Florida and Tennessee, and one each in Arizona, Georgia and North Carolina. On June 5, the REIT’s joint venture, HVP III, sold 50 of its 68 facilities to SROA Capital Fund VII LP, managed by West Palm Beach, FL-based real estate investment firm SROA Capital LLC, for $293.5 million. On June 6, CubeSmart acquired its joint partner’s 90 percent ownership interest in the venture’s remaining 18 properties for $128.3 million.
On May 14, the company declared a dividend of 32 cents per common share, which was equal to the previous quarter. The dividend was paid on July 15 to common shareholders of record on July 1.
CubeSmart owns or manages 1,164 self-storage facilities across the United States. Its operating portfolio comprises 78.8 million square feet.
Extra Space Storage Inc.
Same-store revenue and NOI increased 3.9 percent compared to the same period in 2018. Core FFO, excluding adjustments for non-cash interest, was $1.22 per diluted share, resulting in 6.1 percent growth compared to the second quarter the previous year. Same-store occupancy was 93.6 percent as of June 30, which was down from 94.2 percent year over year.
During the quarter, the company acquired one facility at Certificate of Occupancy and completed one development project for a total investment of about $20.2 million. In conjunction with joint-venture partners, the REIT acquired 11 operating stores for approximately $228.5 million, of which the company contributed $36.6 million. It also sold one facility for $11.8 million.
The company paid a quarterly dividend of 90 cents per common share, which was up from 86 cents the previous quarter. It was paid on June 28 to common shareholders of record on June 14.
Headquartered in Salt Lake City, Extra Space owns or operates 1,752 self-storage properties in 40 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.2 million units and 134 million square feet of rentable space.
Life Storage Inc.
Same-store revenue grew 2 percent, while same-store NOI increased 2.4 percent, year over year. FFO for the quarter was $1.45 per fully diluted common share, compared to $1.39 for the same period in 2018. Adjusted FFO was $1.42, compared to $1.39 a year ago.
Net income attributable to common shareholders for the second quarter was $40.7 million, or $0.87 per fully diluted share. For the same period in 2018, net income attributable to common shareholders was $39.3 million, or $0.84 per fully diluted common share.
Revenue for the company’s 505 wholly owned stabilized facilities increased 2 percent year over year, helped by a 3 percent growth in rental rates and partially offset by a decrease in average occupancy of 100 basis points. Overall occupancy as of June 30 was 90.8 percent, with units renting for an average of $14.27 per square foot.
During the quarter, the REIT acquired four properties for approximately $43.2 million. Three of the facilities are in Cleveland, Ohio, and one is in Jacksonville, Fla.
Subsequent to the end of the quarter, the company approved a quarterly dividend of $1 per common share, which is equal to the previous quarter. It was paid on July 26 to shareholders of record on July 16.
Based in Buffalo, N.Y., Life Storage operates more than 800 self-storage facilities in 28 states and Ontario, Canada. Its portfolio of owned and managed facilities comprises more than 57 million square feet.
National Storage Affiliates Trust (NSAT)
Core FFO per share was $0.38 during the second quarter, an 11.8 percent year-over-year increase. Its net income was $17.7 million, a 36 percent increase compared to the same period in 2018. The increase was primarily attributed to NOI generated from 76 wholly owned properties acquired during the previous 12 months. Same-store NOI was up 5.5 percent, driven primarily by a 4.7 percent increase in same-store total revenue and a 2.8 percent increase in same-store property operating expenses.
Same-store average occupancy was 89.6 percent, up from 89.2 percent during the same period in 2018. Average annualized rental revenue per occupied square foot for same-store facilities was $11.81 during the quarter compared to $11.38 in 2018.
During the quarter, the company acquired 24 wholly owned facilities across eight states for $185.3 million. The properties comprise about 1.8 million net rentable square feet in approximately 12,300 units.
On May 22, the company declared a quarterly dividend of $0.32 per common share, which was up from 30 cents the previous quarter. It was paid on June 28 to holders of record on June 14.
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 729 storage facilities in 35 states and Puerto Rico. Its portfolio comprises approximately 46.5 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.
Public Storage Inc.
Revenue for same-store facilities increased 1.9 percent, or $11.5 million, over the same quarter in 2018, primarily because of higher realized annual rent per occupied square foot. Operations costs for same-store facilities increased 5.1 percent, or $8.1 million, compared to the previous year.
FFO was $2.57 per diluted common share, compared to $2.65 for the same period of 2018, marking a 3 percent decrease. NOI increased $7.9 million compared to last year, including $3.4 million for same-store facilities.
During the quarter, the company acquired 10 facilities across six states for $116.7 million. Four of the properties are in Florida, with two in Virginia and one each in Arizona, Colorado, Michigan and Texas. Together they comprise 700,000 net rentable square feet. It also completed two new development and various expansion projects that added 1.1 million net rentable square feet to its portfolio for $89.7 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 Sept. 27 to shareholders of record as of Sept. 12.
Based in Glendale, Calif., Public Storage has interests in 2,456 self-storage facilities in 38 states, with approximately 166 million net rentable square feet. Operating under the Shurgard brand name, the company also has 231 facilities in seven European countries, with approximately 13 million net rentable square feet.
Sources:
CubeSmart, CubeSmart Reports Second Quarter 2019 Results
Extra Space, Extra Space Storage Inc. Reports 2019 Second Quarter Results
Life Storage, Life Storage Inc. Reports Second Quarter 2019 Results
National Storage Affiliates, National Storage Affiliates Trust Reports Second Quarter 2019 Results
Public Storage, Public Storage Reports Results for the Three and Six Months Ended June 30, 2019
