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 Dec. 31, 2017. In general, the companies showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI), while also achieving increases in occupancy.
“Our same-store performance exceeded guidance as a result of gains in both same-store revenue and occupancy. Topline improvement was supported by stronger traction in organic search and continued attraction of business customers,” said David Rogers, CEO of Life Storage. “Despite near-term industry headwinds, we look toward 2018 with the confidence that we’ve made our company stronger than ever. We have a brand that resonates with the consumer, an expanded business model that includes third-party management and joint ventures, and one of the strongest balance sheets in the industry. These are essential ingredients that provide us with the ability to grow shareholder value over the long term.”
Christopher P. Marr, president and CEO of CubeSmart, expressed similar sentiments. “We continued to execute on our strategic growth plans in 2017, expanding CubeSmart’s owned and managed store count by 18 percent and opening seven newly developed properties totaling over $200 million of investment,” he said. “Fundamentals continue to be impacted by new supply in select submarkets, while demand remains steady and broad-based. Looking forward to 2018, we are confident that our operating platform will continue to maximize store performance, and our disciplined investment strategy will generate attractive risk-adjusted returns for shareholders.”
CubeSmart
CubeSmart reported FFO per share of $0.41 during the quarter, a 7.9 percent year-over-year increase. Same-store NOI at its 432 facilities grew 5.4 percent year over year. The company attributed this to a 4 percent growth in revenue and a .1 percent increase in property operating expenses. Same-store locations contributed 91.1 percent of the REIT’s property NOI during the quarter.
Same-store physical occupancy was 91.7 percent as of Dec. 31, down .1 percent. The company’s total-owned portfolio, representing 484 facilities and comprising 33.8 million square feet of rentable space, had a physical occupancy of 89.2 percent at the end of the fourth quarter.
CubeSmart acquired a storage property in Florida and one in Texas during the quarter for $18.6 million. The REIT also formed a joint venture, HVP IV, to purchase assets in which it will have a 20 percent ownership stake. HVP IV acquired one facility during the quarter for $9.4 million, of which CubeSmart’s contribution was $1.9 million.
The company also acquired a facility in Florida and another in Illinois at Certificate of Occupancy. Those purchases, along with the opening of a joint-venture facility in New York, tallied $29.1 million.
On Dec. 14, the company declared a dividend of 30 cents per common share, an 11.1 percent increase from the previous quarter. The dividend was paid on Jan. 16 to common shareholders of record on Jan. 2.
CubeSmart owns or manages 936 self-storage facilities across the United States. Its operating portfolio comprises 63.4 million square feet.
Extra Space Storage Inc.
Same-store revenue increased 4.9 percent and NOI rose 5.7 percent compared to the same period in 2017. FFO was $1.12 per diluted share, resulting in 8.7 percent growth compared to the fourth quarter the previous year.
Same-store occupancy was 91.9 percent as of Dec. 31, which was a .4 percent increase compared to the same period in 2017.
During the quarter, the company acquired 24 operating facilities, eight at Certificate of Occupancy and assumed full control of six assets from joint-venture partners for $500.5 million. It also made three Certificate-of-Occupancy purchases with joint-venture partners for $46.6 million, of which the REIT’s contribution was $11.8 million.
On Nov. 30, Extra Space sold 36 facilities into a joint venture with financial-services firm TIAA for $295 million. TIAA now owns 90 percent of those properties, with the REIT’s stake at 10 percent. Thirty of the facilities involved in the deal had been used in Extra Space same-store reporting.
The company paid a quarterly dividend of 78 cents per common share, which was equal to the previous quarter. It was paid on Dec. 29 to common shareholders of record on Dec. 15.
Headquartered in Salt Lake City, Extra Space owns or operates 1,483 self-storage properties in 39 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.02 million units and 112 million square feet of rentable space.
Life Storage Inc. (Formerly Sovran Self Storage Inc.)
Total revenue increased 3.4 percent over the previous year, while operating costs grew 6.3 percent, resulting in an NOI increase of 2 percent. Same-store NOI increased .4 percent year over year, which was attributed primarily to a 3.2 percent bump in operating expenses. FFO for the quarter was $1.09 per fully diluted common share, compared to $1.28 for the same period in 2016. Adjusted FFO was $1.34, a 2.3 percent increase.
Net income attributable to common shareholders for the fourth quarter was $21.1 million, or $0.45 per fully diluted share. For the same period in 2016, net income attributable to common shareholders was $18.2 million, or $0.39 per fully diluted common share.
Revenue for the company’s 430 wholly owned stabilized facilities increased 1.3 percent year over year, helped by an increase in average occupancy of 70 basis points and growth in tenant-insurance administrative fees. Average overall occupancy for the quarter was 89.2 percent, with units renting for an average of $13.63 per square foot.
During the quarter, the REIT acquired a previously announced property at Certificate of Occupancy in Charlotte, N.C., for $12.5 million. The property comprises about 70,000 square feet. Life Storage also sold an 86,000-square-foot facility in Salt Lake City for $9.4 million. As a result, the company no longer has a presence in Utah.
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.
Based in Buffalo, N.Y., Life Storage operates more than 700 self-storage facilities in 28 states under the Life Storage and Uncle Bob’s brands. Its portfolio of owned and managed facilities comprises more than 49 million square feet.
National Storage Affiliates Trust (NSAT)
Core FFO per share was $23.6 million during the fourth quarter, a 6.7 percent year-over-year increase. Its net income was $12 million during the quarter, a 96.7 percent gain compared to the $6.1 million it reported for the same period in 2016. Same-store NOI was $30 million, up 5.8 percent.
Same-store revenue was $43.3 million during the quarter, a 5 percent increase from a year ago. This was driven by a 5.2 percent increase in average annualized rental revenue per occupied square foot. Average occupancy was 88.2 percent as of Dec. 31, down from 89.1 percent last year. Same-store average occupancy was 89 percent, down from 89.3 percent during the same period last year.
The company acquired 31 wholly owned self-storage properties during the quarter for $201 million. The facilities are in 10 states and comprise more than 2 million rentable square feet in about 15,000 units.
On Feb. 22, the company declared a quarterly dividend of $0.28 per common share, a 7.7 percent increase from the previous quarter. It will be paid on March 29 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 533 storage facilities in 29 states. Its portfolio comprises approximately 33 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 2.1 percent, or $11.6 million, in the quarter, as compared to the same period in 2016, primarily because of higher realized annual rent per occupied square foot. Cost of operations for the same-store facilities increased 2.6 percent, or $2.9 million, during the period compared to the previous year.
FFO was $2.70 per diluted common share, compared to $2.77 for the same period the previous year, marking a 2.5 percent decrease. NOI increased $13.8 million compared to the same period in 2016, including $8.7 million for same-store facilities.
The company acquired eight self-storage facilities during the quarter for $68.1 million. They include six properties in Texas and one each in Alabama and Kentucky. Together they comprise 500,000 net rentable square feet. It also completed four new development and various expansion projects that added 600,000 net rentable square feet to its portfolio for $56 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 29 to shareholders of record as of March 14.
Based in Glendale, Calif., Public Storage has interests in 2,386 self-storage facilities in 38 states, with approximately 159 million net rentable square feet. Operating under the Shurgard brand name, the company also has 222 facilities in seven European countries, with approximately 12 million net rentable square feet.
Sources:
CubeSmart, CubeSmart Reports 2017 Annual Results
Extra Space, Extra Space Storage Inc. Reports 2017 Fourth Quarter and Year-End Results
Life Storage, Life Storage Inc. Reports Fourth Quarter and Full Year 2017 Results
NSAT, National Storage Affiliates Trust Reports Fourth Quarter and Full Year 2017 Results
Public Storage, Public Storage Reports Results for the Fourth Quarter and Year Ended December 31, 2017
