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), while also achieving increases in occupancy.
“As we approach the end of the traditional busy season, operating performance continues to meet our expectations and business fundamentals remain solid,” said Christopher P. Marr, president and CEO of CubeSmart. “Our third-party management platform continues to be an attractive solution for owners, as we added 41 stores during the second quarter. We remain focused on generating attractive risk-adjusted returns for shareholders by maximizing cash flows and maintaining a disciplined approach to capital allocation.”
Joseph Margolis, CEO of Extra Space, expressed similar sentiments. "2018 continues to go as planned with solid rental-rate growth in the mid-single digits as well as strong same-store occupancy of 94.2 percent,” he said. “We continue to execute our strategy of consistent property operations, steady external growth and efficient capital allocation. We are pleased with our platform's performance in the first two quarters, and we believe we are positioned for a strong second half of 2018."
CubeSmart
CubeSmart reported FFO per share of $0.41 during the quarter, a 5.1 percent year-over-year increase. Same-store NOI at its 458 facilities grew 3.3 percent year over year. The company attributed this to a 3.2 percent growth in revenue and a 3.2 percent increase in operating expenses. Same-store locations contributed 95.4 percent of the REIT’s property NOI during the quarter.
Same-store physical occupancy averaged 93.6 percent during the quarter (94.4 percent as of June 30), which was consistent year over year. The company’s total-owned portfolio, representing 486 facilities and comprising 33.9 million square feet of rentable space, had a physical occupancy of 92.5 percent at the end of the second quarter.
CubeSmart acquired a storage property in Texas during the quarter for $19 million. The REIT’s joint venture, HVP IV, purchased 4 properties for $42.9 million. Two are in Florida, with one each in Georgia and Texas. CubeSmart contributed $3.9 million toward the acquisition.
On May 30, the company declared a dividend of 30 cents per common share, which was equal to the previous quarter. The dividend was paid on July 16 to common shareholders of record on July 2.
CubeSmart owns or manages 1,021 self-storage facilities across the United States. Its operating portfolio comprises 69.2 million square feet.
Extra Space Storage Inc.
Same-store revenue increased 4.1 percent and NOI rose 3.8 percent compared to the same period in 2017. FFO was $1.15 per diluted share, resulting in 5.5 percent growth compared to the second quarter the previous year.
Same-store occupancy was 94.2 percent as of June 30, which was essentially equal year over year.
During the quarter, the company acquired three operating facilities and purchased a joint-venture partner’s interest in 14 other facilities for $238.6 million. It also acquired five operating facilities, made seven Certificate-of-Occupancy purchases and completed a development project with joint-venture partners for $201.2 million, of which the REIT’s contribution was $35.3 million.
The company paid a quarterly dividend of 86 cents per common share, which was a 10.3 percent increase from the previous quarter. It was paid on June 29 to common shareholders of record on June 15.
Headquartered in Salt Lake City, Extra Space owns or operates 1,568 self-storage properties in 39 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.09 million units and 119 million square feet of rentable space.
Life Storage Inc.
Total revenue increased 3.9 percent over the previous year, while operating costs grew 2.7 percent, resulting in an NOI increase of 4.5 percent. Same-store NOI increased 5.2 percent year over year, which was attributed primarily to a 1.5 percent bump in operating expenses. FFO for the quarter was $1.39 per fully diluted common share, compared to $1.24 for the same period in 2017. Adjusted FFO was $1.39, a 4.5 percent increase.
Net income attributable to common shareholders for the second quarter was $39.3 million, or $0.84 per fully diluted share. For the same period in 2017, net income attributable to common shareholders was $19.4 million, or $0.42 per fully diluted common share.
Revenue for the company’s 535 wholly owned stabilized facilities increased 4 percent year over year, helped by an increase in average occupancy of 20 basis points and 3.4 percent growth in rental rates. Average overall occupancy for the quarter was 92.1 percent, with units renting for an average of $13.81 per square foot.
During the quarter, the REIT didn’t acquire any properties but added seven facilities to its third-party management platform. The company previously indicated it expects to contribute up to $50 million toward joint-venture acquisitions this year.
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 50 million square feet.
National Storage Affiliates Trust (NSAT)
Core FFO per share was 0.34 during the second quarter, a 9.7 percent year-over-year increase. Its net income was $13 million during the quarter, a 16.3 percent decrease compared to the $15.6 million it reported for the same period in 2017. The decline was primarily attributed to a reduction in gains on dispositions. Same-store NOI was $42.9 million, up 4.2 percent.
Same-store revenue was $62.4 million during the quarter, a 3.6 percent increase from a year ago. This was driven by a 3.1 percent increase in average annualized rental revenue per occupied square foot. Same-store average occupancy was 89.8 percent, a slight increase from the same period last year.
The company acquired 12 wholly owned self-storage facilities and invested in the expansion of an existing property for $62.9 million. The facilities are in six states and comprise more than 500,000 rentable square feet in about 4,500 units.
On May 23, the company declared a quarterly dividend of $0.29 per common share, a 3.6 percent increase from the previous quarter. It was paid on June 29 to holders of record on June 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 552 storage facilities in 29 states. Its portfolio comprises approximately 34 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 1.5 percent, or $8.5 million, in the quarter, as compared to the same period in 2017, primarily because of higher realized annual rent per occupied square foot. Operations costs for same-store facilities increased 2.6 percent, or $3.8 million, during the period compared to the previous year.
FFO was $2.65 per diluted common share, compared to $2.31 for the same period the previous year, marking a 14.7 percent increase. NOI increased $12.3 million compared to the same period in 2017, including $4.7 million for same-store facilities.
The company acquired three self-storage facilities in Indiana, Kentucky and South Carolina during the quarter for $16 million. Together they comprise 200,000 net rentable square feet. It also completed seven new development and various expansion projects that added 1.2 million net rentable square feet to its portfolio for $135 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 2,402 self-storage facilities in 38 states, with approximately 160 million net rentable square feet. Operating under the Shurgard brand name, the company also has 228 facilities in seven European countries, with approximately 12 million net rentable square feet.
Sources:
CubeSmart, CubeSmart Reports Second Quarter 2018 Results
Extra Space, Extra Space Storage Inc. Reports 2018 Second Quarter Results
Life Storage, Life Storage Inc. Reports Second Quarter 2018 Results; Raises 2018 Full Year Guidance
National Storage Affiliates Trust, National Storage Affiliates Trust Reports Second Quarter 2018 Results
Public Storage, Public Storage Reports Results for the Three and Six Months Ended June 30, 2018
