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 Sept. 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.
“Third-quarter performance continues to reflect healthy demand trends and a competitive pricing environment,” said Christopher P. Marr, president and CEO of CubeSmart. “Our scalable, sophisticated operating platform and customer-service focus generated solid results across our portfolio. We remain active and disciplined in pursuing growth opportunities that deliver attractive, risk-adjusted returns to our shareholders.”
Joseph Margolis, CEO of Extra Space, expressed similar sentiments. "The year continues to progress as expected as we head down the home stretch,” he said. “Our stores have maintained very high occupancy; we continue to achieve positive rate growth; and our diversified portfolio continues to deliver solid results, despite new supply in certain markets. External growth has also been strong through consistent acquisition volume and a record year expanding our third-party management platform."
CubeSmart
CubeSmart reported FFO per share of $0.43 during the quarter, a 2.4 percent year-over-year increase. Same-store NOI at its 458 facilities grew 3.9 percent year over year. The company attributed this to a 3 percent growth in revenue and a .6 percent increase in operating expenses. Same-store locations contributed 94.7 percent of the REIT’s property NOI during the quarter.
Same-store physical occupancy was 92.7 percent as of Sept. 30, down from 93.5 percent last year. The company’s total-owned portfolio, representing 490 facilities and comprising 34.5 million square feet of rentable space, had a physical occupancy of 90.4 percent at the end of the third quarter.
CubeSmart acquired three storage properties in Nevada, North Carolina and Washington, D.C., for $59.6 million. The REIT’s joint venture, HVP IV, purchased two properties in Florida and Georgia for $20.5 million. The company opened one joint-venture property during the quarter in New York for a total cost of $91.5 million.
On Aug. 7, the company declared a dividend of 30 cents per common share, which was equal to the previous quarter. The dividend was paid on Oct. 15 to common shareholders of record on Oct. 1.
CubeSmart owns or manages 1,072 self-storage facilities across the United States. Its operating portfolio comprises 73.3 million square feet.
Extra Space Storage Inc.
Same-store revenue increased 3.2 percent and NOI rose 3.3 percent compared to the same period in 2017. Core FFO, excluding adjustments for non-cash interest and hurricane losses, was $1.20 per diluted share, resulting in 6.2 percent growth compared to the third quarter the previous year.
Same-store occupancy was 93.9 percent as of Sept. 30, which was essentially equal year over year.
During the quarter, the company acquired five operating facilities and one property at Certificate of Occupancy for about $74.3 million. In conjunction with joint-venture partners, the REIT also acquired eight operating facilities, made three Certificate-of-Occupancy purchases and completed one development project for a total cost of approximately $127.1 million, of which the company contributed $34.6 million.
The company paid a quarterly dividend of 86 cents per common share, which was equal to the previous quarter. It was paid on Sept. 28 to common shareholders of record on Sept. 14.
Headquartered in Salt Lake City, Extra Space owns or operates 1,606 self-storage properties in 39 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.1 million units and 122 million square feet of rentable space.
Life Storage Inc.
Total revenue increased 4.4 percent over the previous year, while operating costs fell 3 percent, resulting in an NOI increase of 8.3 percent. Same-store revenue grew 3.6 percent, while same-store NOI increased 4.2 percent, year over year. FFO for the quarter was $1.46 per fully diluted common share, compared to $1.34 for the same period in 2017. Adjusted FFO was $1.45, a 4.3 percent increase.
Net income attributable to common shareholders for the third quarter was $41.1 million, or $0.88 per fully diluted share. For the same period in 2017, net income attributable to common shareholders was $35.5 million, or $0.76 per fully diluted common share.
Revenue for the company’s 533 wholly owned stabilized facilities increased 3.6 percent year over year, helped by a 3.9 percent growth in rental rates and partially offset by a decrease in average occupancy of 70 basis points. Average overall occupancy for the quarter was 90.9 percent, with units renting for an average of $14.12 per square foot.
During the quarter, the REIT acquired two facilities in Boston and Sacramento, Calif., for $19.5 million. The Boston property was previously under Life Storage management. The company also began operations on three development properties owned by unconsolidated joint ventures. The facilities are in Brooklyn, N.Y; Miami and Phoenix. They have a total development cost of $40.6 million, of which the REIT contributed $8.6 million.
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 51 million square feet.
National Storage Affiliates Trust (NSAT)
Core FFO per share was 0.36 during the third quarter, a 9.1 percent year-over-year increase. Its net income was $16.8 million during the quarter, a 49.9 percent increase compared to the $11.2 million it reported for the same period in 2017. The increase was primarily attributed to incremental NOI generated from properties acquired between Oct. 1, 2017, and Sept. 30. Same-store NOI was $44.4 million, up 5 percent.
Same-store revenue was $64.6 million during the quarter, a 4 percent increase from a year ago. This was driven primarily by a 3.8 percent increase in average annualized rental revenue per occupied square foot. Same-store average occupancy was 90.3 percent, essentially equal to the same period last year.
During the quarter, the company formed a joint venture with an affiliate of Heitman America Real Estate REIT LLC, which in September completed the acquisition of 112 Simply Self Storage properties across 17 states and Puerto Rico. The $1.325 billion deal comprises 8 million net rentable square feet. The joint venture subsequently sold six Puerto Rico properties and one facility in Ohio to NSAT. The REIT owns 25 percent of the remaining properties in the joint-venture portfolio and will manage those facilities.
In all, NSAT acquired 13 wholly owned properties during the quarter comprising 900,000 square feet in about 8,000 units.
On Aug. 23, the company declared a quarterly dividend of $0.29 per common share, which was equal to the previous quarter. It was paid on Sept. 28 to holders of record on Sept. 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 669 storage facilities in 34 states and Puerto Rico. Its portfolio comprises approximately 42.5 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 1.2 percent, or $6.6 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 2.8 percent, or $4.1 million, during the period compared to the previous year.
FFO was $2.66 per diluted common share, compared to $2.35 for the same period the previous year, marking a 13.2 percent increase. NOI increased $10.1 million compared to the same period in 2017, including $2.5 million for same-store facilities.
The company acquired 11 self-storage facilities comprising 700,000 square feet during the quarter for $73.8 million. Six of the properties are in Minnesota, with two in Texas and one each in Ohio, South Carolina and Tennessee. It also completed five new development and various expansion projects that added 700,000 net rentable square feet to its portfolio for $83 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 Dec. 27 to shareholders of record as of Dec. 12.
Based in Glendale, Calif., Public Storage has interests in 2,418 self-storage facilities in 38 states, with approximately 161 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 Third Quarter 2018 Results
Extra Space, Extra Space Storage Inc. Reports 2018 Third Quarter Results
Life Storage, Life Storage Inc. Reports Third Quarter 2018 Results; Increases FFO Guidance
National Storage Affiliates Trust, National Storage Affiliates Trust Reports Third Quarter 2018 Results
Public Storage, Public Storage Reports Results for the Three and Nine Months Ended September 30, 2018
