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). Occupancy figures tended to stay about equal or showed slight increases.
“We are encouraged by our third-quarter performance in light of the continued impact from supply and the difficult year-over-year operating expense comparison,” said Christopher P. Marr, president and CEO of CubeSmart. “Despite the competitive operating environment, we see positive signs in markets that experienced supply growth early in the cycle and remain confident in the long-term performance of our high-quality portfolio.”
Joe Margolis, CEO of Extra Space, expressed similar sentiments. “Our diversified portfolio and strong operating platform continue to produce solid results despite headwinds from new supply,” he said. “Occupancy has remained near all-time highs, and same-store revenue increased 3.3 percent in the quarter. We also continue to find external growth opportunities through innovative structures and leveraging industry relationships, creating additional value for our shareholders.”
CubeSmart
CubeSmart reported FFO per share of $0.44 during the quarter, a 2.3 percent year-over-year increase. Same-store NOI at its 467 facilities grew .1 percent year over year. The company attributed this to a 1.5 percent growth in revenue and a 5.3 percent increase in operating expenses. Same-store locations contributed 90.9 percent of the REIT’s property NOI during the quarter.
Same-store physical occupancy was 92.5 percent as of Sept. 30, equal to last year. The company’s total-owned portfolio, representing 519 facilities and comprising 36.3 million square feet of rentable space, had a physical occupancy of 90.6 percent at the end of the third quarter.
CubeSmart acquired two facilities during the quarter for $17.9 million, with one each in Georgia and South Carolina. It has five additional properties under contract for $87.9 million, which are expected to close by the first quarter next year. The REIT’s joint venture, HVP IV, also acquired two Texas properties for $46 million.
On July 23, the company declared a dividend of 32 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 1,171 self-storage facilities across the United States. Its operating portfolio comprises 79.4 million square feet.
Extra Space Storage Inc.
Same-store revenue and NOI increased 3.3 percent compared to the same period in 2018. Core FFO, excluding adjustments for non-cash interest, was $1.24 per diluted share, resulting in 3.3 percent growth compared to the third quarter the previous year. Same-store occupancy was 93.8 percent as of Sept. 30, which was equal year over year.
During the quarter, the company acquired one facility at Certificate of Occupancy for approximately $16.8 million. In conjunction with joint-venture partners, the REIT acquired three operating stores and completed one development project for approximately $29.3 million, of which the company contributed $11.1 million.
The company paid a quarterly dividend of 90 cents per common share, which was equal to the previous quarter. It was paid on Sept. 30 to common shareholders of record on Sept. 16.
Headquartered in Salt Lake City, Extra Space owns or operates 1,797 self-storage properties in 40 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.3 million units and 138 million square feet of rentable space.
Life Storage Inc.
Same-store revenue grew 1.8 percent, while same-store NOI increased 2.6 percent, year over year. FFO for the quarter was $1.46 per fully diluted common share, which was equal to the same period in 2018. Adjusted FFO was $1.46, compared to $1.45 a year ago.
Net income attributable to common shareholders for the second quarter was $140 million, or $2.99 per fully diluted share. For the same period in 2018, net income attributable to common shareholders was $41.1 million, or $0.88 per fully diluted common share. The increase was primarily attributed to the sale of 32 storage facilities for $212 million, which resulted in a $100.2 million gain.
Revenue for the company’s 504 wholly owned stabilized facilities increased 1.8 percent year over year, helped by a 2.8 percent growth in rental rates and partially offset by a decrease in average occupancy of 110 basis points. Overall occupancy as of Sept. 30 was 90.3 percent, with units renting for an average of $14.82 per square foot.
The company acquired 22 properties during the quarter for $281.7 million, including five facilities in Maryland, five in Virginia, three in Washington, two in Florida, two in South Carolina, and one each in Georgia, Nevada, North Carolina, Tennessee and Texas. Through a joint venture with Childress Klein Properties Inc., the REIT also acquired a 40 percent minority investment in six former SpaceMax Storage facilities in Atlanta for $82.6 million, of which the company contributed $16.5 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. It was paid on Oct. 28 to shareholders of record on Oct. 15.
Based in Buffalo, N.Y., Life Storage operates more than 825 self-storage facilities in 29 states and Ontario, Canada. Its portfolio of owned and managed facilities comprises more than 60 million square feet.
National Storage Affiliates Trust (NSAT)
Core FFO per share was $0.40 during the second quarter, an 11.1 percent year-over-year increase. Its net income was $16.5 million, a 1.9 percent decrease compared to the same period in 2018. The loss per share of $0.20 during the quarter was primarily attributed to the Hypothetical Liquidation at Book Value method used for allocating net income among various classes of equity. Same-store NOI was up 4.2 percent, driven primarily by a 3.7 percent increase in same-store total revenue and a 2.7 percent increase in same-store property operating expenses.
Same-store average occupancy was 90.2 percent, up from 89.9 percent during the same period in 2018. Average annualized rental revenue per occupied square foot for same-store facilities was $12.60 during the quarter compared to $11.68 in 2018.
During the quarter, the company acquired six wholly owned facilities across four states for $35.8 million. The properties comprise 300,000 net rentable square feet in approximately 3,200 units.
On Aug. 22, the company declared a quarterly dividend of $0.32 per common share, which was equal to the previous quarter. It was paid on Sept. 30 to holders of record on Sept. 13.
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 735 storage facilities in 35 states and Puerto Rico. Its portfolio comprises approximately 46.8 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 1.1 percent, or $6.5 million, over the same quarter in 2018, primarily because of higher realized annual rent per occupied square foot and occupancy. Operations costs for same-store facilities increased 6.4 percent, or $10.3 million, compared to the previous year.
FFO was $2.76 per diluted common share, compared to $2.66 for the same period of 2018, marking a 3.8 percent decrease. NOI increased $4.4 million compared to last year, which was partially offset by a $3.8 million decrease for same-store facilities.
During the quarter, the company acquired 10 facilities across eight states for $110.7 million. The properties include two each in Georgia and Massachusetts and one each in Florida, Indiana, Minnesota, North Carolina, Tennessee and Texas. Together they comprise 800,000 net rentable square feet. It also completed two new development and various expansion projects that added 1.2 million net rentable square feet to its portfolio for $72.4 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. 30 to shareholders of record as of Dec. 13.
Based in Glendale, Calif., Public Storage has interests in 2,468 self-storage facilities in 38 states, with approximately 167 million net rentable square feet. It holds a 35 percent interest in Shurgard Self Storage SA, which has 231 facilities in seven European countries, with approximately 13 million net rentable square feet.
Sources:
CubeSmart, CubeSmart Reports Third Quarter 2019 Results
Extra Space, Extra Space Storage Inc. Reports 2019 Third Quarter Results
Life Storage, Life Storage Inc. Reports Third Quarter 2019 Results and Provides Preliminary 2020 Guidance
National Storage Affiliates Trust, National Storage Affiliates Trust Reports Third Quarter 2019 Results
Public Storage, Public Storage Reports Results for the Three and Nine Months Ended September 30, 2019
