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 indicated some improvements from the effects of the coronavirus pandemic, particularly in funds from operations (FFO), net operating income (NOI) and occupancy.
“The storage sector experienced a number of tailwinds in the third quarter that benefited our earnings. Demand was healthy and vacates remained muted, resulting in strong occupancy and increased rental rates to new customers, offset by lower late fees and higher bad debt,” said Joe Margolis, CEO of Extra Space. “We recognize that future risks and uncertainties related to the pandemic and general macro-economic conditions may still impact future results; however, to date, the impact has been less significant than previously anticipated.”
Christopher P. Marr, president and CEO of CubeSmart expressed similar sentiments. “The last few months have showcased the strength and resilience of the entire CubeSmart platform. Performance rebounded across our portfolio, as strong demand trends drove record-high same-store occupancies in September.”
“We had a great quarter on many fronts,” added Joe Saffire, CEO of Life Storage. “Our stores returned to positive top-line revenue and NOI growth.”
Due to the uncertainty of continued operational and financial impact from the public-health crisis, CubeSmart, Extra Space and Life Storage have suspended issuing 2020 guidance. NSAT reinstated its guidance for the remainder of the year due to its third-quarter performance.
CubeSmart
CubeSmart reported FFO per share of $0.44 during the quarter, which was equal to the third quarter a year ago. Same-store NOI at its 477 facilities fell 1.6 percent year over year. The company attributed this to a .1 percent increase in revenue and a 4.2 percent increase in operating expenses. Same-store locations contributed 89.3 percent of the REIT’s property NOI during the quarter.
Same-store physical occupancy was 94.3 percent as of Sept. 30, up from 92.5 percent a year ago. The company’s total-owned portfolio, representing 527 facilities and comprising 37 million square feet of rentable space, had a physical occupancy of 93.2 percent at the end of the first quarter.
CubeSmart didn’t acquire any facilities during the quarter. Earlier in the year, it purchased three properties for $74.7 million. Subsequent to Sept. 30, the REIT agreed to acquire the eight-facility Storage Deluxe portfolio in New York for $540 million. At quarter-end, it had five joint-venture projects under construction to which it is expected to contribute $126.8 million.
On July 29, the company declared a dividend of 33 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 1,260 self-storage facilities across the United States. Its operating portfolio comprises 86 million square feet.
Extra Space Storage Inc.
Same-store revenue and NOI decreased 1.5 percent and 2.7 percent, respectively, compared to the same period in 2019. Core FFO, excluding acceleration of share-based compensation expense due to retirement of an executive officer and adjustments for non-cash interest, was $1.31 per diluted share, a 5.6 percent increase over last year. Same-store occupancy was 95.9 percent as of Sept. 30 compared to 93.8 percent a year prior.
During the quarter, the company acquired eight facilities for approximately $87.4 million. In conjunction with joint-venture partners, it also made two Certificate-of-Occupancy (C of O) purchases for a combined $19.6 million, of which the company contributed $9.8 million.
Extra Space 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. 15.
Headquartered in Salt Lake City, Extra Space owns or operates 1,906 self-storage properties in 40 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.4 million units and 147.5 million square feet of rentable space.
Life Storage Inc.
Same-store revenue and NOI increased 1.2 percent and .4 percent, respectively, compared to 2019. FFO was $1.49, compared to $1.46 a year ago, while adjusted FFO for the quarter was $1.52 per fully diluted common share, compared to $1.46.
Net income attributable to common shareholders for the third quarter was $37.1 million, or $.78 per fully diluted share. For the same period in 2019, net income attributable to common shareholders was $140 million, or $2.99 per fully diluted common share. The decrease was primarily attributed to a $100.2 million gain in property sales.
Same-store revenue for the company’s 515 wholly owned, stabilized facilities increased 1.2 percent year over year, impacted by a 2.4 percent decline in rental rates and an increase in average occupancy of 230 basis points. Overall occupancy as of Sept. 30 was 92.4 percent, up from 88.8 percent a year ago, with units renting for an average of $14.44 per square foot.
During the quarter, Life Storage acquired 25 facilities across six states for $326.7 million. Seventeen of the properties were acquired from Sovran HHF Storage Holdings LLC, a joint venture in which the REIT has a 20 percent interest. Similarly, eight of the assets were purchased from Sovran HHF Storage Holdings II LLC, a joint venture in which the company has a 15 percent common interest. The net investment for the acquisitions was $295.3 million.
Subsequent to the end of the quarter, the company approved a quarterly dividend of $1.07 per common share, which was equal to the previous quarter. It was paid on Oct. 26 to shareholders of record on Oct. 13.
Based in Buffalo, N.Y., Life Storage operates more than 900 self-storage facilities in 30 states and Ontario, Canada. Its portfolio of owned and managed facilities comprises more than 65.8 million square feet.
National Storage Affiliates Trust (NSAT)
Core FFO per share was $0.44 during the third quarter, a 10 percent year-over-year increase. The company’s net income was $21.4 million, a 29.7 percent increase compared to the same period in 2019. NSAT reported diluted earnings per share of $.15 during the quarter, which 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 .2 percent, driven primarily by a .4 percent decrease in same-store operating expenses.
Same-store average occupancy was 91.9 percent, an increase of 260 basis points from a year ago. Average annualized rental revenue per occupied square foot for same-store facilities was $12.02 during the quarter compared to $12.19 in 2019.
During the quarter, NSAT acquired four wholly-owned self storage properties for $23.8 million. The facilities comprise about 300,000 rentable square feet in approximately 2,100 units.
On Aug. 20, the company declared a quarterly dividend of $0.34 per common share, which was up from $0.33 the previous quarter. It was paid on Sept. 30 to holders of record on Sept. 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 788 storage facilities in 35 states and Puerto Rico. Its portfolio comprises approximately 49.5 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 decreased 2.7 percent, or $17 million, over the same quarter in 2019, primarily because of lower realized annual rent per occupied square foot and reduced late and administrative fees. Operations costs for same-store facilities decreased .1 percent, or $300,000, compared to the previous year.
FFO was $2.28 per diluted common share, compared to $2.76 for the same period of 2019, marking a 17.4 percent decrease. NOI decreased $9.5 million, which was driven by a $16.8 million decrease in same-store facilities and partially offset by a $7.2 million increase from the remainder of the company’s portfolio.
During the quarter, the company acquired four facilities for $29.1 million. The properties include two in Minnesota and one each in Colorado and Utah. Together they comprise 200,000 net rentable square feet. It also completed various expansion projects, adding 100,000 net rentable square feet to its portfolio for $27.4 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. 15.
Based in Glendale, Calif., Public Storage has interests in 2,504 self-storage facilities in 38 states, with approximately 171 million net rentable square feet. It holds a 35 percent interest in Shurgard Self Storage SA, which has 239 facilities in seven European countries, with approximately 13 million net rentable square feet.
Sources:
CubeSmart, CubeSmart Reports Third Quarter 2020 Results
Extra Space, Extra Space Storage Inc. Reports 2020 Third Quarter Results
Life Storage, Life Storage Inc. Reports Third Quarter Results
National Storage Affiliates Trust, National Storage Affiliates Trust Reports Third Quarter 2020 Results
Public Storage, Public Storage Reports Results for the Three and Nine Months Ended September 30, 2020
