The four U.S.-based self-storage real estate investment trusts (REITs)—CubeSmart, Extra Space Storage Inc., Public Storage Inc. and Sovran Self Storage Inc.—have released financial statements for the quarter that ended Sept. 30. In general, all four entities showed gains in key areas and continue to display aggressive acquisition strategies.
The reports generally did not make assessments regarding damage sustained from Hurricane Sandy, which caused widespread damage in late October to homes and businesses along the Atlantic coast and Northeast.
MJ Partners Real Estate Services, a real estate brokerage and investment banking company specializing in self-storage, included an overview of hurricane-related damage and business expectations in its analysis of the REIT’s third-quarter results. In general, REIT facilities fared well in the storm, experiencing limited damage. Residents and businesses impacted by the storm are expected to create an increase in rental occupancies in some areas, particularly in Connecticut, New Jersey and New York, according to the report.
CubeSmart had 70 locations with 84 percent occupancy affected by the hurricane. Total damages were estimated to be between $600,000 and $800,000, with two facilities reporting wind damage and one reporting water damage, according to MJ Partners.
Public Storage sustained less than $1.5 million in repairs from the storm. The company has 90 facilities in the New Jersey/New York market, and all were open and operating within a few days of the storm, MJ Partners said.
Sovran, which does business as Uncle Bob’s Self Storage, had 68 facilities affected by the hurricane. Twelve were left without power, but only two locations could not open. Just one facility in Toms River, N.J., reported widespread issues, according to MJ Partners. In all, 40 percent of Sovran’s portfolio is in coastal markets.
CubeSmart reported a funds from operations (FFO) per share of $0.19 and a 4.5 percent increase over last year’s third quarter in same-store net operating income (NOI) at its 321 facilities. The company attributed this to a 4.1 percent growth in overall revenue and a 3.4 percent increase in property operating expenses.
The operation gained 370 basis points in physical occupancy compared with the same period last year. The same-store physical occupancy was 84.9 percent as of Sept. 30.
The company closed on 14 self-storage acquisitions totaling $85.9 million during the quarter, in addition to closing on the remaining $68.2 million asset in the second pool of the company’s $560 million acquisition of Storage Deluxe. (Original story: "Self-Storage REIT CubeSmart Completes $560M, 22-Property Acquisition from Storage Deluxe")
CubeSmart also closed on dispositions totaling $12.5 million, including six assets in New Mexico and one asset in California. In total, the company acquired assets and joint-venture interests totaling $266.5 million during the quarter. Combined with $20.5 million under contract, the company’s total value of acquisitions this year is $437.6 million.
On Aug. 1, the company declared a dividend of 8 cents per common share. The dividend was paid on Oct. 15 to common shareholders of record on Oct. 1.
The company’s implied cap rate based on common-share prices was 5.8 percent, according to MJ Partners.
Extra Space Storage Inc.
Same-store revenue increased 6.8 percent and NOI rose 11.4 percent compared to the same period in 2011. FFO was 43 cents per diluted share, resulting in 34.4 percent growth compared to the same period last year.
Same-store occupancy grew by 180 basis points to 89.8 percent, compared to 88 percent at the same time last year.
The company purchased 53 properties during the quarter for approximately $449.5 million. Of the those properties, 36 came from the acquisition of Prudential Real Estate Investors’ 94.9 percent interest in the ESS PRISA III LLC joint venture that was formed in 2005. The joint venture owned 36 properties in 18 states. The other 17 assets were in California, Colorado, New Jersey, New York, South Carolina, Texas, Utah and Virginia.
Extra Space paid a quarterly dividend of 20 cents per common share. The dividend was paid on Sept. 28 to common shareholders of record on Sept. 17.
The company’s implied cap rate based on common-share prices was 5.4 percent, according to MJ Partners.
Public Storage Inc.
Revenue for same-store facilities increased 4.8 percent, or $18.8 million, in the quarter, as compared to the same period in 2011, primarily because of higher realized annual rent per occupied square foot. Cost of operations for the same-store facilities declined by 2.3 percent, or $2.8 million, in the quarter as compared to the same period in 2011.
FFO was $1.73 per diluted common share, compared to $1.29 for the same period last year. NOI for same-store facilities increased 7.9 percent, or $21.6 million, in the quarter compared to the same period in 2011.
During the quarter, the company acquired four self-storage properties (300,000 net rentable square feet), in California, Hawaii (two), and New Jersey, for approximately $56 million. Since the end of the quarter, Public Storage purchased four self-storage facilities (409,000 net rentable square feet) in Arizona, Georgia, Texas and New York for approximately $43 million. The company is also under contract to acquire two more facilities for a combined $21 million.
The company reported a regular common quarterly dividend of $1.10 per common share. 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.
The company’s implied cap rate based on common-share prices was 4.6 percent, according to MJ Partners.
Sovran Self Storage Inc. (Uncle Bob's Self Storage)
Total revenue increased 18.6 percent over last year's third quarter, while property operating costs increased 9.3 percent, resulting in an NOI increase of 23.6 percent.
FFO for the quarter was 85 cents per fully diluted common share, compared to 41 cents for the same period last year.
Net income available to common shareholders for the second quarter was $18.8 million, or 63 cents per fully dilated share. For the same period in 2011, net income available to common shareholders was $2.3 million, or 8 cents per fully diluted common share.
Average overall occupancy was 88.1 percent, with units renting for an average of $10.79 per square foot.
Sovran acquired 10 properties during the quarter, all in existing markets. Five of the facilities are in Georgia, three in Florida and one each in Illinois and North Carolina. The properties cost a combined $63.2 million and comprise 835,600 square feet of net rentable space.
The company paid dividends of 45 cents per common share.
The company’s implied cap rate based on common-share prices was 6.7 percent, according to MJ Partners.