Financial analysts are bullish on the self-storage operating performance of National Storage Affiliates Trust (NSAT), a Maryland real estate investment trust (REIT), believing the operator is poised for growth through 2017, according to a report from “Investor’s Business Daily.” The outlook is based, in part, on NSAT’s financial performance since its initial public offering (IPO) last year and the company’s plan for expansion.
Since the REIT’s IPO last April, the company has provided a 35.9 percent return for investors, including stock-price appreciation and dividends, the source reported. The company’s enterprise value has also grown from $1.2 billion to $1.6 billion since the IPO, and its number of facilities has increased from 246 to 280, according to Arlen Nordhagen, CEO.
While NSAT looks to build on its strong presence in the West and South, it’s also looking to expand into the northeast and mid-Atlantic regions. To do so, the REIT intends to add another six to nine regional brands under its umbrella in the next three to five years, Nordhagen told the source. The operator currently has six regional brands in its platform.
“The key difference is that we unite multiple regional operators and their brands underneath the [NSAT] platform, and we hire these participating regional operators to manage the [company] properties in their regions,” Nordhagen said.
The NSAT model has enabled the company to scale quickly since it was founded in 2013, and Nordhagen believes its financial structure will continue to fuel growth. The REIT operates with two different levels of limited-partnership interests across its portfolio. NSAT partnerships are offered in return for contributing equity from owned and managed assets. “By coming together with a lot of private operators under one umbrella, we have been able to have the scale necessary to execute on a lot of things only larger companies can do,” Nordhagen told the source.
Although the company operates with disparate brands, it runs under a singular Web platform that enables it to unify through online marketing and a call center, Nordhagen said.
“The benefit from a corporate standpoint is [its structure] offers a way to get scale more quickly,” George Hoglund, an analyst for investment banking firm Jefferies & Co., told the source. “And from the standpoint of the smaller operators [under the NSAT umbrella] they get to access benefits from scale they wouldn’t get on their own.”
Through the first three quarters of 2015, NSAT grew its same-store operating income to around 11 percent, up from about 9 percent in the second quarter. The increase was slightly ahead of the average growth from the largest self-storage REITs, which was about 9.6 percent, the source reported.
In the third quarter of 2015, NSAT’s funds from operation (FFO) increased 14 percent to 24 cents per share. Financial analysts expect similar figures when the company reports its fourth-quarter earnings on March 2, the source reported. In addition, analysts polled by Thomson Reuters expect the company’s FFO for all of 2015 to be 91 cents. They also predict increases in FFO to $1.03 in 2016 and $1.14 in 2017.
The company’s operating performance has attracted investors, enabling NSAT to outpace most of the market, according to the source. NSAT shares increased 32 percent between the company’s IPO and the end of 2015. In the last 90 days, its stock price is up 12 percent compared to its REIT competitors, which have gained between 6 percent and 9 percent, Hoglund said.
NSAT stock performance has been down 2.6 percent since Jan. 1, while the four largest self-storage REITs are up marginally, according to Hoglund. “We’re still bullish on the stock and [the company’s] overall outlook,” he told the source. “We think they’ll generate high single-digit same-store [operating income] growth for 2016.”
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 280 self-storage facilities in 16 states comprising approximately 15.8 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.
- Investorâ€™s Business Daily: Storage Firm Has Aggressive Strategy for Growth