Self-Storage REITs Release Financial Results for Second-Quarter 2024

The four largest publicly traded, U.S.-based self-storage real estate investment trusts (REITs)—CubeSmart, Extra Space Storage Inc., National Storage Affiliates Trust (NSAT) and Public Storage Inc.—have released financial statements for the quarter that ended June 30. In general, the companies indicated slight decreases in funds from operations (FFO) and net operating income (NOI).

“As expected, we experienced a marginally stronger seasonal uplift in demand during the second quarter and a customer base who continues to be resilient in an uncertain economy,” said Christopher P. Marr, CEO and president of CubeSmart. “Our data-driven approach to operations continues to allow us to optimize our performance in the face of changing macro conditions.”

“Operating performance met or exceeded our expectations during the quarter except for customer move-in rents, which were impacted by industry-wide competition,” said Joe Russell, CEO and president of Public Storage. “We are adjusting our outlook for 2024 to reflect market move-in rent dynamics while remaining very encouraged by signs of stabilization across our portfolio.”

CubeSmart

CubeSmart reported FFO per share of $0.64 for the second quarter of 2024, down from $0.66 during the same period last year. Same-store NOI at its 598 facilities decreased 1.2% year over year, resulting from 0.3% revenue growth and a 4.2% increase in operating expenses. Revenue increased $5.4 million, while property operating expenses rose $8.3 million compared to the same period in 2023.

Same-store physical occupancy was 91.5% as of June 30, down from 92.7% during the same period in 2023. This includes 598 facilities comprising 43 million rentable square feet, or approximately 96.7% of the aggregate rentable square feet of the company’s 615 consolidated stores. These same-store properties represented 97.8% of CubeSmart’s property NOI for the three-month period.

During the quarter, CubeSmart opened two sites for a total cost of $61.8 million. It also added 39 facilities to its third-party management platform, bringing its total to 879. The company has two joint-venture developments under construction in New York, which are expected to open in the third quarter of 2025.

On May 21, CubeSmart declared a dividend of $0.51 per common share. It was paid on July 15 to common shareholders of record on July 1.

CubeSmart owns or manages 1,497 self-storage facilities across the United States. Its operating portfolio comprises about 91 million square feet.

Extra Space Storage

Same-store revenue at Extra Space increased 0.6% and NOI decreased by 1.1% in the second quarter of 2024, compared to the same period last year. Core FFO, excluding adjustments, was $2.06 per diluted share, which was flat compared to the same period in 2023. Same-store occupancy was 94.3% compared to 94% a year ago.

During the quarter, the company acquired two operating facilities and another at Certificate of Occupancy for a total of $27.6 million. In conjunction with a joint-venture partner, Extra Space completed two developments for a total cost of $28.7 million, of which it invested $27.7 million. It also added 77 properties to its third-party management platform. The company originated $433.2 million in mortgage and mezzanine bridge loans and sold $11.1 million mortgage-bridge loans.

The company paid a quarterly dividend of $1.62 per common share, which was the same as the previous year. It was paid on June 14 to common shareholders of record by that date.

Headquartered in Salt Lake City, Extra Space owns or operates more than 3,812 self-storage facilities nationwide under the Extra Space, Life Storage and Storage Express brand names. The company’s properties comprise about 2.6 million units and 292.1 million square feet of rentable space.

National Storage Affiliates Trust (NSAT)

NSAT reported a net income of $32.3 million for the second quarter of 2024, a YOY decrease of 29%. Its core FFO was $71.2 million, or $0.62 per share, a decrease of 8.8% per share compared to the same period last year. Same-store occupancy was 87%, a decrease of 280 basis points from the year prior.

The company reported a decrease in same-store NOI of 5.6% compared to the same period in 2023. It was driven by a 2.8% decrease in same-store total revenue and an increase of 4.8% in same-store operating expenses.

During the quarter, NSAT acquired three self-storage properties for $25.2 million in a 1031 exchange. The additions comprise 200,000 rentable square feet in 1.300 units. A joint venture between a subsidiary of NSAT and a state pension fund advised by Heitman Capital Management LLC acquired a portfolio of five self-storage properties for $71.9 million. The venture financed the acquisition with capital contributions from its members, of which NSAT contributed $18 million.

On July 1, the company completed the internalization of its participating regional operator (PRO) structure. As a result, it purchased the PROs' management contracts, and in some cases, their brand names, as well as related intellectual property and certain rights to tenant-insurance programs. The company will no longer pay supervisory and administrative fees or reimbursements under the previous agreements with the PROs. NSAT plans to transition the majority of operations in a phased approach, which is expected to occur over the next 12 months.

On May 16, the company declared a quarterly dividend of $0.56 per common share. It was paid on June 28 to holders of record on June 14.

Headquartered in Greenwood, Colorado, NSAT is a self-administered, self-managed REIT focused on the acquisition, operation and ownership of self-storage properties within the top 100 U.S. Metropolitan Statistical Areas. The company has interests in 1,052 self-storage facilities in 42 states and Puerto Rico comprising about 68.8 million rentable square feet.

Public Storage

Revenue for same-store facilities at Public Storage decreased 1% or $9.8 million, compared to the same quarter in 2023, due primarily to lower realized annual rent per occupied square foot and a decline in occupancy. Operation costs for same-store facilities rose 0.9%, or $1.9 million, compared to the previous year. This was mainly attributed to increased property taxes, which were partially offset by a decrease in payroll for onsite property managers.

FFO was $4.23 per diluted common share compared to $4.29 for the same period last year. An increase in NOI of $39.5 million for the non-same store facilities was due primarily to the impact of properties acquired in 2023 and rent-up of recently developed and expanded facilities. The company reported a net income allocable to common shareholders of $2.66 per diluted share.

During the quarter, Public Storage acquired two self-storage facilities comprising 100,000 rentable square feet for $22 million. It also opened two locations and completed various expansion projects, adding 400,000 net rentable square feet to its portfolio for $84 million. In addition, it has various facilities under development and expansion, which are expected to add 3.8 million net rentable square feet at an estimated cost of $738.7 million.

Based in Glendale, California, Public Storage has interests in 3,049 self-storage facilities in 40 states, with approximately 219 million net rentable square feet. It holds a 35% interest in Shurgard Self Storage Ltd., which has 281 facilities in seven European countries, with approximately 16 million net rentable square feet.

Sources:
CubeSmart, CubeSmart Reports Second Quarter 2024 Results
Extra Space Storage, Extra Space Storage Inc. Reports 2024 Second Quarter Results
National Storage Affiliates Trust, National Storage Affiliates Trust Reports Second Quarter 2024 Results
Public Storage, Public Storage Reports Results for the Three and Six Months Ended June 30, 2024