Arlen Nordhagen, president and CEO of National Storage Affiliates Trust (NSAT), a Maryland real estate investment trust (REIT) specializing in self-storage, discussed the impact of consolidation within the self-storage industry in a video interview recorded last month during REITWeek 2016, the investor forum for the National Association of Real Estate Investment Trusts (NAREIT).
NSAT is among a group of large operators that has benefited from pursuing consolidation. The REIT recruits “participating regional operators” (PROs) to join its network and operate similar to a consortium. PROs retain their regional brand names and local expertise but benefit from a common Internet platform as part of the group, Nordhagen said.
NSAT has seven PROs comprising 318 self-storage facilities in 18 states. It expects to add an eighth during the third quarter. Since its inception in 2013, the REIT has grown quickly into one of the nation’s largest operators and pursued aggressive expansion. It ranked No. 6 last year in the annual Inside Self-Storage Top-Operators List, which ranks 100 of the industry’s top operators by net rentable square feet. Since the end of the first quarter, it has either completed or put under contract approximately $390 million of acquisitions, representing 54 properties, according to the company.
“The opportunity for consolidation has been there for years. The thing that’s different now is that the scale benefits of Internet marketing and technology, which become more and more critical, are really driving the economic benefit,” Nordhagen said in the interview. “I do believe we’ll start to see some pretty material consolidation.”
As a reflection of its success, particularly in funds from operation, NSAT decided to increase its quarterly dividend by 10 percent, Nordhagen said.
REITWeek 2016 was held June 7-8 at the Waldorf Astoria New York in Midtown Manhattan, N.Y. The Nordhagen interview can be viewed on the association’s website at REIT.com.
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’s portfolio comprises approximately 19 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.
NAREIT describes itself, as “the worldwide representative voice for REITs and publicly traded real estate companies with an interest in U.S. real estate and capital markets.” REITWeek is designed to bring a large concentration of REIT management teams into one location, enabling them to share insights and their latest company developments.