Self-Storage REITs Release Financial Results for First-Quarter 2018

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 March 31. In general, the companies showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI), while also achieving increases in occupancy.

"We're pleased with the first quarter in that we achieved better than expected results in most of our markets, and with record-high occupancies and solid demand, are well-positioned as we enter the upcoming busy season," said David Rogers, CEO of Life Storage. "We're also encouraged with the continued ramp up of Life Storage Solutions, our third-party management division, as we grow our client base and expand our brand."

Joseph Margolis, CEO of Extra Space, expressed similar sentiments. "We are off to a solid start in 2018, with year-to-date performance progressing as planned,” he said. “We continue to have pricing power and maintained very high occupancy through the winter, which positions us well heading into our leasing season.”

CubeSmart

CubeSmart reported FFO per share of $0.39 during the quarter, an 8.3 percent year-over-year increase. Same-store NOI at its 458 facilities grew 4 percent year over year. The company attributed this to a 3.8 percent growth in revenue and a 3.4 percent increase in property operating expenses. Same-store locations contributed 95.5 percent of the REIT’s property NOI during the quarter.

Same-store physical occupancy averaged 91.9 percent during the quarter, (92.5 percent as of March 31), an increase of 20 basis points. The company’s total-owned portfolio, representing 485 facilities and comprising 33.8 million square feet of rentable space, had a physical occupancy of 90.3 percent at the end of the first quarter.

CubeSmart acquired a storage property in Texas during the quarter for $12.2 million. The REIT’s joint venture, HVP IV, purchased 4 properties for $51 million. Two are in Arizona, with one each in Maryland and Texas. CubeSmart contributed $10.3 million toward the acquisition.

On Feb. 13, the company declared a dividend of 30 cents per common share, which was equal to the previous quarter. The dividend was paid on April 16 to common shareholders of record on April 2.

CubeSmart owns or manages 981 self-storage facilities across the United States. Its operating portfolio comprises 66.3 million square feet.

Extra Space Storage Inc.

Same-store revenue increased 5.2 percent and NOI rose 4.5 percent compared to the same period in 2017. FFO was $1.08 per diluted share, resulting in 5.8 percent growth compared to the first quarter the previous year.

Same-store occupancy was 92.1 percent as of March 31, which was essentially equal year over year.

During the quarter, the company acquired three operating facilities at Certificate of Occupancy and assumed full control of another property from a joint-venture partner for $69.9 million. It also made one Certificate-of-Occupancy purchase and completed a development project with joint-venture partners for $22.8 million, of which the REIT’s contribution was $14.9 million.

The company paid a quarterly dividend of 78 cents per common share, which was equal to the previous quarter. It was paid on March 29 to common shareholders of record on March 15.

Headquartered in Salt Lake City, Extra Space owns or operates 1,523 self-storage properties in 39 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.05 million units and 115 million square feet of rentable space.

Life Storage Inc. (Formerly Sovran Self Storage Inc.)

Total revenue increased 3.7 percent over the previous year, while operating costs also grew 3.7 percent, resulting in an NOI increase of 3.7 percent. Same-store NOI increased 2.5 percent year over year, which was attributed primarily to a 2.6 percent bump in operating expenses. FFO for the quarter was $1.27 per fully diluted common share, compared to $1.26 for the same period in 2017. Adjusted FFO was $1.30, a 3.2 percent increase.

Net income attributable to common shareholders for the first quarter was $33.9 million, or $0.73 per fully diluted share. For the same period in 2017, net income attributable to common shareholders was $20.4 million, or $0.44 per fully diluted common share.

Revenue for the company’s 535 wholly owned stabilized facilities increased 2.5 percent year over year, helped by an increase in average occupancy of 150 basis points and 6 percent growth in income related to tenant insurance. Average overall occupancy for the quarter was 90.6 percent, with units renting for an average of $13.51 per square foot.

During the quarter, the REIT didn’t acquire any properties but added 10 facilities to its third-party management platform. The company expects to contribute up to $50 million toward joint-venture acquisitions this year.

Subsequent to the end of the quarter, the company approved a quarterly dividend of $1 per common share, which is equal to the previous quarter.

Based in Buffalo, N.Y., Life Storage operates more than 700 self-storage facilities in 28 states under the Life Storage and Uncle Bob’s brands. Its portfolio of owned and managed facilities comprises more than 50 million square feet.

National Storage Affiliates Trust (NSAT)

Core FFO per share was $25.9 million during the first quarter, a 10.3 percent year-over-year increase. Its net income was $12 million during the quarter, a 66.7 percent gain compared to the $7.2 million it reported for the same period in 2017. Same-store NOI was $40.9 million, up 4.4 percent.

Same-store revenue was $60.8 million during the quarter, a 4.2 percent increase from a year ago. This was driven by a 4.4 percent increase in average annualized rental revenue per occupied square foot. Average occupancy was 87.2 percent as of March 31, down from 88.3 percent last year. Same-store average occupancy was 88.1 percent, down from 88.5 percent during the same period last year.

The company acquired 25 wholly owned self-storage facilities and one joint-venture property during the quarter for $145.3 million. The wholly owned facilities are in six states and comprise more than 1.4 million rentable square feet in about 12,000 units. The joint-venture purchase was in New Jersey. It comprises about 100,000 square feet in 500 units.

On Feb. 22, the company declared a quarterly dividend of $0.28 per common share, a 7.7 percent increase from the previous quarter. It was paid on March 29 to holders of record on March 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 541 storage facilities in 29 states. Its portfolio comprises approximately 34 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 increased 2.1 percent, or $11.5 million, in the quarter, as compared to the same period in 2017, primarily because of higher realized annual rent per occupied square foot. Cost of operations for the same-store facilities increased 3.3 percent, or $5 million, during the period compared to the previous year.

FFO was $2.37 per diluted common share, compared to $2.34 for the same period the previous year, marking a 1.3 percent increase. NOI increased $13.6 million compared to the same period in 2017, including $6.5 million for same-store facilities.

The company acquired two self-storage facilities in Nebraska and Tennessee during the quarter for $18 million. Together they comprise 200,000 net rentable square feet. It also completed four new development and various expansion projects that added 500,000 net rentable square feet to its portfolio for $60 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 June 28 to shareholders of record as of June 13.

Based in Glendale, Calif., Public Storage has interests in 2,392 self-storage facilities in 38 states, with approximately 159 million net rentable square feet. Operating under the Shurgard brand name, the company also has 223 facilities in seven European countries, with approximately 12 million net rentable square feet.

Sources:
CubeSmart, CubeSmart Reports First Quarter 2018 Results
Extra Space, Extra Space Storage Inc. Reports 2018 First Quarter Results
Life Storage, Life Storage, Inc. Reports First Quarter 2018 Results; Raises Same Store Outlook for 2018
National Storage Affiliates Trust, National Storage Affiliates Trust Reports First Quarter 2018 Results
Public Storage, Public Storage Reports Results for the First Quarter Ended March 31, 2018