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Self-Storage REITs Release Financial Results for Fourth-Quarter 2019

February 27, 2020

8 Min Read
Self-Storage REITs Release Financial Results for Fourth-Quarter 2019

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 Dec. 31. In general, the companies showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI). Occupancy figures tended to stay about equal or showed slight increases.

“We closed out a solid 2019 by hitting the high end of our FFO-per-share target as operating performance showed resilience in the face of new supply,” said Christopher P. Marr, president and CEO of CubeSmart. “We are encouraged to see continued stable demand for the product as newly developed stores lease up, while markets that saw an earlier start to the development cycle begin to see fundamentals stabilize. We remain confident in our ability to maximize long-term cash flows as we leverage the strength of our operating platform across our high-quality portfolio.”

Joe Margolis, CEO of Extra Space, expressed similar sentiments. “Extra Space delivered another solid year of performance despite significant new supply,” he said. “The fourth quarter marks the end of not only another good year, but an incredible decade of performance. During that time, Extra Space Storage provided the highest total 10-year return of any publicly traded REIT, and one of the highest total returns of any company in the S&P 500.”

CubeSmart

CubeSmart reported FFO per share of $0.42 during the quarter, which was equal to the same period a year ago. Same-store NOI at its 466 facilities grew .4 percent year over year. The company attributed this to a 1.6 percent growth in revenue and a 4.6 percent increase in operating expenses. Same-store locations contributed 91.6 percent of the REIT’s property NOI during the quarter.

Same-store physical occupancy was 91.2 percent as of Dec. 31, virtually equal to the previous year. The company’s total-owned portfolio, representing 523 facilities and comprising 36.6 million square feet of rentable space, had a physical occupancy of 89.5 percent at the end of the fourth quarter.

CubeSmart acquired five facilities during the quarter for $57.9 million, with three in Florida and one each in California and Texas. It has two additional properties under contract for $57.5 million, which are expected to close by the second quarter. The REIT’s joint venture, HVP IV, acquired two properties in Texas and Minnesota for $34.3 million.

On Dec. 12, the company declared a dividend of 33 cents per common share, a 3.1 percent increase from the previous quarter. The dividend was paid on Jan. 15 to common shareholders of record on Jan. 2.

CubeSmart owns or manages 1,172 self-storage facilities across the United States. Its operating portfolio comprises 79.6 million square feet.

Extra Space Storage Inc.

Same-store revenue and NOI increased 2.5 percent compared to the same period in 2018. Core FFO, excluding adjustments for non-cash interest, was $1.27 per diluted share, resulting in 4.1 percent growth compared to the fourth quarter the previous year. Same-store occupancy was 92.4 percent as of Dec. 31, up from 91.7 percent a year ago.

During the quarter, the company acquired facilities for $50.9 million. In conjunction with joint-venture partners, the REIT made three Certificate-of-Occupancy acquisitions for approximately $60 million, of which the company contributed $18.1 million.

The company paid a quarterly dividend of 90 cents per common share, which was equal to the previous quarter. It was paid on Dec. 31 to common shareholders of record on Dec. 16.

Headquartered in Salt Lake City, Extra Space owns or operates 1,817 self-storage properties in 40 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.3 million units and 140 million square feet of rentable space.

Life Storage Inc.

Same-store revenue grew 2.6 percent, while same-store NOI increased 4.2 percent, year over year. Adjusted FFO for the quarter was $1.44 per fully diluted common share, a 4.3 percent increase from the same period in 2018. FFO was $1.46, compared to $1.36 a year ago.

Net income attributable to common shareholders for the fourth quarter was $43.5 million, or $.93 per fully diluted share. For the same period in 2018, net income attributable to common shareholders was $92.3 million, or $1.98 per fully diluted common share. The decrease was primarily attributed to the 2018 sale of 12 storage facilities for $55.5 million.

Revenue for the company’s 504 wholly owned stabilized facilities increased 2.6 percent year over year, helped by a 2.6 percent growth in rental rates and partially offset by a decrease in average occupancy of 20 basis points. Overall occupancy as of Dec. 31 was 89.6 percent, with units renting for an average of $14.68 per square foot.

The company acquired two properties during the quarter for $37.5 million in the New York City market. It also expanded its interest in a joint venture, acquiring a 20 percent investment in five Florida facilities that were previously part of its third-party management portfolio. The total purchase price was $56.3 million, of which the REIT contributed $5.7 million.

Subsequent to the end of the quarter, the company approved a quarterly dividend of $1.07 per common share, a 7 percent increase from the previous quarter. It was paid on Jan. 27 to shareholders of record on Jan. 14.

Based in Buffalo, N.Y., Life Storage operates more than 850 self-storage facilities in 29 states and Ontario, Canada. Its portfolio of owned and managed facilities comprises more than 61.8 million square feet.

National Storage Affiliates Trust (NSAT)

Core FFO per share was $0.40 during the fourth quarter, an 8.1 percent year-over-year increase. Its net income was $18.8 million, a 30 percent increase compared to the same period in 2018. It reported diluted earnings per share of $0.13 during the quarter, which was primarily attributed to the Hypothetical Liquidation at Book Value method used for allocating net income among various classes of equity. Same-store NOI was up 3.8 percent, driven primarily by a 2.8 percent increase in same-store total revenue and partially offset by a .3 percent increase in same-store property operating expenses.

Same-store average occupancy was 88.2 percent, which was equal to the same period in 2018. Average annualized rental revenue per occupied square foot for same-store facilities was $12.14 during the quarter compared to $11.83 in 2018.

During the quarter, the company acquired six wholly owned facilities across four states for $35.8 million. The properties comprise 300,000 net rentable square feet in approximately 3,200 units.

During the quarter, the company acquired seven wholly owned facilities across three states for $32.2 million. The properties comprise about 300,000 rentable square feet in approximately 2,500 storage units.

On Nov. 20, the company declared a quarterly dividend of $0.33 per common share, a 3 percent increase from the previous quarter. It was paid on Dec. 31 to holders of record on Dec. 13.

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 742 storage facilities in 35 states and Puerto Rico. Its portfolio comprises approximately 47.1 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 1.1 percent, or $6.6 million, over the same quarter in 2018, primarily because of higher realized annual rent per occupied square foot. Operations costs for same-store facilities increased 4.6 percent, or $5.9 million, compared to the previous year.

FFO was $2.72 per diluted common share, compared to $2.77 for the same period of 2018, marking a 1.8 percent decrease. NOI increased $10.3 million compared to last year, which was driven by a $700,000 increase in our same-store facilities and a $9.6 million increase from the remainder of the company’s portfolio.

During the quarter, the company acquired 12 facilities for $121.1 million. The properties include three in South Carolina; two each in Indiana, North Carolina and Washington; and one each in Arizona, Texas and Virginia. Together they comprise 900,000 net rentable square feet. It also completed three new development projects and various expansions that added 500,000 net rentable square feet to its portfolio for $83.6 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 March 31 to shareholders of record as of March 16.

Based in Glendale, Calif., Public Storage has interests in 2,483 self-storage facilities in 38 states, with approximately 169 million net rentable square feet. It holds a 35 percent interest in Shurgard Self Storage SA, which has 234 facilities in seven European countries, with approximately 13 million net rentable square feet.

Sources:
CubeSmart, CubeSmart Reports 2019 Annual Results
Extra Space, Extra Space Storage Inc. Reports 2019 Fourth Quarter and Year-End Results
Life Storage, Life Storage Inc. Reports Fourth Quarter and Full Year 2019 Results
National Storage Affiliates Trust, National Storage Affiliates Trust Reports 2019 Fourth Quarter and Full Year Results
Public Storage, Public Storage Reports Results for the Fourth Quarter and Year Ended December 31, 2019

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