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 declined slightly.
“Despite new supply’s impact on fundamentals in select submarkets, demand continues to remain steady and broad-based,” said Christopher P. Marr, president and CEO of CubeSmart. “Looking forward to 2019, we remain focused on maximizing store performance and maintaining our disciplined investment strategy to generate attractive, long-term, risk-adjusted returns for shareholders.”
Joseph Margolis, CEO of Extra Space, expressed similar sentiments. “2018 played out as expected, and it was another solid year,” he said. “We expect
CubeSmart reported FFO per share of $0.42 during the quarter, a 2.4 percent year-over-year increase. Same-store NOI at its 456 facilities grew 1.9 percent year over year. The company attributed this to a 3.2 percent growth in revenue and a 6.9 percent increase in operating expenses. Same-store locations contributed 93 percent of the REIT’s property NOI during the quarter.
Same-store physical occupancy was 91.2 percent as of Dec. 31, down slightly from 91.5 percent last year. The company’s total-owned portfolio, representing 493 facilities and comprising 34.6 million square feet of rentable space, had a physical occupancy of 89 percent at the end of the fourth quarter.
CubeSmart acquired four storage properties in California, Illinois, New York and Texas for $117.7 million. The REIT’s joint venture, HVP IV, purchased two properties in Connecticut for $15.1 million.
On Dec. 13, the company declared a dividend of 32 cents per common share, up 6.7 percent from the previous quarter. The dividend was paid on Jan. 15 to common shareholders of record on Jan. 2.
CubeSmart owns or manages 1,086 self-storage facilities across the United States. Its operating portfolio comprises 73.1 million square feet.
Same-store revenue increased 3.8 percent and NOI rose 4.4 percent compared to the same period in 2017. Core FFO, excluding adjustments for non-cash interest, hurricane losses and other deferred financing costs, was $1.22 per diluted share, resulting in 8.9 percent growth compared to the fourth quarter the previous year.
Same-store occupancy was 91.8 percent as of Dec. 31, which was essentially equal year over year.
During the quarter, the company acquired three operating facilities and three properties at Certificate of Occupancy (C of O) for about $74.3 million. In conjunction with joint-venture partners, the REIT also acquired two operating facilities and made four C of O purchases for a total cost of approximately $69.8 million, of which the company contributed $15.7 million.
The company paid a quarterly dividend of 86 cents per common share, which was equal to the previous quarter. It was paid on Dec. 31 to common shareholders of record on Dec. 14.
Headquartered in Salt Lake City, Extra Space owns or operates 1,647 self-storage properties in 39 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.2 million units and 125.7 million square feet of rentable space.
Total revenue increased 3.9 percent over the previous year, while operating costs increased 1.2 percent, resulting in an NOI increase of 5.3 percent. Same-store revenue grew 3 percent, while same-store NOI increased 4.1 percent, year over year. FFO for the quarter was $1.38 per fully diluted common share, compared to $1.34 for the same period in 2017. Adjusted FFO was $1.38, a 3 percent increase.
Net income attributable to common shareholders for the fourth quarter was $92.3 million, or $1.98 per fully diluted share. For the same period in 2017, net income attributable to common shareholders was $21 million, or $0.45 per fully diluted common share.
Revenue for the company’s 521 wholly owned stabilized facilities increased 3 percent year over year, helped by a 3.8 percent growth in rental rates and partially offset by a decrease in average occupancy of 100 basis points. Average overall occupancy for the quarter was 89.4 percent, with units renting for an average of $13.55 per square foot.
During the quarter, the REIT acquired six facilities in Atlanta, New York (two), Orlando, Fla.; Sacramento, Calif.; and St. Louis for $58.3 million. The Atlanta and Orlando properties were previously under Life Storage management.
The company also sold 12 “mature” facilities to an unconsolidated joint venture in which the REIT maintains 20 percent ownership. It’ll continue to manage the properties.
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 750 self-storage facilities in 28 states and Ontario, Canada. Its portfolio of owned and managed facilities comprises more than 55 million square feet.
National Storage Affiliates Trust (NSAT)
Core FFO per share was 0.37 during the third quarter, a 15.6 percent year-over-year increase. Its net income was $14.4 million during the quarter, a 20.5 percent increase compared to the $12 million it reported for the same period in 2017. The increase was primarily attributed to incremental NOI generated from 57 wholly owned properties acquired during 2018. Same-store NOI was $44 million, up 5.3 percent.
Same-store revenue was $64 million during the quarter, a 4.2 percent increase from a year ago. This was driven primarily by a 4.4 percent increase in average annualized rental revenue per occupied square foot and was partially offset by a decrease in average occupancy of 50 basis points. Same-store average occupancy was 88.4 percent, down from 88.9 percent during the same period in 2017.
During the quarter, the company acquired seven facilities in four states for $51.4 million. The properties comprise about 400,000 net rentable square feet in approximately 3,000 units.
On Feb. 21, the company declared a quarterly dividend of $0.30 per common share, which was up 3.4 percent from the previous quarter. It’ll be 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 698 storage facilities in 34 states and Puerto Rico. Its portfolio comprises approximately 44.3 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.
Revenue for same-store facilities increased 1.2 percent, or $6.7 million, in the quarter, as compared to the same period in 2017, primarily because of higher realized annual rent per occupied square foot. Operations costs for same-store facilities increased 4.1 percent, or $4.8 million, during the period compared to the previous year.
FFO was $2.77 per diluted common share, compared to $2.70 for the same period the previous year, marking a 2.6 percent increase. NOI increased $11.1 million compared to the same period in 2017, including $9.2 million for same-store facilities.
The company acquired nine self-storage facilities comprising 600,000 rentable square feet during the quarter for $73.2 million. Four of the properties are split between Georgia and Nebraska, with one each in Colorado, Indiana, Ohio, Oklahoma and Washington. It also completed two new development and various expansion projects that added 600,000 net rentable square feet to its portfolio for $70 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 28 to shareholders of record as of March 13.
Based in Glendale, Calif., Public Storage has interests in 2,429 self-storage facilities in 38 states, with approximately 162 million net rentable square feet. Operating under the Shurgard brand name, the company also has 232 facilities in seven European countries, with approximately 13 million net rentable square feet.
Sources: CubeSmart, CubeSmart Reports 2018 Annual Results Extra Space, Extra Space Storage Inc. Reports 2018 Fourth Quarter and Year-End Results Life Storage, Life Storage Inc. Reports Fourth Quarter and Full Year 2018 Results National Storage Affiliates, National Storage Affiliates Trust Reports 2018 Fourth Quarter and Full Year Results Public Storage, Public Storage Reports Results for the Fourth Quarter and Year Ended December 31, 2018