Section 2 • Industry Ownership


the broader REIT market. While the overall REIT market posted an average 4 percent same-store NOI growth, the self-storage REITs outperformed with NOI growth of slightly more than 9 percent.


According to the NGKF Capital Markets 3Q 2015 Self Storage


REIT Report, “the sector finished the third quarter with four of the REITs (sans newcomer National Storage Affiliates) at well above 91 percent occupancy. All-time high occupancies leading into the fourth quarter will continue the pricing equilibrium in the REITs’ favor. This should keep performance at elevated levels through the winter and set expectations for continued outper- formance for the final quarter of the year.


Acquisition activity totaled 39 properties across the five


REITs for an aggregate volume of just under $280 million. Histor- ically, the fourth quarter is heavily loaded with external growth, so the expectation for additional acquisitions by year-end is reasonably high.


According to the NGKF Report, the volume of new supply ac-


tually coming online continues to lag demand growth. Although new supply remains the most commonly stated risk to the


4Q12 Public Storage Sovran Self Storage National Storage Affiliates 2Q13 3Q13 4Q13


sector’s outperformance, any disruptions caused by new sup- ply will be confined to micro sub-markets. New supply appears scheduled to come online at a pace that will allow for easy ab- sorption by existing demand. All four REITs remain active in the addition of new supply via purchases at completion, joint- venture development, direct development, and third-party management programs geared toward private developers.”


The Public Companies With 2,466 facilities and 157 million net rentable square feet, Public Storage continues to be the largest operator in the self-storage industry according to the Mini-Storage Messenger 2015 Top Operators List (see Table 2.3a on page 31). Moreover, all of their facilities are corporate owned—they do not offer third-party management.


During the first three quarters of the year ending on Septem-


ber 30, 2015, Public Storage expanded its portfolio with both ac- quisitions and new development. This includes the purchase of 11 facilities—one in California, eight in Florida, and two in Tex- as—with 0.8 million net rentable square feet, for $108 million. In addition, Public Storage acquired two facilities in Colorado, with 0.2 million net rentable square feet, for $26 million.


Table 2.2 – Historical Quarterly REIT Occupancy 1Q13


1Q14


CubeSmart 84.4% 85.2% Extra Space


*


88.6% 88.6% 90.8% 90.6% 89.2% 90.4% 92.4% 91.7% 91.4% 92.5% 94.5% 93.6% *


*


90.5% *


89.3% *


89.1% *


91.3% *


92.3% *


90.7% *


90.7% *


Note: Note: PSA, SSS, Cube & NSA are based on period average occupancy, while EXR is based on period end occupancy. * Data not available. Source: NGKF Capital Markets


Chart 2.2 – Adjusted Funds from Operations Per Diluted Share $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 Public Storage 28 Self-Storage Almanac 2016 Sovran Self Storage CubeSmart Extra Space National Storage Affiliates Source: NGKF Capital Markets, Yahoo! Finance 2Q14 3Q14 4Q14 1Q15 2Q15 93.0% 3Q15


91.8% 91.9% 94.0% 94.4% 93.0% 92.6% 94.7% 94.7% 93.5% 93.4% 95.4% 95.3% 87.4% 87.4% 89.7% 90.9% 89.5% 88.9% 90.7% 91.3% 89.4% 89.3% 91.4% 92.0% 88.2%


93.4% 88.3% 90.4%


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