Section 2 • Industry Ownership 





 


 Rental Income # of Stores





Rental Income # of Stores


 Rental Income # of Stores


 Rental Income # of Stores


 Rental Income # of Stores


Source: NKF 3Q20 REIT Report


of recessionary impacts with operations fully returning to normal in the third quarter, except for limited jurisdictions where “State-of-Emergency” declarations still restrict rate increases or late fees. Outperforming the broader REIT uni- verse, the storage sector ended the quarter with total returns at 5.83 percent (as of Sept. 30, NAREIT), behind only Data Center, Infrastructure, and Industrial REIT sectors. Through Oct. 30, the five public storage REITs were up 8.2 percent year-to-date on combined stock price, while the MSCI US REIT Index was down -19.3 percent.


$270.76


$584,577 2,159


$277.14


$129,423 467


$320.02 $262,739 821


$240.18 $121,051 504


$173.15 $76,015 439





$266.63 $592,980 2,224


$280.29 $133,700 477


$314.85 $271,717 863


$242.44 $124,614 514


$172.46 $86,230 500


Excluding joint venture acquisitions and mergers, whol-


ly owned acquisition activity for the quarter was robust, reaching an aggregate volume of $467 million across 41 properties, approaching third quarter 2019 levels. Several REITs mentioned during 2Q reported a desire to be acquisi- tive in the second half of the year. 3Q 2020 volume was down just 2.9 percent in value, and only one less property than the same period last year. Following the drop off in 2Q transac- tions, the resurgence in storage acquisition activity by the REITs is further evidenced by the high volume of reported pending acquisitions expected to close by year-end. If all the pending storage REIT transactions close in 2020, this would result in a 40 percent annual increase over full-year 2019 vol- ume—more than $2.7 billion. With two of the storage REITs announcing high-value portfolio acquisitions in the final quarter, 4Q volume alone will likely surpass the full-year 2018 wholly owned acquisition volume of $1.3 billion.


Several REITs mentioned during 2Q


reported a desire to be acquisitive in the second half of the year. 3Q 2020


volume was down just 2.9 percent in value, and only one less property than the same period last year.


While growth through acquisitions will endure if favorable return metrics are met, the REITs are having to compete with an increasing volume and diversity of capital and investor in- terest in the sector, which is leading some REITs to diversify their income streams through programs such as bridge loan lending, business-to-business last-mile delivery, and micro- fulfillment solutions. Continued expansion of third-party management platforms is also a regular theme for the REITs. Third-party management platforms yield multiple benefits, including further sup- plementing income, providing additional data for revenue man- agement systems and access to online contact- less


rental technology,


all while adding poten- tial off-market targets to the REITs’ acquisitions pipelines. See Table 2.8 on page 25.


24 Self-Storage Almanac 2021


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