3 Remarkable Potential Bargains In Storage REITs

Nov. 15, 2022 6:00 AM ETCUBE, LSI, NSA13 Comments

Summary

  • Self-Storage REITs have taken a beating this year, despite strong operating results.
  • This has created an abundance of bargains in the Storage REIT sector.
  • This article identifies 3 of the best companies available in this bargain-rich sector.
  • Looking for a portfolio of ideas like this one? Members of Hoya Capital Income Builder get exclusive access to our subscriber-only portfolios. Learn More »

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Self-Storage REITs have taken a beating this year, despite strong operating results. They have outperformed the REIT average, but that's not saying much, in a year when the Equity REIT Index has lost (-25.01)% and lagged the dismal returns of both

List of 18 REIT sectors, showing Self-Storage running in 8th place YTD, with Casinos, Hotels, and Farmland leading the way, and Apartment, Office, and Cannabis bringing up the rear

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bar chart, showing self-storage rents rising sharply throughout 2021 and leveling off this year 26% higher than pre-pandemic levels, and a perfect correlation with Miniwarehouse PPI

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Bar chart showing core FFO for all 6 Storage REITs and line chart showing the average, rising from under 5% in 2020 to 27% in 2021 and back to 21.5% in H1 2022

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table of figures, as described in text

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Line chart showing Storage REIT NOI growth leaping in 2021, from negative territory to nearly 30%, before settling back to 20.8% this year, while REIT average histogram shows NOI growth much more muted

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Line chart showing a sharp increase in Google searches from April 2020 to March 2022, a drop of about half that size through the first half of this year, followed by a spike to its current level of 40% above pre-pandemic levels

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Histogram showing that construction spending for storage facilities rose sharply from 2015 - 2018, but the rate of growth plummeted from 2016 thru 2020, and is just now starting to rise again

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Histogram showing huge spike in REIT acquisitions in 2021, from an average of around $4 billion, to over $12B, follow by $10.7 billion thru H1 2022

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Company logo

Life Storage, Inc.

Map of U.S., showing more than 10% of LSI assets located in each of Texas and Florida, with 5 - 10% each in California, Arizona, Louisiana, Georgia, and New York

Company investor presentation

Company logo

CubeSmart Self Storage

map of U.S., showing 25 states in red, where CUBE owns at least one property, and 14 states in gray, where they operate but do not own a facility

Company investor presentation

pie chart, showing 59% of CUBE's NOI comes from the top 10 MSA's, 19% from MSAs 11-25, 11% from MSAs 26 - 40, and 11% from the rest

Company investor presentation

bar chart, showing data as described. NSA has lowest population within 3 miles of its locations, at about 50,000

Company investor presentation

Company logo

National Storage Affiliates

Map of U.S., showing greater than 10% concentration in Texas, 5 - 10% concentration in California, Florida, Oregon, and Georgia, and 2 - 5% concentration in 12 other states (8 of them in the Sunbelt)

Company investor presentation

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This article was written by

Philip Eric Jones profile picture
1.89K Followers
Build sustainable portfolio income with premium dividend yields up to 10%.
I am a teacher, writer, recording artist, and inspirational speaker, who never had much money to invest for most of my life. Then I inherited a sizable sum of money at age 62, and soon found myself on a fascinating journey of making the most of the opportunity my parents have given me. I write of things I have discovered, in the hopes that my thoughts and discoveries may be of help -- or at least amusement -- to others. Promoting Author for Hoya Capital Income Builder. 

Disclosure: I/we have a beneficial long position in the shares of LSI, CUBE, NSA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: A Buy, Sell, or Hold rating in this article does not constitute a Buy, Sell, or Hold recommendation. All investors should do their own due diligence, before investing in any stock.

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