It was a quiet week for US equity REITs, which were on average slightly up 1.1%. It appears as though investors are waiting for the Q2 season results release. Stock performance was down slightly in specialty REITs, but positive for the remaining sectors. One of the week’s best-performing sectors was self-storage, led by National Storage Affiliates, which was up by 5.2%.
Keeping up the good news, National Storage Affiliates reported raising $238 million in proceeds from the offering of common shares. They were able to issue an amount of stock equivalent to half of the total outstanding shares. The company plans to use the proceeds to expand debt capacity in anticipation of new acquisitions.
National Storage operates under an affiliate system which is referred to as PRO, or participating regional operators. Each PRO contributes properties in exchange for operating partnerships (OP) and subordinated performance units (SP). Each PRO manages the properties it contributed to the company. The affiliates are the major owners of the company via OPs and SPs. The most recent addition to the PRO network was Hide-Away. They became the seventh PRO to join the company last April.
In self-storage, National Storage has one of the lowest multiples at 22 times AFFO (despite high). This may be a result of becoming publicly traded last year. In comparison, Public Storage, which is the largest company in the sector, is trading at 29 times. Amidst speculations that the sector is losing strength, National Storage Affiliates has maintained strong stock returns this year whereas its peers showed overall weak performance.
The sector appears to be becoming more concentrated. For example, last May, Sovran Storage acquired LifeStorage for $1.4 billion. The affiliate strategy of National Storage also acts as a consolidation mechanism. National storage appears to be the best bet in self-storage as far as overall outlook.
Disclaimer: This is not a recommendation to buy or sell stocks. The highest-yield stocks are not necessarily the best portfolio investment choice. The purpose of this report — which is essentially a snapshot of information available on July 08, 2016 — is to reduce your stock analysis by enabling you to compare stock and sector performance. Please do your own due diligence before making any investment decision.
As of May 31, 2016, the equity REITs are constituent companies of the FTSE NAREIT All REITs Index. Companies whose equity market capitalization is lower than $100 million have been disregarded.
This report is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.
Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.