Public Storage is gobbling up the ezStorage portfolio for $1.8 billion, but the self-storage REIT still has a healthy appetite for acquisitions. But will any more large portfolios be on the menu?

During the first quarter of 2021, the Glendale, California-based REIT spent a little over $203 million to buy 15 facilities. After the end of the quarter, Public Storage purchased or was under contract to purchase 87 facilities for $2.3 billion. The $2.3 billion total includes the 48-facility ezStorage portfolio.

More buys ahead

Public Storage isn’t finished with acquisitions in 2021, though. 

The company anticipates making a total of $2.7 billion in acquisitions this year, meaning it’s on track to spend about $200 million beyond the slightly more than $2.5 billion already spoken for in the 2021 acquisition budget.

During the REIT’s April 29 earnings call, President and CEO Joe Russell said Public Storage has about $500 million in its acquisition pipeline. However, these deals will be oriented toward one-off acquisitions or acquisitions of small portfolios, he said. 

“We’ve got a lot of [acquisition] activity going on. It’s competitive,” Russell told Wall Street analysts. “We’re still focusing on quality assets, quality markets, and properties that we know that can be accretive and additive to the overall platform. But we’re confident that we’re going to continue to see good activity there.”

Elevated demand expected

Public Storage also is confident about its financial picture for 2021. These are the REIT’s performance projections for this year:

  • Same-store revenue growth of 4% to 5.5%.
  • Same-store NOI growth of 4.8% to 7.3%.
  • Same-store expense growth of 1% to 2%.

The full-year forecast builds on a solid first quarter for Public Storage. Same-store revenue jumped 3.4% compared with the first quarter of 2020, same-store NOI rose 6.7% and same-storage operating expenses fell 5.7%. Same-storage occupancy for the quarter averaged 95.6%, up from 93% at the same time in 2020.

“As we’ve seen now for the last several quarters, the sustainability of consumer and business demand … has been quite elevated,” Russell said.

More move-outs expected

But Public Storage is preparing for a stepped-up pace of move-outs over the remainder of 2021. As a result, the REIT predicts occupancy will dip by 100 basis points in the fourth quarter compared with the same period in 2020.

“One of the things that is hard to predict, even going out another couple of quarters, is what could revert to some degree [of] what you would call normal seasonality,” Russell said.

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John Egan