Self-storage REIT Life Storage is bullish on this year’s acquisition market.
The Williamsville, NY-based company had expected to spend $350 million to $450 million this year on wholly owned acquisitions. But Life Storage just lifted that range to between $550 million and $600 million. In other words, the REIT may wind up spending another $250 million this year on wholly owned acquisitions.
CEO Joe Saffire said during the company’s first-quarter earnings call on May 5 that he and other Life Storage executives are looking at “probably the most acquisition deals” they’ve considered in a number of years.
“The pipeline looks very good,” Saffire said. “Obviously, we’re not going to win everything. But we’re in a very good position, I think, to continue to find good deals, both lease-up and stabilized.”
In the first quarter, Life Storage purchased 16 facilities for $266.2 million. As of March 31, the company was under contract to buy six facilities for $106.5 million. After that date, Life Storage signed deals to buy 11 facilities for $159.2 million. All told, the acquisition tally so far this year stands at 33.
About 80% of the 33 deals have been off-market transactions, Saffire said. One of those deals was a family-run, eight-facility portfolio in Florida.
“We’ve been calling them for over three years. And when they were ready to sell, we were there with the phone call, and that’s a wonderful opportunity for us,” Saffire said.
Highlights of Life Storage’s first-quarter results include:
- Same-store revenue rose 7.3% compared with the same period last year.
- Same-store NOI jumped 8.6% compared with the same period last year.
- Same-store operating costs grew 4.7% compared with the same period last year.
- Same-store occupancy increased from 89.4% at the end of the first quarter in 2020 to 94% at the end of the same period this year.
Bolstered by strong performance in the first quarter, Life Storage has adjusted its full-year forecast by:
- Boosting guidance for same-store revenue to a range of 5.5% to 6.5%, compared with the previous outlook of 3.75% to 4.75%.
- Boosting guidance for same-store NOI to a range of 6.5% to 7.5%, compared with the previous outlook of 3.75% to 4.75%.