Self-storage REIT Life Storage is the midst of an acquisition spree.
As of Aug. 3, the Williamsville, NY-based company had made a record-breaking $555.8 million worth of wholly owned acquisitions this year. But Life Storage is hardly done with acquisitions in 2021.
The REIT now forecasts $800 million to $1 billion worth of wholly owned acquisitions this year, up from the previous estimate of $550 million to $600 million. At the high end of the new outlook, Life Storage has room for more than $400 million in wholly owned acquisitions throughout the rest of 2021.
During the REIT’s second-quarter earnings call, CEO Joe Saffire said Life Storage is capitalizing on a “perfect storm” for finding deals.
“For many years, the biggest issue in this industry was finding sellers,” Saffire told Wall Street analysts, “and we all know that there’s a consolidation opportunity. It’s a very fragmented industry; there’s a lot of mom-and-pops.”
Saffire said the company has leaned on “deep relationships” that in some cases go back decades to secure off-market deals. He attributed the availability of deals to a mix of uncertainty over the future of capital gains, the current cap rate environment and generational shifts in facility ownership.
Highlights of Life Storage’s second-quarter earnings include:
- Same-store revenue jumped 14.7% compared with the same period last year. Each of the REIT’s 31 major markets achieved same-store revenue growth in the second quarter. Life Storage expects same-store revenue growth of 10.5% to 11.5% for the entire year, up from the previous forecast of 5.5% to 6.5%.
- Same-store NOI skyrocketed 20% compared with the same period last year. For 2021, the REIT anticipates same-store NOI growth of 13.5% to 14.5%, up from the earlier projection of 6.5% to 7.5%.
- Same-store operating expenses increased 3.9% compared with the same period last year. The outlook for growth in same-store operating expenses this year remains at 4% to 5%.
- The same-store occupancy rate as of June 30 stood at 95.7%, up from 91.8% at the same point last year.