Self-storage REIT National Storage Affiliates Trust is zooming toward acquisition volume this year approaching $1.3 billion.
To date, the company has closed on or put under contract more than 100 facilities valued at nearly $900 million. For all of 2021, National Storage Affiliates expects to reach acquisition volume of $1 billion to $1.3 billion. The REIT previously expected to complete $500 million to $650 million worth of acquisitions this year.
During an Aug. 4 call to discuss second-quarter earnings, President and CEO Tamara Fischer said the Greenwood Village, CO-based company is seeing an “unprecedented” number of self-storage facilities hitting the market.
“On the acquisition front, we’ve been very busy this year,” Fischer told Wall Street analysts, “and we expect the pace of deals coming to market to remain elevated in the second half.”
Ready for a $1 billion portfolio?
Fischer said National Storage Affiliates even would entertain bidding on a $1 billion to $2 billion portfolio. If such a deal were $1 billion, it probably could be financed through the REIT’s balance sheet, she said. For any portfolio selling at more than $1 billion, the company might need to enlist a joint venture partner.
“I guess the one thing I could say is that to the extent these portfolios are in markets that we like that are a good geographic fit for us, we’d be keenly interested,” said Fischer, stressing that the REIT focuses on properties in secondary and tertiary markets.
Off market pipeline
Fischer said recent acquisitions have carried cap rates ranging from about 5% to 7%. Around two-thirds of deals closed or under contract have been off-market or from the REIT’s captive pipeline, where cap rates are slightly above what the market bears, she said.
“We continue to see meaningful competition for transactions, and the amount of capital seeking to establish or expand the position in self-storage continues to drive cap rate compression, especially on larger portfolios,” Fischer said.
Highlights of National Storage Affiliates’ second-quarter earnings include:
- Same-store revenue growth of 16.3% compared with the same period last year. The REIT now forecasts same-store revenue growth of 11.75% to 12.75% for the full year, up from the previous prediction of 5.5% to 6.5%.
- Growth in same-store operating expenses of 4.3% compared with the same period last year. The company expects growth in same-store operating expenses of 2.5% to 3.5% for the year, down from the previous outlook of 3.5% to 4.5%.
- Same-store NOI growth of 21.5% compared with the same period last year. For 2021, the REIT anticipates NOI growth of 15% to 17%, up from the previous forecast of 6% to 8%.
- Same-store occupancy of 96.7% as of June 30, up 720 basis points versus the same date last year.