The storage industry’s newest REIT is bucking the trend of slower growth, for now.

During the third quarter, National Storage Affiliates reported same-store revenue growth of 7.2 percent and same-store net operating income grew 9.5 percent—besting its other public peers Public Storage, Extra Space Storage, Life Storage and CubeSmart. NSA has 352 same-store locations; the next largest REIT is Life Storage with 657 same-store locations

NSA earned a net income of $7.9 million during the third quarter, an increase of $5.8 million from the same period last year.

Revenue management boost

CEO Arlen Nordhagen said during the company’s earnings call that he expects the company’s growth to trend down towards the sector’s 20-year average.

“I think it’s realistic that we will ultimately be coming down to maybe between five and six percent same-store NOI,” Nordhagen said, “I think we will be above the historical 20-year average but we aren’t going to stay at 9 or 10 percent a year.”

Much of NSA’s outsized growth is attributable to increased performance generated by its newly implemented revenue management platform. Nordhagen said the company will be pushing harder on revenue rate growth now that occupancy is hitting stabilized levels.


Bulking up

While growing quickly, NSA is the newest and smallest in size of the five public storage REITs. It also currently trails its peers in occupancy and rental rates. The company ended the quarter with an average occupancy of 90.2 percent and a rent per occupied square foot of $11.39.

During the quarter NSA continued to bulk up, closing on the 34 properties for about $206 million, bringing the companies year-to-date acquisition total to 76 properties.

Following the close of the quarter on September 30, NSA formed a joint venture partnership with a large state pension fun to acquire the 66-property iStorage portfolio for about $630 million. The JV partner invested $240 million of equity into the deal for a 75 percent ownership stake, with NSA contributing $80 million.

The iStorage deal spans 12 states and brings NSA into new markets in Florida as well as the Philadelphia metro area. The operator also acquired the iStorage property management platform for $20 million, which includes the brand name, insurance program, and about 160 employees.

NSA acquired an additional two properties for $17 million since the end of the quarter, totaling 100,000 square feet. The company has another 30 properties in Florida, Indiana and California under contract for over $200 million.

Alexander Harris