If there’s a silver lining in the coronavirus pandemic for Life Storage, it’s the boom in popularity of its Rent Now contactless rental platform.
The Williamsville, NY-based self-storage REIT unveiled the Rent New program in July 2018. During the company’s second-quarter earnings call on Aug. 7, CEO Joe Saffire said the share of rentals completed through Rent Now spiked at 50% in April before settling at 30% to 35% today.
Life Storage had envisioned the share of Rent Now transactions reaching 11% or 12% by the end of this year. But Saffire said the company thinks the 30% to 35% range will “be the new normal.”
“It is clear to us that customers continue to embrace this new platform and will continue to do so at a much higher rate than pre-COVID days,” he said.
From an operational standpoint, Rent Now contributed to a 7.3% decline in same-store payroll and benefits in the quarter ended June 30 compared with the same period a year earlier, Saffire said.
In the second quarter, Life Storage wrapped up the rollout of the second generation of Rent Now, known as Rent Now 2.0. One of the features of the update is the ability for customers to choose from various pricing tiers based on their needs and preferences.
Some transactions on the Rent Now platform have stemmed from new demand connected to people spending more time at home, Saffire said. For instance, more people are seeking storage tied to home improvement projects like kitchen remodels and creation of home offices, he said.
“It’ll be interesting to see how long this new demand sticks,” Saffire said.
Overall, demand has dropped off only slightly as a result of the pandemic. Same-store move-ins decreased just 3.4% in the second quarter compared with the same period last year, said Andy Gregoire, the REIT’s chief financial officer.
And while the level of rent that’s at least 90 days past due remains elevated, Life Storage collected 99% of rental income in the second quarter compared with pre-pandemic levels, Gregoire said. The company restarted lien auctions and rent increases in June after pausing them early in the second quarter.
Other highlights of the company’s second-quarter results include:
- Same-store revenue for stabilized facilities declined 2% compared with the same period last year.
- Same-store NOI dropped 2.5% versus the same time last year.
- Same-store operating expenses dipped 1.2% compared with the same period last year.
- Same-store occupancy rose from 91.5% on June 30, 2019, to 91.9% on June 30, 2020.
- The company entered three joint ventures, each of which is developing facilities in the New York City market. Life Storage expects to contribute $6.8 million in equity to the joint ventures.
- Life Storage added 13 facilities to its third-party management platform.