REITs 2023 Q3 Financial Results: Key Highlights & CEO Statements

The “Big Four” REITs – CubeSmart, Extra Space Storage Inc., National Storage Affiliates Trust, and Public Storage Inc – have all released their financial statements for the quarter ending September 30, 2023. Below are highlights from each, with a statement from each company’s CEO.

CubeSmart (NYSE: CUBE)

“Our third quarter performance reflects the geographic and demographic quality of our portfolio. Our urban markets have outperformed, led by New York City, as demand and pricing are more stable and less impacted by the single-family home sales market. As post-pandemic demand trends normalize and macroeconomic conditions remain volatile, our seasoned management team is maintaining our focus on maximizing revenues, controlling our costs, and providing outstanding customer service.”

- Christopher P. Marr, President and CEO

Key Quarter Three Highlights:

• Reported diluted earnings per share attributable to common shareholders of $0.45.
• Reported funds from operations, as adjusted, per diluted share of $0.68.
• Increased same-store (592 stores) net operating income 2.0% year over year, driven by 2.3% revenue growth and a 3.0% increase in property operating expenses.
• Averaged same-store occupancy of 92.1% and ended the quarter at 91.4%.
• Added 41 stores to CUBE’s third-party management platform during the quarter, bringing the total third-party managed store count to 763.

Extra Space Storage Inc. (NYSE: EXR)

We had a busy third quarter. In July, we successfully completed our merger with Life Storage adding over 1,200 stores to our portfolio and over 2,300 new members to team Extra Space. The transition is going very smoothly, and I am proud of the teamwork and innovation our employees are demonstrating through the merger.

Our combined portfolio of 3,651 stores provides greater diversification, stability, revenue opportunities, and operational efficiencies that I believe will improve our property level and external growth for years to come.

Key Quarter Three Highlights:

• Achieved net income attributable to common stockholders of $0.96 per diluted share, representing a 41.8% decrease compared to the same period in the prior year, primarily due to $54.2 million in transition costs related to the Life Storage Merger.
• Achieved funds from operations attributable to common stockholders and unit holders of $1.69 per diluted share. FFO, excluding adjustments, was $2.02 per diluted share, representing an 8.6% decrease compared to the same period in the prior year.
• Increased same-store revenue by 1.9% and same-store net operating income by 0.7% compared to the same period in the prior year.
• Reported ending same-store occupancy of 94.1% compared to 95.1% as of September 30, 2022.
• On July 20, 2023, closed the merger with Life Storage, Inc. in an $11.6 billion all-stock transaction, adding over 1,200 stores to the Extra Space Storage platform.
• Completed five obligor exchange offers and consent solicitations through which a total of $2.35 billion of Life Storage's senior notes were exchanged for senior notes of the same tenor of Extra Space Storage L.P.
• S&P Global upgraded all EXR ratings to BBB+ stable.
• In addition to the stores acquired through the Life Storage Merger, acquired three operating stores for a total cost of approximately $18.5 million.
• In conjunction with joint venture partners, acquired two operating stores and one store at completion of construction for a total cost of approximately $44.3 million, of which the Company invested $10.0 million.
• Originated $78.8 million in mortgage and mezzanine bridge loans and also sold $78.8 million in mortgage bridge loans.
• Added 49 stores to EXR’s third-party management platform, in addition to the stores added through the Life Storage Merger. Managed 1,282 stores for third parties and 471 stores in unconsolidated joint ventures, for a total of 1,753 managed stores.
• Paid two dividends totaling $1.62 per share.

National Storage Affiliates Trust (NYSE: NSIT)

“Despite the current headwinds in self storage demand, our team did a good job navigating and responding to this dynamic environment. As a result of these efforts, we’ve maintained our guidance ranges for full-year 2023. We’re also pleased to have completed our $250 million debt private placement prior to the recent increase in debt costs. This transaction demonstrates our healthy access to capital and commitment to enhancing our balance sheet through reducing our floating rate exposure and increasing our weighted average maturity.”

Key Quarter Three Highlights:

• Reported net income of $43.1 million, an increase of 7.2% compared to the third quarter of 2022. Reported diluted earnings per share of $0.26 compared to $0.21 for the third quarter of 2022.
• Reported core funds from operations of $85.8 million, or $0.67 per share, a decrease of 6.9% per share compared to the third quarter of 2022. An increase in net operating income of $6.0 million was more than offset by an increase in interest expense of $14.2 million, primarily due to an increase in average effective interest rates.
• Reported a decrease in same store NOI of 0.1% compared to the same period in 2022, driven by a 1.1% increase in same store total revenues, which was more than offset by an increase of 4.2% in same store property operating expenses.
• Reported same store period-end occupancy of 88.5%, a decrease of 360 basis points compared to third-quarter 2022.
• Acquired two wholly-owned self storage properties for approximately $30.1 million. Consideration for these acquisitions included the issuance of $16.4 million of OP equity.
• Repurchased 6,360,994 of NSIT common shares for approximately $213.4 million under the share repurchase program.

Public Storage (NYSE: PSA)

“Public Storage’s industry-leading platform drove higher move-in volumes, improved occupancy, and better-than-expected NOI growth in our stabilized and lease-up portfolios during the third quarter. Collectively, this propelled a third consecutive increase to our outlook for 2023 within a competitive customer move-in environment across the self-storage industry. The team successfully integrated the $2.2 billion Simply Self Storage portfolio, welcoming approximately 90,000 customers to our platform. We are uniquely positioned to deliver growth and value to our stakeholders in an industry with strong secular fundamentals.”

- Joe Russell, President and CEO

Key Quarter Three Highlights:

• Reported net income allocable to common shareholders of $3.20 per diluted share.

• Reported core FFO allocable to common shareholders of $4.33 per diluted share, an increase of 4.8% relative to the same period in 2022. Core FFO per diluted share increased 5.6% compared to the same period in 2022, excluding the contribution from PSA’s equity investment in PS Business Parks, Inc. which was sold in July 2022.

• Increased Same Store direct net operating income by 1.9%, resulting from a 2.5% increase in Same Store revenues.

• Achieved 79.7% Same Store direct net operating income margin.

• Closed acquisitions of BREIT Simply Storage LLC, a self-storage company that owns and operates 127 self-storage facilities and manages 25 self-storage facilities for third parties for $2.2 billion in cash on September 13, 2023, and ten self-storage facilities for $110.5 million. Subsequent to September 30, 2023, PSA acquired or was under contract to acquire eleven self-storage facilities for $170.3 million.

• Opened three newly developed facilities and completed various expansion projects costing $88.2 million. As of September 30, 2023, PSA had various facilities in development and expansion estimated to cost $952.1 million.

• On July 26, 2023, in connection with the Simply Acquisition, issued $2.2 billion of unsecured senior notes in 2-, 5.5-, 10-, and 30-year tranches bearing annual rates of Compounded SOFR + 0.60%, 5.125%, 5.100%, and 5.350%, respectively.