Self-Storage REITS improving in 4Q of 2021
Overall self storage public REIT performance remains very strong through the fourth quarter of 2021, with a number of key takeaways from the quarter, including:
Key highlights from Self Storage REITS Q4 2021 report filings:
- The self storage REITs remain extremely acquisitive, resulting in record acquisition volume for the year ending December 2021 totaling more than $19 billion, of which the five publicly traded REITs were responsible for $11.75 billion. Several of the largest portfolio transactions the self storage sector has ever seen occurred during the 4th quarter of 2021, including CubeSmart’s $1.7 billion LAACO (Storage West) acquisition.
- Although some seasonality did return toward the end of the 2021 year, property- level performance remains very strong with record high average occupancy levels – averaging 94.9% across the five publicly traded REITS, up 118bps year over year, creating enormous pricing power going into 2022.
- Development activity for 2021 fell meaningfully short of 2019 (approximately
- $3.5 billion in 2021 versus approximately $5.0 billion in 2019), and the REITs do not anticipate 2022 to bring significant supply challenges.
- The public and private markets continue to favor self storage, allowing the REITs to utilize low-cost equity and debt capital to continue to expand their platforms.
- Third party management platforms are continuing to grow, and as the acquisition market becomes increasingly competitive, third party management is being used now more than ever as a strategic way for REITs to purchase managed properties off-market without having to compete against other buyers.
- Self storage led the entire REIT universe with a total return for 2021 of 79.4%, compared to an average return of 43.2% across all other equity REITs.