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NREI: Self-Storage REITs Smell Acquisition Opportunity in Newly-Built Facilities

According to NREI,

Self-storage REITs are ready to swoop in on an enticing source of acquisitions.

As the self-storage industry continues to contend with a glut of supply in many major markets, some developers are nervous. Why? Because they’re wrestling with slower than anticipated lease-ups at new self-storage facilities.

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Indeed, most recent acquisitions by the publicly-traded self-storage REITs have been facilities in lease-up phase, especially in oversupplied markets, says Ryan Lumb, a self-storage analyst at Green Street Advisors Inc., a research and advisory firm based in Newport Beach, Calif. He notes that these facilities won’t directly affect the REITs’ same-property results for at least a couple of years.

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“If you take a longer-term perspective, the acquisition opportunities that have been coming to market from … busted deals do represent a long-term value once we make it out of the current supply cycle,” says Lumb.

Despite that value proposition, Boorstein doesn’t foresee a massive wave of troubled self-storage properties flooding the market. “It’s not like the residential mortgage crisis,” he notes.

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