Public Storage reported its sixth consecutive quarter with same-store revenue growth between 1% and 2%. In the third quarter, according to CEO Joe Russell, the company’s expense growth did accelerate as the REIT utilized marketing to drive volume.
Russell called the quarter its “busiest move-in season and our non-same-store property saw another good lease-up quarter with 21% NOI growth.”
He added that the company “strategically made the decision in the third quarter to again increase the spend because we’re not confused about the fact we have a very challenging and competitive customer environment, but we knew going into the busy season, we could lever and get good traction. And we’re pleased by the amount of activity that we were able to drive through this marketing spend.”
According to Russell, occupancy at quarter end was up 70 basis points that sets us up very well to go into Q4 and Q1, “where we’re not likely to see as much leasing activity. Because again, those are traditionally are lowest volume quarters.”
He talked a bit about elevated level of supply that’s been coming into many markets now for a number of years starting in 2016 when about $2 billion nationally came in to the markets and then that doubled in 2017 to $4 billion; 2018, $5 billion; by all accounts 2019 is going to equal 2018, he explained.
“And our view of 2020 is we will likely see some decrease in, again, deliveries and it may be anywhere from say 10% to 20%. We’re hoping clearly as many others are that it’s 20% or even better, but we continue to track markets and statistics that are guiding us to about that, again, 15% to 20% down.”