Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Storage REITs: Housing Boom Boosts Outlook

  • Self Storage REITs have been unexpected leaders throughout the pandemic. Riding the tailwinds of the single-family housing boom, storage REITs are one of four property sectors in positive territory this year.

  • Storage REITs stumbled into 2020 with challenged fundamentals and a strained outlook after years of relentless supply growth which led to intense competition between operators and downward pressure on rents.

  • Contrary to early predictions, rent collection has remained essentially spotless throughout the pandemic, and dividends have also remained untouched. Payments are essentially "collateralized" by a renter's possessions.

  • After a sharp slowdown in leasing volumes during the "shutdown months," interim updates indicated that demand has rebounded sharply since mid-summer, helped by a red-hot housing market.

  • While storage REITs are no longer the perennially outperforming "darlings" of the REIT sector, our long-term outlook remains favorable. We see opportunities for these REITs to consolidate amid the recent industry struggles.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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