Storage REITs: Keep The Change

• Self-storage REITs - once the darlings of the real estate sector following a half-decade-stretch of relentless growth - stumbled into the 2020s with challenged fundamentals and a strained outlook.

• Storage demand is driven by "change", and there's been no shortage of that amid the pandemic. Self-storage REITs have delivered notable outperformance relative to other real estate sectors this year.

• With rent collection above 95%, self-storage demand has proven to be quiet "sticky," consistent with trends of the prior Financial Crisis. Rents are essentially "collateralized" by a renter's possessions.

• Supply growth, which had weakened self-storage fundamentals over the last half-decade, is poised to finally cool considerably. Acquisition and consolidation opportunities should be plentiful over the next decade.

• Leasing volumes slowed amid the pandemic with a plunge in “move-ins” offset by similarly low “move-outs.” With limited visibility or precedent, the next quarter's earnings results will be especially consequential.

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