In a report published by Citi, Extra Space Storage's EXR CEO, Spencer Kirk, stated that the sector has ample access to capital and the public operators are often being outbid by private REITs, local/regional operators, or institutional buyers.
Citi said that valuations, on average, are in the 7.5% range (expected to compress 50bps in next 12 months) and deals are competitive, generating bids from 10-20 unique parties. “Approximately 30% of product looking to acquire today is in lease-up versus 70% stabilized. Despite a competitive acquisition market, the 300bps spread on development yield versus acquisition yield necessary to start development is not prevalent in the market today.”
Extra Space Storage closed yesterday at $19.61.
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