Self-storage real estate investment trust (REIT) Life Storage (NYSE:LSI) stock recently peaked on its Q3 2021 earnings results despite raising Q4 2021 guidance. Life Storage is a REIT that the name practically sums up the business. In a nutshell, this REIT owns and operates self-storage facilities. These businesses have low overhead, little upkeep and generate loads of cash flow. The business barely down ticked during the pandemic and continues to grow during the reopening trend. Self-storage rates are steadily increased as demand grows. The business tends to be recession-proof and has exhibited 33% year-over-year growth in the last Q. With rising property values and strong cash flow, prudent investors seeking a recession-proof stalwart business with strong predictable cash flow can watch for opportunistic pullbacks in shares of Life Storage.
Q2 FY 2021 Earnings Release
On Nov. 2, 2021, Life Storage released its fiscal third-quarter 2021 results for the quarter ending September 2021. The Company reported a profit of $1.37 per share beating analyst estimates for $1.29 per share by $0.08 per share. Revenues rose 33.2% year-over-year (YoY) to $208.26 million beating the $200.33 million consensus analyst estimates. Life Storage CEO Jeff Saffire commented:
“Operating fundamentals remain strong as we continue to enjoy record seasonal occupancy and robust pricing power. We continue to aggressively expand our footprint, having achieved a significant milestone during the quarter when we crossed the 1,000-store threshold. We have more than $1.7 billion of wholly-owned acquisitions that have closed this year or are currently under contract. The hard work of our acquisitions and third-party management teams over the past several years executing on our relationship-based strategy to be well-positioned when opportunities become available is clearly paying off. The ability of our Operations team to seamlessly onboard such high volumes of stores while also managing elevated occupancy is equally inspiring.”
Upside Guidance
Life Storage raised its guidance for Q4 2021 for funds from operations (FFO) of $1.27 to $1.31 versus $1.26 consensus analyst estimates. The Company raised full-year 2021 FFO of $4.92 to $4.95 versus $4.84 consensus analyst estimates.
Conference Call Takeaways
CEO Saffire set the tone and summed it up:
“First, I am pleased to announce that we celebrated a significant milestone during the quarter when we crossed the 1000 store threshold. Second, I am proud to announce that for the fourth consecutive year Newsweek has recognized our team for Best Customer Service amongst store centers. And third, we continue to perform at record levels, with record occupancy for this time of year and exceptionally strong pricing power. With regards to external growth, we are on pace to achieve record acquisition volume with over $1.7 billion of wholly-owned acquisitions, either closed this year or currently under contract and expected to close by year-end. This represents 115 additional stores and nearly 20% growth in our wholly-owned portfolio. These acquisitions represent a nice mix of both markets and maturity with roughly one-third still in lease-up and approximately 75% in the Sun Belt states. We continue to expand in key markets such as Austin, Atlanta, Tampa, Miami, Phoenix, San Diego, Seattle, and greater New York City. Despite one-third in lease-up, we still expect the blended year one cap rate to be in the mid-four range, as we remain focused on finding both strategic and FFO accretive opportunities. Our third-party managed portfolio totaled 357 stores at quarter-end. And it's proven to be the robust acquisition pipeline that we anticipated. Specifically, 27 stores acquired this year were managed by Life Storage, representing 30% -- 36% of our closed acquisition volume so far this year. And we continue to onboard additional managed stores at a rapid pace, including 30 in the third quarter alone, as owners and developers are attracted to our operating performance and innovative technology platforms. Our team has evaluated a record number of managing opportunities this year, and the pipeline continues to grow. With this strong performance, we are once again increasing our guidance for 2021. We have raised the midpoint of our estimated adjusted funds from operations per share to $4.94 this year, which would be a 24% growth over 2020. We have also nearly doubled the upper end of our acquisition guidance from $1 billion to nearly $2 billion.”
LSI Opportunistic Price Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for LSI stock. The weekly rifle chart uptrend peaked right at the $139.89 Fibonacci (fib) level before a deep sell-off towards the weekly 5-period moving average (MA) at the $127.37 fib. The weekly stochastic crossed back up heading towards the 80-band. The weekly upper Bollinger Bands (BBs) sit at $137.77. The weekly market structure low (MSL) buy triggered on the $119.33 breakout. The daily rifle chart uptrend is stalled as the daily 5-period MA slopes down at $132.79 towards the 15-period MA at $129.98. The daily stochastic formed a mini inverse pup falling through the 80-band when the daily market structure high (MSH) sell triggered under 131.38. Prudent investors can watch for opportunistic pullbacks at the $122.55 fib, $119.33 fib, $115.70 fib, $113.57 fib, $109.69 fib, $106.94 fib, and the $104.74 fib level. Upside trajectories range from the $140.98 fib up to the $156.03 fib level.