PSALL - Storage REITs: Housing Boom Brightens 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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