PREVIEW-Storage REITs tighten belts to meet Q3 market views
* Q3 Revenue and occupancy numbers expected to take a hit
* Operating expenses to play key role in driving up Q3 FFO
* Lease incentives to continue to attract traffic
By Biswarup Gooptu
BANGALORE, Oct 30 (Reuters) - Depressed tenant demand and anaemic consumer spending are expected to weigh on U.S. storage REITs when they start reporting quarterly results this week.
Analysts expect companies such as Public Storage (PSA.N: Cotización), Extra Space Storage Inc (EXR.N: Cotización), U-Store-It Trust YSI.N and Sovran Self Storage SSS.N to beat consensus estimates, largely driven by stringent cost control measures.
However, key metrics such as occupancy and revenue are expected to take a hit as the REITs head into a lean leasing season.
The ongoing recession -- the worst in several decades -- has sucked out demand for storage services as people view such expenses as discretionary.
Third-quarter occupancy numbers for these self-storage REITs are expected to drop by about 300 basis points year-over-year, in spite of increased discounts and incentives to attract customers. BMO Capital analyst Paul Adornato said the latest quarter was probably the last opportunity for the storage REITs to buff up their occupancy numbers for the year. Continuación...