12 Best Self Storage and Apartment Stocks To Buy Now
In this article, we discuss 12 best self storage and apartment stocks. If you want to skip our detailed discussion on the self storage and apartment industry, head directly to 5 Best Self Storage and Apartment Stocks To Buy Now.
According to PwC, the real estate sector is looking past traditional challenges like fluctuating interest rates, a decrease in GDP, and reduced deal opportunities. Instead, it's adopting a more forward-looking strategy towards real estate assets. Real estate experts exude a sense of careful optimism. Their strategy involves riding the existing slump while strategically preparing their companies for a future phase of consistent expansion and favorable financial outcomes.
Valued at approximately $2.53 billion in 2023, the residential real estate market in the United States is projected to reach nearly $2.80 billion by 2028, as reported by Mordor Intelligence. This indicates a compound annual growth rate (CAGR) of around 2.04% throughout the forecast period from 2023 to 2028. The prevailing trend of inflation in the country has deeply influenced businesses. Elevated inflation rates have prompted individuals to allocate more funds towards essential needs like sustenance and attire, concurrently impacting the real estate sector focused on home ownership. Since the COVID-19 pandemic, a multitude of buyers have capitalized on the favorable low interest rates to modify their home loans, move to new locations, or buy their first homes. As a result, there was a notable surge in home sales during the latter part of 2020, and this heightened level has persisted beyond the pre-pandemic period. Prior to the pandemic's onset, home values had been ascending, but with a remarkable surge in demand in 2020, the Freddie Mac House Price Index registered a staggering 11.3% escalation. Additionally, during the final quarter of 2021, a surplus of 142,406 housing units were accessible to address consumer needs, with more than 89% of these units being occupied by homeowners and renters. Moreover, the majority of transactions within this domain stem from citizens categorized as middle-aged and elderly. For example, individuals aged between 45 and 65 years represented over 70% of the country's homeownership rates throughout the four quarters of 2021. A substantial portion of the demand within this sector is fueled by condominiums and apartments. Apartments are projected to dominate this landscape compared to condominiums, as evidenced by the completion of 64,000 apartment units during the second quarter of 2021.
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On the other hand, as per a separate report by Mordor Intelligence, the self-storage market in the United States is projected to increase from $43.34 billion in 2023 to approximately $48.73 billion by 2028, reflecting a CAGR of 2.37% within the forecast period. Owing to swift urbanization in the United States, the demand for self-storage facilities is on the rise. In 2020, as much as 82.66% of the population resided in urban regions, and projections indicate a surge to 89.16% by 2050. Consequently, the necessity for storage options is becoming increasingly urgent. Self-storage providers are capitalizing on this trend by constructing facilities in densely inhabited zones. This demand stems from multiple influences, including the prevalence of compact living spaces in heavily populated areas and individuals opting to move to smaller residences. Favorable economic momentum, including faster job establishment, elevated levels of confidence, and an increase in the number of households, is bolstering the self-storage industry. However, the expansion of the self storage market is at times hindered by government regulations.
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Big moves are happening in the self storage industry. For example, in April 2023, Extra Space Storage Inc. (NYSE:EXR) announced its intention to purchase Life Storage for $12.7 billion. This acquisition will lead to the newly formed company becoming the largest operator of self-storage spaces in the U.S. in terms of the number of stores. The all-stock deal will effectively value the merged company at approximately $36 billion. This merger is set to bring about significant expansion and cost-cutting opportunities for both Extra Space and Life Storage, as stated by Extra Space. Some experts anticipate further consolidation within the self storage industry.
The current market performance can be a motivator for investors to consider the best self storage and apartment stocks. Ergo, investors looking to diversify their portfolios by investing in these stocks can check our list, which includes WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), Prologis, Inc. (NYSE:PLD), and U-Haul Holding Company (NYSE:UHAL).
Our Methodology
We selected the following best self storage and apartment stocks based on hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 910 elite hedge funds tracked as of the end of the second quarter of 2023. The list is arranged in ascending order of the number of hedge fund investors in each firm.
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Best Self Storage and Apartment Stocks To Buy Now
12. UDR, Inc. (NYSE:UDR)
Number of Hedge Fund Holders: 21
UDR, Inc. (NYSE:UDR) is an American multifamily real estate investment trust with a strong track record of managing, developing, and selling real estate properties. It owns apartment homes and multiple properties under development. On July 26, UDR, Inc. (NYSE:UDR) reported a Q2 FFO of $0.63, beating Wall Street expectations by $0.01. The revenue of $404.54 million climbed 9.6% year-over-year. However, it fell short of market estimates by $1.7 million.
According to Insider Monkey’s second quarter database, 21 hedge funds were bullish on UDR, Inc. (NYSE:UDR), compared to 15 funds in the prior quarter. Israel Englander’s Millennium Management is the leading stakeholder of the company, with 2.5 million shares worth just over $111 million.
In addition to WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), Prologis, Inc. (NYSE:PLD), and U-Haul Holding Company (NYSE:UHAL), UDR, Inc. (NYSE:UDR) is one of the best self storage and apartment stocks to invest in.
11. Americold Realty Trust, Inc. (NYSE:COLD)
Number of Hedge Fund Holders: 23
Next on our list of the best self storage stocks is Americold Realty Trust, Inc. (NYSE:COLD), which is one of the major players in temperature-controlled logistics real estate and services. The company owns and manages warehouses across North America, Europe, Asia-Pacific, and South America, offering vast refrigerated storage spaces. On August 3, Americold Realty Trust, Inc. (NYSE:COLD) reported a Q2 FFO of $0.23, beating Wall Street estimates by $0.01. However, the revenue of $649.61 million dropped 11% year-over-year and it fell short of market consensus by $41.98 million.
According to Insider Monkey’s second quarter database, 23 hedge funds were bullish on Americold Realty Trust, Inc. (NYSE:COLD), compared to 24 funds in the previous quarter. Scott W. Clark’s Darlington Partners Capital is the top stakeholder of the company, with 4.78 million shares worth $154.6 million.
Here is what Baron Small Cap Fund has to say about Americold Realty Trust, Inc. (NYSE:COLD) in its Q2 2022 investor letter:
“Americold Realty Trust contributed to our performance this quarter. Americold is a large owner/operator of cold storage facilities. The stock had lagged because of two issues: first, frozen food manufacturers and their customers had labor issues that restricted production and thus the need for storage; and second, the company had execution issues. It seems like industry trends are improving. Plus, the company is making progress increasing its productivity and improving margins, somewhat from the effect of hiring some new senior executives.
The stability of the business and the fact that it pays a nice dividend as a REIT is a positive in this market. Even after its recent pickup, we think the stock still trades at a modest cap rate and well below its private market value, so the stock can work via growth and multiple expansion.”
10. National Storage Affiliates Trust (NYSE:NSA)
Number of Hedge Fund Holders: 22
National Storage Affiliates Trust (NYSE:NSA) is a prominent real estate investment trust headquartered in Colorado. It specializes in owning, managing, and acquiring self-storage properties, mainly situated in the top metropolitan areas in the United States. On August 7, National Storage Affiliates Trust (NYSE:NSA) reported a Q2 FFO of $0.68, missing Wall Street expectations by $0.02. The revenue of $215.51 million increased 8.4% year-over-year, surpassing market estimates by $3.36 million. National Storage Affiliates Trust (NYSE:NSA) is one of the best self storage stocks to invest in.
According to Insider Monkey’s second quarter database, 22 hedge funds were long National Storage Affiliates Trust (NYSE:NSA). This number increased from 16 in the previous quarter. Dmitry Balyasny’s Balyasny Asset Management is a major stakeholder of the company, with around 1.03 million shares worth $35.86 million.
Heartland Value Fund made the following comment about National Storage Affiliates Trust (NYSE:NSA) in its Q1 2023 investor letter:
“Real Estate. In a market filled with uncertainty, stocks that offer investors an added margin of safety stand out. For National Storage Affiliates Trust (NYSE:NSA), which was a new addition in the quarter, that comes in the form of strong insider buying.
National Storage is a real estate investment trust that owns self-storage properties, with two thirds of its facilities located in the Sun Belt. The stock has pulled back significantly, which is not surprising given the deteriorating fundamentals in real estate amid rising interest rates and cap rates. We viewed this as an opportunity to purchase a high-quality REIT at a discounted valuation.
Giving us added confidence: Storage REITs are among the best performers in the real estate sector, with net operating income margins north of 70% and the lowest recurring capital requirements. We also like the fact that NSA’s insiders share in our optimism. Late last year, National Storage’s executive chairman/founder and three directors were significant buyers of the stock.”
9. Apartment Income REIT Corp. (NYSE:AIRC)
Number of Hedge Fund Holders: 25
Apartment Income REIT Corp (NYSE:AIRC) is a real estate investment trust that operates independently and owns a collection of residential communities, consisting of many apartment residences. On July 27, Apartment Income REIT Corp (NYSE:AIRC) reported a Q2 FFO of $0.62, beating Wall Street expectations by $0.02. The revenue of $214.56 million climbed 16.9% year-over-year, beating market estimates by $2.8 million.
According to Insider Monkey’s second quarter database, 25 hedge funds were bullish on Apartment Income REIT Corp (NYSE:AIRC), same as the previous quarter. Dmitry Balyasny’s Balyasny Asset Management is the biggest stakeholder of the company, with over 1.5 million shares worth $55.6 million.
8. Mid-America Apartment Communities, Inc. (NYSE:MAA)
Number of Hedge Fund Holders: 26
Mid-America Apartment Communities, Inc. (NYSE:MAA) is an S&P 500 real estate investment trust that aims to provide strong investment results to shareholders by owning, managing, acquiring, developing, and redeveloping high-quality apartment communities, primarily in the Southeast, Southwest, and Mid-Atlantic regions of the US. On July 26, Mid-America Apartment Communities, Inc. (NYSE:MAA) reported a Q2 FFO of $2.28, beating Wall Street consensus by $0.03. The revenue of $535.15 million rose 8.1% year-over-year, beating market estimates by $1.25 million.
According to Insider Monkey’s second quarter database, 26 hedge funds were bullish on Mid-America Apartment Communities, Inc. (NYSE:MAA), compared to 28 in the last quarter. Dmitry Balyasny’s Balyasny Asset Management is the largest stakeholder of the company, with 1.05 million shares worth $160 million.
Carillon Tower made the following comment about Mid-America Apartment Communities, Inc. (NYSE:MAA) in its Q3 2022 investor letter:
“Mid-America Apartment Communities, Inc. (NYSE:MAA) Communities is a REIT that owns, develops, acquires, and operates multi-family apartment communities in the Sunbelt region of the U.S. In recent quarters, its results have benefited from significant lease rate increases, but investors have begun to anticipate a deceleration as monetary policy takes aim at inflation.”
7. AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 27
AvalonBay Communities, Inc. (NYSE:AVB) is an REIT in the business of developing, redeveloping, acquiring, and managing apartment communities in leading metropolitan areas in New England, the New York/New Jersey Metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. On July 31, AvalonBay Communities, Inc. (NYSE:AVB) reported a Q2 FFO of $2.66, beating Wall Street expectations by $0.05. The revenue of $636.89 million rose 6.3% year-over-year. It is one of the best self storage and apartment stocks to invest in.
According to Insider Monkey’s second quarter database, 27 hedge funds were bullish on AvalonBay Communities, Inc. (NYSE:AVB), as compared to 28 in the last quarter. Greg Poole’s Echo Street Capital Management is the top stakeholder of the company, with 1.57 million shares worth nearly $300 million.
Here is what Baron Real Estate Fund has to say about AvalonBay Communities, Inc. (NYSE:AVB) in its Q2 2022 investor letter:
“We recently re-initiated a position in AvalonBay Communities, Inc. The company is a REIT that owns and operates a $43 billion portfolio of high quality apartment assets, located primarily in the east and west coasts of the U.S. We believe its concentration in high-barrier-to-entry coastal markets and its mix of urban and suburban properties should lead to strong cash flow growth over time. AvalonBay’s investment grade rating provides it with a cost of debt advantage compared to private developers. Management has proven to be a capable acquirer and developer of apartment assets. We believe AvalonBay’s shares are trading at an attractive 25% discount to its private market value.”
6. Equity Residential (NYSE:EQR)
Number of Hedge Fund Holders: 27
Equity Residential (NYSE:EQR) specializes in acquiring, developing, and managing upscale residential properties in dynamic city settings. With ownership or investment in multiple properties containing apartment units, Equity Residential (NYSE:EQR) is expanding in major cities across the United States of America. On July 27, Equity Residential (NYSE:EQR) reported a Q2 FFO of $0.94, in-line with Wall Street expectations. The revenue of $717.31 million rose 4.4% year-over-year, also in-line with market estimates.
According to Insider Monkey’s second quarter database, 27 hedge funds were bullish on Equity Residential (NYSE:EQR), up from 25 in the previous quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the biggest stakeholder of the company, with 8.88 million shares worth $586.4 million.
Like WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), Prologis, Inc. (NYSE:PLD), and U-Haul Holding Company (NYSE:UHAL), Equity Residential (NYSE:EQR) is one of the top self storage and apartment stocks to monitor.
Baron Funds made the following comment about Equity Residential (NYSE:EQR) in its Q4 2022 investor letter:
“In the most recent quarter, we exited the Fund’s position in Equity Residential (NYSE:EQR), the largest U.S. apartment REIT with 80,000 high-quality apartment units. We anticipate that business prospects will be pressured in the year ahead due to softening demand and elevated new supply in some of the company’s key geographic markets.”
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Disclosure: None. 12 Best Self Storage and Apartment Stocks To Buy Now is originally published on Insider Monkey.
