Jefferies Downgrades National Storage Affiliates Trust To Hold, Cites Valuation

Jefferies on Tuesday issued a note on National Storage Affiliates Trust NSA after a recent increase in share price has made present valuations look high, limiting the short-term potential for outperformance. Analysts downgraded National Storage Affiliates Trust from Buy to Hold with a $21 price target.

Analysts George Hoglund and Omotayo Okusanya wrote, "NSA shares are up 23 percent YTD, outperforming both the self-storage REIT peers (+10 percent) and the RMZ (+5 percent)...NSA now trades at 19.9x 2016 FFO, a 6 percent discount to its closest comp, SSS. We think a 10 percent - 15 percent discount is appropriate. While we are still bullish on the fundamental story for NSA, we think the share price now reflects the near-term outlook."

While Jefferies downgraded National Storage Affiliates due to high valuations, they did give one key reason why the company can bring value to shareholders in the long term: Execution.

Analysts at Jefferies noted National Storage Trust Affiliates have been implementing its business plan very well, delivering strong SSNOI growth of 11.5 percent in 2015. The company has recently made acquisitions that align with its business strategy along with the creation of a new revenue management system that has the potential to drive revenue and margin growth.