Monday Morning Quarterback (12/14/2020)

December 14, 2020

SkyView scoured the web for news that matters to self-storage owners—here’s what we found last week.

COVID Related Casualties Near 300,000

Last week, new U.S. COVID cases and related deaths hit an all-time seven-day average high. As of December 13, national coronavirus cases amounted to 16.3 million and nearly 300,000 related casualties. Although numbers continue to rise, the United States will begin vaccinating high-risk individuals this week.

Chart of New Coronavirus Cases Reported per Day

Chart of New Reported Coronavirus Deaths per Day

FDA Approval:

On Friday, an FDA advisory panel recommended approval of Pfizer’s (NYSE: PFE) and BioNTech’s (NASDAQ: BNTX) vaccines, clearing the way for an emergency use authorization. As early as Monday or Tuesday, the first Americans will receive the vaccine as early as Monday (December 14) or Tuesday (December 15). According to BioNTech CEO Ugur Sahin, both BioNTech and Pfizer scaled production to produce 100 million doses by January. However, the vaccine will not be available to most Americans until spring or fall.

Inflation Remains Low:

The U.S. Labor Department reported late last week that consumer and wholesale prices rose slightly from October to November. The Consumer Price Index (CPI) rose 20 bps month-over-month (m/m), driven by a 40 bps increase in energy cost, which offset a drop in food prices. During the past 12 months, overall consumer prices have increased by 1.2%, while core inflation, which excludes volatile energy and food costs, grew by 1.6%.

A day after reporting CPI, the Department of Labor released the Producer Price Index (PPI) for November, showing a 10 bps m/m increase in wholesale prices. The PPI gain, which measures inflationary pressures before reaching the consumer, followed larger increases of 30 bps in October and 40 bps in September. Despite the improvements this fall, wholesale prices have risen 80 bps from November 2019, far below the Central Bank’s 2% annual inflation target from November 2019.

Government Shutdown Averted:

With the economic recovery waning and the pandemic worsening, fiscal stimulus has been in dire need. However, Congressional partisanship continues to hamper COVID-relief efforts, which now threaten a government shut-down. With government funding ending on December 12, the Senate passed a one-week stopgap measure to give Congress more time to negotiate a broader spending bill.

$908 Billion Covid-Aid Bill Proposed:

A small, informal group of bipartisan lawmakers proposed the latest $908 billion COVID relief proposal, which has since gained traction in Congress. This bill’s provisions include bipartisan efforts, such as $300 billion for enhanced unemployment insurance, $300 billion for small businesses, $82 billion for schools, and $16 billion for vaccine distribution.

The parties’ major disagreements surround 1) state and local government aid and 2) a liability shield. Democrats want to provide state and local governments $160 billion relief to those most impacted by the pandemic. Alternatively, Republicans are pushing for a liability shield to protect businesses, health-care facilities, and schools from legal actions in the instance customers, employees, or students contract the virus while at their facilities.

Billions in Self-Storage Transactions This Quarter:

After a slow start, this year’s self-storage transactions quickly rebounded during the fourth quarter. Due to self-storage’s economic resilience and fragmentation, respected investors, such as Blackstone and Bill Gates, are now taking an interest in the asset class for their investment portfolio. In October, a Blackstone affiliate purchased Simply Self Storage for approximately $1.2 billion. Furthermore, the affiliate also plans to acquire smaller facilities under the brand “Simply Self Storage.”

In early December, EzStorage, began exploring a sale that could value the family-owned business at over $2 billion. Most recently, Public Storage (NYSE: PSA) announced that it had acquired 24 properties (2.3 million sq ft) from Beyond Self Storage in the initial phase of a 36-facility portfolio transaction. Once completed, PSA will gain 3.6 million square feet of space, valued at $528 million.