2020 hasn’t been a great year for many ASX real estate investment trusts (REITs). The coronavirus pandemic has hurt earnings across a broad range of real estate sectors including office, commercial and retail. However, National Storage REIT (ASX: NSR) shares are one of the few to climb higher this year. Despite its recent gains, is the National Storage share price still a buy?
Why is the National Storage share price doing well?
National Storage provides tailored storage solutions across Australia with a focus on self-storage units.
The Aussie REIT was subject to several takeover bids earlier this year. These included offers at $2.20 to $2.40 per share from China-based Gaw Capital Partners, as well as United States-based Warburg Pincus and Public Storage.
However, the pandemic uncertainty hit in February and all three bidders withdrew from the race.
That saw the National Storage share price plummet to as low as $1.23 per share in the midst of the March bear market.
Things have been reasonably solid since then. Shares in the Aussie self-storage REIT have climbed 51.2% higher since March and are trading at $1.86 per share.
So, how does the National Storage share price stack up against its fellow REITs in August?
Should you buy National Storage shares?
I personally think National Storage is in a better position than many ASX REITs right now.
There are question marks over current property valuations in the retail, commercial and office sectors. That’s largely due to shifting consumer and worker behaviour resulting from the pandemic.
That’s why shares like Scentre Group (ASX: SCG) and Stockland Corporation Ltd (ASX: SGP) are trading at steep discounts.
Retail tenants are likely to struggle from lower foot traffic while arguably demand for bricks and mortar leases will be subdued.
In contrast, now could be a good time for National Storage’s earnings.
Tough economic times can often see people moving homes as they look to downsize or otherwise relocate.
That means demand for self-storage units could be set to surge if we see stress in the residential property market.
Foolish takeaway
The National Storage share price fell 1.3% lower yesterday but I think it could be a solid buy.
As an REIT, I wouldn’t expect huge share price growth. However, non-cyclical earnings and a price-to-earnings (P/E) ratio of just 5.1 could mean it’s on the buy list.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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