Throughout the years self storage has been a solid asset for anyone looking to invest in a rental property. There are plenty of units to rent at each facility, you don’t need to worry much about tenants because they don’t actually live at the storage unit and the tenants still pay monthly without living there. Sounds like a fairly solid investment but what if there was an even stronger investment? Real Estate Investment Trusts (REITs) are starting to garner more attention around not only the self storage industry but around investment communities as well.
There are many reasons people use self storage including a divorce, marriage, downsizing, moving etc. Self storage REITs are performing strongly due to the failing economy, the foreclosure crisis and in general because people have too much stuff, yet hate getting rid of it making the self storage industry relatively recession proof. A recent Wall Street Journal article stated storage REITs received a 35.4% return in 2011 compared to 8% for all other REITs. The high rate of foreclosures and the ability to keep revenues steady through the economic downturn has storage REITs positioned favorably.
The four biggest self storage REITs, Public Storage, Extra Space Storage, Sovran Self Storage and CubeSmart have all had significant gains in stock value over the past year. Public Storage has seen its stock rise 25% and Extra Space has seen an incredible 40% gain while Sovran and CubeSmart have seen 16% and 15% gains respectively. The 2012 Q1 results were recently turned in by the Big 4 Storage REITs with each showing strong results.
- CubeSmart increased total revenue $11.4 million, increased same store NOI 7.4% over 2011 and declared a $.08 dividend per share.
- Extra Space Storage increased NOI by 10.8% and paid a dividend of $.20 per share.
- Public Storage increased NOI 6.3% compared to 2011 and paid a dividend of $1.10 per share.
- Sovran Self Storage increased revenue 15.2% and NOI 20.3% over 2011 while paying a dividend of $.45 per share.
Helping add value to the storage REITs is the fact most of them are adding storage facilities through acquisitions rather than taking on debt and building new storage facilities themselves. This was a big trend in the last two years and is expected to continue in the future. The Self Storage Association boasts nearly one in ten U.S. household’s rents a self storage unit, nearly a 65% increase in the last 12 years. In addition, residential storage has remained the biggest customer base accounting for nearly 75% of the demand.
Self storage has been a solid investment over the years, gaining about 4% year over year, and self storage REIT’s are now beginning to earn a solid reputation amongst investors as well. With storage REIT returns 4 times higher than all other REITs, the self storage industry is creating a buzz.
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