Self Storage REIT’s Outperform Estimates in 2013 Q1

19 July 2013 by

In mid-May, MJ Partners Real Estate Services released a 20 page report (PDF) highlighting key financial metrics from the first quarter of 2013 for the four U.S. based self storage REITs – CubeSmart, Extra Space Storage, Public Storage and Sovran Self Storage.

The report shows a market overview and charts data for side by side comparisons of the REITs. The comparison is good to see but doesn’t really do justice as all 4 REITs vary greatly in size. All four REITs are reporting healthy operating numbers with Sovran Self Storage (Uncle Bob’s Self Storage) showing the greatest year over year revenue growth at 8.1%. Each REIT showed gains in occupancy with Public reporting the highest occupancy across all stores at 92.4% while CubeSmart showed the largest year over year occupancy gain improving 6.4%.

The report states there was robust revenue growth for each REIT ranging from 5.4% up to 8.1% and net operating income growth of 7.6% up to 10.8%. There was also slow first quarter acquisition volume from public companies as established private equity companies deployed more capital to the market. Public companies seem to prefer “off-market” transactions, providing better pricing than through a broker marketed sale process.

Other factors contributing to the great numbers include increased demand, a decrease in the level of promotional discounts thus increasing the monthly revenue and public companies cost of capital at near record lows.

With regards to other financial measurements, rent per square foot ranged from $10.61 for Sovran up to $13.79 for Public Storage. Each REIT saw revenue, operating income and occupancy increase from last year. Extra Space is reporting the highest occupancy rate they have ever had across all stores at 88.6%. Karl Haas, COO of Extra Space, said, “Our results continue to be the best I have seen in my 25 years in the business.”

Public Storage continues to dominate the self storage market with over $28.24 billion in market capitalization and 2100 stores owned. Extra Space is second with 965 stores owned and $4.84 billion in market capitalization. CubeSmart and Sovran come in third and fourth respectively with $2.27 and $2.11 billion. Each REIT has dividends per common share from $.11 at CubeSmart up to $1.25 at Public Storage. The stock prices reflect the strength of the self storage market with a range from $17.14 at CubeSmart and a whopping $164.27 at Public.

From these financials, one can tell the health of the self storage industry as the economy continues to pick up steam and rebound from the Great Recession. This seems to all be great news for the self storage industry as a whole.

SSF Team

SSF Team

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