Self-Storage Among Top-Performing REITs During First Quarter 2013

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Self-storage and shopping malls posted the largest first-quarter 2013 financial gains among real estate investment trusts (REITs). Although REITs across most sectors performed well during the quarter, self-storage was among a group whose earnings exceeded analyst expectations, according to a report by the Wall Street Journal.

Rent and occupancy rates climbed in many commercial real estate segments. "We saw continued strengthening of property fundamentals across most of the major property sectors," said Craig Leupold, president of Green Street Advisors, a research and analysis firm specializing in REITs.

The four U.S.-based self-storage REITs—CubeSmart, Extra Space Storage Inc., Public Storage Inc. and Sovran Self Storage Inc.—continued their strong three-year performance trend, generally bolstered by increased rental rates and consumer demand. Occupancy across Extra Space locations, for example, rose 2.9 percent during the quarter to a record high of 88.6 percent. The results helped boost Extra Space revenue 7.5 percent to $82.8 million and net operating income 10.8 percent to $56.4 million.

Extra Space owns or operates 965 self-storage properties in 35 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 640,000 units and 70 million square feet of rentable space.

Shopping malls also exceeded some analyst expectations during the quarter. Sector gains were attributed to the in-person appeal upscale malls and outlet centers continue to have with shoppers, without significant growing competition from Internet retailers, said Alexander Goldfarb, an analyst with Sandler O'Neill + Partners.

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