The four publicly traded, U.S.-based self-storage real estate investment trusts (REITs)—CubeSmart, Extra Space Storage Inc., Public Storage Inc. and Sovran Self Storage Inc.—have released financial statements for the quarter that ended Dec. 31, 2013 and the 2013 fiscal year. In general, all four entities showed gains in key areas, particularly funds from operations (FFO), net operating income (NOI) and increased occupancy.
All four REITs continue to cite a lack of new competition in their markets for continued financial success. “2013 was an exceptional year for the self-storage industry and for Extra Space Storage,” said Spencer F. Kirk, CEO of Extra Space. “We saw record-high occupancies and strong operational performance. The inflow of new supply continues to be minimal."
Christopher P. Marr, president and CEO of CubeSmart, added, "Fundamental trends in our self-storage portfolio continue to be positively impacted by consistently improving year-over-year demand and lack of new supply in our markets. As we enter 2014, CubeSmart is well positioned to execute its internal and external growth strategies and generate attractive risk adjusted returns for shareholders."
CubeSmart reported FFO per share of $0.23, a 10 percent year-over-year increase. Same-store NOI at its 298 facilities grew 7.3 percent year over year. The company attributed this to 6.7 percent growth in overall revenue and a 5.3 percent increase in property operating expenses.
The operation gained 420 basis points in physical occupancy compared with the same quarter the previous year. The same-store physical occupancy was 88.9 percent as of Dec. 31. The company’s total-owned portfolio, representing 366 facilities comprising 24.7 million square feet of rentable space, had a physical occupancy of 88.3 percent at the end of the fourth quarter.
CubeSmart acquired six self-storage properties during the quarter for $56.7 million including one asset in Florida, two in Maryland and three in Texas. On Dec. 12, the company also completed the $315.7 million purchase of 35 facilities in North Carolina and Texas as part of a joint venture. It sold 22 assets in California, Tennessee and Texas during the quarter for $90 million.
On Dec. 19, the company declared a dividend of 13 cents per common share. The dividend was paid on Jan. 15 to common shareholders of record on Jan. 2. The board of trustees also declared a 4Q dividend of $0.48 for the 7.75 percent Series A Cumulative Redeemable Preferred Shares that was paid on Jan. 15 to holders of record on Jan. 2.
CubeSmart owns or manages 532 self-storage facilities across the United States and operates the CubeSmart Network, which consists of more than 800 additional self-storage facilities.
Extra Space Storage Inc.
Same-store revenue increased 6.6 percent and NOI rose 8.9 percent compared to the same period in 2012. FFO was 57 cents per diluted share, resulting in 26.7 percent growth compared to the fourth quarter the previous year.
Same-store occupancy grew by 130 basis points to 89.2 percent as of Dec. 31, compared to 87.9 percent at the same time in 2012.
The company purchased 50 properties during the quarter for approximately $310.4 million. Twenty-four of the assets were acquired as part of a buyout of partner interests in an existing joint venture. Extra Space has eight additional properties under contract for a total purchase price of approximately $89.9 million. The acquisition of these properties is expected to occur by the end of April.
The company paid a quarterly dividend of 40 cents per common share on Dec. 31 to common shareholders of record on Dec. 13.
Headquartered in Salt Lake City, Extra Space owns or operates 1,029 self-storage properties in 35 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 680,000 units and 75.7 million square feet of rentable space.
Public Storage Inc.
Revenue for same-store facilities increased 5.4 percent, or $22 million, in the quarter, as compared to the same period in 2012, primarily because of higher realized annual rent per occupied square foot and higher average occupancy. Cost of operations for the same-store facilities decreased by 2.6 percent, or $2.7 million, in the quarter as compared to the same period in 2012.
FFO was $2.13 per diluted common share, compared to $1.86 for the same period the previous year. NOI increased $38.1 million during the quarter compared to the same period in 2012, including $24.7 million for same-store facilities.
During the quarter, the company acquired 89 self-storage facilities comprising approximately 5.6 million net rentable square feet for $765 million. The properties are located in California, Colorado, Florida, Georgia, North Carolina, South Carolina, Texas and Virginia. Public Storage purchased 121 facilities in 2013 for $1.16 billion.
The company reported a regular common quarterly dividend of $1.40 per common share. It also declared dividends with respect to various series of preferred shares. All the dividends are payable on March 31 to shareholders of record as of March 14.
Based in Glendale, Calif., Public Storage has interests in 2,200 self-storage facilities in 38 states with approximately 141 million net rentable square feet. Operating under the Shurgard brand name, the company also has 188 facilities in seven European countries, with approximately 10 million net rentable square feet.
Sovran Self Storage Inc. (Uncle Bob's Self Storage)
Total revenue increased 16.8 percent over the previous year's fourth quarter, while operating costs increased 13 percent, resulting in an NOI increase of 18.7 percent. Same-store NOI increased 7.2 percent year over year for the quarter and 9.9 percent for the year. FFO for the quarter was 98 cents per fully diluted common share, compared to 77 cents for the same period the previous year, a 25.3 percent increase.
Net income available to common shareholders for the fourth quarter was $22.2 million, or 69 cents per fully dilated share. For the same period in 2012, net income available to common shareholders was $13.5 million, or 44 cents per fully diluted common share.
Same-store revenue increased 6.6 percent year over year, helped by an increase in average occupancy of 210 basis points (89.1 percent) and increased rental rates. Average overall occupancy was 88.7 percent, with units renting for an average of $11.37 per square foot. Facilities showing the strongest revenue gain were in Florida, New York, North Carolina and Texas, officials said.
Sovran acquired 11 self-storage properties in 2013 for $94.9 million. The assets are in markets where the company already has a presence. The company also sold four properties during the fourth quarter for $12.3 million.
The company paid dividends of 68 cents per common share, a 28.3 percent increase.
Sovran, which operates facilities under the brand Uncle Bob's Self Storage, operates 484 facilities in 25 states, with a large presence in Texas.