The four publicly traded self-storage real estate investment trusts (REITs), led by Extra Space Storage Inc., topped the second-annual ranking of best alternative investments published by “Bloomberg Markets” magazine. Three of the top five REITs identified in the 141-company Bloomberg REIT Index for the three-year period that ended on March 31 are self-storage operators. The complete list will be published in the publication’s September 2014 issue.
Together, REITs own more than $1 trillion in property in the United States and raised a record $77 billion last year, up from $73 billion in 2012, according to the National Association of Real Estate Investment Trusts. Extra Space was the top-performing REIT between 2011 and 2014, returning 36.7 percent for the three years and 27.9 percent for one year, according to Bloomberg. Its income from operations grew more than 20 percent year over year for the 14 quarters that ended June 30, Bloomberg reported.
“This year we were very surprised to find that self-storage operators topped our list,” Bloomberg investing reporter Devin Banerjee said in an interview with National Public Radio. “These vehicles returned 17.4 percent a year over the past three years. And that topped the stock market; that topped the bond markets; that topped other alternative markets like the private-equity markets, for example.”
Banerjee cited a dip in homeownership and a rise in apartment living as factors that aided self-storage REIT performance. Increased reliance on self-storage by business customers has also contributed to self-storage performance, according to Bloomberg.
“Self-storage has come out of obscurity,” said Spencer Kirk, Extra Space CEO. “It’s no longer the goofy real estate class. It’s the real estate class that during the recession did better than any other.”
Self-Storage REITs returned 101 percent from the beginning of 2008 through 2011, beating all other REIT categories, according to Bloomberg.
Headquartered in Salt Lake City, Extra Space owns or operates 1,071 self-storage properties in 35 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 715,000 units and 79 million square feet of rentable space.