Self-Storage REITs Release Financial Results for First-Quarter 2015

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 March 31, 2015. In general, all four entities showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI), while also achieving increases in occupancy levels.

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 March 31, 2015. In general, all four entities showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI), while also achieving increases in occupancy levels.

"Strong occupancy, pricing power and disciplined expense control led to double-digit FFO and NOI growth for the quarter,” said Spencer F. Kirk, CEO of Extra Space Storage. “We entered 2015 at record-high occupancy and pushed it even higher in the slowest months of the year. Our customer acquisition platform continues to perform, and we are well-positioned for the prime rental season."

CubeSmart CEO Christopher P. Marr also was also pleased about his company’s start to 2015. "Our strong performance to start the year demonstrates the company's continued ability to leverage its operating platform to drive effective rent and occupancy growth throughout the portfolio,” he said. “Customer demand trends remain positive, and new supply, while picking up in a few select markets, remains well below historical levels. Heading into the busy rental season, we are well-positioned to deliver on our internal and external growth expectations."

CubeSmart

CubeSmart reported FFO per share of $0.28 during the quarter, a 12 percent year-over-year increase. Same-store NOI at its 361 facilities during the quarter grew 9.5 percent year over year. The company attributed this to 7 percent growth in revenue and a 2 percent increase in property operating expenses.

The operation gained 180 basis points in physical occupancy compared with the same quarter the previous year. The same-store physical occupancy was 91.2 percent as of March 31. The company’s total-owned portfolio, representing 428 facilities comprising 29 million square feet of rentable space, had a physical occupancy of 90.3 percent at the end of the first quarter.

CubeSmart acquired three storage facilities for $21.8 million during the quarter. The properties are in Arizona, Tennessee and Texas. As of March 31, the REIT had four facilities under contract to purchase for $85.2 million. Three of the properties are in Texas and one in New York.

On Feb. 24, the company declared a dividend of 16 cents per common share, which was equal to the dividend issued the previous quarter. The dividend was paid on April 15 to common shareholders of record on April 1. The board of trustees also declared a dividend of $0.48 for the 7.75 percent Series A Cumulative Redeemable Preferred Shares that was paid on April 15 to holders of record on April 1.

CubeSmart owns or manages 609 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 8.3 percent and NOI rose 11.4 percent compared to the same period in 2014. FFO was 68 cents per diluted share, resulting in 21.1 percent growth compared to the first quarter the previous year.

Same-store occupancy grew by 270 basis points to 92.5 percent as of March 31, compared to 89.8 percent at the same time in 2014.

The company purchased eight properties during the quarter for approximately $84.1 million. The properties are in California, South Carolina, Texas and Virginia. Since the quarter ended, the REIT acquired 24 other properties in Arizona, Georgia and Texas for approximately $193 million.

The company paid a quarterly dividend of 47 cents per common share on March 31 to common shareholders of record on March 16.

Headquartered in Salt Lake City, Extra Space owns or operates 1,106 self-storage properties in 35 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 740,000 units and 81.8 million square feet of rentable space.

Public Storage Inc.

Revenue for same-store facilities increased 6.1 percent, or $27.1 million, in the quarter, as compared to the same period in 2014, primarily because of higher realized annual rent per occupied square foot. Cost of operations for the same-store facilities increased 1.1 percent, or $1.6 million, during the quarter as compared to the same period last year.

FFO was $1.91 per diluted common share, compared to $1.74 for the same period the previous year. NOI increased $39.9 million during the quarter compared to the same period in 2014, including $25.5 million for same-store facilities.

The company acquired four self-storage facilities comprising 300,000 square feet during the quarter for $32.3 million. The assets are in Florida, North Carolina, Texas and Washington. The REIT also completed four new developments comprising 300,000 net rentable square feet for $26.8 million. Various expansion projects added another 100,000 square feet to assets for $4.5 million.

The company reported a regular common quarterly dividend of $1.70 per common share. It also declared dividends with respect to various series of preferred shares. All the dividends are payable on June 30 to shareholders of record as of June 15.

Based in Glendale, Calif., Public Storage has interests in 2,258 self-storage facilities in 38 states, with approximately 146 million net rentable square feet. Operating under the Shurgard brand name, the company also has 193 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 13.2 percent over the previous year's first quarter, while operating costs increased 11 percent, resulting in an NOI increase of 14.4 percent. Same-store NOI increased 7.5 percent year over year. FFO for the quarter was $1.07 per fully diluted common share, compared to 88 cents for the same period the previous year, a 21.6 percent increase.

Net income available to common shareholders for the first quarter was $22.5 million, or 65 cents per fully dilated share. For the same period in 2014, net income available to common shareholders was $16.7 million, or 51 cents per fully diluted common share.

Revenue for the company’s 399 wholly owned facilities increased 5.7 percent year over year, helped by an increase in average occupancy of 100 basis points and 3.4 percent increase in rental rates. Average overall occupancy was 89.3 percent, with units renting for an average of $12.12 per square foot.

Sovran acquired two self-storage properties during the quarter for $15.2 million. The properties are in Chicago and comprise nearly 157,000 square feet. The REIT now operates 16 storage facilities in the Chicago market. Since the end of the quarter, the company has acquired three more assets for $23.9 million. Two of the properties are in Florida and one in Texas.

The company paid a quarterly dividend of 75 cents per common share, which is equal to the amount issued for the last quarter.

Sovran, which operates facilities under the brand Uncle Bob's Self Storage, operates more than 500 facilities in 25 states, with a large presence in Texas.

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