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 June 30. In general, all four entities showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI), while also achieving record-high occupancy levels.
“This spring’s leasing season has proven to be a good one, and we’ve been able to achieve strong rate growth across all of our markets,” said David Rogers, CEO of Sovran. “We hit our best-ever earnings level this quarter, and we are on pace to beat our all-time high for occupancy and rental rates later this summer.”
Christopher P. Marr, president and CEO of CubeSmart, expressed similar optimism. "During the second quarter, our property portfolio achieved all-time high occupancy levels and solid net effective rent growth resulting in FFO performance above expectations,” he said. “We remain disciplined and focused on pursuing external growth opportunities that enhance our portfolio quality and generate long-term value for shareholders."
The four self-storage REITs have performed particularly well recently when compared to other REIT sectors and alternative investments. Led by Extra Space, the storage REIT 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.
"We continue to see strong demand, resulting in solid operational performance,” said Spencer F. Kirk, CEO of Extra Space. “We are achieving record-high occupancies, while successfully increasing street rates. Our Internet presence and operational proficiencies are propelling outstanding results."
CubeSmart reported FFO per share of $0.27, a 17.4 percent year-over-year increase. Same-store NOI at its 346 facilities grew 9.7 percent year over year. The company attributed this to 7.6 percent growth in revenue and a 3.2 percent increase in property operating expenses.
The operation gained 310 basis points in physical occupancy compared with the same quarter the previous year. The same-store physical occupancy was 92.4 percent as of June 30. The company’s total-owned portfolio, representing 387 facilities comprising 26.1 million square feet of rentable space, had a physical occupancy of 92 percent at the end of the second quarter.
CubeSmart acquired nine self-storage properties during the quarter for $127.4 million including four in Florida, two in New York and single assets in Indiana, Massachusetts and Texas. The company also invested $23.5 million in four joint-venture development properties under construction. Officials anticipate they will invest a total of $79.9 million related to these projects.
On May 28, the company declared a dividend of 13 cents per common share. The dividend was paid on July 15 to common shareholders of record on July 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 July 15 to holders of record on July 1.
CubeSmart owns or manages 559 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 7.9 percent and NOI rose 9.9 percent compared to the same period in 2013. FFO was 63 cents per diluted share, resulting in 25.5 percent growth compared to the second quarter the previous year.
Same-store occupancy grew by 160 basis points to 92.4 percent as of June 30, compared to 90.8 percent at the same time in 2013.
The company purchased eight properties during the quarter for approximately $91.2 million. The assets are in California, Florida, Georgia, North Carolina and Washington. Extra Space has five additional properties under contract for a total purchase price of approximately $41.4 million. The acquisition of these properties is expected to occur by the end of September.
The company paid a quarterly dividend of 47 cents per common share on June 30 to common shareholders of record on June 13.
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.
Public Storage Inc.
Revenue for same-store facilities increased 5.3 percent, or $22.6 million, in the quarter, as compared to the same period in 2013, primarily because of higher realized annual rent per occupied square foot and higher average occupancy. Cost of operations for the same-store facilities increased by 1.2 percent, or $1.5 million, in the quarter as compared to the same period in 2013.
FFO was $1.99 per diluted common share, compared to $1.83 for the same period the previous year. NOI increased $38.9 million during the quarter compared to the same period in 2013, including $21.2 million for same-store facilities.
During the first six months of the year, the company acquired six self-storage facilities for approximately $37 million. Five of the properties are in North Carolina and one is in Texas. On July 1, Public Storage purchased 25 storage properties in five states for $240 million. Nineteen of the assets are in Florida. The REIT has four additional facilities under contract for $40 million. The acquisition of these properties is expected to close by the end of December.
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 Sept. 30 to shareholders of record as of Sept 15.
Based in Glendale, Calif., Public Storage has interests in 2,208 self-storage facilities in 38 states, with approximately 142 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 19.9 percent over the previous year's second quarter, while operating costs increased 16.9 percent, resulting in an NOI increase of 21.2 percent. Same-store NOI increased 10 percent year over year. FFO for the quarter was $1 per fully diluted common share, compared to 94 cents for the same period the previous year, a 6.4 percent increase.
Net income available to common shareholders for the second quarter was $20.6 million, or 62 cents per fully dilated share. For the same period in 2013, net income available to common shareholders was $17.9 million, or 57 cents per fully diluted common share.
Revenue for the company’s 386 wholly owned facilities increased 8.6 percent year over year, helped by an increase in average occupancy of 270 basis points and 4.4 percent increase in rental rates. Average overall occupancy was 90.7 percent, with units renting for an average of $11.79 per square foot, an increase of 8.3 percent. Facilities showing the strongest revenue gain were in Florida, Georgia, Illinois, New York and Texas, officials said.
Sovran acquired 19 self-storage properties during the quarter for $130 million. Sixteen of the assets were purchased for $96 million, with the balance acquired for Sovran HHF Storage Holdings LLC, a joint venture in which Sovran owns 20 percent. Seven of the facilities are in New Jersey, with another seven in the St. Louis market. Single assets are in Atlanta, Chicago, New York City, Philadelphia and San Antonio.
The company paid a quarterly dividend of 68 cents per common share.
Sovran, which operates facilities under the brand Uncle Bob's Self Storage, operates 502 facilities in 25 states, with a large presence in Texas.
- CubeSmart: CubeSmart Reports Second Quarter 2014 Results: FFO Per Share Grows 17.4%; Same-Store NOI Increases 9.7%
- Extra Space Storage: Extra Space Storage Inc. Reports 2014 Second Quarter Results
- Public Storage: Public Storage Reports Results for the Quarter Ended June 30, 2014
- Uncle Bobâ€™s Self Storage: Sovran Self Storage Reports Second Quarter Results, Adjusted FFO Per Share Increases 14.9%, Guidance Raised