Self-Storage REITs Release Financial Results for Third-Quarter 2014

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 Sept. 30. 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.

“We are pleased with another quarter of solid earnings,” said Andrew Gregoire, chief financial officer for Sovran. “Our revenue-management system has been driving exceptional top-line growth. The system made pricing adjustments during the third quarter in anticipation of the off-peak season, and we are well positioned for strong year-end performance.”

Extra Space CEO Spencer F. Kirk expressed similar optimism. "We continue to expand our portfolio and leverage our operating platform, making us increasingly competitive in the self-storage industry,” he said. “Steady demand, muted supply and pricing power drove another quarter of double-digit FFO growth."

CubeSmart

CubeSmart reported FFO per share of $0.28, a 12 percent year-over-year increase. Same-store NOI at its 346 facilities grew 10.8 percent year over year. The company attributed this to 7.7 percent growth in revenue and a 1.1 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 91.7 percent as of Sept. 30. The company’s total-owned portfolio, representing 390 facilities comprising 26.4 million square feet of rentable space, had a physical occupancy of 91.5 percent at the end of the third quarter.

CubeSmart acquired three self-storage properties during the quarter for $38.9 million, including two in Florida and one in Massachusetts. The company also invested $26.7 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 Aug. 5, the company declared a dividend of 13 cents per common share. The dividend was paid on Oct. 15 to common shareholders of record on Oct. 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 Oct. 15 to holders of record on Oct. 1.

CubeSmart owns or manages 562 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 7.2 percent and NOI rose 9.3 percent compared to the same period in 2013. FFO was 72 cents per diluted share, resulting in 26.3 percent growth compared to the third quarter the previous year.

Same-store occupancy grew by 100 basis points to 91.7 percent as of Sept. 30, compared to 90.7 percent at the same time in 2013.

The company purchased three properties during the quarter for approximately $26.7 million. The assets are in Florida, Georgia and Texas. Since the quarter ended, Extra Space acquired two other properties in Colorado and Georgia for approximately $17.5 million.

The company paid a quarterly dividend of 47 cents per common share on Sept. 30 to common shareholders of record on Sept. 15.

Headquartered in Salt Lake City, Extra Space owns or operates 1,081 self-storage properties in 35 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 720,000 units and 80 million square feet of rentable space.

Public Storage Inc.

Revenue for same-store facilities increased 5.5 percent, or $24.7 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 0.8 percent, or $1.1 million, in the quarter as compared to the same period in 2013.

FFO was $2.08 per diluted common share, compared to $2 for the same period the previous year. NOI increased $46.1 million during the quarter compared to the same period in 2013, including $23.6 million for same-store facilities.

The company acquired 25 self-storage facilities comprising 1.8 million square feet during the quarter for approximately $239 million. Nineteen of the assets are in Florida, three in Maryland and one each in New Jersey, North Carolina and Virginia. The REIT has four additional facilities under contract for $63 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 Dec. 30 to shareholders of record as of Dec. 15.

Based in Glendale, Calif., Public Storage has interests in 2,234 self-storage facilities in 38 states, with approximately 144 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 21 percent over the previous year's third quarter, while operating costs increased 16.4 percent, resulting in an NOI increase of 23.1 percent. Same-store NOI increased 9.2 percent year over year. FFO for the quarter was $1.12 per fully diluted common share, compared to 98 cents for the same period the previous year, a 14.3 percent increase.

Net income available to common shareholders for the third quarter was $25.6 million, or 77 cents per fully dilated share. For the same period in 2013, net income available to common shareholders was $19.7 million, or 62 cents per fully diluted common share.

Revenue for the company’s 385 wholly owned facilities increased 7 percent year over year, helped by an increase in average occupancy of 140 basis points and 4.4 percent increase in rental rates. Average overall occupancy was 90.9 percent, with units renting for an average of $12.19 per square foot, an increase of 8.7 percent.

Sovran acquired five self-storage properties during the quarter for $46 million. The properties are in Florida, New Jersey, Tennessee, Texas and Virginia.

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 506 facilities in 25 states, with a large presence in Texas.