self storage public reits

The company’s CEO recently said the acquisitions market for self-storage assets is very frothy and that 84% of the company’s acquisitions in 2018 were done through off-market transactions. The rent these tenants pay then comes back to the REIT, which meets the expenses of operating its business and managing the properties. Since its start in 1977, Extra Space has acquired a portfolio of more than 1,400 stores in 38 states, with only a wide swath of the Northern Plains and Mountain West standing out as an obvious gap in its geographical coverage. Although demand has been climbing, only about 10% of U.S. households rent self-storage space, according to industry estimates. In order for their dividend yields to rise in line with prevailing interest rates, share prices for REITs typically have to fall. But because the profits that fund the dividend distribution from the REIT haven't been subject to tax, the REIT is able to pay a larger amount of income to its shareholders than it would ordinarily be able to pay if it were a regular corporation. According to JLL’s Self Storage REITS Q3 2020 report, the national self storage REITs appear to be recovering from the market slow-down caused by the COVID19 pandemic in the early part of 2020, with operating metrics returning to historic levels. Public Storage currently has a consensus rating of "hold," but if demand for self-storage REITs continues to climb, it may be well-suited for a buy-and-hold strategy for the long term. By both owning and operating facilities, Extra Space makes maximum use of its expertise and broadens its options beyond solely company-owned storage facilities. Acquisition activity among the national self storage REITs increased significantly during the third quarter of 2020, and third-party management … The Salt Lake City company has facilities in 37 states; Washington, D.C.; and Puerto Rico. It's similar to net income for regular companies, but it excludes the extensive depreciation that real-estate investment trusts typically have because of their large portfolios of real-estate holdings. Life Storage, headquartered in Buffalo, New York, was formerly known as Uncle Bob’s. Millionacres does not cover all offers on the market. With these five selections, you can choose from a well-diversified set of self-storage REITs that can help you round out your income-producing portfolio. Cumulative Growth of a $10,000 Investment in Stock Advisor, 5 Top Self-Storage REITs to Buy Now @themotleyfool #stocks $PSA $EXR $CUBE $LSI $NSA, self-storage REITs can be a lucrative way, Public Storage is by far the largest player, Public Storage is one of the biggest landlords, Public Storage has been a reliable dividend-payer, 3 Dividend Stocks to Supplement Your Social Security, CubeSmart (CUBE) Q3 2020 Earnings Call Transcript, National Storage Affiliates Trust (NSA) Q3 2020 Earnings Call Transcript, Extra Space Storage Inc (EXR) Q3 2020 Earnings Call Transcript, Copyright, Trademark and Patent Information. All told, the REIT has more than 170 million rentable square feet of real estate, and based on the number of tenants it serves, Public Storage is one of the biggest landlords of any type in the world. For dividend investors, CubeSmart's 4.2% yield is fairly high, even in the storage space. © 2018 - 2021 The Motley Fool, LLC. As Americans have accumulated more possessions over time, and have consequently needed more storage space, Public Storage has become the go-to provider for many of those seeking a place to put their things. Its recent report noted that, although self-storage capitalization rates have compressed in recent years, softening interest rates have widened margins and initial returns can also exceed those of other property types. The analyst also upgraded Public Storage (NYSE: PSA) from Neutral to Buy with a price target lifted from $254 from $267.. Not every company that works with real estate is allowed to set itself up as a real-estate investment trust. Learn more.Already a member? Self-storage facilities have become a popular niche for real-estate investors, and self-storage REITs have naturally followed. At the end of September 2019, storage REITs had a combined total market capitalization of over $75 billion with a dividend yield of 3.32%. Think about it: Residential and office buildings have to be built to strict codes to ensure the safety of residents and occupants, and malls and other retail operations have to be attractive enough to draw in shoppers and support the businesses who rent space there. To get started, we’ve assembled a comprehensive guide that outlines everything you need to know about investing in real estate - and have made it available for FREE today. But those barriers have come crashing down - and now it’s possible to build REAL wealth through real estate at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you. Finance. Patel says Public Storage is one of the most attractive storage REITs owing to its 3.7% dividend yield and long-term growth potential. REITList is a list of Publicly Traded and Public, Non-Listed Real Estate Investment Trusts tracked on REITNotes™. Funds from operations in the first quarter of 2018 were up more than 20% from year-ago levels, and the REIT spent about $145 million on acquisitions of roughly 25 self-storage properties. You may look at those big, square, nondescript buildings that house consumers’ stuff as merely that: buildings. The outlook for the sector remains strong as consumers continue to need storage space. For those who prefer smaller players in an industry with plenty of room for growth, National Storage Affiliates has a lot of runway left to compete with its bigger rivals. But when the basement, garage, or shed just won’t cut it, people turn to storage units -- and they do it often. Comprehensive real estate investing service including CRE. Nareit® is the worldwide representative voice for REITs and publicly traded real estate companies with an interest in U.S. real estate and capital markets. It's this second requirement that divides REITs into two large categories: equity REITs, which hold real estate directly and collect rental income from tenants; and mortgage REITs, which invest in mortgage-backed securities related to financing for real-estate investments by others. Investors have seen that trend play out recently. There are several reasons self-storage has advantages that many other REITs can't match. Nareit's members are REITs and other businesses throughout the world that own, operate, and finance income-producing real estate, as well as those firms and individuals who advise, study, and service those businesses. The REIT also offers ancillary related services, such as logistics support for receiving packages or retrieving items from storage, moving services like truck rentals and professional movers, organizational supplies, customized storage, and even office amenities like workstations with Wi-Fi. With 151 million square feet of rentable space, Public Storage has roughly twice the footprint of ExtraSpace, four times the footprint of CubeSmart and six times the footprint of Sovran Self Storage. If a company doesn't pay out at least 90% of its taxable income as shareholder dividends each year, then it can't be a REIT. The company recently closed the first phase of the deal, which includes 24 facilities comprising 2.3 million net rentable square feet. Because of the 90% net income payout requirement for REITs, shareholders can feel confident that they'll get valuable dividends as long as the REIT remains profitable. They do have risks associated with them, and it's important to assess those risks carefully before investing. Returns as of 01/25/2021. The potential for further share-price growth plus dividend income is a big draw for REIT investors, and self-storage has a lot of promise. It's important to understand that self-storage REITs aren't a perfect investment. 12/11/20 – Public Storage Inc., a self-storage real estate investment trust (REIT) and third-party management firm, has agreed to acquire the Beyond Self Storage portfolio for $528 million. There are more than 2,200 Public Storage self-storage locations in the US, Canada and Europe. Self-storage facility construction slowed in the second quarter of 2019, according to commercial real estate firm Marcus & Millichap. What's left is profit for the REIT. There are more than 2,200 Public Storage self-storage locations in the US, Canada and Europe. Rental rates and revenue per available square foot have showed consistent gains, and occupancy rates well above 90% show the high levels of demand for storage space right now. The largest self-storage REITs saw average rates increase about 12 percent in October, too, according to Green Street. Also, National Storage has seen its share price more than double, leaving its rivals on this list in the dust. Investors like the real-estate investment trust structure because it ensures they'll be able to receive the lion's share of any income the REIT generates. With ordinary real-estate businesses, there's no obligation for the company to make any dividend distribution to investors, forcing shareholders to sell stock if they need cash from their investment. The company has recently gone through a brand change, having previously been known under the Uncle Bob's Self Storage and Sovran Self Storage names. Interestingly, the REIT was originally opened as a financial planning firm, but it opened a Florida self-storage location shortly thereafter, in 1985, and then grew very quickly. The company currently operates more than 750 self-storage facilities in 28 states and Ontario, Canada. Size gives Public Storage the advantage of stability. Since 2013, the company has boosted its quarterly payout seven times, going from $0.45 to $1 per share. To learn more about CafeMedia’s data usage, visit: www.cafemedia.com/publisher-advertising-privacy-policy. Public Storage has more than 2,500 locations across the U.S. in 38 states and facilities in western Europe. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. No five individuals can own more than 50% of any REIT's shares, and like most corporations, REIT management must be conducted by a board of directors or trustees. One option available to these companies is to organize themselves as real-estate investment trusts, or REITs, in order to gain some tax advantages over other types of companies. For the real-estate businesses that want to elect REIT status, the payoff is that REITs are allowed to avoid taxation at the corporate level. This is the largest self-storage company and it acquires, develops, owns, and operates self-storage facilities. Self-Storage REIT companies offer investors exposure to a "relatively defensive sector" within the broader real estate segment for three reasons, Spector wrote in a note. In just over three years, the REIT has almost doubled its quarterly payout, with seven increases in just a dozen quarterly periods. But first, it's important to understand the ins and outs of real-estate investment trusts more broadly and why businesses set themselves up this way. It also owns 42 percent of an office parks … REITS often make further adjustments to FFO to reflect what income came from regular operations and what came from one-time sales of properties. by, Real Estate Investing: 10 Ways to Build Wealth. Market data powered by FactSet and Web Financial Group. Self Storage Real Estate Investment Trusts (REITs) can focus on the ownership, acquisition, development, redevelopment, and operation of self-storage facilities. Smart acquisitions of those local, mom-and-pop storage facilities have added up to a nationwide presence for the REIT, making it harder for other local owners to compete, and thereby clearing the field for further dominance in key markets. Sign up for Real Estate Winners to create a wealth-building strategy today. For dividend investors, that's been a good philosophy so far. Unfortunately, the stock has lagged behind some of its peers in recent years. The company has a healthy development pipeline with several facilities and large expansion projects in development. Compensation may impact where offers appear on our site but our editorial opinions are in no way affected by compensation. Become a diversified real estate investor without ever talking to an agent or swinging a hammer. Public Storage is by far the largest player in the self-storage REIT space. Yields in the 3% to 5% range are quite common for real-estate investment trusts, and some REITs pay even higher dividends. Public Storage: Self-Storage REIT With A Green Future Background to PSA. Simply click here to learn more and access your complimentary copy. Public Storage is an American international self storage company headquartered in Glendale, California, that is run as a real estate investment trust. As rates rise, the interest expense on loans that self-storage REITs borrow to buy or build facilities goes up. That's less of an issue with broadly diversified national self-storage REITs, but smaller companies that have greater concentrations in particular areas can take bigger hits. CubeSmart owns 485 stores with 33.8 million rentable square feet, with an occupancy rate of about 90% as of the first quarter of 2018. The company built its first self-storage facility back in 1972, but today, it has almost 2,400 locations in the U.S. as well as more than 220 facilities in seven different nations in Western Europe through its 49% interest in Shurgard Europe. Evaluating real-estate investment trusts is different from looking at regular stocks. Any remaining after-tax profit is available to the business, either to reinvest in more property, or to return to shareholders through dividends. It also owns 42 percent of an office … Extra Space Storage is the largest self-storage management company and the second-largest owner/operator of self-storage properties in the United States. Storage space is more of a commodity item, though, and that makes it vital for successful self-storage facilities to have occupancy rates that are as high as possible. *By submitting your email you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. Bigger doesn’t always mean better but in this case it does. Dan Caplinger has been a contract writer for the Motley Fool since 2006. Public Storage is an American international self storage company headquartered in Glendale, California, that is run as a real estate investment trust (REIT). The REIT's most recent boost came just last month, with a 10% increase bringing the payout to $0.86 per share on a quarterly basis. They also own and operate more than 1,400 stores. Same-store revenue and net operating income were both higher by 2.5%, and Life Storage sports an occupancy rate of about 91%. It is the largest brand of self-storage services in the US. Fundamentally, National Storage is working hard to grow. With some types of REITs, having substantial portions of space vacant is simply part of the business cycle, and it's worth holding a property empty if it can lead to finding a high-quality tenant that will make a long-term commitment. But with the branding change, Life Storage has been able to add third-party management as a more significant part of its overall business. It also has third-party management responsibility over nearly 500 additional locations, providing another 32.5 million square feet to its overall portfolio. Many people have accumulated so many things that they’ve run out of space in their own homes -- and investors can profit because of it. 12/17/20 – Fund manager Elliott Management Corp., which has invested in self-storage real estate investment trust (REIT) Public Storage through two different entities, has publicly pressured the REIT to change its operational strategies and board of trustees. With lower overhead and operating costs than many other properties, storage REITs can be quite appealing. In particular, there are some specific metrics that apply to REITs that aren't relevant in most other industries, and they play a vital role in judging the relative success of different players in the industry. Even when you ignore the impact of dividends, the REIT's share price has jumped more than 500% over the past decade. With a new image, investors will be interested to see how far the self-storage REIT can climb. In its most recent quarter, the REIT posted a nearly 5% rise in core funds from operations, with a better than 2% rise in same-store revenue among more than 2,000 facilities. Its current quarterly payout of $0.30 per share is 12 times the $0.025 per share it paid as recently as late 2010. Will the Covid 19 Crisis Push Home Values Lower? Finally, there's still room for growth. However, investors in non-REIT real-estate businesses end up essentially having their profits taxed twice: once at the corporate level, and once when they pay any taxes due on the dividend income they receive. Stock Advisor launched in February of 2002. The majority of REITs -- including all self-storage REITs -- own real estate directly, either purchasing or constructing appropriate buildings on their land. The Pennsylvania-based REIT recently acquired 21 stores in places ranging from South Carolina to Massachusetts to Florida. Self Storage REITs Weather Difficult Quarter, See Quick Rebound By Laura Williams-Tracy, SSA Magazine It was a quarter fraught with uncertainty, new cleaning and rental protocols, and far fewer new faces at the customer service counter. Self storage real estate investment trusts (REITs) have been excellent investments over the long term. And with a set of unfair advantages that are completely unheard of with other investments, it’s no surprise why. In 2008, it was the largest of four publicly traded storage REITs. Please read our Privacy Statement and Terms & Conditions. Buying a Home in These 7 States Gives You the Most Bang for Your Buck, www.cafemedia.com/publisher-advertising-privacy-policy, Extensively researched articles in the areas of Real Estate Taxes, REITs, CREs, Regulation A and It is the largest brand of self-storage services in the US. In its most recent quarter, the company spent more than $300 million on acquisitions, including three operating stores and 41 properties to its third-party management platform. Learn More. These self-storage assets can include Climate Controlled storage, Business Storage, Drive Up Storage, 24-hour storages, Outside Storage, Indoor Storage, Mobile Storage, Vehicle Storage Units, and Portable Container Storage. Later in this article, we'll reveal five of the top pure-play self-storage REITs available to investors. Strategic acquisitions remain prevalent in the self-storage industry and third-party management platforms continue to grow, as noted by a 2019 report on the sector from Jones Lang LaSalle. It's been expanding aggressively, spending billions of dollars to bring its total network to about 910,000 units and 103 million square feet of rentable space. In the first quarter of 2018, net income jumped by more than 60%, and funds from operations were up modestly from year-ago levels. Extra Space Storage is a smaller company than Public Storage, but it's been aggressive in its efforts to expand. Yet Extra Space has also rewarded its shareholders with growth. Bring in new people. Below is a list of the five best-performing publicly traded storage REITs in 2019. Because of the regular, dependable income storage-unit rentals provide, self-storage REITs can be a lucrative way for shareholders to benefit both from solid dividend yields and from the growth potential involved in developing new storage facilities. Elliott Management claims that Public Storage has “significantly underperformed” its self-storage REIT peers over the last decade, despite numerous structural advantages, including the highest brand awareness, the best (and most) locations, first-mover … Combine that with the long-term share-price appreciation that the stock has shown, and Public Storage deserves its reputation as a strong leader in self-storage. It's also the newcomer of the group, having come public back in 2015. In addition, the fact that REITs don't have to pay corporate-level tax enables them to pay dividend yields that are often above what a typical corporation would pay. The company is headquartered in Colorado and operates regional self-storage facilities in several high-growth markets. That followed an 8 percent rise in September. These REITs all cover self-storage facilities, but they still have differences that distinguish them from each other. It also must get at least 75% of its gross income either in the form of rental income from real property or from mortgage interest or real-estate sales. https://finance.yahoo.com/news/3-self-storage-reits-consider-162124344.html Public Storage is by far the largest player in the self-storage REIT space. CubeSmart owns or manages more than 1,000 self-storage facilities throughout the United States. Since rebranding in 2016, the company has expanded geographically and added more buildings on the West Coast. [Updated: Jul 27, 2020] Oct 04, 2019 The historical background to PSA is fascinating, the company is responsible for establishing the... Catalyst. Public Storage is a California-based REIT and member of the S&P 500. Sign in here. Many of these storage solutions come at relatively low cost, with affordable rental rates that make it easy for users to hold onto their self-storage units indefinitely. This figure shows you how REITs compare in terms of the amount of income they're able to generate from their holdings, as well as giving an indication about whether a particular REIT's shares carry a higher valuation than others. In 2008, it was the largest of four publicly traded storage REITs. Take the first step towards building real wealth by signing up for our comprehensive guide to real estate investing. Occupancy was a bit low, at 87%, but that arguably reflects the pace at which the self-storage specialist has worked to build up its portfolio of properties. Our commitment to you is complete honesty: we will never allow affiliate partner relationships to influence our opinion of offers that appear on this site. With a long history of strong performance, CubeSmart is still well-positioned to keep growing. Public Storage is a blue-chip with an A rated balance sheet, Extra Space Storage has been a top performer in the past. For many of them, renting a unit at a self-storage facility can be an easy solution, providing much-needed space into which they can pack up the objects they don't want to part with, but don't have space for elsewhere. However, you can also find larger businesses with huge networks that provide storage solutions to customers across the nation. Investors should expect newly built facilities to take time to ramp up to full capacity, but persistent high vacancy rates can indicate poor decision-making in picking a location for the self-storage facility. After having been off the radar for many investors who saw these facilities as low-rent, low-quality real-estate holdings, self-storage has shown how lucrative it can be, and that's invited more competition. For self-storage facilities in particular, occupancy rates are extremely important. They then bear the brunt of paying any necessary tax. Recent results for Life Storage have been encouraging. Net asset value measures the total current market value of real-estate holdings in the REIT's portfolio, reduced by any outstanding debt. In principle, I see nothing wrong with these suggestions. First, funds from operations, or FFO, is an accounting term that shows how profitable a REIT is. First, self-storage facilities require just about the least amount of capital expenditure in order to build and maintain. The Ascent's Best Cities for a High Salary and Low Cost of Living -- How Does the Real Estate Measure Up? Sign in here. Many of these companies are small businesses that own only a single storage location. Put Real Estate’s “Unfair Advantages” to Work for Your Portfolio. You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. In an environment in which mall occupancies are declining and technological changes like telecommuting could pose long-term threats to the office and mall REIT spaces, inertia serves self-storage REITs quite well. All rights reserved. This puts the company at No. The company notes that its size and geographic diversity protect it from the risk associated with specific local or regional economies. Life Storage is the highest-yielding self-storage REIT on this list, with a current yield of around 4.6%. Storage facilities are popping up all over, creating stiff competition thanks to the growing need for storage space and the low barrier to entry. Historically, the self-storage business was highly fragmented, with local owners typically having, at most, a few locations concentrated within a close distance. To qualify as a REIT, a company must be organized as a corporation and must have at least 100 shareholders. Further expansion is in the cards for Extra Space. There are companies that specialize in building, managing, and maintaining self-storage facilities. Extra Space has done a good job of treating dividend investors well, paying a current yield of 3.5% and having grown its quarterly payouts by more than eightfold since 2010. CubeSmart has been acquiring properties both outright and through partially owned joint ventures, and the REIT has seen good enough results that it boosted its guidance on earnings and funds from operations for the full year. You can unsubscribe at any time. CubeSmart aims to make itself the one-stop storage option for all sorts of customers. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Strong demand from renter households and businesses has kept rents and occupancy generally flat in the face of ample supply. From real estate investing to architectural design and the latest housing trends, Carisa Chappell has been writing about all things … We do receive compensation from some affiliate partners whose offers appear here. REITs that meet the requirements above don't have to pay taxes on their income. And nearly 20% of all self-storage properties fall under the ownership of the largest American self-storage REITs. Beyond that point, REITs look like most other businesses, making strategic moves as necessary to capitalize on favorable trends while selling or discontinuing the operation of less successful properties. It's easy for a homeowner to rent out a storage unit and never even think about it, keeping their stuff there and making monthly payments for years on end. The pace of Life Storage's historical dividend growth hasn't been quite as impressive as those of some of its peers, but it's still a notable increase. When new REITs initially form, they typically obtain capital from investors and seek to build up a portfolio of real-estate properties that fits with the intended purpose for that particular real-estate investment trust, through a combination of acquiring existing properties and constructing new ones. This has been a boon for investors looking to profit from storage REITs. They're typically measured as a percentage of square footage occupied divided by total square footage available. Learn More.Already a member? If too many players move into a given market, the result will be reduced occupancy rates that threaten profitability. In all, self storage appears to … In addition, like any REIT, self-storage REITs are vulnerable to interest rate increases. Public Storage is by far the biggest of the four major self storage REITs. Self-storage companies and real estate investment trusts (REITs) are big business. Below are five of the most promising top self-storage REITs for investors to consider. Major companies There are five REITs in the self-storage … Public Storage, a member of the S&P 500 and FT Global 500, is a fully integrated, self-administered, and self-managed REIT that primarily acquires, develops, owns, …