In the financial world, investors keep their eyes on trends and are keenly aware when a certain area seems to be taking off. Recently, the self storage industry has been showing heavy muscle in the financial markets. The self storage category is exhibiting powerful gains and investment in storage facilities has begun to take off.
Powerhouse Storage Investment Management Inc. (SIMI) just released its third quarter 2010 operational outcomes for its 31 owned and contract-managed self storage facilities. An owner-operator, fee manager and consultant in the self storage industry, SIMI currently manages more than 30 properties in the northeast. The company reported that occupancy grew 78 basis points compared to the same quarter last year. Expenses decreased by 23 basis points and net operating income (NOI) rose by 446 basis points compared to the same quarter last year. Also, year to date same store sales rose 251 basis points compared to 2009. And operating expenses have decreased by 401 basis points and NOI rose by 605 basis points compared to the same quarter in 2009. The company reported that same store sales increased mostly through a reduction in tenant concessions and an increase in occupancy and stronger rates. The NOI increases were reported to be due to ongoing expense reductions as well as an increase in revenue.
U-Store-It Trust announced Monday that the company acquired six mini storage facilities that contain an aggregate 332,150 sq. ft. of self storage space. The acquired facilities are located in the northeast corridor of the U.S. The company’s total investment will likely be about $25.5 million. Year to date, the U-Store-It has acquired nine storage facilities for a total investment of $58.7 million.
“We continue to be pleased with our ability to source, negotiate and close on acquisitions of facilities located in our targeted markets. Our pipeline of opportunities located in our core markets continues to grow. We look forward to closing our remaining transactions this year and to a healthy acquisition profile in 2011,” said Christopher Marr, President and Chief Investment Officer of U-Store-It Trust in a press release.
Kayne Anderson Real Estate Partners ILP, a private equity real estate fund launched by Kayne Anderson Capital Advisors teamed up with Flagship Investment Group, a developer and operator of commercial property just last week when they acquired five Florida self storage facilities at a total cost of $25 million. Located in Clemont, Fleming Island, Minneola and Orange Park, the properties add up to about 375,000 sq. ft. within more than 3,100 units.
Profits have grown steadily for the self storage industry during the past five years. With strong markets and purchases by big companies looking for solid investments, small investments can be made as well. For those looking to enter into the self storage industry, there are some tips to remember.
The first recommendation is to speak with a brokerage advisor who will have a good sense of the local markets. The most important aspect to opening or purchasing a storage facility is location. It should be easily accessible to the target customer. Look primarily to urban areas or large neighborhoods. Following initial research, the next step is to follow municipal requirements such as completing applications, gaining township approval, organizing engineers and architects and finding the right contractors and vendors. Other matters to consider are addressing new building codes, ADA requirements, storm water management, security issues and gaining final inspection which will lead you to your ultimate goal: Certificate of Occupancy.
Shebby, Pat. “Tips for Self Storage Investment.” Your Great Finance. Nov. 16, 2010
“Storage Investment Management Releases Third-Quarter Self-Storage Operating Results.” Inside Self-Storage. Nov. 16, 2010.
“U-Store-It Acquires Six Self-Storage Facilities” Yahoo Finance. Nov. 15, 2010.
“Kayne Anderson Partners With Flagship Investment to Buy Five Florida Self-Storage Facilities.” Inside Self-Storage. Nov. 10, 2010.