Self storage has caught the eye of commercial real estate investors with its impressive returns for 2010 and anticipated continued success for 2011. Publicly-traded self storage real estate investment trusts (REITs) yielded total returns of about 30 percent in 2010, faring better than the broader REIT sector and more than doubling the average total return for companies traded on the Dow Jones Industrial Average.
It is hard not to get excited about those numbers. The self storage niche seems poised to retain its strength in the future, attracting enthusiasm from investors who agree that the tone of the industry is bullish in the upcoming year. Self storage REITs are forecasting a 2 percent to 3 percent increase in same-store sales growth in 2011 and an even stronger increase in net operating income in 2011.
Strategic Storage Trust, Inc. (SSTI), one of only four publicly-registered self storage REITs in the country and one of the fastest growing REITs nationwide, has grown its portfolio size to include 61 self storage facilities in 16 states and Canada, totaling approximately 41,000 units with approximately 5.1 million sq. ft. of storage space. SSTI launched its first and only non-traded REIT three years ago focused entirely on the self storage market. In an effort to diversify and grow its portfolio, SSTI recently entered the international marketplace with its first self storage acquisition in Canada, totaling about $14 million and 1,060 units.
"Now that the market has bottomed out and is on the upswing, we're well positioned to continue to diversify and grow our portfolio," said H. Michael Schwartz, SSTI's chairman and CEO in a press release. "We're raising money, we're acquiring properties, building a brand, creating partnerships, and if we keep investing in those tools, we hope to create value in the long term for our shareholders."
According to the National Association of Real Estate Trusts, self storage REITs posted total returns of 29.3 percent in 2010 and the first two months of 2011 already topped 10 percent. There are only four publicly-traded self storage REITs and they account for a total market capitalization of about $23 billion - a small fraction of the $413 billion equity REIT industry.
With about 50,000 self storage facilities in the country, the sector remains highly fragmented. Only 13 percent of the total self storage market is owned by the top ten largest firms including the four public REITs. The vast majority of properties, or 83 percent of the market, are owned by operators that have three or fewer properties.
Sources Used:
Mattson, Beth. “Self-Storage REITs Poach Business Away From Smaller Operators.” NREIOnline.com. April 4, 2011.
“Strategic Storage Trust, Inc. Celebrates Anniversary With Strong Growth Stats.” PR-USA.net. April 4, 2011.