How many times on television or in the movies has the plot of a good murder mystery evolved around a shady land deal gone bad? The concept in Hollywood is a fairly common one. Who wouldn’t be mad if they invested thousands (along with lot of other people) into a venture only to see their money go up in smoke?
Luckily art does not always imitate life and not all land or real estate deals go bad. Real estate investment trusts, commonly known as REITs, have been doing rather well of late. In general, the sector saw a return of eight percent according to the Dow Jones All REIT Equity index. The self storage REITs did even better, leading the way in REITs once again by positing a return of 35.4 percent.
It has helped that the current economy has created an atmosphere that is conducive to a business like the self storage industry being successful.
"Almost every situation in life can create demand for self-storage, like moving, divorce and getting married, [that is] irrespective of where the economy may be,” said Michael Knott, an analyst at Green Street Advisors.
One self storage REIT, Extra Space Storage, outpaced the others by posting a 43 percent return for the last year.
"Along with the rest of the industry, [Extra Space] had a very good year, including increased occupancy and rising rents," said Paul Adornato, an analyst at BMO Capital Markets. According to a recent report in the Wall Street Journal, the industry as a whole is nearing an occupancy rate of 90 percent and has seen rents rise anywhere from 3-10 percent.
Extra Space Storage was pretty aggressive throughout the year when it came to acquiring new self storage facilities. By the end of the year the company had purchased 55 facilities across 17 states; close to half of them were in the fourth quarter when they spent just under $190 million on 28 properties.
"Extra Space Storage is a growth-oriented company and these acquisitions demonstrate that we continue to be a disciplined buyer of assets that enhance our best-in-class portfolio. We are excited by the quality, location and growth potential of the acquisitions we made in 2011," said Spencer F. Kirk, the Company's Chairman and Chief Executive Officer.
That success appears ready to continue in the New Year as well. It was reported on January 3 that the company’s stock traded at a new high for the last 52-weeks ($24.77/share).
Sources Used:
“Investing in a Renter’s Market.” Equities.com; 11 January 2012.
“Storage REITs Enjoy a Boom.” Wall Street Journal; 11 January 2012.
“Storage industry grows along with public interest.” GoErie.com; 04 January 2012.
“Extra Space Storage(R) Announces Acquisition of 28 Properties for $189.9 Million in Fourth Quarter of 2011.” MarketWatch; 03 January 2012.
“Extra Space Storage: The Winning Streak Continues (EXR).” FNN Online; 03 January 2012.