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";s:4:"text";s:25223:"They do have risks associated with them, and it's important to assess those risks carefully before investing. Below is a list of the five best-performing publicly traded storage REITs in 2019. 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. It also has third-party management responsibility over nearly 500 additional locations, providing another 32.5 million square feet to its overall portfolio. The Salt Lake City company has facilities in 37 states; Washington, D.C.; and Puerto Rico. Since rebranding in 2016, the company has expanded geographically and added more buildings on the West Coast. Learn more.Already a member? 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. Access to timely real estate stock ideas and Top Ten recommendations. 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. To be a REIT, a company must invest at least 75% of its total assets in real estate of various types. 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. Market data powered by FactSet and Web Financial Group. I'm referring to the two best self-storage REITs to … 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. 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. Investors have seen that trend play out recently. REITS often make further adjustments to FFO to reflect what income came from regular operations and what came from one-time sales of properties. 6 in terms of owners and operators of self-storage facilities in the U.S., and its overall strategy is to take the best regional operators in the business and tie them together with markets that have the best fundamental prospects for growth. CubeSmart owns or manages more than 1,000 self-storage facilities throughout the United States. Unfortunately, the stock has lagged behind some of its peers in recent years. It's important to understand that self-storage REITs aren't a perfect investment. That tends to remain true regardless of whether the overall economy is strong or weak. You may look at those big, square, nondescript buildings that house consumers’ stuff as merely that: buildings. 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. It also owns 42 percent of an office parks … 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. Sign in here. 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. That's been a winning strategy for the REIT thus far, and it looks poised to continue to succeed going forward. It’s easy to construct a self-storage building because it requires less capital than other forms of real estate. The smallest REIT on the list is National Storage Affiliates. 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. Self-storage facilities have become a popular niche for real-estate investors, and self-storage REITs have naturally followed. With lower overhead and operating costs than many other properties, storage REITs can be quite appealing. This puts the company at No. Finally, REIT investors look for income, so it's helpful to know their dividend yield, or the total annual distributions divided by share price. 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. Same-store revenue and net operating income were both higher by 2.5%, and Life Storage sports an occupancy rate of about 91%. Public Storage is by far the largest player in the self-storage REIT space. Self-storage facility construction slowed in the second quarter of 2019, according to commercial real estate firm Marcus & Millichap. Simply click here to learn more and access your complimentary copy. 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. The analyst also upgraded Public Storage (NYSE: PSA) from Neutral to Buy with a price target lifted from $254 from $267.. Patel says Public Storage is one of the most attractive storage REITs owing to its 3.7% dividend yield and long-term growth potential. For income investors, Public Storage has been a reliable dividend-payer. Millionacres does not cover all offers on the market. 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. However, you can also find larger businesses with huge networks that provide storage solutions to customers across the nation. Comprehensive real estate investing service including CRE. In the first quarter of 2018, net income jumped by more than 60%, and funds from operations were up modestly from year-ago levels. Expansion took it first along the East and Gulf Coasts, and then into the Midwest before making it to the West Coast in 2016 with the acquisition that gave the self-storage REIT its current name. Please read our Privacy Statement and Terms & Conditions. That gives investors a chance to tailor their exposure to match up with the risks they're willing to take and the opportunities they see in the self-storage space. In 2008, it was the largest of four publicly traded storage REITs. 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 … Put Real Estate’s “Unfair Advantages” to Work for Your Portfolio. The biggest risk among self-storage REITs right now is the threat of over-expansion. 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. Certain other metrics can be helpful for REIT investors to consider, although they aren't quite as important in the self-storage context. REIT status is also reserved for larger pools of investors. Strong demand from renter households and businesses has kept rents and occupancy generally flat in the face of ample supply. The Ascent's Best Cities for a High Salary and Low Cost of Living -- How Does the Real Estate Measure Up? [Updated: Jul 27, 2020] Oct 04, 2019 From real estate investing to architectural design and the latest housing trends, Carisa Chappell has been writing about all things … Real-estate investment trusts are specifically structured businesses that hold interests in real estate. 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. 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. 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. Also, turnover at self-storage facilities isn't as high as you might expect. For instance, the shift in population away from the Rust Belt toward the South is likely to put pressure on self-storage holdings in areas with declining populations while promoting rapid expansion in popular locations. There are more than 2,200 Public Storage self-storage locations in the US, Canada and Europe. 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. 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. 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. Stock Advisor launched in February of 2002. With a new image, investors will be interested to see how far the self-storage REIT can climb. For self-storage facilities in particular, occupancy rates are extremely important. With a long history of strong performance, CubeSmart is still well-positioned to keep growing. Management fees hold the prospect of improving overall profit substantially, and that's led to a bounce for the share price. 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. Become a diversified real estate investor without ever talking to an agent or swinging a hammer. With lower expenses, greater income is available. Market data as of 10/3/2019. REITs that meet the requirements above don't have to pay taxes on their income. 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. In all, self storage appears to … 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. Public Storage is an American international self storage company headquartered in Glendale, California, that is run as a real estate investment trust (REIT). 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 Thesis. Take the first step towards building real wealth by signing up for our comprehensive guide to real estate investing. It also owns 42 percent of an office … Later in this article, we'll reveal five of the top pure-play self-storage REITs available to investors. 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. Bring in new people. 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. Even with that rise in the stock, National Storage still sports a yield approaching 4%, putting it in the middle of the pack. As rates rise, the interest expense on loans that self-storage REITs borrow to buy or build facilities goes up. Public Storage is a California-based REIT and member of the S&P 500. 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. Further expansion is in the cards for Extra Space. Self-storage companies and real estate investment trusts (REITs) are big business. The company notes that its size and geographic diversity protect it from the risk associated with specific local or regional economies. Also, National Storage has seen its share price more than double, leaving its rivals on this list in the dust. Size gives Public Storage the advantage of stability. The majority of REITs -- including all self-storage REITs -- own real estate directly, either purchasing or constructing appropriate buildings on their land. Historically, the self-storage business was highly fragmented, with local owners typically having, at most, a few locations concentrated within a close distance. 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. Although demand has been climbing, only about 10% of U.S. households rent self-storage space, according to industry estimates. Many of these companies are small businesses that own only a single storage location. Its current quarterly payout of $0.30 per share is 12 times the $0.025 per share it paid as recently as late 2010. 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. In principle, I see nothing wrong with these suggestions. © 2018 - 2021 The Motley Fool, LLC. 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. https://finance.yahoo.com/news/3-self-storage-reits-consider-162124344.html The outlook for the sector remains strong as consumers continue to need storage space. 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. Returns as of 01/25/2021. In contrast, the five public self-storage REITs owned around 10% of the self-storage industry’s facilities. Sign in here. Public Storage is a California-based REIT and member of the S&P 500. 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. They then bear the brunt of paying any necessary tax. Bigger doesn’t always mean better but in this case it does. Public Storage: Self-Storage REIT With A Green Future Background to PSA. 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. The historical background to PSA is fascinating, the company is responsible for establishing the... Catalyst. If too many players move into a given market, the result will be reduced occupancy rates that threaten profitability. CubeSmart aims to make itself the one-stop storage option for all sorts of customers. They also own and operate more than 1,400 stores. REITList is a list of Publicly Traded and Public, Non-Listed Real Estate Investment Trusts tracked on REITNotes™. Public Storage is by far the biggest of the four major self storage REITs. 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. Life Storage is the highest-yielding self-storage REIT on this list, with a current yield of around 4.6%. 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. 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. You can unsubscribe at any time. Finance. Public Storage is a blue-chip with an A rated balance sheet, Extra Space Storage has been a top performer in the past. The company has a healthy development pipeline with several facilities and large expansion projects in development. To qualify as a REIT, a company must be organized as a corporation and must have at least 100 shareholders. 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. 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. Even when you ignore the impact of dividends, the REIT's share price has jumped more than 500% over the past decade. “The Big 4 self-storage REITs have recently pulled-back, and are once again worth consideration. For dividend investors, that's been a good philosophy so far. *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. 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 also the newcomer of the group, having come public back in 2015. Public Storage is by far the largest player in the self-storage REIT space. Self storage real estate investment trusts (REITs) have been excellent investments over the long term. All rights reserved. The debt-to-equity ratio gives an indication of how much leverage a REIT takes on by comparing outstanding debt to the shareholder equity measured on the company balance sheet. 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. Finally, REITs are required to pay out most of their income to their shareholders. But with the branding change, Life Storage has been able to add third-party management as a more significant part of its overall business. 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. Storage facilities are popping up all over, creating stiff competition thanks to the growing need for storage space and the low barrier to entry. Yet Extra Space has also rewarded its shareholders with growth. In 2008, it was the largest of four publicly traded storage REITs. 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. How to Buy Your First Investment Property With 5% Down (Or Less), These REITs are Immune to the Coronavirus' Impact, Cities and States That Have Paused Evictions Due to COVID-19, The Metros Where Retail CRE will be Hit the Hardest. 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. It has more than 550 storage properties located in 29 different U.S. states, and it has about 34 million rentable square feet in its portfolio. Public Storage has more than 2,500 locations across the U.S. in 38 states and facilities in western Europe. Finally, there's still room for growth. 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. Self Storage Real Estate Investment Trusts (REITs) can focus on the ownership, acquisition, development, redevelopment, and operation of self-storage facilities. 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. 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