self storage market overview: operations and investments
TRANSCRIPT
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Self Storage Market Overview:
Operations and Investments
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My BackgroundMy Background Licensed Real Estate Agent since 1994
Sold Residential Real Estate, 1994 to 2000
Extra Space Storage, 2000 to 2006
District Manager of a15-Property Portfolio
Marcus & Millichap Real Estate Investment Services
Self-Storage Investment Broker, 2006 to present
Self Storage Profits, Scott Meyers, 2011 to Present
Coach / Mentor
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One of the fastest-growing sectors of the commercial real estate industry over the period of the last 25 years
1 in 10 households currently rent a self storage unit (10%). This is up from 6% in 1995
Source: Self Storage Association
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Demand DriversDemand DriversLife Changing Events Death Divorce/Break-Ups Weddings/Consolidating Households Household Moves Small Business
5.09 million existing homes sold (2013); +9% from 2012 & highest level in 7 yrs
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“Self Storage is a great property type as it just continues to ‘puke’ cash”! Ron Havner, CEO,
Public Storage
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REIT Performance: 2013 vs 2012REIT Performance: 2013 vs 2012
Company REV NOI # Stores Occupancy
Extra Space Storage
7.4% 10.0% 1029 88% to 89%
Public Storage 5.3% 8.2% 2200 92% to 93%
Uncle Bob’s 7.7% 9.9% 475 87% to 90%
CubeSmart 7.4% 9.3% 526 85% to 89%
Source: Q4 2013 Earnings Call
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Year End 2013 ResultsYear End 2013 Results Revenue growth ranges from 5.3% to
7.7%
NOI growth ranges from 8.2% to 10.0%
Leading private operators displaying similar strong performance, although REITs on average have about 3% occupancy advantage over non-REITS
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REIT vs Non-REIT Performance: REIT vs Non-REIT Performance: 2013 versus 20122013 versus 2012
REIT’s Non-REITs / Mom & Pops
Income 6.95% 4.45%
Asking Rental Rates 1.0% 0.70%
Physical Occupancy 88% to 90% 85% to 87%
REIT Analyst Calls; Private Sources of over 46 facilities
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Major Markets with Above Major Markets with Above Average Revenue Growth Average Revenue Growth
Source: REIT Earnings Calls
Chicago DenverLos Angeles San Diego
Texas FloridaNew York North Carolina
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Income DriversIncome Drivers
Locks, Boxes & Moving Supplies
Admin Fees Tenant Insurance Truck Rentals
30-day Leases Reduce Discounts Revenue Mgmt Lower Cost of
Operations Increase Occupancy
Diversified cash flow, low volatility and low capital expenditures and no tenant improvement expenses = attractive income stream
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Investment Market Overview
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Self-storage companies were found to be the best real estate investment over the
past 10 years.- Bloomberg
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Cap Rate TrendsCap Rate Trends
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Cap Rate vs. 10-Year TreasuryCap Rate vs. 10-Year Treasury
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Self-Storage vs. Self-Storage vs. Other Investments Other Investments
On Average: Stocks Return 10.98% per year Bonds Return 11.03% per year Storage REITs Return 17.85% per year
Source: Ibbotson Associates SBBI bonds index, NAREIT Report
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Investment MarketInvestment Market
What does this all mean to me??
Raising private equity for your investment or trying to get a loan??
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In Summary… In Summary…
Positive Revenue GrowthIncreased Occupancy
Returning (consumer) DemandHIGH Investor Demand
Low Interest RatesAvailable Capital
Lack of Alternative InvestmentsGo Get ‘Em
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Questions?Questions?