Monday, June 16, 2014

A Look Inside Self Storage R E I T S

The road to the stabilization of the U.S. economy has been a long one, especially for those in the self storage industry. The recession meant that many investors were scared to make new ventures and would even consider pulling out of old ones. However, things have been looking up and REITs in the self storage industry have been seeing some major successes and headway.

REIT Extra Space Storage Inc. recently appointed Diane Olmstead to its board of directors. She has over 32 years of experience in investing and corporate finance and brings a wealth of knowledge to Extra Space and the self storage industry. Key players like these are exactly what the self storage industry needs to grow. We have seen the industry becoming more and more mainstream with both celebrities and the general public taking an interest in the industry in the form of television shows. However, if the self storage industry is really going to soar to the next level, it needs business savvy people to institute sound business practices.

There are a few REITs in the self storage industry that are not afraid of taking a bit of a risk when it comes to investments and higher interest rates for stocks. Since interest rates began to rise in the 1990s, analysts have found that REITs consistently outperform the broader markets. The Jeffries team, which a global investment bank and institutional securities firm headquartered in New York, found that there were a few self storage REITs that will perform on a very good basis in 2014. These include Extra Space Storage and Public Storage.

Self storage REITs all over the nation have been catching the eyes of potential investors. Over the past few months in Long Island, nine self storage facilities have been acquired by two larger firms. Smaller self storage facilities in Long Island have also been approached by large investment firms to sell their properties. Nick Malagisi, the national director for Van Ness International in Buffalo, explained that the interest in self storage facilities is due to the fact that they fared better during the recession than a lot of other sectors. Another factor that interests investment firms is the industry’s low payroll to gross revenue ratio and the near absence of legal liabilities. Investing in self storage is basically a win-win for everyone involved.

Potential tax breaks also attract investors to the self storage industry. The majority of self storage facilities are owned by small business owners with investment firms making up around 11.9 percent of the industry. Local officials are helping in self storage deals as Sovran recently received a tax break from Nassau County Industrial Development Agency and the Town of Babylon IDA based on its recent renovation of its acquired properties. So far, the figures look promising for self storage REITs. If the industry continues to grow, then self storage business owners can look forward to promising returns.


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