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Kennards Self Storage News & Updates

Category archive: Industry Facts

Cubesmart Acquire 26 Storage Centres in $223M Deal

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The New York Storage Exchange listed Storage REIT, Cubesmart, has agreed to acquire 26 self storage centres for $223 million (USD).

This transaction follows the other significant portfolio trades by the self storage REIT’s in the last two years.

The properties and spread throughout California, Florida, Illinois, Nevada, New York, Ohio and Rhode Island.

The SEC filing did not disclose trading occupancy, capitalisation rates or asset quality details.

A Snapshot about Cubesmart

• Owns and operates 539 self storage centres across the USA.
• Market Capitalisation: $3.8 billion
• Occupancy grew 390 basis points last year to hit 9.5%.
• Net operating income increased 7% in 2013.

Author: Kennards Self Storage

Storage outperforming other sectors according to the latest Cushman Wakefield Quarterly Report

HastingsNZ 206 (4)Cushman Wakefield have released a report on the self storage sector in the USA. The report provides detailed analysis and comparisons for self storage compares against other asset classes.

The long term average return table found on page 14 is particularly noteworthy with self storage outperforming each other asset class for the 5 year, 10 year and 15 year periods. Self storage enjoyed an 18.9% return over 5 years, beating apartments on 14.9%. Over 10 years, self storage averaged 20.5% with apartments next best again on 16.4%; and over 15 years self storage was 16.5% while retail comes second with 14.4%.

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Moody’s Identify Strengths in U.S. Self Storage Sector in Latest Investor Report

Maribyrnong April 2013 (16)“Self Storage Industry is poised for more growth”.

Moody’s have recently produced a special comment about the characteristics of the Self Storage Sector. The Report identifies strengths enjoyed by the industry that have resulted in continued performance improvement.

The U.S. has four Self Storage REIT’s that have traded strongly with improving N.O.I.

The mobility of the U.S. households has remained high, with many changing to multi-family housing (apartments) as a result of the shock to the housing sector.

In addition, there has been very little new storage development, and little new supply added to the market.

To read the entire report click here “Self Storage Industry Poised for More Growth”.

Author: Sam Kennard, Managing Director, Kennards Self Storage

Grading Self Storage Centres elevates Investor and Valuer Analysis of Assets

Many property asset classes distinguish the investment quality with gradings of A, B and C to help investors and Valuers understand the transactions and value of assets. In Australia and NZ, the self storage industry lacks this sort of asset quality identification practice.

 

The industry would be better for a practice like this to get traction and use. It would provide valuable insight for investors, valuers and lenders who try to assess the assets they have an interest in.

 

Ray Wilson is a US expert in self storage data analysis and valuation with over 30 years experience. He has developed and uses a grading system as shown below:

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Self Storage Valuation Guidelines Available with the A.P.I.

The Australian Property Institute has developed a ‘Practice Note’ in its Valuation Guidelines. This is a vital step in deepening valuer understanding of the Self Storage Asset Class.

Self Storage is a specialist property use. It has unique attributes that need to be fully understood and considered when undertaking a feasibility or valuation.

Too often the industry or investors suffer when a self storage asset isn’t properly assessed. There is too much ignorance and too much assumption.

Unfortunately there has been a recent flurry of receivership activity in the self storage sector. Perhaps much of this would have been avoided with better industry valuation knowledge.

My observations are that failure in self storage boils down to a few poor assumptions by investors, overestimate occupancy and income, while also underestimating the long rent-up, operating expenses and capital cost.

More knowledge about the Asset Class is greatly assisted by the A.P.I.’s Guidance Note.

Read more about A.P.I.’s Valuation Guidance Note here.

Author: Sam Kennard, Managing Director, Kennards Self Storage

Half a Billion Dollars on 22 Self Storage Assets

CubeSmartpicIn late 2011, CubeSmart negotiated a ‘seismic’ deal to acquire 22 A-grade Self Storage Assets in the New York Area. This transaction ‘Closed’ in August this year.

CubeSmart is a New York Stock Exchange REIT (NYSE:CUBE) with 456 storage centres across the United States.

The $560 Million acquisition of the 22 storage centres from Storage Deluxe has created some buzz in the self storage investment sector. It reflects a very sharp 6.2% capitalisation rate on stable assets.

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U.S. Self Storage R.E.I.T.’S Continue with Solid Performance– 2012 Second Quarter Results

The self storage sector in Australia can take a lot of guidance and learning from the industry in the U.S.A.

The transparency of the self storage industry is far greater in the US due to the presence of four major R.E.I.T’s.

The half year reporting season has now concluded and all these major players are showing solid, even strong performance despite the apparent weak economy.

It is not correct to conclude that self storage is recession-proof. However, it is fair to say that the asset class has counter-cyclical attributes.

It is also probably fair to suggest that the major operators have enhanced their operating models and strengthened business systems in this climate. This has allowed them to capture more customers and grow occupancy despite the economic climate.

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Strata Storage Re-emerges With Developer Push

Kennards Self StorageThe idea of strata self storage has appeared and disappeared in waves in the Australian and New Zealand self storage sector over the past 20 years. It seems that there is a re-emergence of this concept in recent times. Developers with slick campaigns and well-oiled businesses promote the concept with confidence.

Kennards Self Storage offers this paper to provide guidance and insight to potential investors.

The idea of buying a storage space has appeal for to 2 traditional property buyer categories. The first is for the owner- occupier. This might be tradespeople or small business who identify the need for a storage area as permanent solution for the stock or equipment. This seems like quite a pragmatic approach. Though it isn’t without risk.

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Grading Self Storage Centres Elevates Investor and Valuer Analysis of Assets

grading Self StorageThis paper attempts to explore the idea of distinguishing different quality self storage assets.

Many property asset classes distinguish the investment quality with gradings of A, B and C to help investors and Valuers understand the transactions and value of assets. In Australia and NZ, the self storage industry lacks this sort of asset quality identification practice.

 

The self storage industry will gain standing and improve professionalism if practice like this gets traction and use. It would provide valuable insight for investors, valuers and lenders who try to assess the assets they have an interest in.

Continue reading