BAYVIEW ADVISORS SELF STORAGE INDUSTRY AND REIT REPORT Q4 AND END OF YEAR 2014

Transcription

1 BAYVIEW ADVISORS SELF STORAGE INDUSTRY AND REIT REPORT Q4 AND END OF YEAR 2014 JAY J. CROTTY Managing Partner O D: jcrotty@bayviewadv.com THOMAS A. DOYLE Senior Vice President O D tdoyle@bayviewadv.com JOSEPH T. BRAZILL Senior Associate O D jbrazill@bayviewadv.com bayviewadv.com

2 REIT Comparison Highlights RENTAL REVENUE HISTORICAL QUARTERLY OCCUPANCY $450,000,000 $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 CubeSmart Extra Space Public Storage Amerco Sovran Self Storage 96.0% 91.0% 86.0% 81.0% 76.0% $ Q Q4 DIVIDEND PER SHARE TOP 5 U.S. SELF STORAGE FACILITY OWNERS $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 $0.16 $0.47 $1.40 $0.00 $0.75 CubeSmart Extra Space Public Storage Amerco Sovran Self Storage Company Name # of Facilities Total SF Stock Price Public Storage 1, ,400,000 $ Extra Space Storage ,355,507 $ U-Haul International - 19,617,000 $ CubeSmart ,200,000 $ Sovran Self Storage $

3 CubeSmart and Extra Space Highlights CUBESMART (NYSE: CUBE) Reported funds from operations ( FFO ) per share, as adjusted, of $0.28, representing a year-over-year increase of 21.7% Increased same-store (346 facilities) net operating income ( NOI ) 8.6% year over year, driven by 6.6% revenue growth and a 2.3% increase in property operating expenses Same-store occupancy averaged 90.7% during the quarter, up 140 basis points year over year; ended the quarter with same-store occupancy of 90.0% Closed on 30 facility acquisitions totaling $260.6 million FFO, as adjusted, was $46.8 million for the fourth quarter of 2014, compared with $33.0 million for the fourth quarter of 2013 The Company acquired an additional eight properties for $65.1 million during the three months ended December 31, These acquisitions included five facilities in Texas and three in Florida. EXTRA SPACE (NYSE: EXR) Achieved funds from operations ( FFO ) of $0.62 per diluted share. Excluding costs associated with acquisitions, casualty losses and noncash interest, FFO as adjusted was $0.68 per diluted share, representing a 19.3% increase compared to the same period in Increased same-store revenue and net operating income ( NOI ) by 7.3% and 9.5%, respectively, compared to the same period in Increased same-store occupancy by 190 basis points to 91.4% as of December 31, 2014, compared to 89.5% as of December 31, During the quarter, the Company acquired 19 operating stores located in California, Colorado, Florida, Georgia, New Jersey, North Carolina, South Carolina, Texas and Virginia for approximately $163.5 million. Of these 19 stores, 15 were acquired from our third-party managed stores. Subsequent to the end of the quarter, the Company acquired three additional operating stores located in Texas for approximately $41.9 million. Paid a quarterly dividend of $0.47 per share. The Company has 28 operating stores under contract for a total purchase price of approximately $228.9 million. The stores are located in Arizona, North Carolina, South Carolina, Texas and Virginia. All of these acquisitions are expected to close by the end of the second quarter of

4 Public Storage Highlights PUBLIC STORAGE (NYSE: PSA) Q For the three months ended December 31, 2014, net income allocable to our common shareholders was $284.0 million or $1.64 per diluted common share, compared to $243.7 million or $1.41 per diluted common share for the same period in 2013 representing an increase of $40.3 million or $0.23 per diluted common share. Self-storage net operating income increased $41.3 million, which was offset partially by a $9.8 million increase in earnings allocated to preferred shareholders due to the issuance of additional preferred shares and a $7.8 million reduction associated with foreign currency exchange gains and losses. The increase in our self-storage net operating income was the result of a $23.2 million increase for our Same Store Facilities and an $18.1 million increase for our non-same Store Facilities. Revenues for the Same Store Facilities increased 5.6% or $24.9 million in the quarter ended December 31, 2014 as compared to the same period in 2013, due primarily to higher realized annual rent per occupied square foot. YEAR END 2014 For the year ended December 31, 2014, net income allocable to our common shareholders was $908.2 million or $5.25 per diluted common share, compared to $844.7 million or $4.89 per diluted common share for the same period in 2013, representing an increase of $63.5 million or $0.36 per diluted common share. Self-storage net operating income increased $157.2 million and our $36.5 million equity on sale of real estate included in our equity in earnings of real estate entities, which was partially offset by a $49.7 million increase in depreciation and amortization expense associated with acquired facilities, a $24.1 million reduction associated with foreign currency exchange gains and losses, an $28.3 million increase in earnings allocated to preferred shareholders due to the issuance of additional preferred shares and a $17.7 million decrease in interest and other income due primarily to the disposition of 51% of our loan receivable from Shurgard Europe. The $157.2 million increase in our self-storage net operating income is a result of an $84.0 million increase for Same Store Facilities and a $73.2 million increase for our non-same Store Facilities. 22 4

5 Amerco and Sovran Highlights AMERCO (NYSE: UHAL) Net earnings available to common shareholders for its third quarter ended December 31, 2014, of $66.5 million, or $3.40 per share, compared with net earnings of $52.2 million, or $2.67 per share, for the same period last year. Self-storage revenues increased $7.4 million during the third quarter of fiscal 2015, compared with the third quarter of fiscal 2014 due primarily to an increase in the number of rooms rented. The average monthly amount of occupied square feet increased by 13% during the third quarter of fiscal 2015 compared with the same period last year. The growth in revenues and square feet rented comes from a combination of improved occupancy at existing locations as well as the addition of new facilities to the portfolio. Over the last twelve months we have added approximately 1.8 million net rentable square feet to the self-storage portfolio with over 0.3 million of that coming on during the third quarter. Real Estate has traditionally financed the acquisition of self-storage properties to support U-Haul s growth through debt financing and funds from operations and sales. Our plan for the expansion of owned storage properties includes the acquisition of existing self-storage locations from third parties, the acquisition and development of bare land, and the acquisition and redevelopment of existing buildings not currently used for self-storage. We are funding these development projects through internally generated funds. For the first nine months of fiscal 2015, we invested approximately $ 268 million in real estate acquisitions, new construction and renovation and repair. SOVRAN SELF STORAGE (NYSE: SSS) Net income available to common shareholders for the fourth quarter of 2014 was $25.7 million or $0.76 per fully diluted common share. Included in the fourth quarter 2014 net income is a $3.4 million gain related to the sale of a Texas storage facility. Total revenues increased 17.9% over last year s fourth quarter while operating costs increased 14.1%, resulting in an NOI (3) increase of 19.6%. Overall occupancy averaged 88.9% for the period, and rental rates averaged $12.19 per sq. ft. Revenues for the 384 stores wholly owned by the Company since January 1, 2013 increased 6.3% from those of the fourth quarter of 2013, the result of a 60 basis point increase in average occupancy and a 5.2% increase in rental rates. The Company acquired five self storage facilities for a total cost of approximately $55 million in the fourth quarter. Subsequent to quarter end, the Company s Board of Directors authorized a 10% increase in its quarterly dividend to $0.75 per share or $3.00 annualized. 22 5

6 Industry News MARCH 2, 2015 Near Fed majority backs June liftoff Yellen hasn t yet endorsed: Janet Yellen s premium on consensus may lead to a Federal Reserve decision the chair hasn t yet endorsed, as a near majority aligns in favor of a possible June interest rate hike. (Reuters) FEBRUARY 19, 2015 This chart shows why Wal-Mart had no choice but to raise wages: On Thursday, Wal-Mart announced that it would raise its minimum hourly wage for 500,000 employees. This chart is why. (Business Insider) FEBRUARY 16, 2015 Operators weigh options as $6 billion in loans come due: A wave of CMBS loans are coming due over the next three years, and it couldn t come at a better time for the self-storage industry. Nearly $6 billion worth of 10-year self-storage CMBS loans are set to mature between 2015 and 2017, according to figures from mortgage data provider Trepp. (Sparefoot) FEBRUARY 4, 2015 How We Learned to Love the Core Real Estate Asset Pricing Bubble: In the years preceding the last commercial real estate pricing run-up, pricing hit new, all-time highs; replacement cost became a quaint, old-fashioned metric, and replacement rents were replaced by ever-escalating rents based on forward-looking pro forma to make any acquisition and most developments look promising. (National Real Estate Investor) 22 6

7 BAYVIEW ADVISORS TEAM CONTACTS JAY J. CROTTY Managing Partner O D jcrotty@bayviewadv.com FL RE Broker THOMAS A. DOYLE Senior Vice President O D tdoyle@bayviewadv.com FL RE Salesperson JOSEPH T. BRAZILL Senior Associate O D jbrazill@bayviewadv.com FL RE Salesperson bayviewadv.com