Given record-high occupancy levels at its facilities over the past several quarters, Uncle Bob’s Self Storage has had to turn away thousands of potential tenants. There’s just not enough room. According to David Rogers, CEO of Uncle Bob’s owner Sovran Self Storage, that’s benefiting independent operators.
“They’ve got to go somewhere, and they are going to smaller operators,” Rogers said of the turned-away customers.
Sovran ended the first quarter with a same-store occupancy rate of 90.5 percent, up from 89.2 percent a year ago.
“We have been on a nice upward trend, hitting historic occupancies over the last few quarters,” Rogers told Wall Street analysts April 30.
Aided by a lack of new supply, Rogers said rising occupancy throughout the sector has generated greater pricing power for operators as a whole. At Uncle Bob’s facilities, same-store rent averaged $11.94 per square foot during the first quarter, up from $11.55 a year ago.
Rogers said Uncle Bob’s will be pushing up rates aggressively heading into the second quarter. Asking rates are up almost 5 percent since last year and are growing.
In the first quarter, the publicly traded self-storage REIT enjoyed a 34.4 percent boost in profit compared with same period a year ago, totaling nearly $22.6 million. Revenue for the quarter reached $85.4 percent, up 13.2 percent over last year.
Revenue grew 5.7 percent at the company’s 399 same-store locations compared with last year, while same-store net income grew 7.5 percent. The company has more than 500 locations in the U.S., with 433 of them being wholly owned.
Sovran bought six facilities during the first quarter for a combined total of $135.2 million.
Four of the facilities, in Connecticut and New York, were purchased from Arredondo Holdings for $120 million. The facilities operated under the name Westy Self Storage until 2013, when Uncle Bob’s began leasing the properties and rebranded them.
Also during the first quarter, the company bought two facilities in the Chicago, IL, market.
One is an existing facility at 5253 W. 111th St. in Alsip, IL, that Sovran picked up for $6.77 million.
The other is a facility converted from an industrial building at 5860 N. Pulaski Road in Chicago. Sovran bought the property from the developer for $8.5 million as part of a certificate-of-occupancy deal. Property records show the developer bought the property last June for $3.5 million.
More on the way
Since March 31, the end of the third quarter, Sovran has purchased three facilities for a total of $23.9 million. Those stores facilities are in Dallas, TX; Jacksonville, FL; and Fort Myers, FL. The Jacksonville property had been managed by publicly traded self-storage REIT CubeSmart.
Paul Powell, chief investment officer at Sovran, said his REIT has four existing properties under contract and three certificate-of-occupancy deals under contract for a total of $26 million. In addition, the company is negotiating to buy 11 properties for about $67 million, and is arranging four certificate-of-occupancy deals for about $43 million.