Over the past few years, U-Haul has been cautious about snapping up existing self-storage facilities because of rising acquisition costs, according to Chief Accounting Officer Jason Berg. As a result of those higher costs, U-Haul wants to be more of a developer than an acquirer.

“For several years, we were buying existing product at less than what we could build it for,” Berg told Wall Street analysts during a conference call. “We are now at the point where that’s kind of shifted.”

The company has $100 million to $120 million worth of construction projects in its pipeline that it expects to finish over the next two to three years, Berg said.

U-Haul did expand its self-storage assets over the past 12 months, adding more than 2 million square feet for a total footprint of 20.3 million square feet. The company tallied 63 new self-storage locations in fiscal 2015.

The company spent $375 million on real estate in the just-completed fiscal year, with much of that money going toward acquisition and development.

Storage revenue growth

Over the past 12 months, U-Haul’s self-storage revenue rose by 16 percent. The moving and storage operator generated a total of $211.1 million from its self-storage rental business in fiscal 2015.

Amerco, the Reno, NV-based parent company of U-Haul, wrapped up fiscal 2015 on March 31.

The self-storage segment accounted for just 6.8 percent of the company’s annual revenue of more than $3 billion, two-thirds of which comes from truck and trailer rentals. The company posted profit of $356.7 million in fiscal 2015.

Room to grow

Average monthly occupancy at U-Haul’s self-storage facilities was 81.7 percent in fiscal 2015, up from 80.5 percent in fiscal 2014. About one-third of the rentable space added in fiscal 2014 was brand-new vacant space, which brought down overall occupancy. The other two-thirds were acquired facilities with an average occupancy rate of 70 percent.

“What this tends to show is that we have considerable room for additional self-storage revenue growth from just what has already been acquired or developed,” Berg said.

Alexander Harris