Self-storage operator Strategic Storage Trust boosted revenue by 24 percent in 2013, but high interest expenses caused net loss of $7.4 million.
Strategic Storage Trust, a non-traded REIT that operates the SmartStop Self Storage brand, posted revenue of $83.1 million in 2013, compared with $66.6 million in 2012.
The company notched operating income of $13.36 million, but interest payments of $18.8 million and other expenses pulled the company’s net income into the red.
Interest adds up
The company came closer to profitability last year than in previous years, including $19 million in 2012 and $21.4 million in 2011. The company has racked up a deficit of $69.4 million.
The company has had to take on considerable debt to acquire its 122 facilities, and with that debt comes the company’s burden of high interest. As of Dec. 31, the REIT’s secured debt added up to $391.3 million.
Since its inception, the company has been snatching up properties to achieve critical mass:
- From 2008 through the end of 2011, the REIT bought 91 facilities for a total of $522 million; 46 of those properties were purchased in 2011.
- In 2012, Strategic Storage Trust purchased 19 properties for $93 million.
- In 2013, the company acquired 12 properties for $82 million.
- So far this year, the REIT has picked up three facilities for about $31.6 million.
Operations on the right track
The good news for Ladera Ranch, CA-based Strategic Storage Trust is that its operations are strong. Same-store revenue, operating income, rental rates and occupancy rates all headed upward in 2013.
Revenue rose 9.1 percent at the company’s same-store facilities, while operating income rose 17.2 percent. Same-store rentals increased 14 cents to $9.94 per foot at the end of 2013. Same-store occupancy climbed 5 percentage points to 83 percent.
“Our continued growth coupled with our ability to operate our portfolio with more efficiencies has contributed to our success in 2013 and bodes well for the future,” Chairman and CEO Michael Schwartz said.
Strategic Storage Trust II
Strategic Storage Trust is backing Strategic Storage Trust II, which aims to operate as a publicly traded REIT. An IPO launched in January, with the ultimate goal of raising more than $1 billion.
Strategic Storage Trust II will open for business when it collects at least $1.5 million. As of March 24, the company had raised $65,000, according to a filing with the U.S. Securities and Exchange Commission.
Strategic Storage Trust has signed a contract to buy five facilities in North Carolina and South Carolina for $22.1 million. The plan is to transfer that deal to Strategic Storage Trust II once the minimum $1.5 million is raised.
The Carolina deal is expected to close in the second or third quarter of 2014, and be financed by IPO proceeds and the assumption of a $12.8 million loan secured by the properties.
The 355,000-square-foot, 2,500-unit portfolio comprises:
- 150 Airport Blvd. in Morrisville, NC
- 120 Centrewest Court in Cary, NC
- 5012 New Bern Ave. in Raleigh, NC
- 338 Jesse St. in Myrtle Beach, SC (pictured above)
- 4630 Dick Pond Road in Myrtle Beach, SC