Boosted in part by a bump in Internet bookings, first-quarter revenue for self-storage REIT Public Storage rose 10.3 percent and profit increased by 7.5 percent compared with the same period last year.
Public Storage reaped $519.6 million in revenue during the first quarter of 2014, with profit of $174.1 million.
For the REIT’s 1,983 same-store locations, revenue grew 5.1 percent over the previous year, while profit increased 5.6 percent. Same-store locations represent 89 percent of the company’s rentable square footage.
During a call with Wall Street analysts, Chairman and CEO Ron Havner said: “New supply in our industry is nominal, and this makes for an ideal operating environment.”
Winning on the web
One factor that helped lift first-quarter performance is the REIT’s Internet presence, according to Havner.
During the first quarter, 58 percent of move-ins were booked online, compared with 51 percent in the same period last year.
“I think the ability of the larger operators to place themselves in better [search] rankings on either the desktop or mobile is very helpful,” Havner said.
Occupancy on the rise
Average occupancy for the quarter was 92.6 percent, compared with 91.9 percent during the same period last year. Public Storage ended the quarter with total occupancy of 93.2 percent. Occupancy continued to rise through April, ending the month at 93.9 percent.
“As we go into May and June,” Havner said, “we’ll kind of get sold out, so we’ll peak out at 95 percent to 95.5 percent occupancy in the system.”
Realized per-square-foot rents jumped by 4.3 percent to $14.41 during the first quarter compared with last year. John Reyes, chief financial officer, said Public Storage’s street rates are going up as the self-storage industry heads into its busy season.
“People are actually taking those rates. Move-in rates are starting to creep higher in the first quarter,” Reyes said.
Reyes said street rates are about 6 percent to 7 percent higher now than they were a year ago.
While other self-storage REITs were busy making acquisitions during the first quarter, Public Storage was in development mode.
The company finished two facilities and expanded another facility during the first quarter, adding a total of 335,000 square feet at a cost of $40 million.
The company has an unspecified number of development and expansion projects underway that will add 1.9 million square feet at a cost of $195 million. The company allocated $38 million of that expense during the first quarter.
The company bought only one facility during the first quarter—the 86,000-square-foot Spare Space Storage in Austin, TX. The price tag: $11 million. The company paid $6 million in cash and financed the rest.
Looking ahead, the company has a contract to buy five facilities in North Carolina for $26 million. That deal is expected to close during the second quarter.