Self-storage rentals are becoming an even bigger chunk of U-Haul’s business.
Amerco, parent company of Phoenix-based moving and storage company U-Haul International, generated $2.57 billion in revenue during the 2014 fiscal year, which ended March 31. That’s an increase of 12.6 percent over the 2013 fiscal year.
Moving equipment rentals, mostly trucks and vans, remain U-Haul’s biggest moneymaker, accounting for $1.96 billion in revenue during the 2014 fiscal year. Self-storage revenue totaled $181.8 million, up 19 percent from 2013.
While making up just 7 percent of the company’s total revenue, self-storage is U-Haul’s second-fastest-growing business segment.
“Our plans are to continue to opportunistically expand our presence in the self-storage market through acquisitions, while continuing to work on our conversion and development projects,” Jason Berg, principal financial officer and chief accounting officer at Reno, NV-based Amerco, said May 29 during a conference call with Wall Street analysts.
Bigger storage footprint
While U-Haul’s self-storage revenue grew 19 percent in 2014, revenue from rental of moving equipment went up 9 percent.
The only business area growing faster than self-storage rentals is “other,” driven primarily by rentals of U-Box portable storage containers. “Other” revenue soared 64 percent in 2014, climbing to $158 million.
Our plans are to continue to opportunistically expand our presence in the self-storage market through acquisitions, while continuing to work on our conversion and development projects.
— Jason Berg, principal financial officer and chief accounting officer at Amerco
The increases in revenue for self-storage and U-Box rentals stem, in part, from the company’s expansion of company-owned locations. U-Haul added 2.1 million square feet of self-storage, or about 21,000 units, for the year ended March 31, bring the total to nearly 18.2 million square feet.
The company bought or developed 40 self-storage facilities in the 2014 fiscal year, Berg said.
Berg said self-storage revenue growth also has been aided by a 2 percent rise in average occupancy, nearly reaching 81 percent for 2014. “This leaves us considerable room for additional self-storage revenue growth with little additional costs,” he said.
Increased investment likely
In 2014, the company spent $321 million on acquisition, construction and repair of locations that offer both self-storage and moving rentals. That’s nearly double the $169 million spent on such projects in 2013.
A key part of U-Haul’s growth strategy has been to buy vacant retail or industrial properties and convert them into self-storage facilities. One example is a facility that opened recently at a former textile factory in Wake Forest, NC. The 324,841-square-foot complex, dating back to 1924, had been vacant for several years. U-Haul bought the property last October for $5 million.
Berg said the company doesn’t have a set amount it plans to allocate for acquisitions during the 2015 fiscal year, but he expects it to be in line with the sum spent in 2014.
“We would love to do another $300 million this year, but I can’t give a firm projection on that,” Berg told Wall Street analysts.