U-Haul has upped its investment in self-storage, and it’s starting to pay off.

During the nine month period ending December 31, 2015, U-Haul spent $439 million on self-storage acquisition, renovation and development—that’s 63 percent more than the $268 million it spent during the same period the year before.

Its rate of expansion is accelerating as well. Of the 3.6 million square feet U-Haul added to its portfolio in 2015, one-third was added during the last three months of the year.

“We’re going right ahead in the self-storage business,” said Joe Shoen, CEO of U-Haul’s parent company AMERCO, during the recent conference call that the company.

Very well positioned

Shoen added that the company’s experience and customer-service focus gives it an edge over new entrants flocking to the self-storage space.

“Every fund that has put together a few billion dollars seems to think that they now are storage experts. There is a little more customer service to it than I think they understand,” Shoen said.

“I believe we’re very well-positioned,” he added, “I believe we understand the customer. I believe that our customer service puts us in the upper tier in that business,” Shoen said.

Joe Shoen, president, chairman and CEO of AMERCO.
Joe Shoen, president, chairman and CEO of AMERCO.

Revenue boost

U-Haul is already seeing results from expanding its storage holdings. Self-storage revenue increased 18 percent during the quarter ended December 31, with a total of $63.2 million earned.

“It’s the largest quarterly increase that I’ve seen going back into recent history,” said Jason Berg, chief financial officer of AMERCO, during the recent earnings call.

Berg attributed the increase to gains in occupancy at existing stores, occupancy at new facilities and overall improvement in rental rates.

Occupancy drops

However, U-Haul reported that overall storage occupancy, 78.4 percent, fell three percent compared to the same quarter last year.

Berg said the drop is due to the amount of brand new self-storage space the company has added over the last year. Of the new self-storage space added in 2015, half came from new development that has zero percent occupancy and the other half came from acquisitions with an average occupancy of 66 percent.

“Excluding this new square footage occupancy, result show an improvement,” Berg said.

Unlike the publicly-traded storage REITs, U-Haul does not report same-store occupancy.

Alexander Harris