U-Haul continues to move full-speed ahead when it comes to increasing its self-storage business.

“We have a pipeline full of self-storage products and I expect we’ll see an increased amount of inventory come in the next 12 months than in the prior 12 months,” said Joe Shoen, chairman of parent company Amerco.

The company is splitting its purchases between new buildings that it converts and acquisitions of existing sites, the company reported in fiscal Q2 2017 results ending Sept. 30. The company continues to seek new buying opportunities for developing sites and existing facilities.

U-Haul acquired the vacant warehouse in Asheville, NC in June, it is adding 900 self-storage units.
U-Haul acquired the vacant warehouse in Asheville, NC in June, it is adding 900 self-storage units.

Keep adding

Storage revenue rose about 16 percent during the recent quarter, from $62 million during the same period last year to $72.2 million.

“We attribute it to occupancy gains at existing locations, new facilities being added to the system as well as general improvement in rates,” CFO Jason Berg said.

He added that the company added approximately 3.5 million net rentable square feet over the last 12 months, with about 540,000 of that alone in Q2. Those additions bring U-Haul’s total self-storage footprint to 25.48 million square feet.

Overall occupancy fell to 78.9 percent compared to the year-ago period of 84 percent. Unlike the self-storage REITs, U-Haul reports occupancy for all of its facilities, not just stabilized locations.

Amerco officials added that it generally takes 12 to 18 months after the initial cash outlay to open the conversions -– with five years being the worst-case scenario — thus its financial reports don’t reflect the benefits until customers are signed and revenue generated.

Truck rentals up

Overall, Amerco reported net earnings of $176.5 million, or $9.01 per share, on revenue of $999 million in the second quarter. That compares with year-ago earnings of $183.4 million, or $9.36 per share, on revenue of $963 million.

“This quarter has developed about like we thought it would: Truck transactions were up, income per transaction down,” Shoen said. “The truck resale market is supporting lower pricing and is likely to stay that way. We continue to add rental vehicles and self-storage locations.”

Storage payoff expected

In related news, Joseph Gaebler of Seeking Alpha predicted further growth for U-Haul’s self-storage business.

“Amerco’s self-storage business has a large amount of ‘hidden earnings’ that have not yet been taken into account by the market. A spin-off of Amerco’s self-storage business could unlock value.” –Joseph Gaebler, Alpha News

“Amerco’s U-Haul business has distinct competitive advantages due to its brand name and size,” he wrote. “These advantages would be incredibly difficult to replicate.


Bruce Goldberg