Public Storage continued to push occupancy and rental rates during the third quarter, helping the publicly traded self-storage REIT boost operating revenue 11.6 percent compared with the same period last year.
The Glendale, CA-based company brought in $571.5 million during the three months ended Sept. 30. Year to date, the company has pulled in revenue of $1.63 billion, a 10.9 percent increase over the first nine months of 2013. The company grew same-store sales by 5.5 percent over the same quarter last year.
Profit grew by 3.3 percent to nearly $295 million compared with the same period a year ago. Year-to-date profit climbed to $801.5 million, a 5.5 percent jump compared with last year.
Occupancy rates continued to drive revenue gains for the company. Occupancy at same-store facilities averaged 94.7 percent during the third quarter, compared with 94.4 percent during the same period last year. Meanwhile, average realized rents grew by more than 5 percent — from $14.48 per square foot a month to $15.25 per square foot.
John Reyes, chief financial officer of Public Storage, said the company is looking to bump up occupancy even more by being slightly less aggressive on pricing in the coming months.
“As we move into the next couple of quarters, we’re going to try to expand the occupancy,” Reyes said during a conference call with Wall Street analysts. “As a result, we’re spending more on television, a little more on Internet advertising, and we’re being a little more conservative on pricing and promotions.”
Reyes said occupancy is just one of the factors the company relies on to achieve its ultimate goal: revenue growth over the long haul.
“For us, it’s not solely about occupancy,” Reyes said. “We switch between which lever to pull and which lever we think is going to be optimal to get us our revenue growth.”
Early in the third quarter, Public Storage completed the acquisition of a 25-facility portfolio from Veritage Management for $239 million. The 1.8 million-square-foot portfolio is concentrated in Florida.
Since Sept. 30, Public Storage has purchased 10 self-storage facilities in Minnesota, Virginia, Arizona, North Carolina, South Carolina, Texas and Florida for a combined price tag of $98 million. The new acquisitions span 929,000 rentable square feet. Four more facilities, with purchase prices totaling $63 million, are under contract; those deals are expected to close by the end of 2014. The four facilities cover a combined 333,000 square feet.
In addition, the company has $342 million worth of development and expansion projects underway that will add 3 million square feet to the Public Storage portfolio.
Referring to the overall upswing in self-storage development, Public Storage CEO Ron Havner (pictured at top) said: “I’m sure the developers are very excited to be building. And that will, in my mind, accelerate new supply.”
Public Storage’s development pipeline is spread across 13 states. The company is on track to deliver $35 million to $40 million worth of new supply each quarter through the first half of 2015.
Photo of Ron Havner courtesy of NAREIT