Despite a muted year on the acquisition front, Sovran Self Storage Inc., operator of Uncle Bob’s Self Storage, posted double-digit growth in 2013.
The Amherst, NY-based REIT boosted revenue over the previous year by 17 percent to $273.5 million. CEO David Rogers attributed the growth to strong occupancy levels, higher rents and a bump in tenant insurance commissions.
Total profit in 2013 climbed to more than $74 million, a 34 percent jump over the previous year.
“The overall pictures of the self-storage sector remains pretty much unchanged—growth in new supply is minimum, demand is picking up, customer awareness continues to grow,” Rogers said during a conference call with Wall Street analysts.
Same-store revenue rose 7.7 percent over the previous year and same-store profit grew 9.9 percent. The company has 358 same-store locations out of 407 facilities it opens outright. The company manages another 77 facilities.
Average same-store occupancy reached 89.5 percent in 2013, surpassing the previous average by more than 2 percent. At $11.02, average rent per square foot increased 35 cents over the previous year. Further bolstering growth were tenant insurance commission at the company’s same-store locations, which grew 26 percent over the previous year to $7.1 million.
Know When to Hold ’Em
Compared with 2012, the company had a quiet 2013 in terms of acquisitions. The company bought 11 facilities in 2013 for a total of $94.9 million. That’s less than half of the $189 million the company spent during the previous year to buy 28 facilities.
The reduction in activity came, in part, because Uncle Bob’s was outmuscled by competitors in bidding for some of the largest portfolio deals of 2103. Rogers said the REIT reviewed those portfolios and were close to buying a couple of them. As it turned out, larger REITs were willing to pay more than Uncle Bob’s was.
“We’re very disciplined in our acquisitions; we are not going to overpay for deals that we feel are getting overpriced,” Rogers said.
The company said it plans to spend more money on acquisitions this year, with six acquisitions totaling $86.7 million on the books so far in the first quarter. Another $100 million is budgeted this year for acquisitions.
Know When to Fold ’Em
The company also found itself on the other side of real estate deals in 2013, but not as often as in 2012.
Uncle Bob’s sold four facilities in 2013, all during the fourth quarter. The properties—in Tallahassee, FL; Dayton, OH; and Christiansburg, VA—went for a combined $12.3 million. In 2012, the company sold 17 facilities for $47.7 million; those facilities were in Maryland, Michigan and Texas.
Rogers said the company’s sell-off strategy involves exiting markets that are overly competitive or replacing older facilities in markets where it has bought newer facilities.
“We wanted to get out of some of the markets where we might have been subject to inordinate competition,” Rogers said.
Each year, Uncle Bob’s reviews its portfolio to come up with sell-off opportunities. Paul Powell, executive vice president of real estate investments, said Uncle Bob’s might sell five to 10 facilities this year but isn’t marketing any properties for sale right now.