Rowlett Storage Units at 2416 Lakeview Pkwy | Extra Space Storage
ExtraSpace Storage (EXR)

What are Self-Storage REITs?

Self-storage REITs own, operate, develop and manage primary self-storage facilities, focused
in densely populated metros. Self-storage facilities range from one story to several stories in
height and can offer amenities such as climate control, elevators and 24-hour surveillance.
Leases are among the shortest in the REIT universe at one month in duration. The REITs run
occupancies in the low-to-mid 90% range. Given their expertise and brand awareness, the
REITs also have active third party management platforms. The self-storage sector is
fragmented with the five largest players, four being REITs, representing less than 15% of the
rentable square feet, nationally. Storage metrics are quoted on a per square foot basis, and
rent per square foot is usually quoted on an annualized basis. Self-storage tenants include
individuals as well as commercial customers. The best quality self-storage sites can
accommodate large trucks associated with some commercial customers.

Same store revenue growth: In the self-storage sector, same store revenue growth is the
most closely watched metric. This metric gives the investor an idea of the demand
environment for self-storage and the ability for the operators to raise rates.
Net Asset Value (NAV): The self-storage REITs are typically valued based on an NAV (net
asset value) basis. However, the REITs have traded at premiums to their NAVs due to the
significant consolidation and technological shift that are both disproportionately benefitting
the REITs.

Key Terms

Primary storage facility: The primary facility is a self-storage facility where rent storage
space is the primary means of business.
Secondary storage facility: The secondary facility is a building that conducts other forms of
business and additionally offers self-storage services.
Discounts/Concessions: These discounts are really teaser prices that self-storage operators
use to induce customers into their facilities. Discounts are primarily used during the first
month of storage.
Street rate: These are market rental rates for new self-storage customers.
Revenue per available square foot (RevPAF): This is total rental revenue divided by total
portfolio rentable square feet. RevPAF is also expressed as rental rate x occupancy.

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