SELF STORAGE REIT DIVIDENDS MOST DEPENDABLE
I’m Lauren Gores for StorageMart News. Real estate has been a boom-and-bust market, but investors are finding serious value in a certain type of space.
Spoiler alert — we’re talking about self-storage. Specifically, though, about Real Estate Investment Trusts — how they’re grabbing up self-storage facilities — and why.
See, those trusts — referred to as REITs — invest directly in real estate and are bought, sold and traded on the stock market.
Self-storage REITs have done well for investors — even in 2013 when some others haven’t had the same kind of returns.
The Wall Street Journal reports REITs are cooling off — except for two sectors — lodging and self-storage.
“Self-storage REITs have been among the strongest-performing sectors over the last decade. So it’s not a big surprise that they’re yet again a strongly performing segment of the market.” (Via REIT.com)
A writer for The Motley Fool looked at three successful REITs in three different industries. Any guesses as to which one wins out?
“Digital Realty provides the buildings and infrastructure required for data centers. American Tower focuses on cell towers. Extra Space Storage is one of four REITs that make up the self-storage sector. One of these companies has found the secret sauce for success.”
See that green line at the top? The one that keeps going up? That’s Extra Space Storage over the past year. The blue line reflects the return of the S&P 500 in the same time period.
At the beginning of 2013, Jim Cramer touted another REIT called Public Storage, saying, “That is a REIT that is standing the test of time, especially with baby boomers retiring. People are looking for storage as they go into smaller houses. It’s a downsizing situation.” (Via Seeking Alpha, Flickr / Tulane Public Relations)
A Forbes article notes the record-high occupancy rates of around 90 percent for self-storage facilities, and says self-storage REITs are expanding “ … by gobbling up the smaller chains and pursuing far-reaching dominance in the highly fragmented specialty commercial real estate sector.”
Investor’s Business Daily explains why REITs continue to be great income plays — because they pay most of their net income to trust holders.