Think about it: Residential and office buildings have to be built to strict codes to ensure the safety of residents and occupants, and malls and other retail operations have to be attractive enough to draw in shoppers and support the businesses who rent space there. For many of them, renting a unit at a self-storage facility can be an easy solution, providing much-needed space into which they can pack up the objects they don't want to part with, but don't have space for elsewhere. Combine that with the long-term share-price appreciation that the stock has shown, and Public Storage deserves its reputation as a strong leader in self-storage. Also, turnover at self-storage facilities isn't as high as you might expect. But when the basement, garage, or shed just won’t cut it, people turn to storage units -- and they do it often. For dividend investors, CubeSmart's 4.2% yield is fairly high, even in the storage space. The company’s CEO recently said the acquisitions market for self-storage assets is very frothy and that 84% of the company’s acquisitions in 2018 were done through off-market transactions. Strategic acquisitions remain prevalent in the self-storage industry and third-party management platforms continue to grow, as noted by a 2019 report on the sector from Jones Lang LaSalle. REITS often make further adjustments to FFO to reflect what income came from regular operations and what came from one-time sales of properties. Patel says Public Storage is one of the most attractive storage REITs owing to its 3.7% dividend yield and long-term growth potential. [Updated: Jul 27, 2020] Oct 04, 2019 What's left is profit for the REIT. It's similar to net income for regular companies, but it excludes the extensive depreciation that real-estate investment trusts typically have because of their large portfolios of real-estate holdings. You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. I'm referring to the two best self-storage REITs to … If a company doesn't pay out at least 90% of its taxable income as shareholder dividends each year, then it can't be a REIT. It's been expanding aggressively, spending billions of dollars to bring its total network to about 910,000 units and 103 million square feet of rentable space. Self-storage facility construction slowed in the second quarter of 2019, according to commercial real estate firm Marcus & Millichap. Life Storage is the highest-yielding self-storage REIT on this list, with a current yield of around 4.6%. Finally, REIT investors look for income, so it's helpful to know their dividend yield, or the total annual distributions divided by share price. https://finance.yahoo.com/news/3-self-storage-reits-consider-162124344.html With a long history of strong performance, CubeSmart is still well-positioned to keep growing. It’s easy to construct a self-storage building because it requires less capital than other forms of real estate. The majority of REITs -- including all self-storage REITs -- own real estate directly, either purchasing or constructing appropriate buildings on their land. Because of the 90% net income payout requirement for REITs, shareholders can feel confident that they'll get valuable dividends as long as the REIT remains profitable. Storage space is more of a commodity item, though, and that makes it vital for successful self-storage facilities to have occupancy rates that are as high as possible. Stock Advisor launched in February of 2002. Public Storage is by far the largest player in the self-storage REIT space. As rates rise, the interest expense on loans that self-storage REITs borrow to buy or build facilities goes up. Extra Space has done a good job of treating dividend investors well, paying a current yield of 3.5% and having grown its quarterly payouts by more than eightfold since 2010. First, funds from operations, or FFO, is an accounting term that shows how profitable a REIT is. © 2018 - 2021 The Motley Fool, LLC. Sign in here. CubeSmart owns 485 stores with 33.8 million rentable square feet, with an occupancy rate of about 90% as of the first quarter of 2018. Public Storage is a California-based REIT and member of the S&P 500. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. Unfortunately, the stock has lagged behind some of its peers in recent years. Acquisition activity among the national self storage REITs increased significantly during the third quarter of 2020, and third-party management … Many people have accumulated so many things that they’ve run out of space in their own homes -- and investors can profit because of it. The REIT also offers ancillary related services, such as logistics support for receiving packages or retrieving items from storage, moving services like truck rentals and professional movers, organizational supplies, customized storage, and even office amenities like workstations with Wi-Fi. We do receive compensation from some affiliate partners whose offers appear here. The pace of Life Storage's historical dividend growth hasn't been quite as impressive as those of some of its peers, but it's still a notable increase. The Pennsylvania-based REIT recently acquired 21 stores in places ranging from South Carolina to Massachusetts to Florida. 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