Self Storage Market Favoring More Sophisticated Operators

Spencer Kirk, CEO of Extra Space Storage, Inc. (NYSE: EXR), joined REIT.com for a CEO Spotlight video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.

Kirk commented on the company’s first quarter results, which showed double-digit growth in funds from operations (FFO) and net operating income (NOI). The results reflected a combination of special initiatives taken by Extra Space and industry-wide developments, according to Kirk. He noted that the company has a strong operating platform, while the current operating environment is “unprecedented.”

“There is virtually no new supply, and the Internet has tilted the field in favor of the larger, more sophisticated operators,” Kirk said. He pointed out that the company attracts about 85 percent of its customers through the Internet.

Turning to geographic expansion, Kirk said the REIT has a “great footprint” from Hawaii to Puerto Rico. Potential markets that Extra Space would be interested in targeting include Minneapolis-St. Paul and the Seattle-Portland area, he added.

The interview occurred prior to the announcement that Extra Space had entered into a definitive agreement to acquire SmartStop Self Storage, Inc., a public non-listed REIT, for $1.4 billion. SmartStop is currently the seventh-largest owner and operator of self-storage facilities in the United States, according to Extra Space, operating 169 self-storage properties in 21 states and Canada.