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  1. #1
    jcarlisle's Avatar
    jcarlisle is offline CM Emeritus, Reg. Member
    Join Date
    Feb 2009
    Chicago, IL

    Default SS REITs' 3Q Results Will Mean Belt-Tightening

    From Reuters:

    "Depressed tenant demand and anaemic consumer spending are expected to weigh on U.S. storage REITs when they start reporting quarterly results this week."

    "Key metrics such as occupancy and revenue are expected to take a hit as the REITs head into a lean leasing season. The ongoing recession -- the worst in several decades -- has sucked out demand for storage services as people view such expenses as discretionary."

    "3Q occupancy numbers for self-storage REITs are expected to drop by about 300 basis points year-over-year, in spite of increased discounts and incentives to attract customers."

    Rest of the article here:

    I know it's nothing unexpected, but what's your reaction to this?
    John Carlisle
    Community Manager Emeritus
    Still a Big Fan of Self-Storage!

  2. #2
    astro is offline Senior Member
    Join Date
    Feb 2008
    Cashiers, NC


    Not that I wish anyone in this business, less than great luck, but now the REIT's are going to get to experience exactly what I have gone through for the last 14 months. I promise, it isn't nice or easy to swallow.

    REITs, welcome to the real world.
    Bob Taylor (Astro)
    Blue Ridge Self Storage
    Cashiers, NC

    Disclaimer: What Gina said....'cause the the cheese fell of my cracker.

  3. #3
    MisterJim444 is offline Senior Member
    Join Date
    Dec 2007
    Winchester, Virginia


    A key factor to keep an eye on is the growing gap between physical occupancy and financial occupancy obviously reflecting the increased discounting we are seeing in virtually every market. While it is great to say your square footage or unit occupancies are still above 80%, if your financial occupancy is now in the low 70% or high 60% don’t blame the managers. As an owner, if you feel it is necessary to match the lowest price in your market plus give away another 10% (like U-Store It is promoting) then you can’t expect you facility to financially perform as it has in the past. So watch for the physical – financial gap in the REIT’s reporting to better understand the full impact of the discounting we are seeing.

    Learning Never Ends, But Will Time?

  4. #4
    Gina6k's Avatar
    Gina6k is offline Moderator
    Join Date
    Apr 2008
    Morgan Hill, California


    MisterJim444 - On behalf of the managers on the front lines, THANK YOU for your comments. My local peers are having a hard time with this subject.

    Owners are saying; "Get them in the door, rent those units!" Then a short while later "Hey! What's happening to our deposits? How many delinquent accounts are you sitting on?"

    While locally delinquents seem to be rising, what we are seeing is people are still paying, but always one month behind. It's a sad state of affairs but so many are living paycheck to paycheck, so one little thing going wrong sets them back.

    Discounting is huge, $1-20 move-ins are all around us, and still they have spaces open. We've not cut that drastically yet, but October is not looking great in the South Bay area.

    Storman & shaekirk I'd bet are seeing similar situations in the SF Bay Area. Overall, 2009 will still be a decent year for us overall, but I fear with the rampant discounting and the lack of consumer confidence and spending that it's going to be a rough year-end all around.
    Gina 6k
    Cochrane Storage dot com
    Morgan Hill, California

    My profile photo is a Blue Star flag meant to be displayed by families with active duty service members.

    You only live once, but if you do it right, once is enough!
    I am not an attorney, just an experienced manager who is willing to share what I have learned. Your thoughts, practices or opinions may vary and neither of us may be right.

  5. #5
    Jeff Supnick is offline Member
    Join Date
    Feb 2009
    New Jersey

    Default Physical – Financial Gap in the REIT’s Reporting

    Mr Jim once again you hit the nail on the head.

    The single most talked about topic on the Self Storage REIT conference calls in the 2nd quarter of 2009 was all about the subject of maintaining occupancy by discounting and move in incentives. We recently published information about REIT performance in 2nd quarter 09. In the 2nd quarter 09 top line revenues on average, compared to the previous years 2nd quarter for all of the REIT's declined by about 3%.

    Th actual reported revenue results for 2nd Quarter 2009 ended up far better than had been expected, prior to their release. Will be listening to the upcoming 3rd Quarter results starting next week for a clue as to the current state of market demand and rental rates.

    Jeff Supnick
    Supnick Real Estate Co.



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