Stor­ing value?

Daily Freeman (Kingston, NY) - - BUSINESS -

Whether it’s a new job, di­vorce or go­ing to col­lege, life has a way of mak­ing ex­tra stor­age space a ne­ces­sity.

Those life tran­si­tions help keep self-stor­age build­ings full and rents go­ing up. Among the big­gest land­lords of self-stor­age space are pub­licly traded real es­tate in­vest­ment trusts, or REITs.

In­vestors flocked to these REITs in re­cent years as de­mand for stor­age space surged, ex­ceed­ing sup­ply, said Brad Schwer, eq­uity an­a­lyst at Morn­ingstar.

Shares in the two largest – Pub­lic Stor­age and Ex­tra Space Stor­age – notched big gains un­til this year. Both are down nearly 15 per­cent so far, part of a broader slide in self-stor­age REITs. The sec­tor posted a neg­a­tive an­nual re­turn of 8.3 per­cent through the first three quar­ters of 2016, ac­cord­ing to the Na­tional As­so­ci­a­tion of Real Es­tate In­vest­ment Trusts. Still, the fac­tors that of­ten prompt peo­ple to rent stor­age space re­main, as do the ul­tra-low va­cancy rates and ris­ing rents, par­tic­u­larly in Cal­i­for­nia. And pop­u­la­tion trends are in their fa­vor. “Down­siz­ing baby boomers should fuel de­mand for self-stor­age,” said Schwer. That could help re­vive shares in the two REITs, both of which are trad­ing be­low Schwer’s es­ti­mates of their fair value price. That sug­gests they’re un­der­val­ued. Here’s a look at the two big­gest self-stor­age REITs:

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