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In a move to fortify its presence in Minnesota, Public Storage PSA recently acquired six storage locations in Downtown Minneapolis and the neighboring popular cities. In fact, the rebranded storage sites have pushed up the company’s presence by 12% in Minnesota.
Located across the metro area, from Downtown Minneapolis to the suburbs of Lakeville, Edina, New Hope and Bloomington, as well as in the City of Hutchinson, these storage locations are likely to add a competitive edge to Public Storage which has opened about 50 locations around the state in just the last decade or so.
The latest expansion of its footprint in the Twin Cities is a strategic fit for Public Storage. This is because of the migration of the rural population toward urban and suburban markets in the state as the level of unemployment is low, while housing is affordable in the Minneapolis-Saint Paul market. This, in turn, is spurring demand for storage facilities and giving ample scope to storage facility providers like Public Storage to capitalize.
In fact, the company, a recognized and established name in the self-storage industry in the United States, has been benefiting from robust industry fundamentals and favorable demographics in its markets.
The company has been capitalizing on growth opportunities and since the beginning of 2013 through Jun 30, 2018, Public Storage has acquired 276 facilities with 19.4 million net rentable square feet from third parties, for around $2.5 billion. Further, the company unveiled newly-developed and expanded self-storage space for a total cost of $1.1 billion, adding approximately 10.0 million net rentable square feet during this period.
Following Jun 30, 2018, the company acquired or was under contract to acquire 14 self-storage facilities, spanning 0.8 million net rentable square feet of space, for $95.2 million. Also, as of Jun 30, 2018, the company had several facilities in development (2.2 million net rentable square feet), with an estimated cost of $315 million, as well as expansion projects (3.9 million net rentable square feet) worth roughly $364 million. Such acquisitions and expansions bode well for long-term growth.
Nonetheless, supply has been rising in a number of markets. This is a concern as it limits the company’s power to raise rents and turn on more discounting. Also, rate hike adds to its woes.
Shares of Public Storage have outperformed the industry it belongs to, in the past six months. This Zacks Rank #3 (Hold) company’s shares have logged in a gain of 15.0%, while the industry has rallied 9.7% during the same time period.
Stocks to Consider
A few better-ranked stocks from the real estate space are Outfront Media Inc. OUT, PS Business Parks, Inc. PSB and W. P. Carey Inc. WPC. While Outfront Media sports a Zacks Rank #1 (Strong Buy), PS Business Parks and W. P. Carey carry Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Outfront Media’s Zacks Consensus Estimate for 2018 FFO per share remained unchanged at $2.06 in the last 30 days.
PS Business Parks’ current-year FFO per share estimates inched up 0.3% to $6.39 over the last 30 days.
W. P. Carey’s FFO per share estimates for 2018 moved 5.8% north to $5.12 in 60 days’ time.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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