The self-storage industry is performing very well right now, and the stocks of real estate investment trusts, or REITs, that specialize in the property type have risen sharply. However, only a few self-storage REITs are publicly traded.
But investors could soon have another choice, and one that's much earlier in its growth story than the other publicly traded options. According to Bloomberg reports, California-based SmartStop Self Storage is considering an initial public offering, or IPO, that could come as soon as this year.
SmartStop in a nutshell
To be perfectly clear, SmartStop is already a real estate investment trust. The business' formal name is SmartStop Self Storage REIT. It just isn't currently traded on a public stock exchange. This isn't uncommon -- REITs can be publicly traded, public and not traded, or private investment vehicles.
SmartStop is the 10th largest self-storage operator in the United States, with 155 properties either owned or managed on a third-party basis. In all, the company's portfolio consists of about 11.9 million square feet of rentable storage space spread amongst 105,000 units. The properties are located in 19 different U.S. states, and the company also has a significant footprint in the Toronto market. The portfolio has particularly high concentrations along both coasts and in the Great Lakes region as well as in Texas.
We've seen a surge in IPO activity over the past year or so, and that's especially true in industries that are performing well. For example, record low mortgage rates have led to an explosion in refinancing activity, and as a result we've seen several major mortgage companies decide to pull the trigger on their IPOs.
The same is true in the storage industry, and we're seeing just how resilient and in-demand storage facilities are. Just to name one example, Life Storage (NYSE: LSI), one of the largest players in the space, recently reported same-store revenue growth of nearly 15% in the second quarter.
SmartStop's recent results have been quite impressive as well. In the second quarter of 2021, the company reported same-store revenue and NOI growth of 21.5% and 28.7%, respectively. Occupancy in the portfolio reached 96.3% at the end of the second quarter, the highest level in the company's history. In short, SmartStop's business is very strong right now.
Other self-storage operators have reported strong results as well, and this has been a major catalyst for their stock prices. There are currently four major self-storage REITs in the market, and all have handily beaten the S&P 500 over the past year.