Self Storage Group: REITs Can Be Terrible Investments But This New REIT Could Soar
- NAV of $4.82 implies the stock ($3.55) could see appreciation of 35.8% if it traded at a 1 P/B.
- SELF transitioned from an Investment Mgmt company to a REIT; they will distribute $1/Share of other investments; Expected returns (@ 1 P/B) become 1.27/2.55 = 49.8% (ex. Dividends).
- All 7 storage facilities were built in 2012/13 and are state-of-the-art climate-controlled facilities. Cap Rates imply Carrying Value could be as high as $33m ($28.5m currently).
- SELF yields 7.3% ($0.065/Q dividend), which can be considered safe given projected FY14 FFO. After the special dividend and with occupancy of 90%, SELF would yield ~10-12%.
- SELF is a low-risk investment with a portfolio consisting of 7 new state-of-the-art climate-controlled facilities and $0 debt. As a result, breakeven occupancy rates are ~20% (well below average).