U-Store-It Posts Decent 2Q; Fair Value Estimate Unchanged

We've reviewed U-Store-It's YSI second-quarter results, and while we'll update our valuation model to account for incremental acquisition activity announced in the earnings release, we don't anticipate a material change to our fair value estimate for the self-storage landlord. Similar to Public Storage PSA, U-Store-It's internal operations have improved with firmed fundamentals in the apartment sector. On a year-over-year, same-store basis, net operating income grew 7.4% on a 3.5% increase in revenue and a 2.3% decline in expense. Other property revenue, comprising items such as insurance commissions, and occupancy growth of 2.3% to 78.5% drove the same-property improvement, since realized annual rent per square foot was flat. While we think apartment fundamentals should accrue to U-Store-It in a small manner in the near term, we caution that growth prospects may be meager as the firm fights an uphill battle against the multitude of mom-and-pop storage owners and the goliath in the sector, Public Storage.