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Jernigan Capital Puts Dallas on Development Watchlist

Jernigan Capital Puts Dallas on Development Watchlist
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The outlook for the self storage industry remains bright for at least the next couple of years, according to Dean Jernigan, chairman and CEO of self storage lending firm Jernigan Capital.

“The performance of the sector will be strong in 2017 and 2018,” Jernigan said during a recent earnings conference call. “There’s a new supply that’s coming on that won’t dramatically impact the public companies. Their platforms are so strong today, they’re going to continue to take market share from the small entrepreneurs, so it’s a great time to be in storage.”

Too much, too fast in the Big D

Jernigan cautioned about one market faced with potential overbuilding of self storage facilities.

“The only market that I’m seeing now that I’m ready to put on our watch list is the Dallas-Fort Worth Metroplex area,” he said. “There is substantial activity in the Metroplex, about 100 properties that we’re following that are in the entitlement process, and some are under construction.”

Jernigan said very few projects have actually been delivered.

“There’s seven million people in that market. But we’re just a little bit concerned about that market. Fortunately for us, we have no loans in that market. So we’re feeling good about that market in case it gets overbuilt.”

Sunny outlook for earnings

The company’s upbeat picture included doubling its guidance for the three months ending June 30, from a low of net income of $1.36 million and earnings per share of 22 cents to a high of net income of $2.11 million and EPS of 34 cents per share.

For the year ending Dec. 31, Jernigan Capital predicted a low for net income of $3.65 million and a high of $7 million, as well as EPS of 59 cents to $1.14.

“The first quarter was a transformational quarter for our company,” Jernigan said. “First and foremost, we witnessed our initial self storage development investments approach certificate of occupancy stage at estimated fair values that significantly exceeded our initial expectations and guidance.”

Joint venture investment

In other news, Jernigan Capital’s new joint venture partnership with Heitman Capital Management is moving along, the CEO said. Heitman is investing $110 million and has a 90 percent stake in investments put into the joint venture.

“Our financial results clearly demonstrate our ability to create shareholder value by focusing on well-located self storage development projects during this unprecedented period of success for the self storage sector,” Jernigan said.

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