Kelsey Smith is a single mother who works as a waitress in Midvale, Utah, and lives with a roommate in a small apartment in the Sugar House neighborhood of Salt Lake City. Smith, 26, pays $500 a month for daycare for her 3- year-old, which makes it hard to get by on a waitress’s pay. She says she’s had to move to cheaper lodgings six or seven times.

Rather than drag all her belongings with her, Smith rents a 10-foot-by-15-foot (3-meter-by-5-meter) self-storage unit, for which she pays $80 a month -- as much as two shifts’ worth of wages and tips. The unit contains furniture and other items she’s accumulated over the years -- “just the things you’d need if you had a home,” she says. “People don’t want to let go.”

Millions of Americans are like Kelsey Smith, Bloomberg Markets magazine will report in its September issue. They’ve got furniture and old photos, children’s toys and bric-a-brac that they’re loath to give up, yet they can’t find a place for it in their homes, garages or apartments.

That’s been a huge boon for Kenneth Woolley and Spencer Kirk. They’re the chairman and chief executive officer, respectively, of Extra Space Storage Inc., the best-performing of four publicly listed self-storage companies, all organized as real estate investment trusts.

REITs -- agglomerations of property that sell like stocks -- are booming. Investors are pouring into the asset class as they search for alternatives to a frothy equities market and low-yielding bonds. Bloomberg indexes for hotel, shopping-center and apartment REITs have returned more than 12 percent this year as of Aug. 4, compared with 4 percent for the Standard & Poor’s 500 Index.

Tax Advantage

REITs are attractive to investors because they pay no taxes if they distribute all of their income to shareholders, which gives them relatively high dividend yields.

The hottest REITs are the self-storage trusts, according to Bloomberg Markets’ second annual ranking of alternative investments. Three out of the top five of the REITs in the 141-company Bloomberg REIT Index for the three-year period ended on March 31 are self-storage companies, excluding firms with less than $100 million in market value.

Extra Space is the top performer, with an annualized return of 36.7 percent for the three years and 27.9 percent for one year. The shares closed today at $52.02, up 23.47 percent year to date. Extra Space’s income from operations grew more than 20 percent year over year for the 14 quarters ended on June 30.

The high returns are driven by robust demand for storage units, which are also used by small businesses to hold inventory.

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