The leading real estate investment trust (REIT) operating
self-storage facilities -
) - reported core FFO (funds from operations) of $1.92 per share,
beating the Zacks Consensus Estimate of $1.90 per share by 1.1%
and the prior-year quarter core FFO of $1.76 per share by 9.1%.
Results were aided by improved property operations leading to a
surge in net operating income and acquisition of 56 self-storage
facilities since Jan 2012. In addition, the company announced a
12% hike in its quarterly dividend rate.
After taking into account the impact of a number of non-core
items, reported FFO came in at $2.00 per share, representing an
uptick of 15.6% from the year-ago figure of $1.73 per share.
During the reported quarter, Public Storage recorded a 7.3%
year-over-year increase in total revenue to $512.0 million. The
revenue figure also exceeded the Zacks Consensus Estimate of $504
Quarter in Detail
Same-store revenues increased 5.5% year over year to $441.0
million during the quarter, while net operating income (NOI)
climbed 7.2% to $316.2 million. The increase in same-store
revenues was primarily due to a 4.0% rise in realized annual rent
per occupied square foot to $14.46. Weighted average square foot
occupancy in the same-store portfolio also increased 140 basis
points (bps) to 94.4% as of Sep 30, 2013 from 93.0% as of Sep 30,
On the other hand, during the reported quarter, same-store
revenues in Shurgard Europe decreased 2.4% year over year to
$48.0 million. Same-store NOI for Shurgard Europe fell 3.5% from
the prior-year quarter to $28.3 million. This was due to a fall
in weighted average square foot occupancy in the same-store
portfolio (down 210 bps to 81.5%) and a smaller decline in
realized annual rent per occupied square foot (down 0.2% to
Acquisitions and Expansion
During third-quarter 2013, Public Storage acquired 29 storage
facilities (spanning a 2.2 million net rentable square feet) for
$371 million in cash. These facilities are positioned in
California, Florida, Massachusetts, Rhode Island, and Texas. This
leads the total tally of acquisitions year to date through Sep
30, 2013 to 32 facilities (2.5 million net rentable square feet)
for $392 million.
Moreover, the company has already purchased 44 storage facilities
(2.8 million net rentable square feet) for $324 million in
October and is under contract to buy another 44 facilities (2.7
million square feet) for $430 million. These acquisitions are
expected to close in Dec 2013. These 88 facilities help extend
the company's property portfolio with assets in California,
Colorado, Florida, Georgia, North Carolina, South Carolina,
Texas, and Virginia.
Public Storage also accomplished the expansion to its Bronx, N.Y.
facility adding 209,000 net rentable square feet at a cost of
around $20 million.
As of Sep 30, 2013, Public Storage had development and expansion
projects in its pipeline worth an estimated cost of $188 million
($46 million already incurred at the end of the third quarter).
These projects would add approximately 1.6 million net rentable
square feet of self-storage space.
Public Storage exited the quarter with nearly $57.0 million of
cash and cash equivalents, up from $17.2 million at year-end
Concurrent with its earnings release, Public Storage announced a
quarterly dividend of $1.40 per share, reflecting a 12% increase
over the prior quarter. The dividend will be paid on Dec 30, 2013
to shareholders of record as of Dec 13, 2013.
We are encouraged with the better-than-expected results at Public
Storage. Moreover, the dividend hike boosts investors' confidence
in the stock. The company's ongoing acquisition initiatives
helped it carve a niche in the U.S and the European market.
Furthermore, the 'Public Storage' brand is widely recognized in
the self-storage industry. Backed by this, we believe the company
is well poised to maintain its growth curve going forward.
Public Storage also owns a 43% common equity interest in
PS Business Parks Inc.
), which owns and operates commercial space, primarily flex,
multi-tenant office and industrial space.
Public Storage currently has a Zacks Rank #2 (Buy). A number of
other REITs that are also performing well and deserve a look
Getty Realty Corp.
Parkway Properties Inc.
), both carrying a Zacks Rank #1 (Strong Buy).
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.
GETTY REALTY CP (GTY): Free Stock Analysis
PARKWAY PPTY (PKY): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
PS BUSINESS PKS (PSB): Free Stock Analysis
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