The leading real estate investment trust (REIT) operating
self-storage facilities -
) - reported core FFO (funds from operations) of $2.08 per share,
beating the Zacks Consensus Estimate of $2.02 per share by 3.0%
and the prior-year quarter core FFO of $1.86 per share by 11.8%.
Results were aided by improved property operations leading to a
surge in net operating income and the acquisition of 145
self-storage facilities since Jan 2012.
After taking into account the impact of a number of non-core
items, reported FFO came in at $2.13 per share, representing an
uptick of 14.5% from the year-ago figure of $1.86 per share.
During the reported quarter, Public Storage recorded a 9.3%
year-over-year increase in total revenue to $513.5 million. The
revenue figure marginally exceeded the Zacks Consensus Estimate
of $512 million.
For full-year 2013, Public Storage's core FFO per share came
in at $7.44 on revenues of nearly $2.0 billion. This was higher
than the prior-year core FFO per share of $6.68 on revenues of
Quarter in Detail
Same-store revenues increased 5.4% year over year to $432.5
million during the quarter, while net operating income (NOI)
climbed 8.0% to $332.3 million. The increase in same-store
revenues was primarily due to a 4.2% rise in realized annual rent
per occupied square foot to $14.41. Weighted average square foot
occupancy in the same-store portfolio also increased 40 basis
points (bps) to 91.8% as of Dec 31, 2013 from 91.4% as of Dec 31,
On the other hand, during the reported quarter, same-store
revenues in Shurgard Europe remained flat at $49.3 million.
Same-store NOI for Shurgard Europe fell 2.4% from the prior-year
quarter to $29.6 million. This was due to a fall in realized
annual rent per occupied square foot (down 1.2% to $27.04),
partly offset by a rise in weighted average square foot occupancy
in the same-store portfolio (up 80 bps to 82.8%).
Acquisitions and Expansion
During fourth-quarter 2013, Public Storage acquired 89 storage
facilities (spanning 5.6 million net rentable square feet) for
$765 million. These facilities are positioned in
California, Colorado, Florida, Georgia,
North Carolina, South Carolina,
Texas, and Virginia. This leads the total tally of
acquisitions for 2013 to 121 facilities (8 million net rentable
square feet) for $1.16 billion.
Public Storage also completed one new development facility for a
cost of around $17 million. This facility added 105,000 net
rentable square feet of space to the company's portfolio.
As of Dec 31, 2013, Public Storage had development and
expansion projects in its pipeline worth an estimated cost of
$196 million ($52.3 million already incurred through the end of
the fourth quarter). These projects would add approximately 1.8
million net rentable square feet of storage space.
Public Storage exited the year with around $19.2 million of cash
and cash equivalents, up from $17.2 million at year-end 2012.
Concurrent with its earnings release, Public Storage announced a
quarterly dividend of $1.40 per share. The dividend will be paid
on Mar 31, 2014 to shareholders of record as of Mar 14.
We are encouraged with the better-than-expected results at Public
Storage. The company's 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
It also has one of the strongest balance sheets in the sector
with adequate liquidity and a major part of its portfolio
comprises unencumbered assets. Backed by this, we believe the
company is well poised to maintain its growth curve going
Public Storage also owns a 42% 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). Investors
interested in the REIT industry may consider stocks like
Sovran Self Storage Inc.
). Both these stocks carry the same rank as Public Storage.
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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.