), a leading real estate investment trust (REIT) operating
self-storage facilities, reported second quarter 2012 FFO (funds
from operations) of $1.38 per share, compared with $1.39 in the
year-earlier quarter. The marginal decrease in reported FFO despite
improved property operations was primarily due to the adverse
impact of foreign currency translations.
PUBLIC STORAGE (PSA): Free Stock Analysis
SOVRAN SLF STOR (SSS): Free Stock Analysis
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Excluding several non-recurring items, FFO for second quarter 2012
was $1.62 per share compared with $1.43 in the year-ago quarter
reflected in a year-over-year increase of 13.3%. Recurring FFO for
the second quarter of 2012 beat the Zacks Consensus Estimate by 9
During the reported quarter, Public Storage recorded a 5.4%
increase in total revenues to $457.7 million from $434.4 million in
the year-earlier quarter. Total revenues for the reported quarter
were well ahead of the Zacks Consensus Estimate of $430 million.
Same-store revenues increased 5.1% year over year to $394.7 million
during the quarter, while net operating income (NOI) climbed 8.3%
to $273.7 million. The increase in same-store revenues was
primarily due to a 4.9% rise in realized annual rent per occupied
square foot to $13.23. Occupancy in the same-store portfolio was
92.6% at quarter-end versus 92.3% in the prior-year period.
Public Storage currently has a 49% stake in Shurgard Europe, which
has interests in 189 facilities (10 million net rentable square
feet) located in seven Western European countries. Public Storage
is also the managing member of the JV that owns Shurgard Europe.
During the reported quarter, same-store revenue in Shurgard Europe
increased 0.4% to $47.0 million. Same-store NOI for Shurgard Europe
increased 2.2% year over year to $26.8 million, driven by a 2.7%
rise in realized annual rent per occupied square foot to $25.52.
During second quarter 2012, the company acquired four self-storage
properties for $46 million cash. Spanning 316,000 net rentable
square feet, two of the acquired properties are located in
California, and one each in Florida and New York. Subsequent to the
quarter-end, Public Storage acquired one self-storage facility
(61,000 net rentable square feet) in California for $6 million in
cash. The company is currently under contract to acquire two
additional properties for $31 million.
At quarter-end, Public Storage had $438.5 million of cash and cash
equivalents. The company maintained its quarterly dividend at $1.10
per share. Funds from operations available for distribution (FAD)
among common shareholders exceeded the regular common distributions
by about $70.2 million during the quarter.
We maintain our Neutral rating on the stock, which presently has a
Zacks #3 Rank, translating into a short-term Hold rating. We also
have a Neutral recommendation and a Zacks #2 Rank (short-term Buy
Sovran Self Storage Inc.
), one of the competitors of Public Storage.
Note: 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.