), a leading real estate investment trust (REIT) operating
self-storage facilities, reported adjusted FFO (funds from
operations) of $1.86 per share, well ahead of the Zacks Consensus
Estimate of $1.76 per share and prior-year quarter figure of
$1.66 per share.
After taking into account the impact of a number of non-core
items, reported FFO came in at $1.86 per share, significantly
ahead of $1.50 per share reported in the prior-year quarter.
The surge in FFO per share was primarily due to improved property
operations and impact of foreign currency translations. The
company also announced a 14% hike in its quarterly dividend rate.
For full year 2012, Public Storage's adjusted FFO reached $6.68
per share, exceeding the Zacks Consensus Estimate of $6.24 per
share and the prior-year figure of $5.93 per share. Including the
impact of a number of non-core items, reported FFO came in at
$6.31 per share, up from $5.67 per share in the prior year.
During the reported quarter, Public Storage recorded a 6.5%
increase in total revenue to $465.5 million from $437.0 million
in the year-earlier quarter. Total revenue for the reported
quarter was also well ahead of the Zacks Consensus Estimate of
For full year 2012, the company achieved a 6.4% year-over-year
increase in revenue to $1.8 billion. The figure also surpassed
the Zacks Consensus Estimate of $1.75 billion.
Quarter in Detail
Same-store revenues increased 4.9% year over year to $405.1
million during the quarter, while net operating income (NOI)
climbed 8.9% to $306.6 million. The increase in same-store
revenues was primarily due to a 3.5% rise in realized annual rent
per occupied square foot to $13.72. Occupancy in the same-store
portfolio was 91.4% at quarter-end versus 89.6% in the prior-year
During the reported quarter, same-store revenue in Shurgard
Europe decreased 2.5% to $47.2 million. However, same-store NOI
for Shurgard Europe increased 0.8% year over year to $28.6
million, driven by a 1.1% rise in realized annual rent per
occupied square foot to $26.29.
During fourth quarter 2012, Public Storage acquired 10
self-storage facilities for $82 million in cash. Of the 10
properties, 3 are located in Fla., 2 each in Ga. and Calif. and 1
each in Ariz., N.Y. and Texas.
The properties span 761,000 net rentable square feet of
self-storage space as well as additional space that the company
plans to convert into 220,000 net rentable square feet of storage
space for an additional cost of $15 million.
DCT INDUSTRIAL (DCT): Free Stock Analysis
HERSHA HOSPTLY (HT): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
PS BUSINESS PKS (PSB): Free Stock Analysis
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At year-end 2012, Public Storage had $17.2 million of cash and
cash equivalents. As of that date, the company had $133.0 million
outstanding on its credit facility. The company repaid this in
full on Jan 16, 2013 and financed the repayment with the proceeds
generated from the Series W preferred share issuance.
Notably, in Dec 2012, the company made redemptions of 3 preferred
series at par aggregating $362.5 million. However, the company
recognized $12.0 million in charges related to this redemption.
Moreover, subsequent to the quarter-end, the company issued 5.20%
Series W preferred shares generating gross proceeds of $500.0
Concurrent with its earnings release, Public Storage announced a
hike in its quarterly dividend. The increased dividend now stands
at $1.25 per share, reflecting an augmentation of 15 cents per
share, or 14% from the prior-quarter amount. This dividend will
be paid on Mar 28, 2013 to shareholders of record as of Mar 13.
We are encouraged with the better-than-expected results at Public
Storage. We believe that the company is well poised to maintain
its growth curve backed by its robust presence in all the major
markets in the U.S.
It is the leading owner and operator of storage facilities in the
U.S. and has significantly increased the scale and scope of its
operations through the acquisition of Shurgard Storage Centers
that has a considerable presence in the European markets.
It also owns a 41% common equity interest in
PS Business Parks Inc.
), which owns and operates commercial space, primarily flex,
multi-tenant office and industrial space. In addition, the
storage facilities of the company have high visibility and are
usually located in heavily populated areas that enhance the local
awareness of the brand.
This provides a significant upside potential to the company and
we expect the size and scope of its operations to enable it to
achieve economies of scale, thereby generating high operating
margins in the fourth quarter. However, demand for storage
facilities has reduced relatively as customers have trimmed down
their discretionary spending, and this remains our concern.
Public Storage currently has a Zacks Rank #3 (Hold). A number of
other REITs that are performing well and deserve a look include
Hersha Hospitality Trust
DCT Industrial Trust Inc.
), both carrying a Zacks Rank #2 (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.