Public Storage 's ( PSA ) fourth-quarter 2014 core FFO (funds from operations) of $2.20 per share came in line with the Zacks Consensus Estimate and up 5.8% from the year-ago figure. After considering the impact of non-core items, reported FFO came in at $2.17 per share, representing an uptick of 1.9% on a year-over-year basis.
During the reported quarter, this self-storage real estate investment trust ("REIT") recorded a 10.3% year-over-year increase in total revenue to $566.1 million. The revenue figure also marginally exceeded the Zacks Consensus Estimate of $565 million.
For full year 2014, the company reported core FFO per share of $8.09, up 8.7% from a year ago. Revenues came in at around $2.2 billion, reflecting a 10.8% rise year over year.
Inside the Headlines
Same-store revenues increased 5.6% year over year to $467.7 million during the fourth quarter, while net operating income ("NOI") climbed 6.8% to $364.0 million. The increase in same-store revenues was primarily driven by a 5.2% rise in realized annual rent per occupied square foot to $15.20. The company also experienced a 50 basis points (bps) year-over-year increase in weighted average square foot occupancy to 93.5% as of Dec 31, 2014. Moreover, the company experienced an increase in NOI from non-Same Store Facilities, backed by the acquisition of 165 self-storage facilities since Jan 2013.
Furthermore, same-store revenues in Shurgard Europe climbed 3.8% to $50.3 million in the quarter. Same-store NOI for Shurgard Europe edged up 0.8% from the prior-year quarter to $29.3 million. Though realized annual rent per occupied square foot fell 3.3% to $24.06, it was offset by a 620 bps rise in weighted average square foot occupancy in the same-store portfolio to 88.9%.
As of Dec 31, 2014, Public Storage held projects for 25 newly developed facilities (3.0 million net rentable square feet of storage space) at a total cost of $351 million and several expansion projects (they will add 0.4 million net rentable square feet of storage space) at a total sum of $60 million.
In fourth-quarter 2014, Public Storage bought 13 self-storage facilities - 4 located in Minnesota, 2 in Virginia and Texas, and 1 each in North Carolina, South Carolina, Florida, California and Arizona - spanning 1.2 million net rentable square feet - for a total price of $154 million.
Public Storage exited fourth-quarter 2014 with around $187.7 million of cash and cash equivalents, up from $19.2 million at year-end 2014.
Concurrent with its earnings release, Public Storage announced a quarterly dividend of $1.40 per share. The dividend will be paid on Mar 31, 2015 to shareholders of record as of Mar 16.
The year-over-year increase in earnings at Public Storage is encouraging, thanks to the superior performance of its U.S. portfolio. The company's acquisition initiatives helped it carve a niche in the U.S. and European markets. However, the continuous decline in European assets' realized annual rent per occupied square foot remains a cause of concern.
Public Storage currently has a Zacks Rank #2 (Buy). Investors interested in the REIT industry may also consider stocks like Sovran Self Storage Inc. ( SSS ), CubeSmart ( CUBE ) and Extra Space Storage Inc. ( EXR ). While Sovran Self Storage sports a Zacks Rank #1 (Strong Buy), CubeSmart and Extra Space Storage share the same Zacks Rank as 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.