LSI Life Storage Inc

Public Storage (PSA), a leading real estate investment trust (REIT) operating self-storage facilities, reported first quarter 2011 FFO (funds from operations) of $1.48 per share, compared with $0.78 in the year-earlier quarter. Fund from operations, 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.

Excluding several non-recurring items, FFO for first quarter 2011 was $1.28 per share compared with $1.15 in the year-ago quarter. Recurring FFO for first quarter 2011 missed the Zacks Consensus Estimate by 3 cents.

During the reported quarter, Public Storage recorded an increase in total revenues to $419.8 million from $397.4 million in the year-earlier quarter. Total revenues for the reported quarter were well ahead of the Zacks Consensus Estimate of $396 million.

Same-store revenues increased 3.4% year-over-year to $362.9 million during the quarter, while net operating income climbed 5.4% to $235.5 million. The increase in same-store revenues was primarily due to a 1.7% increase in average occupancy and a 1.4% rise in realized rent per occupied square foot.

Occupancy in the same-store portfolio was 89.8% at quarter-end versus 88.3% in the prior-year period. Realized annual rent per occupied square foot increased from $12.45 in the year-earlier quarter to $12.62 in the reported quarter.

Public Storage currently has a 49% stake in Shurgard Europe, which has interests in 188 facilities (10 million net rentable square feet) located in 7 Western European countries. Public Storage is also the managing member of the JV that owns Shurgard Europe.

During the reported quarter, Public Storage acquired 5 self-storage facilities spanning 386,000 square feet of net rentable space for $19.6 million. The properties were located in Nevada. In addition, Public Storage acquired the leasehold interest in a land parcel at one of its existing self-storage facilities for approximately $6.6 million. The company is also currently under negotiations to acquire 2 facilities (227,000 net rentable square feet, one in New York and the other in Los Angeles) for approximately $28 million.

At quarter-end, Public Storage had $145.1 million of cash. The company increased its quarterly dividend from 80 cents per share to 95 cents. Funds from operations available for distribution (FAD) among common shareholders exceeded the regular common distributions by about $76.1 million during the quarter.

We maintain our ‘Neutral’ rating on the stock, which presently has a Zacks #2 Rank, translating into a short-term ‘Buy’ rating. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank (short-term ‘Hold’) for Sovran Self Storage Inc. (SSS), one of the competitors of Public Storage.

 
PUBLIC STORAGE (PSA): Free Stock Analysis Report
 
SOVRAN SLF STOR (SSS): Free Stock Analysis Report
 
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