LSI Life Storage Inc

Public Storage (PSA), a leading real estate investment trust (REIT) operating self-storage facilities, reported third quarter 2011 FFO (funds from operations) of $1.29 per share, compared with $1.69 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 third quarter 2011 was $1.56 per share compared with $1.35 in the year-ago quarter. Recurring FFO for third quarter 2011 exceeded the Zacks Consensus Estimate by 12 cents.

During the reported quarter, Public Storage recorded an increase in total revenues to $453.0 million from $422.3 million in the year-earlier quarter. Total revenues for the reported quarter were well ahead of the Zacks Consensus Estimate of $428 million.

Same-store revenues increased 5.8% year-over-year to $390.0 million during the quarter, while net operating income climbed 8.6% to $269.5 million. The increase in same-store revenues was primarily due to a 1.3% increase in average occupancy and a 4.0% rise in realized annual rent per occupied square foot.

Average occupancy in the same-store portfolio was 92.2% at quarter-end versus 91.0% in the prior-year period. Realized annual rent per occupied square foot increased from $12.65 in the year-earlier quarter to $13.15 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 quarter, Public Storage acquired a property each in California, Florida and Maryland aggregating 217,000 net rentable square feet for a total purchase price of approximately $27 million. Subsequent to the quarter-end, the company also acquired a California property spanning 87,000 net rentable square feet for $10.5 million.

At quarter-end, Public Storage had $160.7 million of cash and cash equivalents. The company maintained its quarterly dividend at 95 cents per share. Funds from operations available for distribution (FAD) to common shareholders exceeded the regular common distribution by about $98.7 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 #3 Rank 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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