PSA Zooms Ahead of Estimates - Analyst Blog
February 24 2012 - 3:30AM
Zacks
Public Storage
(PSA), a top real estate investment trust (REIT) operating
self-storage facilities, reported fourth quarter 2011 FFO (funds
from operations) of $1.50 per share, compared with $1.33 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 fourth quarter 2011 was $1.66 per share compared
with $1.45 in the year-ago quarter. Recurring FFO for fourth
quarter 2011 exceeded the Zacks Consensus Estimate by 7 cents.
For full year 2011, Public Storage
reported FFO of $5.67 per share, compared with $4.72 in the
previous year. Recurring FFO for fiscal 2011 was $5.93 per share
compared with $5.22 in 2010. Fiscal 2011 recurring FFO surpassed
the Zacks Consensus Estimate by 15 cents.
During the reported quarter, Public
Storage recorded a healthy increase in total revenues to $444.7
million from $417.8 million in the year-earlier quarter. Total
revenues for the reported quarter were well ahead of the Zacks
Consensus Estimate of $422 million. For full year 2011, the company
reported total revenues of approximately $1.75 billion compared to
$1.64 billion in the previous year.
Total same-store revenues increased
5.0% year-over-year to $382.3 million during the quarter, while net
operating income climbed 6.1% to $278.7 million. The increase in
same-store revenues was primarily due to a 1.3% increase in average
occupancy and a 3.4% rise in realized annual rent per occupied
square foot. Occupancy in the same-store portfolio was 90.2% at
quarter-end versus 89.0% in the prior-year period. Realized annual
rent per occupied square foot increased from $12.79 in the
year-earlier quarter to $13.22 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 2 self-storage facilities spanning across 155,000 square
feet of rentable space for $16.0 million. The properties were
located in California and Texas. The company also acquired the
remaining ownership interests in 2 consolidated partnerships for
$6.3 million in cash. In addition, during the reported quarter
Public Storage entered into a contract to acquire a portfolio of 6
self-storage properties (2 in Florida and 1 each in California,
Massachusetts, New Jersey and Pennsylvania) for an aggregate
purchase price of $42 million in cash.
With superior quarterly and fiscal
results that witnessed a healthy increase in both revenues and
earnings, the company increased its quarterly dividend for first
quarter 2012 by 16% to $1.10 per share. Funds from operations
available for distribution (FAD) among common shareholders exceeded
the regular common distributions by $113.2 million during the
quarter. At year-end 2011, Public Storage had $139.0 million of
cash compared to $456.3 million in the year-ago period.
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 #2 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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