Public Storage (PSA), a top real estate investment trust (REIT) operating self-storage facilities, reported fourth quarter 2010 FFO (funds from operations) of $1.33 per share, compared with $1.27 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 2010 was $1.45 per share compared with $1.33 in the year-ago quarter. Recurring FFO for fourth quarter 2010 exceeded the Zacks Consensus Estimate by 8 cents.
For full year 2010, Public Storage reported FFO of $4.72 per share, compared with $5.61 in the previous year. Recurring FFO for fiscal 2010 was $5.22 per share compared with $5.03 in 2009. Fiscal 2010 recurring FFO surpassed the Zacks Consensus Estimate by 50 cents.
During the reported quarter, Public Storage recorded an increase in total revenues to $418.2 million from $402.2 million in the year-earlier quarter. Total revenues for the reported quarter were well ahead of the Zacks Consensus Estimate of $392 million. For full year 2010, the company reported total revenues of approximately $1.6 billion – similar to that recorded in the previous year.
Same-store revenues increased 2.4% year-over-year to $360.4 million during the quarter, while net operating income climbed 4.2% to $260.3 million. The increase in same-store revenues was primarily due to a 1.7% increase in average occupancy and a 0.3% rise in realized rent per occupied square foot.
Occupancy in the same-store portfolio was 89.0% at quarter-end versus 87.5% in the prior-year period. Realized annual rent per occupied square foot increased from $12.75 in the year-earlier quarter to $12.79 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 4 self-storage facilities spanning across 302,000 square feet of space for $14.3 million. The properties were located in Florida, New Jersey and Ohio. In addition, subsequent to the quarter-end, Public Storage acquired 5 properties in Nevada spanning 386,000 square feet of space for $19.5 million.
At year-end 2010, Public Storage had $456 million of cash, $102 million invested in short-term corporate securities and full availability of $300 million under its line of credit. The company maintained its quarterly dividend of 80 cents per share. Funds from operations available for distribution (FAD) among common shareholders exceeded the regular common distributions by about $104 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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