Public Storage’s PSA first-quarter 2018 core funds from operations (FFO) per share of $2.48 marked 4.6% growth from the prior-year quarter figure of $2.37. The figure also surpassed the Zacks Consensus Estimate of $2.46.
Results highlight improvement in net operating income (NOI) from both same-store and non same-store facilities. Higher realized annual rent per occupied square foot supported the company’s same-store performance. Additionally, Public Storage benefited from its expansion efforts.
Quarterly revenues of $669.9 million also climbed 3.8% from the prior-year quarter. The figure also beat the Zacks Consensus Estimate of $668.9 million.
Behind the Headlines
Same-store revenues advanced 2.1% year over year to $549.9 million during the first quarter, while the company’s NOI inched up 1.7% to $395.9 million. The increase in same-store revenues was primarily driven by a 3.0% rise in realized annual rent per occupied square foot to $17.30. However, the weighted-average square foot occupancy of 92.3% contracted 80 basis points year over year.
In addition, the company’s NOI from non-same store facilities grew on the back of the 127 self-storage facilities acquired and developed since January 2016.
Portfolio Activity
In the reported quarter, Public Storage bought two self-storage facilities, comprising 0.2 million net rentable square feet of area, for $18 million. As of Mar 31, 2018, the company was under contract to acquire three self-storage facilities, spanning 0.2 million net rentable square feet of space, for $19 million.
Finally, as of Mar 31, 2018, the company had several facilities in development (2.7 million net rentable square feet), with an estimated cost of $381 million, as well as expansion projects (2.3 million net rentable square feet) worth roughly $281 million. Public Storage estimates to incur the remaining $382 million of development costs related to these projects mainly over the next 18 months.
Liquidity
Public Storage exited first-quarter 2018 with around $363.0 million of cash and cash equivalents, down from $433.4 million recorded at the end of the prior quarter.
Dividend
On Apr 25, Public Storage’s board of trustees announced a regular quarterly dividend of $2.00 per share. The amount will be paid on Jun 28 to shareholders of record as of Jun 13, 2018.
In Conclusion
Public Storage is one of the largest owners and operators of storage facilities in the United States. The company’s acquisition and expansion efforts look promising. In addition, a solid balance sheet has enabled the company to pay sustainable dividends. However, supply has been rising in a number of its markets. This limits the company’s power to raise rents and turn on more discounting. Furthermore, rate hike remains another concern.
Public Storage currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock has gained 0.5% over the past three months, outperforming the 6.8% loss incurred by the industry it belongs to.
Public Storage Price, Consensus and EPS Surprise
Public Storage Price, Consensus and EPS Surprise | Public Storage Quote
We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. ARE, Essex Property Trust Inc. ESS and Regency Centers Corporation REG. Alexandria and Regency Centers are scheduled to release results on Apr 30, while Essex Property is slated to report earnings figures on May 2.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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