Public Storage’s (PSA) acquisition initiatives have helped it carve a niche in the U.S. and European markets. In the third quarter, Public Storage bought 25 self-storage facilities – 19 in Florida, 3 in Maryland and 1 each in North Carolina, New Jersey and Virginia, covering 1.8 million net rentable square feet – for a total of $239 million. Moreover, following the quarter-end, the company acquired a number of self-storage facilities.
Notably, during 2013, the company acquired 121 self-storage properties for around $1.2 billion, marking its largest expansion initiative since the 2006 Shurgard merger. In the first half of 2014, Public Storage bought five self-storage facilities in North Carolina and one in Texas. Such acquisitions bode well for the company’s long-term growth.
Further, aided by an increase in revenues, Public Storage reported better-than-expected earnings in third-quarter 2014. The company’s core FFO of $2.11 per share in the quarter rose 9.9% from the year-ago figure. After considering the impact of a number of non-core items, reported FFO came in at $2.08 per share, representing an uptick of 4% on a year-over-year basis. Both the FFO per share and core FFO per share exceeded the Zacks Consensus Estimate of $2.07 per share.
In fact, the ‘Public Storage’ brand is the most recognized and established name in the self-storage industry, boasting a presence over all the major metropolitan markets of the U.S. We believe that the company holds one of the strongest balance sheets in the sector. However, the continuous decline in the European assets’ realized annual rent per occupied square foot remains a cause of concern. Also, a significantly competitive environment, together with a substantial construction pipeline, increases the company’s operational risks.
To gain a deeper insight into Public Storage, you can refer to our updated research report issued on Dec 31, 2014.
Over the last 30 days, the Zacks Consensus Estimate for 2014 remained unchanged at $8.01, while that for 2015 moved a cent up to $8.62 per share. The stock currently carries a Zacks Rank #2 (Buy).
Stocks That Warrant a Look
Investors interested in the gaming industry may also consider stocks like Chatham Lodging Trust (CLDT), Extra Space Storage Inc. (EXR) and RLJ Lodging Trust (RLJ). All these stocks have a Zacks Rank #2, similar to Public Storage.
Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.
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