Public Storage’s PSA first-quarter 2015 funds from operations (“FFO”) per share came in at $1.91, up from $1.74 reported in the year-ago period. Core FFO per share was $1.94, ahead of $1.80 recorded in the prior year. Results lagged the Zacks Consensus Estimate of $1.95 per share. However, the company has raised its quarterly dividend rate by 21%.
During the reported quarter, this self-storage real estate investment trust (“REIT”) recorded a 9.6% year-over-year increase in total revenue to $569.4 million. The revenue figure also exceeded the Zacks Consensus Estimate of $567 million.
Inside the Headlines
Same-store revenues increased 6.1% year over year to $472.3 million during the first quarter, while net operating income (“NOI”) climbed 8.4% to $329.8 million. The increase in same-store revenues was primarily driven by a 5.6% rise in realized annual rent per occupied square foot to $15.19.
The company also experienced a year-over-year increase of 80 basis points (bps) in weighted average square foot occupancy to 93.4%. Moreover, the company’s NOI from non-Same Store Facilities increased, backed by the acquisition of 48 self-storage facilities since Jan 2014.
In first-quarter 2015, Public Storage bought 4 self-storage facilities – one each in Florida, North Carolina, Texas and Washington – spanning 0.3 million net rentable square feet – for $32.3 million in total.
Liquidity
Public Storage exited first-quarter 2015 with around $152.8 million of cash and cash equivalents, down from $187.7 million at year-end 2014.
Raises Dividend
On Apr 29, Public Storage announced a quarterly dividend of $1.70 per share, reflecting a 21% hike from dividend paid in the prior quarter. The increased dividend will be paid on Jun 30 to shareholders of record as of Jun 15.
In Conclusion
Though an earnings miss at Public Storage is discouraging, we believe that the company’s strong brand value in the self-storage industry as well as acquisition initiatives would help it grow. A dividend raise also boosts shareholders’ confidence in the stock.
Public Storage currently has a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like Prologis, Inc. PLD, SL Green Realty Corp. SLG and Terreno Realty Corp. TRNO. All these stocks carry a Zacks Rank #2 (Buy).
Note: FFO, 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.
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