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Public Storage (PSA) Q2 FFO Beats Estimates on Higher Rent

Zacks Equity Research

Public Storage’s PSA second-quarter 2019 core funds from operations (FFO) per share of $2.64 improved 2.7% from the prior-year figure of $2.57. The reported figure also surpassed the Zacks Consensus Estimate by a whisker.

Results were driven by better-than-expected growth in revenues. Higher realized annual rent per occupied square foot supported the company’s same-store performance. Additionally, Public Storage benefited from its expansion efforts in the reported quarter.

Quarterly revenues of $711.0 million also climbed 3.7% from the prior-year quarter, outpacing the Zacks Consensus Estimate of $705.1 million.

Behind the Headlines

Same-store revenues advanced 1.9% year over year to nearly $602.1 million during the second quarter, while the company’s NOI inched up 0.8% to $434.3 million. This upside in same-store revenues was primarily driven by a 1.7% increase in realized annual rent per occupied square foot to $17.55. Weighted-average square foot occupancy of 94% expanded 20 basis points year over year.

In addition, the company’s NOI from non-same store facilities grew on the back of the facilities acquired in 2018 and 2019, and the fill up of recently-developed and expanded facilities.

Portfolio Activity

During the June-end quarter, Public Storage bought 10 self-storage facilities, comprising 0.7 million net rentable square feet of area, for $116.7 million. Following Jun 30, 2019, the company acquired or was under contract to acquire 10 self-storage facilities, spanning 0.8 million net rentable square feet of space, for $86.5 million.

Finally, as of Jun 30, 2019, the company had several facilities in development (1.1 million net rentable square feet), with an estimated cost of $189 million, as well as expansion projects (2.7 million net rentable square feet) worth roughly $332 million. Public Storage estimates to incur the remaining $329 million of development costs related to these projects, mainly over the next 18 months.


Public Storage exited second-quarter 2019 with around $360.3 million of cash and cash equivalents, slightly down from the $361.2 million recorded at the end of 2018.

Notably, on Apr 19, 2019, the company amended its $500-million revolving line of credit. The move helped extension of the maturity date from Mar 31, 2020 to Apr 19, 2024, as well as lower the current effective borrowing spread over LIBOR from 0.850% to 0.70%, and the current effective facility fee from 0.080% to 0.070%.  


On Jul 24, Public Storage’s board of trustees announced a regular quarterly dividend of $2.00 per share. The amount will be paid on Sep 27, to shareholders of record as of Sep 12, 2019.

In Conclusion

Public Storage’s outstanding performance in the June-end quarter, backed by growth in realized annual rent per occupied square foot and occupancy, is encouraging. The company is benefiting from healthy demand for self-storage space amid favorable demographics in its markets. Its expansion efforts are also encouraging. Further, with the second-quarter amendment of its revolving line of credit, Public Storage has enhanced the company’s financial flexibility through maturity extension and reduction in borrowing cost.

The company, however, operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. In addition, there is a development boom of self-storage units in many markets. This high supply is likely to intensify competition, curb its power to raise rents and turn on discounting.

Public Storage currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Public Storage Price, Consensus and EPS Surprise

Public Storage Price, Consensus and EPS Surprise

Public Storage price-consensus-eps-surprise-chart | Public Storage Quote

We, now, look forward to the earnings releases of other REITs like Regency Centers Corporation REG, Apartment Investment and Management Company AIV and Federal Realty Investment Trust FRT, which are slated to report their quarterly numbers tomorrow.

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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