Public Storage Revenues Plummet - Analyst Blog

Public Storage (PSA), a real estate investment trust (REIT) operating self-storage facilities, reported a decline in total revenues for fourth quarter 2009 to $402.9 million, compared to $416.8 million in the year-earlier quarter. For full year 2009, total revenues were $1.6 billion compared to $1.7 billion in the previous year. The year-over-year decrease in revenue was primarily due to a reduction in realized rent per square foot.

During the quarter, FFO (fund from operations) was $1.27 per share compared to $1.48 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.

The year-over-year decrease in FFO was largely due to foreign currency exchange loss. Excluding the one-time items, FFO for the fourth quarter of 2009 was $1.33 per share compared to $1.38 in the year-ago period. For full year 2009, Public Storage reported FFO of $5.61 per share compared to $5.05 in the previous year. Excluding non-recurring items, FFO for full year 2009 was $5.03 per share, versus $5.16 in 2008.

Same-store revenues decreased 3.9% during the quarter year-over-year, while net operating income declined 3.7%. Overall occupancy in the same-store portfolio was 87.4% during the quarter versus 87.8% in the prior-year quarter. Realized annual rent per occupied square foot decreased 3.8% year-over-year from $13.27 to $12.76.

For full year 2009, same-store revenues of Public Storage decreased 3.2%, while net operating income declined 3.9% compared to the year-ago period. Overall occupancy in the same-store portfolio was 88.7% during the year versus 89.5% in the prior year. Realized annual rent per occupied square foot decreased 2.8% year-over-year from $13.08 to $12.71.

Public Storage currently has a 49% stake in Shurgard Europe that has interests in 187 facilities (10 million net rentable square feet) located in seven Western European countries. Public Storage is also the managing member of the JV that owns Shurgard Europe. The company has currently extended the maturity of its existing $561.7 million loan to Shurgard Europe to Mar 2013.

At year-end 2009, Public Storage had $764 million of unrestricted cash and access to $300 million line of credit. Total outstanding debt as of Dec 31, 2009 was $519 million with no significant debt maturities before 2011. During the year, funds from operations available to distribute to common shareholders (FAD) exceeded the regular common distributions by $430 million. Management also increased the quarterly dividend by 18% from $0.55 per share to $0.65.
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