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Public Storage (PSA) Meets Q3 FFO Estimates, Ups Dividend
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Public Storage’s (PSA - Free Report) third-quarter 2016 funds from operations (“FFO”) per share of $2.51 came in line with the Zacks Consensus Estimate. The figure also expanded 10.6% from the prior-year quarter.
Results reflect an improvement in net operating income (“NOI”) from both same-store and non-same store facilities. The company also announced an 11% hike in its quarterly dividend.
However, revenues of $663.1 million climbed 7.2% from a year ago but missed the Zacks Consensus Estimate of $667 million.
Behind the Headlines
Same-store revenues were up 5.1% year over year to $542.3 million during the third quarter, while NOI climbed 4.7% to $400.3 million. The increase in same-store revenues was primarily driven by a 5.2% rise in realized annual rental income per occupied square feet to $17.06. The weighted-average square foot occupancy of 95.3% remained unchanged year over year.
Moreover, the company’s NOI from non-same store facilities enhanced because of 308 self-storage facilities acquired, developed or expanded since Jan 2013.
Portfolio Activity
In third-quarter 2016, Public Storage bought eight self-storage facilities, comprising 0.6 million net rentable square feet, for $73 million. Following the quarter end, the company acquired or was under contract to acquire 21 self-storage facilities, spanning 1.7 million net rentable square feet, for $149 million.
Finally, as of Sep 30, 2016, the company had several facilities in development (4.2 million net rentable square feet), with an estimated cost of $543 million, as well as expansion projects (1.1 million net rentable square feet) worth an estimated $145 million. Public Storage expects to incur the remaining $427 million of development costs related to these projects mainly over the next 18 months.
Liquidity
Public Storage exited third-quarter 2016 with around $57.2 million of cash and cash equivalents, down from $104.3 million at the prior-year end.
Dividend Raised
On Oct 26, 2016, Public Storage’s Board of Trustees declared a quarterly dividend of $2.00 per share, denoting a hike of 11% over the prior-quarter payout. The amount will be paid on Dec 29 to shareholders of record as of Dec 14.
In Conclusion
Public Storage is a recognized and established name in the self-storage industry in the U.S. Its strong presence in major cities serves as a key growth driver. Acquisition initiatives are expected to propagate growth. However, the company has been experiencing rising supply in some of its markets, which remains a concern for the demand of its properties. Also, stiff competition in the self-storage industry, a large development pipeline and any rise in interest rates may pose a challenge to the company.
We now look forward to the earnings releases of General Growth Properties, Inc , Vornado Realty Trust (VNO - Free Report) and Taubman Centers, Inc. scheduled next week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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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Public Storage (PSA) Meets Q3 FFO Estimates, Ups Dividend
Public Storage’s (PSA - Free Report) third-quarter 2016 funds from operations (“FFO”) per share of $2.51 came in line with the Zacks Consensus Estimate. The figure also expanded 10.6% from the prior-year quarter.
Results reflect an improvement in net operating income (“NOI”) from both same-store and non-same store facilities. The company also announced an 11% hike in its quarterly dividend.
However, revenues of $663.1 million climbed 7.2% from a year ago but missed the Zacks Consensus Estimate of $667 million.
Behind the Headlines
Same-store revenues were up 5.1% year over year to $542.3 million during the third quarter, while NOI climbed 4.7% to $400.3 million. The increase in same-store revenues was primarily driven by a 5.2% rise in realized annual rental income per occupied square feet to $17.06. The weighted-average square foot occupancy of 95.3% remained unchanged year over year.
Moreover, the company’s NOI from non-same store facilities enhanced because of 308 self-storage facilities acquired, developed or expanded since Jan 2013.
Portfolio Activity
In third-quarter 2016, Public Storage bought eight self-storage facilities, comprising 0.6 million net rentable square feet, for $73 million. Following the quarter end, the company acquired or was under contract to acquire 21 self-storage facilities, spanning 1.7 million net rentable square feet, for $149 million.
Finally, as of Sep 30, 2016, the company had several facilities in development (4.2 million net rentable square feet), with an estimated cost of $543 million, as well as expansion projects (1.1 million net rentable square feet) worth an estimated $145 million. Public Storage expects to incur the remaining $427 million of development costs related to these projects mainly over the next 18 months.
Liquidity
Public Storage exited third-quarter 2016 with around $57.2 million of cash and cash equivalents, down from $104.3 million at the prior-year end.
Dividend Raised
On Oct 26, 2016, Public Storage’s Board of Trustees declared a quarterly dividend of $2.00 per share, denoting a hike of 11% over the prior-quarter payout. The amount will be paid on Dec 29 to shareholders of record as of Dec 14.
In Conclusion
Public Storage is a recognized and established name in the self-storage industry in the U.S. Its strong presence in major cities serves as a key growth driver. Acquisition initiatives are expected to propagate growth. However, the company has been experiencing rising supply in some of its markets, which remains a concern for the demand of its properties. Also, stiff competition in the self-storage industry, a large development pipeline and any rise in interest rates may pose a challenge to the company.
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.
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 General Growth Properties, Inc , Vornado Realty Trust (VNO - Free Report) and Taubman Centers, Inc. scheduled next week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>