Public Storage Revenues Dip

Public Storage (PSA - Analyst Report), a real estate investment trust (REIT) operating self-storage facilities, reported a decline in total revenues for the third quarter to $412.9 million, compared to $431.2 million in the year-earlier quarter. The year over year decrease in revenue was primarily due to the continued challenges in the macroeconomic environment.
 
During the quarter, FFO (fund from operations) was $1.44 per share, compared to $1.08 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 increase in FFO was largely due to foreign currency exchange gain. Excluding the one-time items, FFO for the third quarter of 2009 was $1.30 per share compared to $1.37 in the year-ago period.
 
Same-store revenues decreased 4.6% during the quarter year over year, while net operating income declined 6.3%. Overall occupancy in the same-store portfolio was 89.6% during the quarter versus 90.5% in the prior year quarter. Realized annual rent per occupied square foot also decreased 4.2% year over year from $13.29 to $12.73.
 
Public Storage currently has a 49% stake in Shurgard Europe that has interests in 186 facilities (9.9 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 its existing $571.8 million loan to Shurgard Europe.
 
During the quarter, PS Business Parks Inc. (PSB - Analyst Report) sold approximately 3.5 million common shares in a public offering. Concurrent with the offering, Public Storage acquired approximately 0.4 million of PSB’s shares, bringing its current ownership stake in the company to 41% from 46% in the second quarter of 2009.
 
At quarter end, Public Storage had $671 million of unrestricted cash and access to $300 million line of credit. Total outstanding debt as of Sep 30, 2009 was $522 million with no significant debt maturities before 2011. Consequently, Public Storage is better equipped than its peers to withstand the current economic downturn.

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