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Public Storage (PSA) Q1 FFO Meets Estimates, Revenues Up Y/Y

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Public Storage’s (PSA - Free Report) first-quarter 2019 funds from operations (FFO) per share of $2.52 improved 6.3% from the prior-year figure of $2.37. The reported figure came in line with the Zacks Consensus Estimate. Core FFO per share of $2.53 increased 2% from the year-ago period.

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 $689.0 million also climbed 2.9% from the prior-year quarter. However, the figure missed the Zacks Consensus Estimate of $690.3 million.

Behind the Headlines

Same-store revenues advanced 1.5% year over year to $588.7 million during the first quarter, while the company’s NOI inched up 0.6% to $419.6 million. This upside in same-store revenues was primarily driven by a 1.2% rise in realized annual rent per occupied square foot to $17.41. Weighted-average square foot occupancy of 92.5% expanded 40 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 March-end quarter, Public Storage bought 12 self-storage facilities, comprising 0.8 million net rentable square feet of area, for $81.3 million. Following Mar 31, 2019, the company acquired or was under contract to acquire 10 self-storage facilities, spanning 0.7 million net rentable square feet of space, for $116.4 million.

Finally, as of Mar 31, 2019, the company had several facilities in development (1.2 million net rentable square feet), with an estimated cost of $194 million, as well as expansion projects (2.7 million net rentable square feet) worth roughly $318 million. Public Storage estimates to incur the remaining $299 million of development costs related to these projects, mainly over the next 18 months.


Public Storage exited first-quarter 2019 with around $217.9 million of cash and cash equivalents, down from $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 Apr 24, Public Storage’s board of trustees announced a regular quarterly dividend of $2.00 per share. The amount will be paid on Jun 27, to shareholders of record as of Jun 12, 2019.

In Conclusion

Public Storage is a recognized and established name in the self-storage industry in the United States. The company is benefiting from healthy demand for self-storage space amid favorable demographics in its markets. Also, its expansion efforts are encouraging. Further, a solid operating platform and a healthy balance sheet enable the company to pay sustainable dividends.

However, the company 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 for the company, curb its power to raise rents and turn on discounting.

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 other REITs like Omega Healthcare Investors, Inc. (OHI - Free Report) , Senior Housing Properties Trust (SNH - Free Report) and Plymouth Industrial REIT, Inc. (PLYM - Free Report) , which are slated to report their quarterly numbers in the next week.

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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