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Public Storage (PSA) Q1 FFO Meets Estimates, Revenues Beat

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Public Storage's (PSA - Free Report) first-quarter 2020 core funds from operations (FFO) per share of $2.58 improved 2.0% from $2.53 reported a year ago. The reported figure met the Zacks Consensus Estimate.

Quarterly revenues of $716.1 million increased 3.9% year on year and surpassed the Zacks Consensus Estimate of $711.7 million.

The company’s quarterly performance reflects the favorable impact of higher revenues for its same-store facilities, resulting from higher realized annual rent per occupied square foot. Nevertheless, this is offset by increased cost of operations from its same-store facilities, comprising elevated marketing costs and property tax expenses.

Behind the Headlines

Same-store revenues inched up 1.2% year over year to $609.5 million during the first quarter. This upside was primarily driven by a 0.8% increase in realized annual rent per occupied square foot to $17.43. Moreover, weighted-average square foot occupancy of 93.1% expanded 60 basis points year over year.

However, same-store cost of operations increased 4% year over year to $180.3 million, primarily reflecting a rise in marketing expenses and property manager payroll as well as uptick in property taxes. Consequently, the company’s same-store net operating income (NOI) inched up 0.1% to $429.3 million.

Nonetheless, the company’s NOI from non-same store facilities grew on the back of the facilities acquired in 2019 and 2020, and the fill-up of the recently developed and expanded facilities.

Portfolio Activity

During the March quarter, Public Storage acquired nine self-storage facilities, comprising 0.7 million net rentable square feet of area, for $186.2 million. These included two each in California, New York and Tennessee and one each in Indiana, Massachusetts and Nebraska. Following Mar 31, 2020, the company acquired or was under contract to acquire six self-storage facilities, spanning 0.4 million net rentable square feet of space, for $66.8 million.

Finally, as of Mar 31, 2020, the company had several facilities in development (1.4 million net rentable square feet), with an estimated cost of $229 million, as well as expansion projects (2.9 million net rentable square feet) worth $406 million. Public Storage expects to incur the remaining $473 million of development costs related to these projects, mainly over the next 18 to 24 months.


Public Storage exited first-quarter 2020 with $718.4 million of cash and cash equivalents, up from $409.7 million recorded at the end of 2019.

In January, the company completed a public offering of 500 million euros ($552 million) of Euro denominated Senior Unsecured Notes, bearing interest at a fixed rate of 0.875% and slated to mature on Jan 24, 2032.

Dividend Update

On Apr 21, 2020, the company announced a quarterly dividend of $2 per common share. The dividend will be paid on Jun 30, 2020 to shareholders of record as of Jun 15, 2020.


Public Storage expects year-over-year same-store rental income and net operating income to take a hit for the rest of the year. This is due to the fact that the company has temporarily curtailed its existing tenant rate increase program and witnessed a fall in demand for its self-storage facilities.

The company also apprised of its acquisition plans for the rest of the year. It expects a decline in its scale of acquisitions for the year.

The coronavirus pandemic has also resulted in the company expecting higher operating expenses for the year.

PS Business Parks currently carries 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 price-consensus-eps-surprise-chart | Public Storage Quote

We now look forward to the earnings releases of other REITs, Omega Healthcare Investors, Inc. (OHI - Free Report) , Vornado Realty Trust (VNO - Free Report) and Realty Income Corporation (O - Free Report) . All three companies are scheduled to release their quarterly numbers on May 4.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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