Summary
Public Storage (PSA) reported its second quarter results for the period ending June 29, 2010. The company's net income allocable to common shareholders saw a significant decrease compared to the prior year, primarily driven by foreign currency exchange losses related to its Euro-denominated note receivable from Shurgard Europe. While the core self-storage business, representing 92% of revenues, experienced improving trends with same-store revenue declines narrowing to 0.2% year-over-year, the overall net income was heavily impacted by these currency fluctuations. Despite the reported net income decrease, Public Storage demonstrated continued strategic activity, acquiring 31 new self-storage facilities for $198 million, primarily in Southern California, and having an active pipeline for further acquisitions. The company maintained a strong liquidity position with substantial cash on hand and available credit, positioning it to fund operations and strategic growth initiatives. Management highlighted its confidence in maintaining REIT status and meeting distribution requirements, underscoring a focus on shareholder value.
Financial Highlights
31 data points| Revenue | $407.51M |
| Interest Expense | $7.28M |
| Net Income | $125.04M |
| EPS (Basic) | $0.36 |
| EPS (Diluted) | $0.36 |
| Shares Outstanding (Basic) | 168.80M |
| Shares Outstanding (Diluted) | 169.63M |
Key Highlights
- 1Net income allocable to common shareholders decreased significantly in both the three-month ($60.8M vs. $135.5M) and six-month ($95.6M vs. $295.0M) periods ended June 30, 2010, largely due to foreign currency exchange losses on the Shurgard Europe note receivable.
- 2Same-store revenue decline narrowed to 0.2% for the three months ended June 30, 2010, and 1.2% for the six months, indicating a stabilization and improvement from prior periods, though still showing year-over-year decreases.
- 3The company acquired 31 self-storage facilities for $198 million in the first six months of 2010, primarily in Southern California, and has a pipeline for further acquisitions.
- 4Public Storage maintained a strong liquidity position with approximately $474 million in cash and $95 million in short-term investments, along with a $300 million line of credit.
- 5Operating expenses for same-store facilities increased by 2.2% and 0.7% for the three and six months, respectively, primarily driven by higher property taxes and repairs and maintenance, partially offset by reduced advertising spend.
- 6Equity in earnings from Shurgard Europe increased significantly, with net operating income up 7.7% and 6.7% for the three and six months, respectively, indicating improved performance in its European operations.
- 7The company continues to operate as a REIT and expects to meet its distribution requirements to shareholders, with $367.6 million in distributions paid in the first six months of 2010.