10-QPeriod: Q1 FY2011

Public Storage Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 9, 2011For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) reported a significant increase in net income for the first quarter of 2011 compared to the same period in 2010, primarily driven by a strong recovery in same-store rental income and a favorable foreign currency exchange gain. Total revenues saw a healthy increase, bolstered by both same-store and other facilities, indicating a positive operational trend. The company's balance sheet shows a decrease in cash and marketable securities, largely due to strategic investments and loan repayments, while assets related to real estate facilities remain robust. Liabilities have decreased primarily due to a reduction in notes payable, indicating improved debt management. The company continues to focus on operational efficiency and strategic growth, with plans for further acquisitions and potential redemptions of preferred securities. Investors can find reassurance in the continued growth of same-store rental income and the company's proactive approach to capital management.

Financial Highlights

31 data points
Beta

Revenue

$419.69M

Net Income

$206.11M

49.1% Net Margin

EPS (Diluted)

$0.87

Total Assets

$9.44B

Cash & Equivalents

$145.10M

Free Cash Flow

$264.82M

Financial Statements
Beta
Revenue$419.69M
Interest Expense$6.98M
Net Income$206.11M
EPS (Basic)$0.87
EPS (Diluted)$0.87
Shares Outstanding (Basic)169.31M
Shares Outstanding (Diluted)170.38M

Key Highlights

  • 1Net income attributable to common shareholders increased significantly to $148.1 million ($0.87 per diluted share) in Q1 2011 from $34.7 million ($0.21 per diluted share) in Q1 2010.
  • 2Total revenues grew by 5.8% to $419.8 million in Q1 2011 compared to $397.4 million in Q1 2010.
  • 3Same-store rental income increased by 3.4% year-over-year, driven by higher occupancy (up 1.7%) and increased rent per occupied square foot (up 1.4%).
  • 4The company reported a foreign currency exchange gain of $31.3 million in Q1 2011, a substantial swing from a loss of $34.8 million in Q1 2010.
  • 5Total assets remained relatively stable, with a slight decrease to $9.436 billion from $9.495 billion, while total liabilities decreased by approximately 13% to $672.7 million from $774.2 million.
  • 6Cash and cash equivalents decreased to $145.1 million at March 31, 2011, from $456.3 million at December 31, 2010, primarily due to investing activities and loan repayments.
  • 7The company successfully repaid $105.5 million in notes payable during the quarter.

Frequently Asked Questions

The substantial increase in net income was primarily driven by a significant positive swing in foreign currency exchange, moving from a $34.8 million loss in Q1 2010 to a $31.3 million gain in Q1 2011. Additionally, improved operational performance from same-store facilities, which saw a 3.4% increase in rental income, and the absence of a $25.7 million charge related to the redemption of Equity Shares, Series A (incurred in Q1 2010), also contributed to the higher net income.

Public Storage has reduced its total liabilities, largely due to paying down $105.5 million in notes payable during the quarter. While cash and cash equivalents decreased, this was partly due to strategic investments and loan repayments. The company has access to a $300 million credit line and maintains a strong liquidity position to meet its operating and capital needs.

The outlook for the core self-storage operations appears positive. Same-store rental income has shown consistent year-over-year improvement, with a 3.4% increase in Q1 2011 attributed to higher occupancy rates and increased rent per square foot. The company's strategy to maintain occupancy between 89-90% and adjust rental rates accordingly is supporting this growth, indicating resilience in demand despite broader economic conditions.

Yes, Public Storage has an investment in Shurgard Europe. The company's results were significantly impacted by a foreign currency exchange gain on a Euro-denominated loan to Shurgard Europe in Q1 2011, which offset a loss in the prior year. While this created significant quarterly volatility, Shurgard Europe's operational performance itself showed improvement, with revenues up 1.8% on a constant currency basis.