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Public Storage (NYSE: PSA)
Second Quarter Results
PSA announced net income for the three months ended June 30, 2008 of $133.8 million compared to a $77.1 million for the same period in 2007, representing an increase of $56.7 million. This improvement is primarily due to improvements in operating income with respect to our domestic self-storage facilities and reduced amortization expense, offset in part by a reduction in foreign exchange gains and increased general and administrative expense due to $25.4 million in incentive compensation incurred in the quarter ended June 30, 2008. Funds from operations (“FFO”) for the quarter were $1.10 per common share on a diluted basis, which is unchanged for the same period last year.
During the first quarter of 2008, PSA acquired two self-storage facilities in California with net rentable square feet of 211,000 for an aggregate purchase price of $31.2 million, which includes the assumption of approximately $10.3 million of debt. The Company also completed a newly developed facility with 49,000 net rentable square feet at a total cost of $5.6 million and an expansion project at a total cost of $7.8 million with 84,000 net rentable square feet.
At June 30, 2008, PSA had 25 projects that were either under construction or were expected to begin construction generally within the next year, comprised of two newly developed self-storage facilities (119,000 net rentable square feet) in the United States for a total estimated cost of $17.6 million, 22 projects (926,000 net additional rentable square feet) in the United States, which expand existing self-storage facilities and enhance their visual appeal for a total estimated cost of $85.5 million and expansion of one European facility located in London, England (21,000 net rentable square feet and total estimated costs of $6.6 million). These projects will be fully funded by us. Opening dates for these facilities are estimated through the next 24 months. The development of these facilities is subject to various risks and contingencies.
On July 21, 2008, PSA acquired the remaining interest that they did not own in an affiliated partnership (the “Acquisition Joint Venture”) from an institutional investor for an aggregate purchase price of $45.8 million. The Acquisition Joint Venture owned 12 self-storage facilities. The purchase price included the repayment of approximately $38.4 million of debt due to the investor (bearing interest at 8.5% per annum) and the acquisition of their equity for approximately $7.4 million.
PSA’s Board of Trustees has authorized the repurchase from time to time of up to 35,000,000 of our common shares on the open market or in privately negotiated transactions. From January 1, 2008 through June 30, 2008, the Company repurchased a total of 1,520,196 common shares for an aggregate of approximately $111.9 million (none were repurchased from July 1, 2008 through August 7, 2008). They have 11,278,084 shares remaining on our repurchase authorization at August 7, 2008.
During the first quarter of 2008 PSA completed
two expansion projects at a total cost of $5.0 million with 82,000
net rentable square feet. At March 31, 2008, they were under
contract to acquire two self-storage facilities in California with net rentable square feet of
210,000 for an aggregate purchase price of $31 million, which
includes approximately $10 million of assumed debt. On April 22,
2008, they acquired one of these facilities containing 101,000 net
rentable square feet at a cost of approximately $16 million. While
the remaining acquisition is subject to contingencies, it is
expected to close in the second quarter of 2008.
At March 31, 2008, PSA had 29 projects that were either under
construction or were expected to begin construction generally within
the next year, comprised of three newly developed self-storage
facilities (168,000 net rentable square feet) in the United States
for a total estimated cost of $22.3 million, 25 projects (1,026,000
net additional rentable square feet) in the United States, which
expand existing self-storage facilities and enhance their visual
appeal for a total estimated cost of $90.8 million and expansion of
one European facility located in London (37,000 net rentable square
feet and total estimated costs of $6.6 million). Opening dates for
these facilities are estimated through the next 24 months.
U-Store-It (NYSE: YSI)
Second Quarter Results
YSI reported net income for the three month ended June 30, 2008 of $0.3 million or $0.01 per share, compared to $0.3 million or $0.00 per share for the same period in 2007. Funds from Operations (“FFO”) grew 2.0% to $15.0 million for the second quarter of 2008, compared to $14.7 million for the same quarter in 2007. FFO per share was $.24 per share.
YSI’s same-store pool at June 30, 2008 represented 382 facilities containing approximately 24.3 million rentable square feet and representing approximately 93.9% of the aggregate rentable square feet of the YSI's 403 owned facilities. These same-store facilities represent approximately 94.8% of property net operating income for the quarter ended June 30, 2008.
The same-store average physical occupancy for the second quarter of 2008 was 80.7% compared to 80.2% for the same quarter of last year. In-place annual rent per square foot grew 1.1% to $12.22 in the second quarter of 2008 over the same quarter of last year. Same-store rental income for the second quarter of 2008 grew 5.6% over the same period in 2007. Same-store total revenues and operating expenses grew 4.8% and 9.0%, respectively, over the second quarter of 2007. Same-store net operating income grew 2.3% in the second quarter of 2008 compared to the same quarter of 2007.
During the quarter, YSI disposed of five facilities for aggregate proceeds of $12.5 million and recognized gains totaling $5.3 million. We do not include these gains in our $0.24 of FFO per share. On May 7, 2008, the Company declared a dividend of $0.18 per share. The dividend was paid on July 22, 2008, to shareholders of record on July 7, 2008.
Extra Space Storage (NYSE: EXR)
Second Quarter Results
EXR announced an increased revenue and net operating income ("NOI") in EXR’s portfolio of 211 same-stores by 1.8% and 3.2%, respectively, for the quarter ending June 30, 2008, when compared to the same quarter in 2007. Excluding tenant insurance income, same-store revenue and NOI increased by 1.4% and 2.5%, respectively.
Funds from Operations (“FFO”) for the three months ending June 30, 2008 were $0.26 per diluted share compared to $0.27 for the same quarter in 2007. FFO per diluted share was reduced by approximately $0.02 from unrecovered acquisition costs and by approximately $0.01 related to carrying costs associated with the Company's development program. FFO for the quarter also includes approximately $0.01 in dilution from the Company's recent public offering of common stock. FFO available to common stockholders was $20.3 million for the three months ended June 30, 2008, as compared to $18.9 million for the three months ended June 30, 2007. Same store revenue and NOI increased by 1.4% and 2.5% compared to the same period in 2007. EXR declared and paid a quarterly dividend of $0.25 per common share.
EXR raised $244.4 million in gross proceeds from a public offering of common stock. Net proceeds were $232.7 after deducting underwriting discounts, commissions and offering expenses. The Company acquired two properties located in California and Florida for $17.8 million. Subsequent to the end of the quarter, the Company acquired an additional 40.0% interest in an existing joint venture with Prudential Real Estate Investors ("Prudential") for $44.0 million. EXR completed the development of a self-storage property located in Illinois for approximately $6.9 million.
Second Quarter Results
SSS announced a net income for the three months ended June 30, 2008 of $10.5 million or $.48 per diluted share compared to $7.4 million or $.36 per diluted share for the same period in 2007. FFO for the quarter were $.84 per diluted share which is equal to the same quarter last year. Same store revenue increased 1.2% over the same quarter in 2007. This is a result of a 2.6% increase in rental rates, which was offset by a 220 basis point decrease in average occupancy. Average occupancy for the portfolio was 82.6% and an average rent per square foot for the portfolio was $10.51.
In June, the Company formed a joint venture with an affiliate of Heitman, LLC (the “JV”) to acquire and manage up to $350 million of storage properties to be acquired from unaffiliated owners. In July, the JV purchased 21 properties at a cost of $144 million, and expects to acquire additional facilities in the coming months.
During the quarter, the Company refinanced its near term debt maturities and repaid its line of credit with the proceeds of a $250 million term note, entered into a new Line of Credit agreement providing $125 million of unsecured financing and acquired the balance of its partner’s investment in Locke Sovran I. The Company sold its storage facility just outside Detroit, Michigan for $7.4 million. A gain of $.7 million (which was not included in the FFO computation) was recognized on the sale. The Company has no remaining stores in that market.
The Company is continuing its program of expanding and enhancing its existing stores. Twelve expansions were completed during the quarter at a cost of $15.9 million; ten additional projects are expected to be placed on line during the balance of the year, with another fifteen to be initiated and underway by year-end.
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