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Public Storage Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 7, 2011 06:21AM

Public Storage Inc. (PSA) filed Quarterly Report for the period ended 2011-09-30. Public Storage has a market cap of $21.3 billion; its shares were traded at around $124.82 with a P/E ratio of 23.16 and P/S ratio of 12.94. The dividend yield of Public Storage stocks is 3.04%. Public Storage had an annual average earning growth of 5.7% over the past 10 years. GuruFocus rated Public Storage the business predictability rank of 4.5-star.



Highlight of Business Operations:

For the three months ended September 30, 2011, net income allocable to our common shareholders was $118.0 million or $0.69 per diluted common share, compared to $182.2 million or $1.07 per diluted common share for the same period in 2010, representing a decrease of $64.2 million or $0.38 per diluted common share. This decrease is due to (i) a foreign currency exchange loss of $28.3 million during the quarter ended September 30, 2011 as compared to a gain of $55.5 million for the same period in 2010 and (ii) $16.2 million in Emerging Issues Task Force D-42 (“EITF D-42”) charges related to the redemption of our preferred securities, partially offset by (iii) improved operations of our Same Store Facilities (discussed below) and our non-same store facilities and (iv) increased equity in earnings from Shurgard Europe, due primarily to Shurgard Europe s acquisition of its joint venture partner s interests on March 2, 2011.

For the nine months ended September 30, 2011, net income allocable to our common shareholders was $397.5 million or $2.33 per diluted common share, compared to $277.8 million or $1.64 per diluted common share for the same period in 2010, representing an increase of $119.7 million or $0.69 per diluted common share. This increase is due to (i) improved operations of our Same Store Facilities (discussed below) and our non-same store facilities, (ii) a foreign currency exchange gain of $13.5 million during the nine months ended September 30, 2011 as compared to a loss of $28.6 million for the same period in 2010, and (iii) increased equity in earnings and interest and other income from Shurgard Europe, due primarily to Shurgard Europe s acquisition of its joint venture partner s interests on March 2, 2011.

Net operating income increased 2.5% for the three months ended September 30, 2011 as compared to the same period in 2010, and 0.9% for the nine months ended September 30, 2011 as compared to the same period in 2010. These increases were due to a 2.4% and 1.7% increase in revenues for the three and nine months ended September 30, 2011, respectively, as compared to the same periods in 2010, offset partially by a 2.3% and 2.7% increase in cost of operations, respectively. Revenues in the three and nine months ended September 30, 2011 increased as compared to the same periods in 2010 due primarily to higher realized annual rents per foot. Cost of operations increased in the three and nine months ended September 30, 2011 due primarily to increased repairs and maintenance expenditures.

The increases in tenant reinsurance revenues in the three and nine months ended September 30, 2011 as compared to the same periods in 2010 are primarily attributable to an increase in the percentage of our existing tenants retaining such policies, as well as an increase in the number of facilities due to the acquisition from third parties of 42 facilities in the year ended December 31, 2010 and nine facilities in the nine months ended September 30, 2011. On average, approximately 61.5%, and 60.6% of our tenants had such policies during the three and nine months ended September 30, 2011, respectively, as compared to 58.5% and 58.2% during the same periods in 2010. We believe that the growth in tenant reinsurance revenues in the remainder of 2011 may not be as high as experienced in 2010 because we expect less growth in the percentage of tenants retaining insurance policies.

The interest and other income from Shurgard Europe is comprised of interest income on the loans receivable from Shurgard Europe as well as trademark license fees received from Shurgard Europe for the use of the “Shurgard” trade name. As described more fully in Note 4 to our September 30, 2011 financial statements, we record 51% of the aggregate interest income and trademark license fees as interest and other income, while 49% is presented as additional equity in earnings on our statements of income. Interest and other income from Shurgard Europe was $6.2 million and $21.2 million the three and nine months ended September 30, 2011, respectively, as compared to $6.2 million and $18.8 million for the same periods in 2010. The increase in the nine month periods is due primarily to an additional $237.9 million loan to Shurgard Europe on March 2, 2011 (described more fully in Note 5 to our September 30, 2011 financial statements), bearing interest at 7%, which was extinguished on June 15, 2011. No further interest will be recorded on this loan for periods after June 15, 2011.

Read the The complete Report



Stocks Discussed: PSA,
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