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Public Storage's CEO Discusses Q1 2012 Results - Earnings Call Transcript

A reconciliation to GAAP of the non-GAAP financial measures we are providing on this call is included in our earnings press release. You can find our press release, SEC reports and audio webcast replay of this conference call on our website at

I'll turn the call over to John Reyes.

John Reyes

Thank you, Clem. Our first quarter core FFO per share was $1.44 compared to $1.28 last year, a 13% increase. Five items contributed to this growth. First, our same-store net operating income increased by 6.3%, adding $0.09 per share. The non-same-store properties added $0.02. Last year's acquisition of affiliated partnership interest added $0.02. Lower financing cost added $0.02. And ancillary operations, primarily our tenant reinsurance business, added $0.01.

In the press release, we changed some of our presentation. First, we increased the size of our same-store pools to include properties that we have operated for the last 3 years at a stabilized occupancy level. For our U.S. same stores, we increased the pool by 10. For Shurgard Europe, the pool is increased by 13. We also modified our same-store expense classification to highlight other direct property costs, supervisory payroll and allocated overhead. Other self-storage companies may include some or all of these cost synergies in their G&A expenses. While we modified the presentation, we did not change what is included in our same-store expenses.

We completed several capital transactions in 2012. We issued $923 million of preferred securities with a blended rate of 5.8%, and redeemed $833 million with an average rate of 6.7%. We had about $4 million of negative carry in the first quarter associated with these issuances. In addition, on July 2, we will redeem $173 million of our 7% Series and preferred stock. We expect to record an EITF charge of approximately $5.4 million in the second quarter. Assuming no further issuances, preferred dividends are expected to be about $7 million lower in the second quarter as compared to last year. Our weighted average preferred coupon is now 6.3%.

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