Skip to main content

Public Storage (PSA)

Q2 2010 Earnings Call Transcript

August 6, 2010 1:00 pm ET


Clem Teng – Director, IR

John Reyes – SVP and CFO

Ron Havner – Vice Chairman, CEO and President


Smedes Rose – KBW

Eric Wolfe – Citi

David Toti – FBR Capital Markets

Christy McElroy – UBS

Dave Bragg – ISI

Todd Thomas – KeyBanc Capital Markets

David Harris – Gleacher & Company

Ki Bin Kim – Macquarie

Scroll to Continue

TheStreet Recommends

Jay Habermann – Goldman Sachs

Michael Salinsky – RBC Capital Markets

Michael Mueller – JPMorgan

Paula Poskon – Robert W. Baird

Michael Knott – Green Street Advisors

Ross Nussbaum – UBS



Compare to:
Previous Statements by PSA
» Public Storage Q1 2010 Earnings Call Transcript
» Public Storage Q4 2009 Earnings Call Transcript
» Public Storage, Inc. Q2 2009 Earnings Call Transcript

Good afternoon. My name is Wes and I will be your conference operator today. At this time, I would like to welcome everyone to the Public Storage second quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions). Thank you.

I will now turn the conference over to Mr. Clem Teng, Director of Investor Relations. Please go ahead, sir.

Clem Teng

Good morning, and thank you for joining us for our second quarter earnings call. Here with me today are Ron Havner, CEO, and John Reyes, CFO. We’ll follow the usual format followed by a question-and-answer period. However, to allow for equal participation, we request that you ask only one question when your turn comes up and then return to the queue for any follow-up questions.

Before we start, I want to remind you that all statements, other than statements of historical facts, included in this conference call are forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in these statements.

These risks and other factors that could adversely affect our business and future results are described in today’s earnings press release, as well as in our reports filed with the Securities and Exchange Commission. Our forward-looking statement speak only as of today August 6, 2010, and we assume no obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.

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


Now I’ll turn it over to John Reyes.

John Reyes

Thank you Clem. Our core FFO per share was $1.27 compared to $1.25 last year representing an increase of 2%. Core FFO per share excludes the impact of foreign currency exchange gains and losses, EITF D-42 charges from redeeming our preferred securities and due diligence costs related to our acquisition activity.

Our core FFO during the quarter was impacted by the redemption of our equity stock, improved operations from both Shurgard Europe and our non-stabilized assets in the U.S., partially offset by reduced operations in our Same Store properties. The redemption of 205 million of our equity stock during the quarter resulted in a $5 million increase in our FFO as distributions to these shareholders were eliminated.

Notwithstanding the currency conversion rate that was 6.5% lower than last year due to a stronger dollar, FFO from Shurgard Europe increased by $2 million. This increase was primarily due to improved property operations, which Ron will discuss in a moment.

Operations with respect to our portfolio of 94 non-stabilized facilities increased by 3 million. Included in this number is 1.5 million generated by the 31 facilities that were acquired during the quarter.

Partially offsetting these items is a $3 million decline in our Same Store net operating income. The declines in our year-over-year Same Store revenue and NOI continue to moderate sequentially in the second quarter as compared to the first quarter and the fourth quarter of last year.

On a year-over-year basis, revenues declined 0.2% in the second quarter compared to a 2.2% decline in the first quarter and a 3.8% decline in the fourth quarter. NOI declined 1.5% in the second quarter compared to a decline of 3% in the first quarter and a 3.4% decline in the fourth quarter.

During the quarter, we were able to put approximately $338 million of cash to work, $205 million to redeem our equity stock and $118 million to acquire facilities and together with the net proceeds from a new preferred series $15 million to redeem one of our existing preferred series.

In the second quarter, we retained approximately $48 million of our operating cash flow. At June 30, 2010, our cash and marketable securities totaled about $570 million. In July our Shurgard Europe team completed the refinancing of the €115 million JV loans. The new loan’s maturity date is July 2013. Shurgard Europe has a 20% interest in the joint venture.

With that I will now turn it over to Ron.

Ron Havner

Thank you, John. Our domestic Same Store properties continued to improve. Occupancy traded higher year-over-year ending the second quarter at 91.8% about 1.2% higher than last year. Both occupancy and in-place rents were higher in July than prior year. Asking or street rates were above last year and have been higher since March.

Our year-over-year revenue per available foot growth or REVPAF growth was positive in June and July, the first positive month since December 2008. There is a large gap in revenue growth rates between various markets.

Read the rest of this transcript for free on