Public Storage Inc. said Friday that fourth-quarter profit fell 20.2% as the self-storage industry continues to be plagued by excess capacity. The news sent the company's shares down $2.92, or 9%, to $28.98 in New York Stock Exchange trading.
The Glendale real estate investment trust that rents mini warehouses to the public said it earned $67.2 million, or 20 cents a share, compared with $84.2 million, or 38 cents, a year ago. Revenue for the period ended Dec. 31 rose 4% to $209.2 million.
Public Storage's funds from operations, a key measure of profitability for REITs, fell nearly 10%, to $117.2 million, or 60 cents a share, from a year earlier. Analysts were expecting the company to come in around 70 cents a share, according to Thomson First Call.
A REIT allows individual investors to participate in large real estate ventures. Unlike other public companies, REITs must distribute 95% of their income to shareholders.
Public Storage last year rolled back its prices after a sharp increase in 2001 sent customers to cheaper facilities owned by a growing number of rivals. The company is the industry leader, with 1,409 storage facilities in 37 states.
The number of storage facilities nationwide has shot up by more than 60% in the last decade to more than 35,000 properties, according to MiniCo Inc.'s Self-Storage Almanac. Meanwhile, calls from potential customers to Public Storage and other companies began to decline at the end of last year as the booming housing market moved many families from apartments to more spacious homes.
In addition to reducing rents, Public Storage launched a national advertising campaign that ended in May. The campaign should have run longer, President Harvey Lenkin told analysts Friday. Restoring the company's customer base has been costly, he said, adding that first-quarter results are likely to lag behind year-earlier totals.
For all of 2002, Public Storage's profit fell 1.7% to $318.7 million, on a 7.6% gain in revenue, to $841.5 million. Funds from operations rose 2.5% to $512.1 million.