Public Storage Inc. said Thursday that its third-quarter profit rose 7.7% as it reduced losses from unprofitable operations and continued to attract new business through aggressive advertising and discounts.
The Glendale-based real estate investment trust, which rents out storage units in 37 states, earned $89.7 million, or 39 cents a share, compared with $83.4 million, or 27 cents, in the same period last year.
Public Storage's funds from operations, one of Wall Street's key measures of profitability for REITs, surged 22% to $99.8 million, or 79 cents a share, compared with $81.4 million, or 65 cents, a year ago. The results beat Wall Street's consensus estimate of 74 cents, said Los Angeles money manager Craig Silvers of Bricks & Mortar Capital.
"It was a great quarter," said Silvers, who owns the stock. "They made the right moves to drive their profits."
The company accelerated a plan to shut down unprofitable storage units in which renters filled stackable containers rather than leasing individual units. It also spent 37% more on advertising and more than doubled promotional discounts to attract business in the highly competitive industry.
The number of storage facilities in the U.S. 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. Public Storage is the largest company in the industry, with 1,411 facilities.
Average occupancy in the firm's facilities rose to 91.9% this year from 85.8% in 2002.
Public Storage shares rose 40 cents at $41.35 on the New York Stock Exchange before results were announced.