The company last week reported net income after dividends of $121.4 million for the last quarter of 2010, a 3% increase over the $117.5 million earned in the same period in 2009. Total revenue rose 4% to $418 million in the fourth quarter, up from $402 million in the same period the year before.
Despite the gains, the results did not meet the expectations of market analysts, who predicted stronger growth.
Chief Financial Officer John Reyes noted that Public Storage — which owns 49% of rival firm Shurgard Europe — lost $13.7 million on paper during the quarter because of a loss on the currency exchange. Public Storage extended a large loan in euros to Shurgard in 2006.
Swings in conversion rates have a significant effect on earnings for the Glendale-based company, spurring a $42-million loss in 2010 compared with a nearly $10-million gain in 2009.
Havner said the company gained 20,000 net customers in the fourth quarter as occupancy picked up by 1.7%. Same-store revenue grew by 2.4 %.
The Los Angeles market, which had been losing ground, grew by more than 1% for the quarter, Havner said.
Reyes said the company will raise rental rates in spring, focusing on existing customers rather than “street rates” charged to new customers. In the last few years, Public Storage and other storage firms offered steep discounts to lure new business, but began to ease those policies last year as the market stabilized.
“I thought we were too conservative last year in our increases,” Reyes said. “We are rectifying that this year.”
Asked during a call with investors how the business has evolved over the last 20 years, Havner said the number of competitors exploded.
But with many of the smaller operators slammed in recent years by soft demand and the real estate crash, the number of players has shrunk and Public Storage’s opportunity to buy properties has grown. In the last five months, the company committed roughly $57 million to acquire facilities in several states.
“I’m feeling relatively optimistic for our growth in the next couple of years,” Havner said.