Public storage-Shurgard merger gets boost.

PUBLIC Storage Inc, got some good news last week that could make its $5 billion purchase of rival public storage company Shurgard Storage Centers Inc. go smoother.

Shurgard reported fourth-quarter earnings that beat analysts' expectations, posting a 7.8 percent year-over-year increase in same-store net operating income, an industry gauge for strength of operations.

But the real good news was that Shurgard got an "all clear" on its Sarbanes-Oxley assessment, according to Christy McElroy and Ross Nussbaum at Banc of America Securities, which was a financial advisor in the company's sale to Public Storage.

The green light should make it easier for Glendale-based Public Storage to take advantage of the merger's economies of scale and cut general operational expenses.

"The company no longer has internal control weaknesses," they wrote in a March 21 note to investors. "This should enable a smoother integration and facilitate Public Storage's ability to reduce (general and administrative) costs."

When Public Storage agreed to buy Shurgard earlier this month, some Wall Street analysts balked at the price, Banc of America's McElroy and Nussbaum believe in the long run the company will come out on top.

"However, we believe the long-term growth potential will be realized as the integration process gains momentum and synergies become evident," they wrote in the report last week.