Public Storage (NYSE:PSA) announced today operating results for
the three and nine months ended September 30, 2017.
Operating Results for the Three Months
Ended September 30, 2017
For the three months ended September 30, 2017, net income
allocable to our common shareholders was $279.7 million or $1.61
per diluted common share, compared to $309.0 million or $1.78 in
2016 representing a decrease of $29.3 million or $0.17. The
decrease is due primarily to a $14.7 million increase in allocation
to our preferred shareholders as a result of redemption activities
in the three months ended September 30, 2017, a $7.8 million
casualty loss and $5.2 million in incremental tenant reinsurance
losses related to Hurricanes Harvey and Irma, and a $9.8 million
increase in foreign exchange translation losses associated with our
euro denominated debt as compared to the same period in 2016. These
amounts were partially offset by a $15.7 million increase in
self-storage net operating income (described below).
The $15.7 million increase in self-storage net operating income
is a result of a $10.6 million increase in our Same Store
Facilities (as defined below) and $5.1 million increase in our Non
Same Store Facilities (as defined below). Revenues for the Same
Store Facilities increased 2.4% or $13.0 million in the three
months ended September 30, 2017 as compared to 2016, due primarily
to higher realized annual rent per occupied square foot. Cost of
operations for the Same Store Facilities increased by 1.6% or $2.4
million in the three months ended September 30, 2017 as compared to
2016, due primarily to increased property taxes, repairs and
maintenance and payroll. The increase in net operating income for
the Non Same Store Facilities is due primarily to the impact of 321
self-storage facilities acquired, developed or expanded since
January, 2015.
Operating Results for the Nine Months
Ended September 30, 2017
For the nine months ended September 30, 2017, net income
allocable to our common shareholders was $837.5 million or $4.81
per diluted common share, compared to $831.1 million or $4.78 in
2016 representing an increase of $6.4 million or $0.03. The
increase is due primarily to a $53.1 million increase in
self-storage net operating income and a $15.6 million increase in
equity in earnings of real estate entities, offset partially by a
$38.5 million increase in foreign exchange translation losses
associated with our euro denominated debt, as well as a $7.8
million casualty loss and $5.2 million in incremental tenant
reinsurance losses related to Hurricanes Harvey and Irma.
The $53.1 million increase in self-storage net operating income
is a result of a $35.9 million increase in our Same Store
Facilities and $17.2 million increase in our Non Same Store
Facilities. Revenues for the Same Store Facilities increased 3.2%
or $51.4 million in the nine months ended September 30, 2017 as
compared to 2016, due primarily to higher realized annual rent per
occupied square foot. Cost of operations for the Same Store
Facilities increased by 3.6% or $15.5 million in the nine months
ended September 30, 2017 as compared to 2016, due primarily to
increased property taxes, repairs and maintenance and advertising
and selling costs. The increase in net operating income for the Non
Same Store Facilities is due primarily to the impact of 321
self-storage facilities acquired, developed or expanded since
January, 2015.
Funds from Operations
For the three months ended September 30, 2017, funds from
operations (“FFO”) was $2.35 per diluted common share, as compared
to $2.51 in 2016, representing a decrease of 6.4%. FFO is a
non-GAAP (generally accepted accounting principles) term defined by
the National Association of Real Estate Investment Trusts and
generally represents net income before depreciation, gains and
losses and impairment charges with respect to real estate
assets.
For the nine months ended September 30, 2017, FFO was $7.00 per
diluted common share, as compared to $6.94 in 2016, representing an
increase of 0.9%.
We also present “Core FFO per share,” a non-GAAP measure that
represents FFO per share excluding the impact of (i) foreign
currency exchange gains and losses, (ii) EITF D-42 charges related
to the redemption of preferred securities, (iii) reversals of
accruals with respect to share based awards forfeited by executive
officers and (iv) certain other non-cash and/or nonrecurring income
or expense items. We review Core FFO per share to evaluate our
ongoing operating performance, and we believe it is used by
investors and REIT analysts in a similar manner. However, Core FFO
per share is not a substitute for net income per share. Because
other REITs may not compute Core FFO per share in the same manner
as we do, may not use the same terminology or may not present such
a measure, Core FFO per share may not be comparable among
REITs.
The following table reconciles from FFO per share to Core FFO
per share (unaudited):
Three Months Ended September 30, Nine
Months Ended September 30, Percentage
Percentage 2017 2016 Change 2017 2016 Change FFO per
share $ 2.35 $ 2.51 (6.4 )% $ 7.00 $ 6.94 0.9 % Eliminate the per
share impact of items excluded from Core FFO, including our equity
share from investments: Foreign currency exchange loss 0.08 0.02
0.26 0.03 Application of EITF D-42 0.10 - 0.18 0.15 Casualty losses
and tenant claims due to hurricanes 0.07 - 0.07 - Reversals of
accruals on forfeited executive share-based awards - - (0.03 ) -
Other items 0.01 - - 0.02 Core
FFO per share $ 2.61 $ 2.53 3.2 % $ 7.48 $ 7.14 4.8 %
Property Operations—Same Store
Facilities
The Same Store Facilities represent those facilities that have
been owned and operated on a stabilized level of occupancy,
revenues and cost of operations since January 1, 2015. We review
the operations of our Same Store Facilities, which excludes
facilities whose operating trends are significantly affected by
factors such as casualty events, as well as recently developed or
acquired facilities, to more effectively evaluate the ongoing
performance of our self-storage portfolio in 2015, 2016 and 2017.
The Same Store pool decreased from 2,055 facilities at June 30,
2017 to 2,042 facilities at September 30, 2017 as a result of
disruptions caused by Hurricanes Harvey and Irma. We believe the
Same Store information is used by investors and analysts in a
similar manner. The following table summarizes the historical
operating results of these 2,042 facilities (130.3 million net
rentable square feet) that represent approximately 83% of the
aggregate net rentable square feet of our U.S. consolidated
self-storage portfolio at September 30, 2017.
Selected
Operating Data for the Same
Store Facilities
(2,042 facilities)
(unaudited):
Three Months Ended September 30, Nine Months
Ended September 30, Percentage
Percentage 2017 2016 Change 2017 2016
Change (Dollar amounts in thousands, except for per square foot
amounts) Revenues: Rental income $ 539,165 $ 525,719 2.6 % $
1,571,769 $ 1,520,048 3.4 % Late charges and administrative fees
25,229 25,699 (1.8 )% 72,874
73,161 (0.4 )% Total revenues (a)
564,394 551,418 2.4 % 1,644,643
1,593,209 3.2 % Cost of operations: Property
taxes 55,874 53,479 4.5 % 167,963 160,799 4.5 % On-site property
manager payroll 28,285 27,784 1.8 % 82,828 83,022 (0.2 )%
Supervisory payroll 9,586 9,449 1.4 % 29,499 28,386 3.9 % Repairs
and maintenance 11,380 11,042 3.1 % 32,111 29,683 8.2 % Snow
removal - - 0.0 % 2,249 3,369 (33.2 )% Utilities 10,611 10,931 (2.9
)% 29,973 30,266 (1.0 )% Advertising and selling expense 6,901
7,693 (10.3 )% 21,694 18,558 16.9 % Other direct property costs
14,296 13,917 2.7 % 43,418 41,698 4.1 % Allocated overhead
10,565 10,850 (2.6 )% 32,136
30,589 5.1 % Total cost of operations (a)
147,498 145,145 1.6 % 441,871
426,370 3.6 % Net operating income (b) $ 416,896
$ 406,273 2.6 % $ 1,202,772 $ 1,166,839
3.1 % Gross margin 73.9 % 73.7 % 0.3 % 73.1 % 73.2 % (0.1 )%
Weighted average for the period: Square foot occupancy 94.5
% 95.3 % (0.8 )% 94.1 % 94.8 % (0.7 )% Realized annual rental
income per (c): Occupied square foot $ 17.52 $ 16.95 3.4 % $ 17.12
$ 16.43 4.2 % Available square foot (“REVPAF”) $ 16.56 $ 16.14 2.6
% $ 16.09 $ 15.56 3.4 % At September 30: Square foot occupancy 93.2
% 94.2 % (1.1 )% Annual contract rent per occupied square foot (d)
$ 18.07 $ 17.59 2.7 % (a) Revenues and
cost of operations do not include ancillary revenues and expenses
generated at the facilities with respect to tenant reinsurance and
retail sales. (b) See attached reconciliation of
self-storage net operating income (“NOI”) to operating income.
(c) Realized annual rent per occupied square foot is
computed by dividing annualized rental income, before late charges
and administrative fees, by the weighted average occupied square
feet for the period. Realized annual rent per available square foot
(“REVPAF”) is computed by dividing annualized rental income, before
late charges and administrative fees, by the total available
rentable square feet for the period. These measures exclude late
charges and administrative fees in order to provide a better
measure of our ongoing level of revenue. Late charges are dependent
upon the level of delinquency and administrative fees are dependent
upon the level of move-ins. In addition, the rates charged for late
charges and administrative fees can vary independently from rental
rates. These measures take into consideration promotional
discounts, which reduce rental income. (d) Annual contract
rent represents the agreed upon monthly rate that is paid by our
tenants in place at the time of measurement. Contract rates are
initially set in the lease agreement upon move-in, and we adjust
them from time to time with notice. Contract rent excludes other
fees that are charged on a per-item basis, such as late charges and
administrative fees, does not reflect the impact of promotional
discounts and does not reflect the impact of rents that are written
off as uncollectible.
The following table summarizes selected quarterly financial data
with respect to the Same Store Facilities (unaudited):
For the Quarter Ended March 31
June 30 September 30 December 31 Entire Year (Amounts
in thousands, except for per square foot amounts) Total revenues:
2017 $ 533,706 $ 546,543 $ 564,394 2016 $ 512,971 $ 528,820 $
551,418 $ 540,147 $ 2,133,356 Total cost of operations: 2017
$ 148,032 $ 146,341 $ 147,498 2016 $ 142,437 $ 138,788 $ 145,145 $
114,154 $ 540,524 Property taxes: 2017 $ 55,889 $ 56,200 $
55,874 2016 $ 53,555 $ 53,765 $ 53,479 $ 31,113 $ 191,912
Repairs and maintenance, including snow removal expenses: 2017 $
11,639 $ 11,341 $ 11,380 2016 $ 11,420 $ 10,590 $ 11,042 $ 11,126 $
44,178 Advertising and selling expense: 2017 $ 6,741 $ 8,052
$ 6,901 2016 $ 5,187 $ 5,678 $ 7,693 $ 7,266 $ 25,824
REVPAF: 2017 $ 15.65 $ 16.05 $ 16.56 2016 $ 15.01 $ 15.52 $ 16.14 $
15.83 $ 15.63 Weighted average realized annual rent per
occupied square foot: 2017 $ 16.83 $ 17.00 $ 17.52 2016 $ 16.04 $
16.29 $ 16.95 $ 16.89 $ 16.54 Weighted average occupancy
levels for the period: 2017 93.1 % 94.6 % 94.5 % 2016 93.6 % 95.4 %
95.3 % 93.8 % 94.5 %
Property Operations—Non Same
Store Facilities
The Non Same Store Facilities at September 30, 2017 represent
321 facilities that were not stabilized with respect to occupancies
or rental rates since January 1, 2015 or that we did not own as of
January 1, 2015. The following table summarizes operating data with
respect to the Non Same Store Facilities (unaudited):
NON SAME STORE Three Months Ended
September 30, Nine Months Ended September 30,
FACILITIES 2017 2016 Change 2017
2016 Change (Dollar amounts in thousands,
except for per square foot amounts)
Revenues: 2017
acquisitions $ 1,735 $ - $ 1,735 $ 2,873 $ - $ 2,873 2016
acquisitions 9,297 5,292 4,005 26,909 10,395 16,514 2015
acquisitions 4,281 4,076 205 12,567 11,448 1,119 Developed
facilities 11,615 6,579 5,036 29,521 16,030 13,491 Other facilities
54,916 55,792 (876 ) 161,702
161,048 654 Total revenues
81,844 71,739 10,105 233,572
198,921 34,651
Cost of
operations before depreciation and amortization expense:
2017 acquisitions 633 - 633 1,013 - 1,013 2016 acquisitions 3,364
1,937 1,427 10,348 3,662 6,686 2015 acquisitions 1,401 1,362 39
4,110 3,929 181 Developed facilities 5,466 2,989 2,477 14,460 7,422
7,038 Other facilities 14,953 14,472 481
44,686 42,072 2,614
Total cost of operations 25,817 20,760
5,057 74,617 57,085
17,532
Net operating income: 2017 acquisitions
1,102 - 1,102 1,860 - 1,860 2016 acquisitions 5,933 3,355 2,578
16,561 6,733 9,828 2015 acquisitions 2,880 2,714 166 8,457 7,519
938 Developed facilities 6,149 3,590 2,559 15,061 8,608 6,453 Other
facilities 39,963 41,320 (1,357 )
117,016 118,976 (1,960 ) Net
operating income (a) $ 56,027 $ 50,979 $ 5,048 $ 158,955
$ 141,836 $ 17,119
At September
30:
Square foot occupancy: 2017 acquisitions 89.5 % - - 2016
acquisitions (b) 89.1 % 91.3 % (2.4 )% 2015 acquisitions 93.9 %
91.2 % 3.0 % Developed facilities 64.7 % 66.6 % (2.9 )% Other
facilities 85.0 % 91.5 % (7.1 )% 81.8 %
87.6 % (6.6 )% Annual contract rent per occupied
square foot: 2017 acquisitions $ 10.15 $ - - 2016 acquisitions (b)
10.10 10.96 (7.8 )% 2015 acquisitions 14.06 13.85 1.5 % Developed
facilities 13.44 13.90 (3.3 )% Other facilities 17.28
16.98 1.8 % $ 14.97 $ 15.71
(4.7 )% (a) See attached
reconciliation of self-storage NOI to operating income. (b)
Contract rents per foot and occupancies at September 30, 2016,
representing amounts for the properties we acquired in the first
nine months of 2016, are higher than the amounts at September 30,
2017, representing amounts for the properties that we acquired
throughout 2016, due primarily to the mix of properties at each
date.
NON SAME STORE
Nine Months Ended September 30,
FACILITIES
(Continued) 2017 2016 Change
At September
30:
Number of facilities: 2017 acquisitions 14 - 14 2016
acquisitions 55 32 23 2015 acquisitions 17 17 - Developed
facilities 48 30 18 Other facilities 187 187 -
321 266 55 Net rentable square feet (in
thousands): 2017 acquisitions 830 - 830 2016 acquisitions 4,121
2,329 1,792 2015 acquisitions 1,285 1,285 - Developed facilities
5,642 3,225 2,417 Other facilities 14,585 14,020
565 26,463 20,859 5,604
Hurricanes Harvey and Irma
Update
In August and September, due to Hurricanes Harvey and Irma, 115
properties in Houston and 125 properties in Florida were
temporarily closed. We removed 13 properties from our Same Store
pool that had significant disruptions in ongoing rental operations
from the hurricanes. We recorded an aggregate $7.8 million casualty
loss due to damaged buildings and equipment combined with expenses
for repairs, cleanup, and disposal. We expect to incur
approximately $10.0 million of capital expenditures to complete the
repair of hurricane damage. Current loss estimates (including
business interruption) are less than our insurance deductibles, as
a result, we do not expect to receive any insurance proceeds. We
also recorded $5.2 million in incremental ancillary cost of
operations, representing estimated claims cost resulting from the
hurricanes with respect to tenants covered under our tenant
reinsurance program. The casualty loss and incremental ancillary
cost of operations are excluded from our Core FFO per share.
Investing and Capital Markets
Activities
During the three months ended September 30, 2017, we acquired
seven self-storage facilities (two each in Florida and South
Carolina and one each in Kentucky, North Carolina and Ohio) with
0.4 million net rentable square feet for $47.3 million. During the
nine months ended September 30, 2017, we acquired 14 self-storage
facilities (three in Ohio, two each in Florida, Indiana, North
Carolina and South Carolina and one each in Kentucky, Minnesota and
New York) with 0.8 million net rentable square feet for $81.7
million. Subsequent to September 30, 2017, we acquired or were
under contract to acquire eight self-storage facilities (six in
Texas and one each in Alabama and Kentucky) with 0.5 million net
rentable square feet for $67.8 million.
During the three months ended September 30, 2017, we completed
nine newly developed facilities and various expansion projects (1.4
million net rentable square feet) costing $144.5 million. For the
nine months ended September 30, 2017, we completed 12 newly
developed facilities and various expansion projects (2.1 million
net rentable square feet) costing $255.3 million. At September 30,
2017, we had various facilities in development (2.8 million net
rentable square feet) estimated to cost $365 million and various
expansion projects (1.9 million net rentable square feet) estimated
to cost $235 million. The remaining $378 million of development
costs for these projects is expected to be incurred primarily in
the next 18 months.
On August 4, 2017, we called our 5.75% Series T Preferred Shares
for redemption. The shares were redeemed on September 28, 2017 for
$462.5 million.
On August 9, 2017, we issued our 5.05% Series G Preferred Shares
for gross proceeds of $300 million.
On September 18, 2017, we completed a public offering of $1.0
billion in aggregate principal amount of senior notes in two equal
tranches; one tranche bearing interest at an annual rate of 2.370%
maturing on September 15, 2022, and a second tranche bearing
interest at an annual rate of 3.094% maturing on September 15,
2027.
Distributions Declared
On October 25, 2017, our Board of Trustees declared a regular
common quarterly dividend of $2.00 per common share. The Board also
declared dividends with respect to our various series of preferred
shares. All the dividends are payable on December 28, 2017 to
shareholders of record as of December 13, 2017.
Third Quarter Conference
Call
A conference call is scheduled for October 26, 2017 at 10:00
a.m. (PDT) to discuss the third quarter earnings results. The
domestic dial-in number is (866) 406-5408, and the international
dial-in number is (973) 582-2770 (conference ID number for either
domestic or international is 94094559). A simultaneous audio
webcast may be accessed by using the link at PublicStorage.com
under “Company Info, Investor Relations, News and Events, Events
Calendar.” A replay of the conference call may be accessed through
November 9, 2017 by calling (800) 585-8367 (domestic) or (404)
537-3406 (international) or by using the link at PublicStorage.com
under “Company Info, Investor Relations, News and Events, Events
Calendar.” All forms of replay utilize conference ID number
94094559.
About Public Storage
Public Storage, a member of the S&P 500 and FT Global 500,
is a REIT that primarily acquires, develops, owns and operates
self-storage facilities. The Company’s headquarters are located in
Glendale, California. At September 30, 2017, we had interests in
2,374 self-storage facilities located in 38 states with
approximately 157 million net rentable square feet in the United
States and 220 storage facilities located in seven Western European
nations with approximately 12 million net rentable square feet
operated under the “Shurgard” brand. We also own a 42% common
equity interest in PS Business Parks, Inc. (NYSE:PSB) which
wholly-owned approximately 28 million rentable square feet of
commercial space and had an interest in 395 apartments at September
30, 2017.
Additional information about Public Storage is available on our
website, PublicStorage.com.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements in this press release, other than statements
of historical fact, are forward-looking statements which may be
identified by the use of the words “expects,” “believes,”
“anticipates,” “should,” “estimates” and similar expressions. These
forward-looking statements involve known and unknown risks and
uncertainties, which may cause our actual results and performance
to be materially different from those expressed or implied in the
forward-looking statements. Factors and risks that may impact
future results and performance include, but are not limited to,
those described in Part 1, Item 1A, “Risk Factors” in our most
recent Annual Report on Form 10-K filed with the Securities and
Exchange Commission (the “SEC”) on February 28, 2017 and in our
other filings with the SEC and the following: general risks
associated with the ownership and operation of real estate,
including changes in demand, risk related to development of
self-storage facilities, potential liability for environmental
contamination, natural disasters and adverse changes in laws and
regulations governing property tax, real estate and zoning; risks
associated with downturns in the national and local economies in
the markets in which we operate, including risks related to current
economic conditions and the economic health of our customers; the
impact of competition from new and existing self-storage and
commercial facilities and other storage alternatives; difficulties
in our ability to successfully evaluate, finance, integrate into
our existing operations and manage acquired and developed
properties; risks associated with international operations
including, but not limited to, unfavorable foreign currency rate
fluctuations, changes in tax laws, and local and global economic
uncertainty that could adversely affect our earnings and cash
flows; risks related to our participation in joint ventures; the
impact of the regulatory environment as well as national, state and
local laws and regulations including, without limitation, those
governing environmental, taxes, our tenant reinsurance business and
labor, and risks related to the impact of new laws and regulations;
risks of increased tax expense associated either with a possible
failure by us to qualify as a REIT, or with challenges to the
determination of taxable income for our taxable REIT subsidiaries;
changes in federal or state tax laws related to the taxation of
REITs and other corporations; security breaches or a failure of our
networks, systems or technology could adversely impact our
business, customer and employee relationships; risks associated
with the self-insurance of certain business risks, including
property and casualty insurance, employee health insurance and
workers compensation liabilities; difficulties in raising capital
at a reasonable cost; delays in the development process; ongoing
litigation and other legal and regulatory actions which may divert
management’s time and attention, require us to pay damages and
expenses or restrict the operation of our business; and economic
uncertainty due to the impact of war or terrorism. These
forward-looking statements speak only as of the date of this press
release. All of our forward-looking statements, including those in
this press release, are qualified in their entirety by this
statement. We expressly disclaim any obligation to update publicly
or otherwise revise any forward-looking statements, whether as a
result of new information, new estimates, or other factors, events
or circumstances after the date of this press release, except where
expressly required by law. Given these risks and uncertainties, you
should not rely on any forward-looking statements in this press
release, or which management may make orally or in writing from
time to time, as predictions of future events nor guarantees of
future performance.
PUBLIC STORAGE
SELECTED INCOME STATEMENT
DATA
(Amounts in thousands, except per share
data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2017 2016 2017
2016
Revenues: Self-storage
facilities $ 646,238 $ 623,157 $ 1,878,215 $ 1,792,130 Ancillary
operations 40,123 39,991 118,005
116,992 686,361 663,148
1,996,220 1,909,122
Expenses: Self-storage cost of operations 173,315 165,905
516,488 483,455 Ancillary cost of operations 17,304 12,722 39,611
40,462 Depreciation and amortization 113,320 109,432 334,426
321,573 General and administrative 22,311
22,140 62,331 63,508
326,250 310,199 952,856
908,998 Operating income 360,111 352,949 1,043,364
1,000,124
Other income (expense): Interest and other
income 4,569 3,750 12,722 11,614 Interest expense (2,389 ) (1,221 )
(4,553 ) (3,310 ) Equity in earnings of unconsolidated real estate
entities 17,218 17,237 57,235 41,628 Gain on real estate investment
sales - - 975 689 Foreign currency exchange loss (13,446 ) (3,665 )
(44,452 ) (5,987 ) Casualty loss (7,789 ) -
(7,789 ) - Net income 358,274 369,050
1,057,502 1,044,758 Allocation to noncontrolling interests
(1,600 ) (1,745 ) (4,684 ) (4,921 ) Net income
allocable to Public Storage shareholders 356,674 367,305 1,052,818
1,039,837 Allocation of net income to: Preferred shareholders –
distributions (61,055 ) (57,178 ) (182,457 ) (178,666 ) Preferred
shareholders – redemptions (14,692 ) - (29,330 ) (26,873 )
Restricted share units (1,210 ) (1,170 )
(3,502 ) (3,231 ) Net income allocable to common
shareholders $ 279,717 $ 308,957 $ 837,529 $
831,067
Per common
share:
Net income per common share – Basic $ 1.61 $ 1.78 $
4.83 $ 4.80 Net income per common share – Diluted $
1.61 $ 1.78 $ 4.81 $ 4.78 Weighted
average common shares – Basic 173,715 173,108
173,560 173,057 Weighted average
common shares – Diluted 174,240 173,848
174,128 173,899
PUBLIC STORAGE
SELECTED BALANCE SHEET DATA
(Amounts in thousands, except share and
per share data)
September 30, 2017 December 31, 2016
ASSETS (Unaudited) Cash and cash equivalents $
694,233 $ 183,688 Operating real estate facilities: Land and
buildings, at cost 14,369,903 13,963,229 Accumulated depreciation
(5,585,825 ) (5,270,963 ) 8,784,078 8,692,266
Construction in process 221,970 230,310 Investments in
unconsolidated real estate entities 726,168 689,207 Goodwill and
other intangible assets, net 205,868 212,719 Other assets
133,377 122,148 Total assets $ 10,765,694
$ 10,130,338
LIABILITIES AND
EQUITY Senior unsecured notes $ 1,396,201 $ 359,810
Mortgage notes 29,653 30,939 Accrued and other liabilities
380,420 297,935 Total liabilities 1,806,274
688,684 Equity: Public Storage shareholders’ equity:
Cumulative Preferred Shares, $0.01 par value, 100,000,000 shares
authorized, 161,000 shares issued (in series) and outstanding,
(174,700 at December 31, 2016) at liquidation preference 4,025,000
4,367,500 Common Shares, $0.10 par value, 650,000,000 shares
authorized, 173,738,808 shares issued and outstanding, (173,288,787
shares at December 31, 2016) 17,374 17,329 Paid-in capital
5,631,049 5,609,768 Accumulated deficit (662,360 ) (487,581 )
Accumulated other comprehensive loss (74,873 )
(95,106 ) Total Public Storage shareholders’ equity 8,936,190
9,411,910 Noncontrolling interests 23,230
29,744 Total equity 8,959,420 9,441,654
Total liabilities and equity $ 10,765,694 $
10,130,338
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Computation of Funds from Operations
and Funds Available for Distribution
(Unaudited – amounts in thousands, except
per share data)
Three Months Ended Nine Months Ended September
30, September 30, 2017 2016 2017
2016
Computation of
FFO per Share:
Net income allocable to common shareholders $ 279,717 $
308,957 $ 837,529 $ 831,067 Eliminate items excluded from FFO:
Depreciation and amortization 113,320 109,432 334,426 321,573
Depreciation from unconsolidated real estate investments 18,054
18,328 52,635 57,319 Depreciation allocated to noncontrolling
interests and restricted share unitholders (858 ) (884 ) (2,657 )
(2,642 ) Gains on sale of real estate investments, including our
equity share from investments - (78 )
(3,077 ) (767 ) FFO allocable to common shares (a) $ 410,233
$ 435,755 $ 1,218,856 $ 1,206,550
Diluted weighted average common shares 174,240
173,848 174,128 173,899 FFO per
share (a) $ 2.35 $ 2.51 $ 7.00 $ 6.94
Reconciliation of
Earnings per Share to FFO per Share:
Earnings per share—Diluted $ 1.61 $ 1.78 $ 4.81 $ 4.78
Eliminate per share amounts excluded from FFO: Depreciation and
amortization allocable to common shareholders 0.75 0.73 2.21 2.16
Gains on sale of real estate investments, including our equity
share from investments and other (0.01 ) -
(0.02 ) - FFO per share (a) $ 2.35 $
2.51 $ 7.00 $ 6.94
Computation of
Funds Available for Distribution ("FAD"):
FFO allocable to common shares $ 410,233 $ 435,755 $
1,218,856 $ 1,206,550 Eliminate effect of items included in FFO but
not FAD: Share-based compensation expense in excess of cash paid
12,297 11,076 13,096 13,241 Foreign currency exchange loss,
including our equity share from investments 13,446 3,665 44,452
5,046 Application of EITF D-42, including our equity share from
investments 17,552 - 32,190 26,873 Less: Capital expenditures to
maintain real estate facilities (28,985 ) (22,834 )
(82,525 ) (67,779 ) FAD (a) $ 424,543 $
427,662 $ 1,226,069 $ 1,183,931
Distributions paid to common shareholders and restricted share
units $ 348,555 $ 312,540 $ 1,045,140 $
920,097 Distribution payout ratio 82.1 %
73.1 % 85.2 % 77.7 % Distributions per
common share $ 2.00 $ 1.80 $ 6.00 $ 5.30
(a) FFO and FFO per share are
non-GAAP measures defined by the National Association of Real
Estate Investment Trusts and, along with the non-GAAP measure FAD,
are considered helpful measures of REIT performance by REITs and
many REIT analysts. FFO represents net income before real estate
depreciation, gains or losses and impairment charges, which are
excluded because they are based upon historical real estate costs
and assume that building values diminish ratably over time, while
we believe that real estate values fluctuate due to market
conditions. FAD represents FFO adjusted to exclude certain non-cash
charges and to deduct capital expenditures. We utilize FAD in
evaluating our ongoing cash flow available for investment, debt
repayment, and common distributions. We believe investors and
analysts utilize FAD in a similar manner. FFO and FFO per share are
not a substitute for net income or earnings per share. FFO and FAD
are not substitutes for GAAP net cash flow in evaluating our
liquidity or ability to pay dividends, because they exclude
investing and financing activities presented on our statements of
cash flows. In addition, other REITs may compute these measures
differently, so comparisons among REITs may not be helpful.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Reconciliation of Self-Storage Net
Operating Income to
Operating Income
(Unaudited – amounts in thousands)
Three Months Ended Nine Months Ended September
30, September 30, 2017 2016 2017
2016 Self-storage revenues for: Same Store Facilities
$ 564,394 $ 551,418 $ 1,644,643 $ 1,593,209 Non Same Store
Facilities 81,844 71,739 233,572
198,921 Self-storage revenues 646,238 623,157
1,878,215 1,792,130 Self-storage cost of operations for:
Same Store Facilities 147,498 145,145 441,871 426,370 Non Same
Store Facilities 25,817 20,760
74,617 57,085 Self-storage cost of operations
173,315 165,905 516,488 483,455 Self-storage net operating
income for: Same Store Facilities 416,896 406,273 1,202,772
1,166,839 Non Same Store Facilities 56,027
50,979 158,955 141,836
Self-storage net operating income (a) 472,923 457,252 1,361,727
1,308,675 Ancillary operating revenues 40,123 39,991 118,005
116,992 Ancillary cost of operations (17,304 ) (12,722 ) (39,611 )
(40,462 ) Depreciation and amortization (113,320 ) (109,432 )
(334,426 ) (321,573 ) General and administrative expense
(22,311 ) (22,140 ) (62,331 ) (63,508 )
Operating income on our income statement $ 360,111 $ 352,949
$ 1,043,364 $ 1,000,124
(a) Net operating income or “NOI” is a non-GAAP financial
measure that excludes the impact of depreciation and amortization
expense, which is based upon historical real estate costs and
assumes that building values diminish ratably over time, while we
believe that real estate values fluctuate due to market conditions.
We utilize NOI in determining current property values, evaluating
property performance, and in evaluating operating trends. We
believe that investors and analysts utilize NOI in a similar
manner. NOI is not a substitute for net income, net operating cash
flow, or other related GAAP financial measures, in evaluating our
operating results. This table reconciles from NOI for our
self-storage facilities to the operating income presented on our
income statement.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171025006513/en/
Public StorageClemente Teng, 818-244-8080, Ext. 1141
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