Public Storage (NYSE:PSA) announced today operating results for
the quarter and year ended December 31, 2017.
Operating Results for the Three Months
Ended December 31, 2017
For the three months ended December 31, 2017, net income
allocable to our common shareholders was $334.1 million or $1.92
per diluted common share, compared to $352.8 million or $2.03 in
2016 representing a decrease of $18.7 million or $0.11. The
decrease primarily reflects (i) a $29.2 million reduction due to
the impact of foreign exchange translation gains and losses
associated with our euro denominated debt and (ii) a $7.2 million
increase in interest expense associated with higher outstanding
debt balances offset partially by (iii) a $13.8 million increase in
self-storage net operating income (described below).
The $13.8 million increase in self-storage net operating income
is a result of a $8.7 million increase in our Same Store Facilities
(as defined below) and a $5.1 million increase in our Non Same
Store Facilities (as defined below). Revenues for the Same Store
Facilities increased 2.1% or $11.6 million in the three months
ended December 31, 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 2.6% or $2.9
million in the three months ended December 31, 2017 as compared to
2016, due primarily to increased property manager payroll and
repairs and maintenance costs, offset partially by reduced
advertising and selling costs. The increase in net operating income
for the Non Same Store Facilities is due primarily to the impact of
345 self-storage facilities acquired, developed or expanded since
January 2015.
Operating Results for the Year Ended
December 31, 2017
In 2017, net income allocable to our common shareholders was
$1,171.6 million or $6.73 per diluted common share, compared to
$1,183.9 million or $6.81 per share in 2016 representing a decrease
of $12.3 million or $0.08. The decrease primarily reflects (i) a
$67.6 million reduction due to the impact of foreign exchange
translation gains and losses associated with our euro denominated
debt, (ii) an $8.5 million increase in interest expense associated
with higher outstanding debt balances and (iii) a $7.8 million
casualty loss and $5.2 million in incremental tenant reinsurance
losses related to Hurricane Harvey and Irma offset partially by
(iv) a $66.9 million increase in self-storage net operating income
(described below) and (v) an $18.9 million increase in our equity
in earnings of unconsolidated real estate entities.
The $66.9 million increase in self-storage net operating income
is a result of a $44.6 million increase in our Same Store
Facilities and a $22.3 million increase in our Non Same Store
Facilities. Revenues for the Same Store Facilities increased 3.0%
or $63.0 million in 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 3.4% or $18.4
million in 2017 as compared to 2016, due primarily to increased
property taxes, advertising and selling expense and repairs and
maintenance costs, offset partially by lower snow removal costs.
The increase in net operating income for the Non Same Store
Facilities is due primarily to the impact of 345 self-storage
facilities acquired, developed or expanded since January 2015.
Funds from Operations
For the three months ended December 31, 2017, funds from
operations (“FFO”) was $2.70 per diluted common share, as compared
to $2.77 in 2016, representing a decrease of 2.5%. 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 years ended December 31, 2017 and 2016, FFO was flat at
$9.70 per diluted common share.
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 December 31, Year
Ended December 31, Percentage
Percentage 2017 2016 Change 2017
2016 Change FFO per share $ 2.70 $ 2.77 (2.5
)% $ 9.70 $ 9.70 0.0 %
Eliminate the per share impact of items
excluded from Core FFO, including our equity share from
investments:
Foreign currency exchange loss (gain),
net
0.03 (0.14 ) 0.29 (0.11 ) Application of EITF D-42 0.01 0.02 0.19
0.17
Casualty losses and tenant claims due to
hurricanes
- - 0.07 -
Reversals of accruals on forfeited
executive share-based awards
- - (0.03 ) - Other items 0.01 - 0.01
0.03 Core FFO per share $ 2.75 $ 2.65
3.8 % $ 10.23 $ 9.79 4.5 %
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.
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 82%
of the aggregate net rentable square feet of our U.S. consolidated
self-storage portfolio at December 31, 2017.
Selected Operating Data for the Same
Store Facilities (2,042 facilities) (unaudited):
Three Months Ended December 31, Year
Ended December 31, Percentage
Percentage 2017 2016 Change 2017
2016 Change (Dollar amounts in thousands,
except for per square foot amounts) Revenues: Rental income $
527,011 $ 515,653 2.2 % $ 2,098,780 $ 2,035,701 3.1 % Late charges
and administrative fees 24,719 24,494
0.9 % 97,593 97,655 (0.1 )% Total
revenues (a) 551,730 540,147 2.1 %
2,196,373 2,133,356 3.0 % Cost
of operations: Property taxes 31,665 31,113 1.8 % 199,628 191,912
4.0 % On-site property manager payroll 24,707 23,438 5.4 % 107,535
106,460 1.0 % Supervisory payroll 8,542 8,580 (0.4 )% 38,041 36,966
2.9 % Repairs and maintenance 11,122 10,260 8.4 % 43,233 39,943 8.2
% Snow removal 812 866 (6.2 )% 3,061 4,235 (27.7 )% Utilities 9,162
9,158 0.0 % 39,135 39,424 (0.7 )% Advertising and selling expense
6,749 7,266 (7.1 )% 28,443 25,824 10.1 % Other direct property
costs 14,435 14,099 2.4 % 57,853 55,797 3.7 % Allocated overhead
9,874 9,374 5.3 % 42,010
39,963 5.1 % Total cost of operations (a)
117,068 114,154 2.6 % 558,939
540,524 3.4 % Net operating income (b) $ 434,662
$ 425,993 2.0 % $ 1,637,434 $ 1,592,832
2.8 % Gross margin 78.8 % 78.9 % (0.1 )% 74.6 % 74.7 % (0.1
)% Weighted average for the period: Square foot occupancy
93.1 % 93.8 % (0.7 )% 93.8 % 94.5 % (0.7 )% Realized annual rental
income per (c): Occupied square foot $ 17.40 $ 16.89 3.0 % $ 17.19
$ 16.54 3.9 % Available square foot (“REVPAF”) $ 16.18 $ 15.83 2.2
% $ 16.11 $ 15.63 3.1 % At December 31: Square foot occupancy 91.2
% 92.5 % (1.4 )%
Annual contract rent per occupied square
foot (d)
$ 17.97 $ 17.44 3.0 % (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) Contract rent represents the
applicable contractual monthly rent charged to our tenants,
excluding the impact of promotional discounts, late charges and
administrative fees.
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 $ 551,730 $ 2,196,373 2016 $
512,971 $ 528,820 $ 551,418 $ 540,147 $ 2,133,356 Total cost
of operations: 2017 $ 148,032 $ 146,341 $ 147,498 $ 117,068 $
558,939 2016 $ 142,437 $ 138,788 $ 145,145 $ 114,154 $ 540,524
Property taxes: 2017 $ 55,889 $ 56,200 $ 55,874 $ 31,665 $
199,628 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 $ 11,934 $ 46,294 2016 $ 11,420 $
10,590 $ 11,042 $ 11,126 $ 44,178 Advertising and selling
expense: 2017 $ 6,741 $ 8,052 $ 6,901 $ 6,749 $ 28,443 2016 $ 5,187
$ 5,678 $ 7,693 $ 7,266 $ 25,824 REVPAF: 2017 $ 15.65 $
16.05 $ 16.56 $ 16.18 $ 16.11 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 $ 17.40 $ 17.19 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 % 93.1 % 93.8 % 2016 93.6 % 95.4 % 95.3 %
93.8 % 94.5 %
Property Operations – Non Same Store
Facilities
The Non Same Store Facilities at December 31, 2017 represent 345
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 December 31,
Year Ended December 31,
FACILITIES 2017
2016 Change 2017 2016
Change
(Dollar amounts in thousands, except for
per square foot amounts)
Revenues: 2017 acquisitions $ 2,704 $ - $ 2,704 $ 5,577 $ -
$ 5,577 2016 acquisitions 9,427 7,779 1,648 36,336 18,174 18,162
2015 acquisitions 4,368 4,126 242 16,935 15,574 1,361 Developed
facilities 12,780 7,375 5,405 42,301 23,405 18,896 Other facilities
53,209 54,271 (1,062 ) 214,911
215,319 (408 ) Total revenues 82,488
73,551 8,937 316,060
272,472 43,588
Cost of operations before depreciation
and amortization expense:
2017 acquisitions 993 - 993 2,006 - 2,006 2016 acquisitions 3,345
2,793 552 13,693 6,455 7,238 2015 acquisitions 1,188 1,081 107
5,298 5,010 288 Developed facilities 5,066 3,510 1,556 19,526
10,932 8,594 Other facilities 13,485 12,912
573 58,171 54,984 3,187
Total cost of operations 24,077 20,296
3,781 98,694 77,381
21,313
Net operating income: 2017 acquisitions
1,711 - 1,711 3,571 - 3,571 2016 acquisitions 6,082 4,986 1,096
22,643 11,719 10,924 2015 acquisitions 3,180 3,045 135 11,637
10,564 1,073 Developed facilities 7,714 3,865 3,849 22,775 12,473
10,302 Other facilities 39,724 41,359 (1,635 )
156,740 160,335 (3,595 ) Net
operating income (a) $ 58,411 $ 53,255 $ 5,156 $ 217,366
$ 195,091 $ 22,275
At December
31:
Square foot occupancy: 2017 acquisitions (b) 87.3 % - - 2016
acquisitions 85.9 % 82.9 % 3.6 % 2015 acquisitions 92.4 % 90.8 %
1.8 % Developed facilities 63.5 % 58.6 % 8.4 % Other facilities
82.8 % 89.0 % (7.0 )% 79.9 %
82.8 % (3.5 )% Annual contract rent per occupied square
foot: 2017 acquisitions (b) $ 14.63 $ - - 2016 acquisitions 10.23
9.99 2.4 % 2015 acquisitions 14.17 13.73 3.2 % Developed facilities
13.33 13.51 (1.3 )% Other facilities 17.16
16.89 1.6 % $ 15.03 $ 15.07 (0.3
)%
At December
31:
Number of facilities: 2017 acquisitions (b) 34 - 34 2016
acquisitions 55 55 - 2015 acquisitions 17 17 - Developed facilities
52 36 16 Other facilities 187 187
- 345 295 50
Net rentable square feet (in thousands): 2017 acquisitions
(b) 2,114 - 2,114 2016 acquisitions 4,177 4,121 56 2015
acquisitions 1,285 1,285 - Developed facilities 6,059 4,019 2,040
Other facilities 14,677 14,069
608 28,312 23,494 4,818
(a) See attached reconciliation of
self-storage NOI to operating income. (b) Amounts at
December 31, 2017 for the 2017 acquisitions include 22 properties
acquired from third parties and 12 properties we commenced
consolidating at December 31, 2017 in connection with acquiring the
74.25% interest we did not own in a legacy institutional
partnership.
Investing and Capital Markets
Activities
During the three months ended December 31, 2017, we acquired
eight self-storage facilities (six in Texas and one each in Alabama
and Kentucky) with 0.5 million net rentable square feet for $68.1
million. During 2017, we acquired 22 self-storage facilities (six
in Texas, three in Ohio, two each in Florida, Indiana, Kentucky,
North Carolina and South Carolina and one each in Alabama,
Minnesota and New York) with 1.4 million net rentable square feet
for $149.8 million. Subsequent to December 31, 2017, we acquired or
were under contract to acquire two self-storage facilities (one
each in Nebraska and Tennessee) with 0.2 million net rentable
square feet for $18 million.
During the three months ended December 31, 2017, we completed
four newly developed facilities and various expansion projects (0.6
million net rentable square feet) costing $56 million. During 2017,
we completed 16 newly developed facilities and various expansion
projects (2.7 million net rentable square feet) costing an
aggregate of $312 million. At December 31, 2017, we had various
facilities in development (2.7 million net rentable square feet)
estimated to cost $367 million and various expansion projects (1.9
million net rentable square feet) estimated to cost $247 million.
The remaining $350 million of development costs for these projects
is expected to be incurred primarily in the next 18 months.
On December 31, 2017, we acquired the 74.25% interest we did not
own in 12 stabilized self-storage facilities (three in California,
two in Minnesota, Nevada and New York, and one each in New Jersey,
Ohio and Virginia) with 0.7 million net rentable square feet for
$135.5 million in cash. Our existing 25.75% interest in the
earnings of the legacy institutional partnership that owned these
properties, and that we managed, was reflected as Equity in
Earnings of Real Estate Entities. We commenced consolidating these
properties effective December 31, 2017.
During 2017, we raised $1,580.0 million in gross proceeds from
public offerings comprised of a) two series of Preferred Shares for
$580.0 million in gross proceeds with an average coupon rate of
5.1% and b) a public offering of senior notes, comprised of $500
million maturing in five years at a 2.370% coupon rate and $500
million maturing in ten years at a 3.094% coupon rate. During 2017,
we redeemed two series of Preferred Shares with an average coupon
rate of 5.8% at par for $922.5 million.
Distributions Declared
On February 20, 2018, 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 March 29, 2018 to
shareholders of record as of March 14, 2018.
Fourth Quarter Conference
Call
A conference call is scheduled for February 21, 2018 at 11:00
a.m. (PST) to discuss the fourth 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 1389368). A simultaneous audio webcast
may be accessed by using the link at www.publicstorage.com under
“Company Info, Investor Relations, News and Events, Events
Calendar.” A replay of the conference call may be accessed through
March 7, 2018 by calling (800) 585-8367 (domestic) or (404)
537-3406 (international) or by using the link at
www.publicstorage.com under “Company Info, Investor Relations, News
and Events, Events Calendar.” All forms of replay utilize
conference ID number 1389368.
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 December 31, 2017, we had interests in
2,386 self-storage facilities located in 38 states with
approximately 159 million net rentable square feet in the United
States and 222 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 owned
and operated approximately 28 million rentable square feet of
commercial space at December 31, 2017.
Additional information about Public Storage is available on our
website, www.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 27, 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 Year Ended December 31, December 31,
2017 2016 2017
2016
Revenues: Self-storage facilities $
634,218 $ 613,698 $ 2,512,433 $ 2,405,828 Ancillary operations
38,090 37,729 156,095
154,721 672,308 651,427
2,668,528 2,560,549
Expenses: Self-storage cost of operations 141,145 134,450
657,633 617,905 Ancillary cost of operations 10,734 10,716 50,345
51,178 Depreciation and amortization 120,100 111,741 454,526
433,314 General and administrative 20,551
20,148 82,882 83,656
292,530 277,055 1,245,386
1,186,053 Operating income 379,778 374,372 1,423,142
1,374,496
Other income (expense): Interest and other
income 6,049 3,524 18,771 15,138 Interest expense (8,137 ) (900 )
(12,690 ) (4,210 ) Equity in earnings of unconsolidated real estate
entities 18,420 15,128 75,655 56,756 Gain on real estate investment
sales 446 - 1,421 689 Foreign currency exchange (loss) gain (5,593
) 23,557 (50,045 ) 17,570 Casualty loss - -
(7,789 ) - Net income 390,963 415,681
1,448,465 1,460,439 Allocation to noncontrolling interests
(1,564 ) (1,942 ) (6,248 ) (6,863 ) Net income
allocable to Public Storage shareholders 389,399 413,739 1,442,217
1,453,576 Allocation of net income to: Preferred shareholders –
distributions (54,078 ) (59,548 ) (236,535 ) (238,214 ) Preferred
shareholders – redemptions - - (29,330 ) (26,873 ) Restricted share
units (1,241 ) (1,379 ) (4,743 ) (4,610
) Net income allocable to common shareholders $ 334,080 $
352,812 $ 1,171,609 $ 1,183,879
Per common
share:
Net income per common share – Basic $ 1.92 $ 2.04 $
6.75 $ 6.84 Net income per common share – Diluted $
1.92 $ 2.03 $ 6.73 $ 6.81 Weighted
average common shares – Basic 173,771 173,190
173,613 173,091 Weighted average
common shares – Diluted 174,218 173,812
174,151 173,878
PUBLIC STORAGE SELECTED BALANCE SHEET
DATA
(Amounts in thousands, except share and
per share data)
December 31, 2017 December 31, 2016
ASSETS
(Unaudited) Cash and cash equivalents $ 433,376 $ 183,688
Operating real estate facilities: Land and buildings, at
cost 14,665,989 13,963,229 Accumulated depreciation
(5,700,331 ) (5,270,963 ) 8,965,658 8,692,266 Construction
in process 264,441 230,310 Investments in unconsolidated real
estate entities 724,173 689,207 Goodwill and other intangible
assets, net 214,957 212,719 Other assets 130,287
122,148 Total assets $ 10,732,892 $ 10,130,338
LIABILITIES AND EQUITY Senior unsecured
notes $ 1,402,109 $ 359,810 Mortgage notes 29,213 30,939 Accrued
and other liabilities 337,201 297,935
Total liabilities 1,768,523 688,684 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, 173,853,370 shares issued and
outstanding, (173,288,787 shares at December 31, 2016)
17,385 17,329 Paid-in capital 5,648,399 5,609,768 Accumulated
deficit (675,711 ) (487,581 ) Accumulated other comprehensive loss
(75,064 ) (95,106 ) Total Public Storage
shareholders’ equity 8,940,009 9,411,910 Noncontrolling interests
24,360 29,744 Total equity
8,964,369 9,441,654 Total liabilities and
equity $ 10,732,892 $ 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 Year Ended December 31, December 31,
2017 2016 2017
2016
Computation of
FFO per Share:
Net income allocable to common shareholders $ 334,080 $ 352,812 $
1,171,609 $ 1,183,879 Eliminate items excluded from FFO:
Depreciation and amortization 120,100 111,741 454,526 433,314
Depreciation from unconsolidated real estate investments 19,296
17,088 71,931 74,407
Depreciation allocated to noncontrolling
interests and restricted share unitholders
(910 ) (907 ) (3,567 ) (3,549 )
Gains on sale of real estate investments,
including our equity share from investments
(1,831 ) (1 ) (4,908 ) (768 ) FFO
allocable to common shares (a) $ 470,735 $ 480,733 $
1,689,591 $ 1,687,283 Diluted weighted average common
shares 174,218 173,812 174,151
173,878 FFO per share (a) $ 2.70 $ 2.77
$ 9.70 $ 9.70
Reconciliation of
Earnings per Share to FFO per Share:
Earnings per share—Diluted $ 1.92 $ 2.03 $ 6.73 $ 6.81 Eliminate
per share amounts excluded from FFO:
Depreciation and amortization allocable to
common shareholders
0.79 0.74 3.00 2.90
Gains on sale of real estate investments,
including our equity share from investments and other
(0.01 ) - (0.03 ) (0.01 ) FFO
per share (a) $ 2.70 $ 2.77 $ 9.70 $ 9.70
Computation of
Funds Available for Distribution ("FAD"):
FFO allocable to common shares $ 470,735 $ 480,733 $ 1,689,591 $
1,687,283 Eliminate effect of items included in FFO but not FAD:
Share-based compensation expense in excess of cash paid 9,615 7,524
22,711 20,765
Foreign currency exchange loss (gain),
including our equity share from investments
5,593 (23,557 ) 50,045 (18,511 )
Application of EITF D-42, including our
equity share from investments
1,689 3,067 33,879 29,940 Less: Capital expenditures to maintain
real estate facilities (42,255 ) (18,268 )
(124,780 ) (86,047 ) FAD (a) $ 445,377 $ 449,499
$ 1,671,446 $ 1,633,430
Distributions paid to common shareholders
and restricted share units
$ 348,672 $ 347,447 $ 1,393,812 $ 1,267,544
Distribution payout ratio 78.3 % 77.3 %
83.4 % 77.6 % Distributions per common share $ 2.00 $
2.00 $ 8.00 $ 7.30 (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 Year Ended December 31, December 31,
2017 2016 2017
2016 Self-storage revenues for: Same Store Facilities
$ 551,730 $ 540,147 $ 2,196,373 $ 2,133,356 Non Same Store
Facilities 82,488 73,551 316,060
272,472 Self-storage revenues 634,218 613,698
2,512,433 2,405,828 Self-storage cost of operations for:
Same Store Facilities 117,068 114,154 558,939 540,524 Non Same
Store Facilities 24,077 20,296
98,694 77,381 Self-storage cost of operations
141,145 134,450 657,633 617,905 Self-storage net operating
income for: Same Store Facilities 434,662 425,993 1,637,434
1,592,832 Non Same Store Facilities 58,411
53,255 217,366 195,091
Self-storage net operating income (a) 493,073 479,248 1,854,800
1,787,923 Ancillary operating revenues 38,090 37,729 156,095
154,721 Ancillary cost of operations (10,734 ) (10,716 ) (50,345 )
(51,178 ) Depreciation and amortization (120,100 ) (111,741 )
(454,526 ) (433,314 ) General and administrative expense
(20,551 ) (20,148 ) (82,882 ) (83,656 )
Operating income on our income statement $ 379,778 $ 374,372
$ 1,423,142 $ 1,374,496 (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.
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Public StorageClemente Teng(818) 244-8080, Ext. 1141
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