Public Storage (NYSE:PSA) announced today operating results for
the three and six months ended June 30, 2018.
Operating Results for the Three Months
Ended June 30, 2018
For the three months ended June 30, 2018, net income allocable
to our common shareholders was $348.3 million or $2.00 per diluted
common share, compared to $276.7 million or $1.59 per diluted
common share in 2017 representing an increase of $71.6 million or
$0.41 per diluted common share. The increase is due primarily to
(i) a $12.3 million increase in self-storage net operating income
(described below), (ii) our $24.0 million equity share of a gain on
sale of assets recorded by PS Business Parks in the three months
ended June 30, 2018, (iii) a $47.4 million increase due to the
impact of foreign currency exchange gains and losses associated
with our euro denominated debt and (iv) a $14.6 million allocation
to preferred shareholders associated with preferred share
redemptions in the three months ended June 30, 2017. These
increases were offset partially by a $13.0 million increase in
general and administrative expense due to the acceleration of
share-based compensation expense accruals for our CEO and CFO in
2018 as a result of their upcoming retirement and the reversal of
share-based compensation accruals forfeited by retiring executives
in 2017.
The $12.3 million increase in self-storage net operating income
is a result of a $4.7 million increase in our Same Store Facilities
(as defined below) and a $7.6 million increase in our Non Same
Store Facilities (as defined below). Revenues for the Same Store
Facilities increased 1.5% or $8.5 million in the three months ended
June 30, 2018 as compared to 2017, due primarily to higher realized
annual rent per occupied square foot. Cost of operations for the
Same Store Facilities increased by 2.6% or $3.8 million in the
three months ended June 30, 2018 as compared to 2017, due primarily
to increased property taxes. The increase in net operating income
of $7.6 million for the Non Same Store Facilities is due primarily
to the impact of 137 self-storage facilities acquired and developed
since January 2016.
Operating Results for the Six Months
Ended June 30, 2018
For the six months ended June 30, 2018, net income allocable to
our common shareholders was $636.1 million or $3.65 per diluted
common share, compared to $557.8 million or $3.20 in 2017
representing an increase of $78.3 million or $0.45 per diluted
common share. The increase is due primarily to (i) a $25.9 million
increase in self-storage net operating income, (ii) our $34.9
million equity share of gains recorded by PS Business Parks in the
six months ended June 30, 2018, (iii) a $41.1 million increase due
to the impact of foreign currency exchange gains and losses
associated with our euro denominated debt and (iv) a $14.6 million
allocation to preferred shareholders associated with preferred
share redemptions in the six months ended June 30, 2017. These
increases were offset partially by a $21.0 million increase in
general and administrative expense due to the acceleration of
share-based compensation expense accruals for our CEO and CFO in
2018 as a result of their upcoming retirement and the reversal of
share-based compensation accruals forfeited by retiring executives
in 2017.
The $25.9 million increase in self-storage net operating income
is a result of an $11.2 million increase in our Same Store
Facilities and $14.7 million increase in our Non Same Store
Facilities. Revenues for the Same Store Facilities increased 1.8%
or $20.0 million in the six months ended June 30, 2018 as compared
to 2017, due primarily to higher realized annual rent per occupied
square foot. Cost of operations for the Same Store Facilities
increased by 3.0% or $8.8 million in the six months ended June 30,
2018 as compared to 2017, due primarily to increased property
taxes, property manager payroll, and allocated overhead. The
increase in net operating income of $14.7 million for the Non Same
Store Facilities is due primarily to the impact of 137 self-storage
facilities acquired and developed since January 2016.
Funds from Operations
For the three months ended June 30, 2018, funds from operations
(“FFO”) was $2.65 per diluted common share, as compared to $2.31 in
2017, representing an increase of 14.7%. 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 six months ended June 30, 2018, FFO was $5.02 per
diluted common share, as compared to $4.65 in 2017, representing an
increase of 8.0%.
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 and (iii) accelerations
of accruals due to the upcoming retirement of our CEO and CFO and
reversals of accruals with respect to share-based awards forfeited
by retiring senior executive officers. 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 June 30, Six Months Ended June 30,
Percentage Percentage 2018 2017 Change 2018 2017 Change FFO
per share $ 2.65 $ 2.31 14.7 % $ 5.02 $ 4.65 8.0 % Eliminate the
per share impact of
items excluded from Core FFO, including
our equity share from investments:
Foreign currency exchange (gain) loss (0.13 ) 0.15 (0.06 ) 0.18
Application of EITF D-42 - 0.08 - 0.08
Acceleration (reversal) of share-based
compensation expense due to executive officer retirement
0.04 (0.03 ) 0.09 (0.03 ) Other items 0.01 -
- - Core FFO per share $ 2.57
$ 2.51 2.4 % $ 5.05 $ 4.88 3.5 %
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, 2016. 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 2016, 2017 and 2018.
We believe the Same Store information is used by investors and REIT
analysts in a similar manner. The Same Store pool decreased from
2,052 facilities at March 31, 2018 to 2,048 facilities at June 30,
2018. The following table summarizes the historical operating
results of these 2,048 facilities (131.3 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 June 30, 2018.
Selected
Operating Data for the Same
Store Facilities
(2,048 facilities)
(unaudited):
Three Months Ended June 30, Six Months Ended June 30, Percentage
Percentage 2018 2017 Change 2018 2017 Change (Dollar amounts
in thousands, except for per square foot amounts) Revenues: Rental
income $ 534,997 $ 526,249 1.7 % $ 1,058,876 $ 1,039,210 1.9 % Late
charges and administrative fees 23,654 23,887
(1.0 )% 48,318 47,998 0.7 %
Total revenues (a) 558,651 550,136 1.5
% 1,107,194 1,087,208 1.8 % Cost
of operations: Property taxes 59,174 56,066 5.5 % 117,566 111,928
5.0 % On-site property manager payroll 27,847 27,554 1.1 % 56,511
55,061 2.6 % Supervisory payroll 9,296 9,895 (6.1 )% 18,891 20,035
(5.7 )% Repairs and maintenance 10,948 11,203 (2.3 )% 20,352 20,873
(2.5 )% Snow removal 654 194 237.1 % 2,787 2,216 25.8 % Utilities
9,556 9,339 2.3 % 20,379 19,552 4.2 % Advertising and selling 7,706
8,138 (5.3 )% 14,229 14,937 (4.7 )% Other direct property costs
14,521 14,247 1.9 % 29,557 28,520 3.6 % Allocated overhead
11,100 10,335 7.4 % 24,182
22,533 7.3 % Total cost of operations (a)
150,802 146,971 2.6 % 304,454
295,655 3.0 % Net operating income (b) $ 407,849
$ 403,165 1.2 % $ 802,740 $ 791,553 1.4
% Gross margin 73.0 % 73.3 % (0.4 )% 72.5 % 72.8 % (0.4 )%
Weighted average for the period: Square foot occupancy 94.0
% 94.6 % (0.6 )% 93.1 % 93.8 % (0.7 )% Realized annual rental
income per (c): Occupied square foot $ 17.35 $ 16.95 2.4 % $ 17.32
$ 16.87 2.7 % Available square foot (“REVPAF”)
$
16.30 $ 16.03 1.7 % $ 16.13 $ 15.83 1.9 % At June 30: Square foot
occupancy 93.7 % 94.7 % (1.1 )%
Annual contract rent per occupied square
foot (d)
$ 17.93 $ 17.63 1.7 % (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) 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: 2018 $ 548,543 $ 558,651 2017 $ 537,072 $ 550,136 $
568,429 $ 555,588 $ 2,211,225 Total cost of operations: 2018
$ 153,652 $ 150,802 2017 $ 148,684 $ 146,971 $ 148,198 $ 118,351 $
562,204 Property taxes: 2018 $ 58,392 $ 59,174 2017 $ 55,862
$ 56,066 $ 55,855 $ 32,332 $ 200,115
Repairs and maintenance, including snow
removal expenses:
2018 $ 11,537 $ 11,602 2017 $ 11,692 $ 11,397 $ 11,421 $ 11,983 $
46,493 Advertising and selling expense: 2018 $ 6,523 $ 7,706
2017 $ 6,799 $ 8,138 $ 6,972 $ 6,802 $ 28,711 REVPAF: 2018 $
15.96 $ 16.30 2017 $ 15.63 $ 16.03 $ 16.54 $ 16.17 $ 16.09
Weighted average realized annual rent per
occupied square foot:
2018 $ 17.30 $ 17.35 2017 $ 16.79 $ 16.95 $ 17.49 $ 17.37 $ 17.15
Weighted average occupancy levels for the
period:
2018 92.3 % 94.0 % 2017 93.1 % 94.6 % 94.6 % 93.1 % 93.8 %
Property Operations – Non Same Store
Facilities
The Non Same Store Facilities at June 30, 2018 represent 355
facilities that were not stabilized with respect to occupancies or
rental rates since January 1, 2016 or that we did not own as of
January 1, 2016. The following table summarizes operating data with
respect to the Non Same Store Facilities (unaudited). Additional
data and metrics with respect to these facilities is included in
the MD&A in our June 30, 2018 Form 10-Q.
NON SAME STORE Three Months Ended June 30, Six Months Ended
June 30,
FACILITIES 2018 2017 Change 2018 2017 Change
(Dollar amounts in thousands, except for per square foot amounts)
Revenues: 2018 acquisitions $ 459 $ - $ 459 $ 526 $ - $ 526
2017 acquisitions 7,116 799 6,317 13,976 1,138 12,838 2016
acquisitions 9,761 9,031 730 19,190 17,612 1,578 2016 - 2018 new
developments 8,618 3,630 4,988 15,738 5,957 9,781 2013 - 2015 new
developments 6,591 6,151 440 12,992 11,949 1,043 Other facilities
54,010 54,452 (442 ) 107,127
108,113 (986 ) Total revenues 86,555 74,063
12,492 169,549 144,769 24,780
Cost of operations before depreciation
and amortization expense:
2018 acquisitions 165 - 165 187 - 187 2017 acquisitions 2,459 229
2,230 4,966 380 4,586 2016 acquisitions 3,521 3,502 19 7,158 6,984
174 2016 - 2018 new developments 4,937 2,918 2,019 8,992 5,214
3,778 2013 - 2015 new developments 2,098 1,913 185 4,197 3,780 417
Other facilities 15,894 15,662 232
32,109 31,160 949 Total cost of
operations 29,074 24,224 4,850
57,609 47,518 10,091
Net operating
income: 2018 acquisitions 294 - 294 339 - 339 2017 acquisitions
4,657 570 4,087 9,010 758 8,252 2016 acquisitions 6,240 5,529 711
12,032 10,628 1,404 2016 - 2018 new developments 3,681 712 2,969
6,746 743 6,003 2013 - 2015 new developments 4,493 4,238 255 8,795
8,169 626 Other facilities 38,116 38,790 (674
) 75,018 76,953 (1,935 ) Net operating income
(a) $ 57,481 $ 49,839 $ 7,642 $ 111,940 $ 97,251 $ 14,689
(a) See attached reconciliation of
self-storage net operating income (“NOI”) to operating income.
Investing and Capital
Activities
During the three months ended June 30, 2018, we acquired three
self-storage facilities (one each in Indiana, Kentucky and South
Carolina) with 0.2 million net rentable square feet for $16.0
million. For the six months ended June 30, 2018, we acquired five
self-storage facilities (one each in Indiana, Kentucky, Nebraska,
South Carolina and Tennessee) with 0.4 million net rentable square
feet for $33.9 million. Subsequent to June 30, 2018, we acquired or
were under contract to acquire fourteen self-storage facilities
(six in Minnesota, two in Texas, one each in Colorado, Florida,
Kentucky, Ohio, South Carolina and Tennessee) with 0.8 million net
rentable square feet for $95.2 million.
During the three months ended June 30, 2018, we completed seven
newly developed facilities and various expansion projects (1.2
million net rentable square feet) costing $135 million. For the six
months ended June 30, 2018, we completed eleven newly developed
facilities and various expansion projects (1.7 million net rentable
square feet) costing an aggregate of $195 million. At June 30,
2018, we had various facilities in development (2.2 million net
rentable square feet) estimated to cost $315 million and various
expansion projects (3.9 million net rentable square feet) estimated
to cost $364 million. The remaining $445 million of development
costs for these projects is expected to be incurred primarily in
the next 18 months.
As previously reported, Shurgard Europe is considering an
initial public offering. On July 13, 2018, we received a cash
distribution from Shurgard Europe totaling $145.4 million,
representing our 49% share of an aggregate dividend totaling $296.8
million. The dividend was funded by Shurgard Europe in part through
proceeds from a bank loan. During the three months ended June 30,
2018, Shurgard Europe acquired five self-storage facilities in
Sweden (0.3 million net rentable square feet) for an aggregate of
$46 million.
Distributions Declared
On July 25, 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 September 27, 2018 to
shareholders of record as of September 12, 2018.
Second Quarter Conference
Call
A conference call is scheduled for August 2, 2018 at 11:00 a.m.
(PDT) to discuss the second 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 5787104). 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 August 15,
2018 by calling (800) 585-8367 (domestic), (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
5787104.
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 June 30, 2018, we had interests in 2,402
self-storage facilities located in 38 states with approximately 160
million net rentable square feet in the United States and 228
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 June 30, 2018.
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 March 1, 2018 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 Six Months Ended June 30, June 30, 2018
2017 2018 2017
Revenues: Self-storage facilities $ 645,206 $
624,199 $ 1,276,743 $ 1,231,977 Ancillary operations 40,322
40,113 78,709 77,882
685,528 664,312 1,355,452
1,309,859
Expenses: Self-storage
cost of operations 179,876 171,195 362,063 343,173 Ancillary cost
of operations 11,101 11,383 21,741 22,307 Depreciation and
amortization 119,777 110,177 237,756 221,106 General and
administrative 31,329 14,992
62,849 40,020 342,083
307,747 684,409 626,606
Operating income 343,445 356,565 671,043 683,253
Other
income (expense): Interest and other income 6,328 4,155 11,872
8,153 Interest expense (8,388 ) (1,116 ) (16,495 ) (2,164 ) Equity
in earnings of unconsolidated real estate entities 41,963 20,068
72,758 40,017 Gain on real estate investment sales - 975 424 975
Foreign currency exchange gain (loss) 21,944
(25,440 ) 10,126 (31,006 ) Net income 405,292
355,207 749,728 699,228 Allocation to noncontrolling interests
(1,490 ) (1,505 ) (2,929 ) (3,084 ) Net
income allocable to Public Storage shareholders 403,802 353,702
746,799 696,144 Allocation of net income to: Preferred shareholders
– distributions (54,077 ) (61,281 ) (108,158 ) (121,402 ) Preferred
shareholders – redemptions - (14,638 ) - (14,638 ) Restricted share
units (1,425 ) (1,102 ) (2,522 ) (2,292
) Net income allocable to common shareholders $ 348,300 $
276,681 $ 636,119 $ 557,812
Per common
share:
Net income per common share – Basic $ 2.00 $ 1.59 $
3.66 $ 3.22 Net income per common share – Diluted $
2.00 $ 1.59 $ 3.65 $ 3.20 Weighted
average common shares – Basic 173,932 173,602
173,912 173,483 Weighted average
common shares – Diluted 174,224 174,075
174,186 174,072
PUBLIC STORAGE
SELECTED BALANCE SHEET DATA
(Amounts in thousands, except share and
per share data)
June 30, 2018 December 31, 2017
ASSETS (Unaudited)
Cash and equivalents $ 338,419 $ 433,376 Operating
real estate facilities: Land and buildings, at cost 14,944,632
14,665,989 Accumulated depreciation (5,923,687 )
(5,700,331 ) 9,020,945 8,965,658 Construction in process 234,044
264,441 Investments in unconsolidated real estate entities 762,247
724,173 Goodwill and other intangible assets, net 207,390 214,957
Other assets 129,917 130,287 Total
assets $ 10,692,962 $ 10,732,892
LIABILITIES AND EQUITY Senior unsecured notes $
1,392,516 $ 1,402,109 Mortgage notes 28,318 29,213 Accrued and
other liabilities 351,336 337,201 Total
liabilities 1,772,170 1,768,523 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, (161,000 at December 31, 2017) at
liquidation preference
4,025,000 4,025,000
Common Shares, $0.10 par value,
650,000,000 shares authorized, 173,937,035 shares issued and
outstanding, (173,853,370 shares at December 31, 2017)
17,394 17,385 Paid-in capital 5,673,078 5,648,399 Accumulated
deficit (735,065 ) (675,711 ) Accumulated other comprehensive loss
(84,601 ) (75,064 ) Total Public Storage
shareholders’ equity 8,895,806 8,940,009 Noncontrolling interests
24,986 24,360 Total equity
8,920,792 8,964,369 Total liabilities and
equity $ 10,692,962 $ 10,732,892
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Computation of Funds from Operations
and Funds Available for Distribution
(Unaudited – amounts in thousands)
Three Months Ended Six Months Ended June 30, June 30, 2018
2017 2018 2017
Computation of
FFO per Share:
Net income allocable to common shareholders $ 348,300 $
276,681 $ 636,119 $ 557,812 Eliminate items excluded from FFO:
Depreciation and amortization 119,777 110,177 237,756 221,106
Depreciation from unconsolidated real estate investments 19,308
17,368 38,623 34,581
Depreciation allocated to noncontrolling
interests and restricted share unitholders
(1,014 ) (837 ) (1,932 ) (1,799 )
Gains on sale of real estate investments,
including our equity share from investments
(23,873 ) (1,466 ) (35,764 ) (3,077 )
FFO allocable to common shares (a) $ 462,498 $ 401,923
$ 874,802 $ 808,623 Diluted weighted average
common shares 174,224 174,075
174,186 174,072 FFO per share (a) $ 2.65
$ 2.31 $ 5.02 $ 4.65
Reconciliation of
Earnings per Share to FFO per Share:
Earnings per share—Diluted $ 2.00 $ 1.59 $ 3.65 $ 3.20
Eliminate per share amounts excluded from FFO:
Depreciation and amortization allocable to
common shareholders
0.79 0.73 1.58 1.46
Gains on sale of real estate investments,
including our equity share from investments and other
(0.14 ) (0.01 ) (0.21 ) (0.01 ) FFO per
share (a) $ 2.65 $ 2.31 $ 5.02 $ 4.65
Computation of
Funds Available for Distribution ("FAD"):
FFO allocable to common shares $ 462,498 $ 401,923 $ 874,802
$ 808,623 Eliminate effect of items included in FFO but not FAD:
Share-based compensation expense in excess
of cash paid
17,080 4,085 22,989 799 Foreign currency exchange (gain) loss
(21,944 ) 25,440 (10,126 ) 31,006
Application of EITF D-42, including our
equity share from investments
- 14,638 - 14,638 Less: Capital expenditures to maintain real
estate facilities (28,883 ) (26,490 ) (53,227
) (53,540 ) FAD (a) $ 428,751 $ 419,596
$ 834,438 $ 801,526
Distributions paid to common shareholders
and restricted share units
$ 348,984 $ 348,372 $ 697,995 $ 696,585
Distribution payout ratio 81.4 % 83.0 %
83.6 % 86.9 % Distributions per common share $ 2.00
$ 2.00 $ 4.00 $ 4.00
(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 Six Months Ended June 30, June 30, 2018
2017 2018 2017 Self-storage revenues for: Same Store
Facilities $ 558,651 $ 550,136 $ 1,107,194 $ 1,087,208 Non Same
Store Facilities 86,555 74,063
169,549 144,769 Self-storage revenues 645,206
624,199 1,276,743 1,231,977 Self-storage cost of operations
for: Same Store Facilities 150,802 146,971 304,454 295,655 Non Same
Store Facilities 29,074 24,224
57,609 47,518 Self-storage cost of operations
179,876 171,195 362,063 343,173 Self-storage net operating
income for: Same Store Facilities 407,849 403,165 802,740 791,553
Non Same Store Facilities 57,481 49,839
111,940 97,251 Self-storage net
operating income (a) 465,330 453,004 914,680 888,804 Ancillary
revenues 40,322 40,113 78,709 77,882 Ancillary cost of operations
(11,101 ) (11,383 ) (21,741 ) (22,307 ) Depreciation and
amortization (119,777 ) (110,177 ) (237,756 ) (221,106 ) General
and administrative expense (31,329 ) (14,992 )
(62,849 ) (40,020 ) Operating income on our income statement
$ 343,445 $ 356,565 $ 671,043 $ 683,253
(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 StorageRyan Burke(818) 244-8080, Ext. 1141
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