Public Storage (NYSE:PSA) announced today operating results for
the three and nine months ended September 30, 2018.
Operating Results for the Three Months
Ended September 30, 2018
For the three months ended September 30, 2018, net income
allocable to our common shareholders was $322.7 million or $1.85
per diluted common share, compared to $279.7 million or $1.61 per
diluted common share in 2017 representing an increase of $43.0
million or $0.24 per diluted common share. The increase is due
primarily to (i) a $10.1 million increase in self-storage net
operating income (described below), (ii) a $16.1 million increase
due to the impact of foreign currency exchange gains and losses
associated with our euro denominated debt, (iii) a $14.7 million
allocation to preferred shareholders associated with preferred
share redemptions in the three months ended September 30, 2017, and
(iv) a $7.8 million casualty loss and $5.2 million in incremental
tenant reinsurance losses related to Hurricanes Harvey and Irma in
the three months ended September 30, 2017. These impacts were
offset partially by a $7.1 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.
The $10.1 million increase in self-storage net operating income
is a result of a $2.5 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 1.2% or $6.6 million in the three months ended
September 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 2.8% or $4.1 million in
the three months ended September 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 153 self-storage facilities
acquired and developed since January 2016.
Operating Results for the Nine Months
Ended September 30, 2018
For the nine months ended September 30, 2018, net income
allocable to our common shareholders was $958.8 million or $5.50
per diluted common share, compared to $837.5 million or $4.81 per
diluted common share in 2017 representing an increase of $121.3
million or $0.69 per diluted common share. The increase is due
primarily to (i) a $35.9 million increase in self-storage net
operating income (described below), (ii) our $34.9 million equity
share of gains recorded by PS Business Parks in the nine months
ended September 30, 2018, (iii) a $57.2 million increase due to the
impact of foreign currency exchange gains and losses associated
with our euro denominated debt, (iv) a $29.3 million allocation to
preferred shareholders associated with preferred share redemptions
in the nine months ended September 30, 2017, and (v) a $7.8 million
casualty loss and $5.2 million in incremental tenant reinsurance
losses related to Hurricanes Harvey and Irma in the nine months
ended September 30, 2017. These impacts were offset partially by a
$28.0 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 $35.9 million increase in self-storage net operating income
is a result of a $13.7 million increase in our Same Store
Facilities and $22.2 million increase in our Non Same Store
Facilities. Revenues for the Same Store Facilities increased 1.6%
or $26.6 million in the nine months ended September 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 2.9% or $12.9 million in the nine months
ended September 30, 2018 as compared to 2017, due primarily to
increased property taxes. The increase in net operating income of
$22.2 million for the Non Same Store Facilities is due primarily to
the impact of 153 self-storage facilities acquired and developed
since January 2016.
Funds from Operations
For the three months ended September 30, 2018, funds from
operations (“FFO”) was $2.66 per diluted common share, as compared
to $2.35 in 2017, representing an increase of 13.2%. 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, 2018, FFO was $7.68 per
diluted common share, as compared to $7.00 in 2017, representing an
increase of 9.7%.
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) 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 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 2018 2017 Change 2018 2017 Change FFO per
share $ 2.66 $ 2.35 13.2 % $ 7.68 $ 7.00 9.7 %
Eliminate the per share impact of items
excluded from Core FFO, including our equity share from
investments:
Foreign currency exchange (gain) loss (0.01 ) 0.08 (0.07 ) 0.26
Application of EITF D-42 - 0.10 - 0.18
Casualty losses and tenant claims due to
hurricanes
- 0.07 - 0.07
Acceleration (reversal) of share-based
compensation expense due to executive officer retirement
0.04 - 0.13 (0.03 ) Other items 0.01 0.01
0.01 - Core FFO per share $ 2.70
$ 2.61 3.4 % $ 7.75 $ 7.48 3.6 %
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
2,048 facilities at June 30, 2018 to 2,046 facilities at September
30, 2018. The following table summarizes the historical operating
results of these 2,046 facilities (131.2 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 September 30, 2018.
Selected
Operating Data for the Same
Store Facilities
(2,046 facilities)
(unaudited):
Three Months Ended September 30, Nine Months Ended September 30,
Percentage Percentage 2018 2017 Change 2018 2017 Change
(Dollar amounts in thousands, except for per square foot amounts)
Revenues: Rental income $ 549,234 $ 542,535 1.2 % $ 1,607,298 $
1,580,888 1.7 % Late charges and administrative fees 25,289
25,434 (0.6 )% 73,557
73,375 0.2 % Total revenues (a) 574,523
567,969 1.2 % 1,680,855 1,654,263
1.6 % Cost of operations: Property taxes 59,004
55,822 5.7 % 176,501 167,685 5.3 % On-site property manager payroll
28,608 28,530 0.3 % 85,066 83,541 1.8 % Supervisory payroll 8,928
9,611 (7.1 )% 27,802 29,628 (6.2 )% Repairs and maintenance 11,251
11,407 (1.4 )% 31,580 32,262 (2.1 )% Snow removal - - 0.0 % 2,787
2,216 25.8 % Utilities 10,871 10,697 1.6 % 31,238 30,238 3.3 %
Advertising and selling 7,814 6,966 12.2 % 22,027 21,885 0.6 %
Other direct property costs 14,814 14,169 4.6 % 44,350 42,670 3.9 %
Allocated overhead 10,916 10,877 0.4 %
35,075 33,388 5.1 % Total cost of
operations (a) 152,206 148,079 2.8 %
456,426 443,513 2.9 % Net operating
income (b) $ 422,317 $ 419,890 0.6 % $ 1,224,429
$ 1,210,750 1.1 % Gross margin 73.5 % 73.9 %
(0.5 )% 72.8 % 73.2 % (0.5 )% Weighted average for the
period: Square foot occupancy 94.0 % 94.6 % (0.6 )% 93.4 % 94.1 %
(0.7 )% Realized annual rental income per (c): Occupied square foot
$ 17.83 $ 17.49 1.9 % $ 17.49 $ 17.08 2.4 % Available square foot
(“REVPAF”) $ 16.75 $ 16.54 1.3 % $ 16.34 $ 16.07 1.7 % At September
30: Square foot occupancy 92.1 % 93.2 % (1.2 )%
Annual contract rent per occupied square
foot (d)
$ 18.30 $ 18.04 1.4 % (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 $ 548,116 $ 558,216 $ 574,523 2017 $ 536,618 $
549,676 $ 567,969 $ 555,164 $ 2,209,427 Total cost of
operations: 2018 $ 153,532 $ 150,688 $ 152,206 2017 $ 148,577 $
146,857 $ 148,079 $ 118,261 $ 561,774 Property taxes: 2018 $
58,359 $ 59,138 $ 59,004 2017 $ 55,831 $ 56,032 $ 55,822 $ 32,320 $
200,005
Repairs and maintenance, including snow
removal expenses:
2018 $ 11,523 $ 11,593 $ 11,251 2017 $ 11,684 $ 11,387 $ 11,407 $
11,969 $ 46,447 Advertising and selling expense: 2018 $
6,516 $ 7,697 $ 7,814 2017 $ 6,792 $ 8,127 $ 6,966 $ 6,794 $ 28,679
REVPAF: 2018 $ 15.97 $ 16.31 $ 16.75 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 $ 17.83 2017 $ 16.79 $ 16.95 $ 17.49 $ 17.37 $
17.15
Weighted average occupancy levels for the
period:
2018 92.3 % 94.0 % 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 September 30, 2018 represent
373 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 September 30, 2018 Form 10-Q.
NON SAME STORE Three Months Ended
September 30, Nine Months Ended September 30,
FACILITIES 2018 2017
Change 2018 2017
Change (Dollar amounts in thousands, except for per square
foot amounts)
Revenues: 2018 acquisitions $ 1,762 $ - $
1,762 $ 2,288 $ - $ 2,288 2017 acquisitions 7,409 1,735 5,674
21,385 2,873 18,512 2016 acquisitions 10,031 9,297 734 29,221
26,909 2,312 2016 - 2018 new developments 10,427 5,124 5,303 26,165
11,081 15,084 2013 - 2015 new developments 6,891 6,491 400 19,883
18,440 1,443 Other facilities 55,573 55,622
(49 ) 163,562 164,649 (1,087 ) Total revenues
92,093 78,269 13,824 262,504
223,952 38,552
Cost of operations before depreciation
and amortization expense:
2018 acquisitions 678 - 678 865 - 865 2017 acquisitions 2,478 633
1,845 7,444 1,013 6,431 2016 acquisitions 3,479 3,364 115 10,637
10,348 289 2016 - 2018 new developments 6,391 3,191 3,200 15,383
8,405 6,978 2013 - 2015 new developments 2,120 2,275 (155 ) 6,317
6,055 262 Other facilities 16,285 15,773 512
48,628 47,154 1,474 Total cost
of operations 31,431 25,236 6,195
89,274 72,975 16,299
Net
operating income: 2018 acquisitions 1,084 - 1,084 1,423 - 1,423
2017 acquisitions 4,931 1,102 3,829 13,941 1,860 12,081 2016
acquisitions 6,552 5,933 619 18,584 16,561 2,023 2016 - 2018 new
developments 4,036 1,933 2,103 10,782 2,676 8,106 2013 - 2015 new
developments 4,771 4,216 555 13,566 12,385 1,181 Other facilities
39,288 39,849 (561 ) 114,934
117,495 (2,561 ) Net operating income (a) $ 60,662 $ 53,033
$ 7,629 $ 173,230 $ 150,977 $ 22,253 (a)
See attached reconciliation of self-storage net
operating income (“NOI”) to operating income.
Investing and Capital
Activities
During the three months ended September 30, 2018, we acquired
eleven self-storage facilities (six in Minnesota, two in Texas and
one each in Ohio, South Carolina and Tennessee) with 0.7 million
net rentable square feet for $73.8 million. For the nine months
ended September 30, 2018, we acquired sixteen self-storage
facilities (six in Minnesota, two each in South Carolina, Tennessee
and Texas, one each in Indiana, Kentucky, Nebraska and Ohio) with
1.0 million net rentable square feet for $107.8 million. Subsequent
to September 30, 2018, we acquired or were under contract to
acquire nine self-storage facilities (three in Georgia, two in
Colorado, one each in Florida, Indiana, Oklahoma and Washington)
with 0.6 million net rentable square feet for $79.7 million.
During the three months ended September 30, 2018, we completed
five newly developed facilities and various expansion projects (0.7
million net rentable square feet) costing $83 million. For the nine
months ended September 30, 2018, we completed sixteen newly
developed facilities and various expansion projects (2.4 million
net rentable square feet) costing an aggregate of $278 million. At
September 30, 2018, we had various facilities in development (1.6
million net rentable square feet) estimated to cost $251 million
and various expansion projects (3.8 million net rentable square
feet) estimated to cost $346 million. The remaining $343 million of
development costs for these projects is expected to be incurred
primarily in the next 18 months.
On July 13, 2018, we received a cash distribution from Shurgard
Europe of $145.4 million.
On October 15, 2018, Shurgard Europe completed an initial global
offering (the “Offering”), and its shares commenced trading on
Euronext Brussels under the “SHUR” symbol. In the Offering,
Shurgard Europe issued 21.7 million of its common shares to third
parties at a price of €23 per share. There is a potential “green
shoe” for an additional €75 million in gross proceeds at a price of
€23 per share. Our equity interest, comprised of a direct and
indirect pro-rata ownership interest in 31.3 million shares,
decreased from 49% to 36.6% as a result of the Offering (35.2%
assuming exercise of the “green shoe”). While we did not sell any
shares in the Offering, and we have no current plans to do so, we
will record a gain on disposition in the three months ending
December 31, 2018, as if we had sold a proportionate share of our
investment in Shurgard Europe. Shurgard Europe’s publicly reported
information can be obtained on its website,
https://corporate.shurgard.eu and on the website of the Luxembourg
Stock Exchange, http://www.bourse.lu.
On October 18, 2018, we sold our property in West London to
Shurgard Europe for €36.5 million in cash, and will record a gain
on disposition in the three months ending December 31, 2018.
Distributions Declared
On October 24, 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 December 27, 2018 to
shareholders of record as of December 12, 2018.
Third Quarter Conference
Call
A conference call is scheduled for October 31, 2018 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 6166156). 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
November 14, 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 6166156.
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, 2018, we had interests in
2,418 self-storage facilities located in 38 states with
approximately 161 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 September 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 Nine Months Ended September 30, September
30, 2018 2017 2018 2017
Revenues: Self-storage
facilities $ 666,616 $ 646,238 $ 1,943,359 $ 1,878,215 Ancillary
operations 39,752 40,123 118,461
118,005 706,368 686,361
2,061,820 1,996,220
Expenses: Self-storage cost of operations 183,637 173,315
545,700 516,488 Ancillary cost of operations 11,907 17,304 33,648
39,611 Depreciation and amortization 124,516 113,320 362,272
334,426 General and administrative 27,429
22,311 90,278 62,331
347,489 326,250 1,031,898
952,856 Operating income 358,879 360,111 1,029,922
1,043,364
Other income (expense): Interest and other
income 7,020 4,569 18,892 12,722 Interest expense (8,094 ) (2,389 )
(24,589 ) (4,553 ) Equity in earnings of unconsolidated real estate
entities 17,771 17,218 90,529 57,235 Gain on real estate investment
sales 1,401 - 1,825 975 Foreign currency exchange gain (loss) 2,612
(13,446 ) 12,738 (44,452 ) Casualty loss -
(7,789 ) - (7,789 ) Net income 379,589 358,274
1,129,317 1,057,502 Allocation to noncontrolling interests
(1,562 ) (1,600 ) (4,491 ) (4,684 ) Net income
allocable to Public Storage shareholders 378,027 356,674 1,124,826
1,052,818 Allocation of net income to: Preferred shareholders –
distributions (54,080 ) (61,055 ) (162,238 ) (182,457 ) Preferred
shareholders – redemptions - (14,692 ) - (29,330 ) Restricted share
units (1,268 ) (1,210 ) (3,790 ) (3,502
) Net income allocable to common shareholders $ 322,679 $
279,717 $ 958,798 $ 837,529
Per common
share:
Net income per common share – Basic $ 1.85 $ 1.61 $
5.51 $ 4.83 Net income per common share – Diluted $
1.85 $ 1.61 $ 5.50 $ 4.81 Weighted
average common shares – Basic 173,975 173,715
173,933 173,560 Weighted average
common shares – Diluted 174,348 174,240
174,240 174,128
PUBLIC STORAGE
SELECTED BALANCE SHEET DATA
(Amounts in thousands, except share and
per share data)
September 30, 2018 December 31, 2017
ASSETS
(Unaudited) Cash and equivalents $ 432,525 $ 433,376
Operating real estate facilities: Land and buildings, at cost
15,135,893 14,665,989 Accumulated depreciation (6,041,262 )
(5,700,331 ) 9,094,631 8,965,658 Construction in process
253,719 264,441 Investments in unconsolidated real estate entities
619,405 724,173 Goodwill and other intangible assets, net 209,317
214,957 Other assets 138,343 130,287
Total assets $ 10,747,940 $ 10,732,892
LIABILITIES AND EQUITY Senior unsecured notes
$ 1,390,080 $ 1,402,109 Mortgage notes 27,865 29,213 Accrued and
other liabilities 409,973 337,201 Total
liabilities 1,827,918 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, 174,059,645 shares issued and
outstanding, (173,853,370 shares at December 31, 2017)
17,406 17,385 Paid-in capital 5,697,308 5,648,399 Accumulated
deficit (760,284 ) (675,711 ) Accumulated other comprehensive loss
(84,339 ) (75,064 ) Total Public Storage
shareholders’ equity 8,895,091 8,940,009 Noncontrolling interests
24,931 24,360 Total equity
8,920,022 8,964,369 Total liabilities and
equity $ 10,747,940 $ 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 Nine Months Ended September 30, September
30, 2018 2017 2018 2017
Computation of
FFO per Share:
Net income allocable to common shareholders $ 322,679 $
279,717 $ 958,798 $ 837,529 Eliminate items excluded from FFO:
Depreciation and amortization 124,516 113,320 362,272 334,426
Depreciation from unconsolidated real estate investments 19,615
18,054 58,238 52,635
Depreciation allocated to noncontrolling
interests and restricted share unitholders
(892 ) (858 ) (2,824 ) (2,657 )
Gains on sale of real estate investments,
including our equity share from investments
(1,766 ) - (37,530 ) (3,077 )
FFO allocable to common shares (a) $ 464,152 $ 410,233
$ 1,338,954 $ 1,218,856 Diluted weighted
average common shares 174,348 174,240
174,240 174,128 FFO per share (a) $
2.66 $ 2.35 $ 7.68 $ 7.00
Reconciliation of
Earnings per Share to FFO per Share:
Earnings per share—Diluted $ 1.85 $ 1.61 $ 5.50 $ 4.81
Eliminate per share amounts excluded from FFO:
Depreciation and amortization allocable to
common shareholders
0.82 0.75 2.40 2.21
Gains on sale of real estate investments,
including our equity share from investments and other
(0.01 ) (0.01 ) (0.22 ) (0.02 ) FFO per
share (a) $ 2.66 $ 2.35 $ 7.68 $ 7.00
Computation of
Funds Available for Distribution ("FAD"):
FFO allocable to common shares $ 464,152 $ 410,233 $
1,338,954 $ 1,218,856 Eliminate effect of items included in FFO but
not FAD:
Share-based compensation expense in excess
of cash paid
17,998 12,297 40,987 13,096 Foreign currency exchange (gain) loss
(2,612 ) 13,446 (12,738 ) 44,452
Application of EITF D-42, including our
equity share from investments
- 17,552 - 32,190 Less: Capital expenditures to maintain real
estate facilities (40,180 ) (28,985 ) (93,407
) (82,525 ) FAD (a) $ 439,358 $ 424,543
$ 1,273,796 $ 1,226,069
Distributions paid to common shareholders
and restricted share units
$ 349,166 $ 348,555 $ 1,047,161 $ 1,045,140
Distribution payout ratio 79.5 % 82.1 %
82.2 % 85.2 % Distributions per common share $
2.00 $ 2.00 $ 6.00 $ 6.00 (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 Nine Months Ended September 30, September
30, 2018 2017 2018 2017 Self-storage revenues for: Same
Store Facilities $ 574,523 $ 567,969 $ 1,680,855 $ 1,654,263 Non
Same Store Facilities 92,093 78,269
262,504 223,952 Self-storage revenues
666,616 646,238 1,943,359 1,878,215 Self-storage cost of
operations for: Same Store Facilities 152,206 148,079 456,426
443,513 Non Same Store Facilities 31,431
25,236 89,274 72,975
Self-storage cost of operations 183,637 173,315 545,700 516,488
Self-storage net operating income for: Same Store Facilities
422,317 419,890 1,224,429 1,210,750 Non Same Store Facilities
60,662 53,033 173,230
150,977 Self-storage net operating income (a) 482,979
472,923 1,397,659 1,361,727 Ancillary revenues 39,752 40,123
118,461 118,005 Ancillary cost of operations (11,907 ) (17,304 )
(33,648 ) (39,611 ) Depreciation and amortization (124,516 )
(113,320 ) (362,272 ) (334,426 ) General and administrative expense
(27,429 ) (22,311 ) (90,278 ) (62,331 )
Operating income on our income statement $ 358,879 $ 360,111
$ 1,029,922 $ 1,043,364 (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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