Public Storage (NYSE:PSA) announced today operating results for
the three and six months ended June 30, 2017.
Operating Results for the Three Months
Ended June 30, 2017
For the three months ended June 30, 2017, net income allocable
to our common shareholders was $276.7 million or $1.59 per diluted
common share, compared to $280.8 million or $1.61 in 2016
representing a decrease of $4.1 million or $0.02. The decrease is
due primarily to a $34.1 million increase in foreign exchange
translation losses associated with our euro denominated debt
partially offset by a $16.3 million increase in self-storage net
operating income (described below) and a $9.8 million increase in
equity in earnings of real estate entities.
The $16.3 million increase in self-storage net operating income
is a result of a $10.2 million increase in our Same Store
Facilities (as defined below) and $6.1 million increase in our Non
Same Store Facilities (as defined below). Revenues for the Same
Store Facilities increased 3.3% or $17.8 million in the three
months ended June 30, 2017 as compared to 2016, due primarily to
higher realized annual rent per occupied square foot. Cost of
operations for the Same Store Facilities increased by 5.4% or $7.6
million in the three months ended June 30, 2017 as compared to
2016, due primarily to increased property taxes, repairs and
maintenance and advertising and selling costs. The increase in net
operating income for the Non Same Store Facilities is due primarily
to the impact of 292 self-storage facilities acquired, developed or
expanded since January 2015.
Operating Results for the Six Months
Ended June 30, 2017
For the six months ended June 30 2017, net income allocable to
our common shareholders was $557.8 million or $3.20 per diluted
common share, compared to $522.1 million or $3.00 in 2016
representing an increase of $35.7 million or $0.20. The increase is
due primarily to a $37.4 million increase in self-storage net
operating income, a $15.6 million increase in equity in earnings of
real estate entities and a $12.2 million decrease in EITF D-42
charges as a result of our preferred redemption activities in 2017
compared to 2016 partially offset by a $28.7 million increase in
foreign exchange translation losses associated with our euro
denominated debt.
The $37.4 million increase in self-storage net operating income
is a result of a $25.4 million increase in our Same Store
Facilities and $12.0 million increase in our Non Same Store
Facilities. Revenues for the Same Store Facilities increased 3.7%
or $38.6 million in the six months ended June 30, 2017 as compared
to 2016, due primarily to higher realized annual rent per occupied
square foot. Cost of operations for the Same Store Facilities
increased by 4.7% or $13.2 million in the six months ended June 30,
2017 as compared to 2016, due primarily to increased property
taxes, repairs and maintenance and advertising and selling costs.
The increase in net operating income for the Non Same Store
Facilities is due primarily to the impact of 292 self-storage
facilities acquired, developed or expanded since January 2015.
Funds from Operations
For the three months ended June 30, 2017, funds from operations
(“FFO”) was $2.31 per diluted common share, as compared to $2.34 in
2016, representing a decrease of 1.3%. 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, 2017, FFO was $4.65 per
diluted common share, as compared to $4.43 in 2016, representing an
increase of 5.0%.
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, (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 June 30, Six Months
Ended June 30, Percentage Percentage
2017 2016 Change 2017 2016 Change FFO
per share $ 2.31 $ 2.34 (1.3 )% $ 4.65 $ 4.43 5.0 % Eliminate the
per share impact of items excluded from Core FFO, including our
equity share from investments: Foreign currency exchange loss
(gain), net 0.15 (0.04 ) 0.18 0.01 Application of EITF D-42 0.08
0.09 0.08 0.15 Reversals of accruals on forfeited executive
share-based awards (0.03 ) - (0.03 ) - Other items -
0.01 - 0.02 Core FFO per share $
2.51 $ 2.40 4.6 % $ 4.88 $ 4.61 5.9 %
Property Operations—Same Store
Facilities
The Same Store Facilities represent those facilities that have
been owned and operated on a stabilized level of occupancy,
revenues and cost of operations since January 1, 2015. We review
the operations of our Same Store Facilities, which excludes
facilities whose operating trends are significantly affected by
factors such as casualty events, as well as recently developed or
acquired facilities, to more effectively evaluate the ongoing
performance of our self-storage portfolio in 2015, 2016 and 2017.
The Same Store pool decreased from 2,060 facilities at March 31,
2017 to 2,055 facilities at June 30, 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 2,055 facilities (131.3 million net rentable
square feet) that represent approximately 85% of the aggregate net
rentable square feet of our U.S. consolidated self-storage
portfolio at June 30, 2017.
Selected
Operating Data for the Same
Store Facilities
(2,055 facilities)
(unaudited):
Three Months Ended June 30, Six Months Ended
June 30, Percentage Percentage 2017
2016 Change 2017 2016 Change (Dollar
amounts in thousands, except for per square foot amounts) Revenues:
Rental income $ 526,151 $ 508,619 3.4 % $ 1,039,200 $ 1,000,740 3.8
% Late charges and administrative fees 23,867
23,608 1.1 % 47,963 47,793 0.4 %
Total revenues (a) 550,018 532,227 3.3
% 1,087,163 1,048,533 3.7 % Cost
of operations: Property taxes 56,557 54,101 4.5 % 112,794 107,982
4.5 % On-site property manager payroll 27,481 27,822 (1.2 )% 54,924
55,604 (1.2 )% Supervisory payroll 9,896 9,682 2.2 % 20,030 19,049
5.1 % Repairs and maintenance 11,241 10,191 10.3 % 20,916 18,806
11.2 % Snow removal 190 488 (61.1 )% 2,249 3,369 (33.2 )% Utilities
9,305 9,072 2.6 % 19,490 19,469 0.1 % Advertising and selling
expense 8,104 5,721 41.7 % 14,894 10,948 36.0 % Other direct
property costs 14,674 13,891 5.6 % 29,320 27,965 4.8 % Allocated
overhead 9,857 8,767 12.4 %
21,695 19,884 9.1 % Total cost of operations
(a) 147,305 139,735 5.4 %
296,312 283,076 4.7 % Net operating income (b)
$ 402,713 $ 392,492 2.6 % $ 790,851 $ 765,457
3.3 % Gross margin 73.2 % 73.7 % (0.7 )% 72.7 % 73.0
% (0.4 )% Weighted average for the period: Square foot
occupancy 94.5 % 95.4 % (0.9 )% 93.8 % 94.5 % (0.7 )% Realized
annual rental income per (c): Occupied square foot $ 16.97 $ 16.26
4.4 % $ 16.89 $ 16.14 4.6 % Available square foot (“REVPAF”) $
16.03 $ 15.50 3.4 % $ 15.83 $ 15.25 3.8 % At June 30: Square foot
occupancy 94.6 % 95.3 % (0.7 )% Annual contract rent per occupied
square foot (d) $ 17.66 $ 17.05 3.6 % (a) Revenues
and cost of operations do not include ancillary revenues and
expenses generated at the facilities with respect to tenant
reinsurance and retail sales. (b) See attached
reconciliation of self-storage net operating income (“NOI”) to
operating income. (c) Realized annual rent per occupied
square foot is computed by dividing annualized rental income,
before late charges and administrative fees, by the weighted
average occupied square feet for the period. Realized annual rent
per available square foot (“REVPAF”) is computed by dividing
annualized rental income, before late charges and administrative
fees, by the total available rentable square feet for the period.
These measures exclude late charges and administrative fees in
order to provide a better measure of our ongoing level of revenue.
Late charges are dependent upon the level of delinquency and
administrative fees are dependent upon the level of move-ins. In
addition, the rates charged for late charges and administrative
fees can vary independently from rental rates. These measures take
into consideration promotional discounts, which reduce rental
income. (d) Annual contract rent represents the agreed upon
monthly rate that is paid by our tenants in place at the time of
measurement. Contract rates are initially set in the lease
agreement upon move-in, and we adjust them from time to time with
notice. Contract rent excludes other fees that are charged on a
per-item basis, such as late charges and administrative fees, does
not reflect the impact of promotional discounts and does not
reflect the impact of rents that are written off as uncollectible.
The following table summarizes selected quarterly financial data
with respect to the Same Store Facilities (unaudited):
For the Quarter Ended March 31
June 30 September 30 December 31 Entire Year (Amounts
in thousands, except for per square foot amounts) Total revenues:
2017 $ 537,145 $ 550,018 2016 $ 516,306 $ 532,227 $ 554,998 $
543,661 $ 2,147,192 Total cost of operations: 2017 $ 149,007
$ 147,305 2016 $ 143,341 $ 139,735 $ 146,135 $ 115,045 $ 544,256
Property taxes: 2017 $
56,237
$ 56,557 2016 $ 53,881 $ 54,101 $ 53,808 $ 31,409 $ 193,199
Repairs and maintenance, including snow removal expenses: 2017 $
11,734
$ 11,431 2016 $ 11,496 $ 10,679 $ 11,143 $ 11,213 $ 44,531
Advertising and selling expense: 2017 $ 6,790 $ 8,104 2016 $ 5,227
$ 5,721 $ 7,746 $ 7,318 $ 26,012 REVPAF: 2017 $ 15.63 $
16.03 2016 $ 15.00 $ 15.50 $ 16.12 $ 15.81 $ 15.61 Weighted
average realized annual rent per occupied square foot: 2017 $ 16.81
$ 16.97 2016 $ 16.02 $ 16.26 $ 16.93 $ 16.87 $ 16.52
Weighted average occupancy levels for the period: 2017 93.1 % 94.5
% 2016 93.6 % 95.4 % 95.3 % 93.8 % 94.5 %
Property Operations—Non Same
Store Facilities
The Non Same Store Facilities at June 30, 2017 represent 292
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 June
30, Six Months Ended June 30,
FACILITIES 2017
2016 Change 2017 2016 Change
(Dollar amounts in thousands, except for per square foot
amounts)
Revenues: 2017 acquisitions $ 799 $ - $ 799 $ 1,138
$ - $ 1,138 2016 acquisitions 9,031 3,264 5,767 17,612 5,103 12,509
2015 acquisitions 4,214 3,777 437 8,286 7,372 914 Developed
facilities 9,781 5,194 4,587 17,906 9,451 8,455 Other facilities
50,356 49,925 431 99,872
98,514 1,358 Total revenues
74,181 62,160 12,021 144,814
120,440 24,374
Cost of
operations before depreciation and amortization expense:
2017 acquisitions 229 - 229 380 - 380 2016 acquisitions 3,502 1,174
2,328 6,984 1,725 5,259 2015 acquisitions 1,374 1,275 99 2,709
2,567 142 Developed facilities 4,831 2,623 2,208 8,994 4,433 4,561
Other facilities 13,954 12,880 1,074
27,794 25,749 2,045 Total
cost of operations 23,890 17,952 5,938
46,861 34,474 12,387
Net operating income: 2017 acquisitions 570 - 570 758
- 758 2016 acquisitions 5,529 2,090 3,439 10,628 3,378 7,250 2015
acquisitions 2,840 2,502 338 5,577 4,805 772 Developed facilities
4,950 2,571 2,379 8,912 5,018 3,894 Other facilities 36,402
37,045 (643 ) 72,078 72,765
(687 ) Net operating income (a) $ 50,291 $
44,208 $ 6,083 $ 97,953 $ 85,966 $ 11,987
At June
30:
Square foot occupancy: 2017 acquisitions 93.0 % - - 2016
acquisitions (b) 90.3 % 91.7 % (1.5 )% 2015 acquisitions 94.2 %
92.3 % 2.1 % Developed facilities 72.5 % 65.8 % 10.2 % Other
facilities 89.0 % 92.4 % (3.7 )% 86.4 %
88.2 % (2.0 )%
Annual contract rent per occupied square
foot:
2017 acquisitions $ 9.70 $ - - 2016 acquisitions (b) 9.96 11.10
(10.3 )% 2015 acquisitions 13.87 13.09 6.0 % Developed facilities
13.29 12.73 4.4 % Other facilities 17.16 16.80
2.1 % $ 14.89 $ 15.52 (4.1 )%
At June
30:
Number of facilities: 2017 acquisitions 7 - 7 2016 acquisitions 55
24 31 2015 acquisitions 17 17 - Developed facilities 39 29 10 Other
facilities 174 174 -
292 244 48 Net rentable
square feet (in thousands): 2017 acquisitions 398 - 398 2016
acquisitions 4,121 1,703 2,418 2015 acquisitions 1,285 1,285 -
Developed facilities 4,473 3,113 1,360 Other facilities
13,340 12,958 382 23,617
19,059 4,558 (a)
See attached reconciliation of self-storage NOI to operating
income. (b)
Contract rents per foot and occupancies at
June 30, 2016, representing amounts for the properties we acquired
in the first six months of 2016, are higher than the amounts at
June 30, 2017, representing amounts for the properties that we
acquired throughout 2016, due primarily to the mix of properties at
each date.
Investing and Capital Markets
Activities
During the three months ended June 30, 2017, we acquired three
self-storage facilities (two in Indiana and one in Ohio) with 0.2
million net rentable square feet for $11.6 million. During the six
months ended June 30, 2017, we acquired seven self-storage
facilities (two each in Indiana and Ohio and one each in Minnesota,
New York and North Carolina) with 0.4 million net rentable square
feet for $34.4 million. Subsequent to June 30, 2017, we acquired or
were under contract to acquire seven self-storage facilities (two
each in Florida and South Carolina and one each in Kentucky, North
Carolina and Ohio) with 0.4 million net rentable square feet for
$47.1 million.
During the three months ended June 30, 2017, we completed a
newly developed facility and various expansion projects (0.2
million net rentable square feet) costing $21.9 million. For the
six months ended June 30, 2017, we completed three newly developed
facilities and various expansion projects (0.7 million net rentable
square feet) costing an aggregate of $110.8 million. At June 30,
2017, we had various facilities in development (3.9 million net
rentable square feet) estimated to cost $468 million and various
expansion projects (1.7 million net rentable square feet) estimated
to cost $191 million. The remaining $376 million of development
costs for these projects is expected to be incurred primarily in
the next 18 months.
On June 2, 2017, we issued our 5.150% Series F Preferred Shares
for gross proceeds of $280 million.
On June 23, 2017, we called our 5.90% Series S Preferred Shares
for redemption. The shares were redeemed on July 26, 2017 for $460
million plus accrued dividends.
Distributions Declared
On July 26, 2017, our Board of Trustees declared a regular
common quarterly dividend of $2.00 per common share. The Board also
declared dividends with respect to our various series of preferred
shares. All the dividends are payable on September 28, 2017 to
shareholders of record as of September 13, 2017.
Second Quarter Conference
Call
A conference call is scheduled for July 27, 2017 at 10:00 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 46859484). 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 11,
2017 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
46859484.
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, 2017, we had interests in 2,358
self-storage facilities located in 38 states with approximately 156
million net rentable square feet in the United States and 220
storage facilities located in seven Western European nations with
approximately 12 million net rentable square feet operated under
the “Shurgard” brand. We also own a 42% common equity interest in
PS Business Parks, Inc. (NYSE:PSB) which owned and operated
approximately 28 million rentable square feet of commercial
space.
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 28, 2017 and in our
other filings with the SEC and the following: general risks
associated with the ownership and operation of real estate,
including changes in demand, risk related to development of
self-storage facilities, potential liability for environmental
contamination, natural disasters and adverse changes in laws and
regulations governing property tax, real estate and zoning; risks
associated with downturns in the national and local economies in
the markets in which we operate, including risks related to current
economic conditions and the economic health of our customers; the
impact of competition from new and existing self-storage and
commercial facilities and other storage alternatives; difficulties
in our ability to successfully evaluate, finance, integrate into
our existing operations and manage acquired and developed
properties; risks associated with international operations
including, but not limited to, unfavorable foreign currency rate
fluctuations, changes in tax laws, and local and global economic
uncertainty that could adversely affect our earnings and cash
flows; risks related to our participation in joint ventures; the
impact of the regulatory environment as well as national, state and
local laws and regulations including, without limitation, those
governing environmental, taxes, our tenant reinsurance business and
labor, and risks related to the impact of new laws and regulations;
risks of increased tax expense associated either with a possible
failure by us to qualify as a REIT, or with challenges to the
determination of taxable income for our taxable REIT subsidiaries;
changes in federal or state tax laws related to the taxation of
REITs and other corporations; security breaches or a failure of our
networks, systems or technology could adversely impact our
business, customer and employee relationships; risks associated
with the self-insurance of certain business risks, including
property and casualty insurance, employee health insurance and
workers compensation liabilities; difficulties in raising capital
at a reasonable cost; delays in the development process; ongoing
litigation and other legal and regulatory actions which may divert
management’s time and attention, require us to pay damages and
expenses or restrict the operation of our business; and economic
uncertainty due to the impact of war or terrorism. These
forward-looking statements speak only as of the date of this press
release. All of our forward-looking statements, including those in
this press release, are qualified in their entirety by this
statement. We expressly disclaim any obligation to update publicly
or otherwise revise any forward-looking statements, whether as a
result of new information, new estimates, or other factors, events
or circumstances after the date of this press release, except where
expressly required by law. Given these risks and uncertainties, you
should not rely on any forward-looking statements in this press
release, or which management may make orally or in writing from
time to time, as predictions of future events nor guarantees of
future performance.
PUBLIC STORAGE
SELECTED INCOME STATEMENT DATA
(Amounts in thousands, except per share
data)
(Unaudited)
Three Months Ended Six Month Ended June
30, June 30, 2017 2016 2017 2016
Revenues: Self-storage facilities $ 624,199 $
594,387 $ 1,231,977 $ 1,168,973 Ancillary operations 40,113
39,801 77,882 77,001
664,312 634,188 1,309,859
1,245,974
Expenses: Self-storage
cost of operations 171,195 157,687 343,173 317,550 Ancillary cost
of operations 11,383 14,317 22,307 27,740 Depreciation and
amortization 110,177 107,013 221,106 212,141 General and
administrative (a) 14,992 18,321
40,020 41,368 307,747
297,338 626,606 598,799
Operating income 356,565 336,850 683,253 647,175
Other
income (expense): Interest and other income 4,155 4,028 8,153
7,864 Interest expense (1,116 ) (1,378 ) (2,164 ) (2,089 ) Equity
in earnings of unconsolidated real estate entities 20,068 10,227
40,017 24,391 Gain on real estate investment sales 975 - 975 689
Foreign currency exchange (loss) gain (25,440 ) 8,632
(31,006 ) (2,322 ) Net income 355,207 358,359
699,228 675,708 Allocation to noncontrolling interests
(1,505 ) (1,700 ) (3,084 ) (3,176 ) Net income
allocable to Public Storage shareholders 353,702 356,659 696,144
672,532 Allocation of net income to: Preferred shareholders –
distributions (61,281 ) (59,216 ) (121,402 ) (121,488 ) Preferred
shareholders – redemptions (14,638 ) (15,537 ) (14,638 ) (26,873 )
Restricted share units (1,102 ) (1,131 )
(2,292 ) (2,061 ) Net income allocable to common
shareholders $ 276,681 $ 280,775 $ 557,812 $
522,110
Per common
share:
Net income per common share – Basic $ 1.59 $ 1.62 $
3.22 $ 3.02 Net income per common share – Diluted $
1.59 $ 1.61 $ 3.20 $ 3.00 Weighted
average common shares – Basic 173,602 173,087
173,483 173,032 Weighted average
common shares – Diluted 174,075 174,000
174,072 173,925 a)
Included in general and administrative expense for the three and
six months ended June 30, 2017 is a $5.4 million reversal of
share-based compensation expense due to the forfeiture of
share-based awards upon retirement of certain senior executives in
the three months ended June 30, 2017.
PUBLIC STORAGE
SELECTED BALANCE SHEET DATA
(Amounts in thousands, except share and
per share data)
June 30, 2017 December 31, 2016
ASSETS (Unaudited) Cash and cash equivalents $
358,266 $ 183,688 Operating real estate facilities: Land and
buildings, at cost 14,159,339 13,963,229 Accumulated depreciation
(5,482,071 ) (5,270,963 ) 8,677,268 8,692,266
Construction in process 282,374 230,310 Investments in
unconsolidated real estate entities 715,268 689,207 Goodwill and
other intangible assets, net 207,203 212,719 Other assets
125,348 122,148 Total assets $ 10,365,727
$ 10,130,338
LIABILITIES AND
EQUITY Senior unsecured notes $ 390,692 $ 359,810
Mortgage notes 30,086 30,939 Preferred shares called for redemption
460,000 - Accrued and other liabilities 322,923
297,935 Total liabilities 1,203,701 688,684
Equity: Public Storage shareholders’ equity: Cumulative Preferred
Shares, $0.01 par value, 100,000,000 shares authorized, 167,500
shares issued (in series) and outstanding, (174,700 at December 31,
2016) at liquidation preference 4,187,500 4,367,500 Common Shares,
$0.10 par value, 650,000,000 shares authorized, 173,699,438 shares
issued and outstanding, (173,288,787 shares at December 31, 2016)
17,370 17,329 Paid-in capital 5,625,784 5,609,768 Accumulated
deficit (609,424 ) (487,581 ) Accumulated other comprehensive loss
(82,143 ) (95,106 ) Total Public Storage
shareholders’ equity 9,139,087 9,411,910 Noncontrolling interests
22,939 29,744 Total equity
9,162,026 9,441,654 Total liabilities and
equity $ 10,365,727 $ 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 Six Month Ended June 30,
June 30, 2017 2016 2017 2016
Computation of
FFO per Share:
Net income allocable to common shareholders $ 276,681 $
280,775 $ 557,812 $ 522,110 Eliminate items excluded from FFO:
Depreciation and amortization 110,177 107,013 221,106 212,141
Depreciation from unconsolidated real estate investments 17,368
19,454 34,581 38,991 Depreciation allocated to noncontrolling
interests and restricted share unitholders (837 ) (876 ) (1,799 )
(1,758 ) Gains on sale of real estate investments, including our
equity share from investments (1,466 ) -
(3,077 ) (689 ) FFO allocable to common shares (a) $
401,923 $ 406,366 $ 808,623 $ 770,795
Diluted weighted average common shares 174,075
174,000 174,072 173,925 FFO per
share (a) $ 2.31 $ 2.34 $ 4.65 $ 4.43
Reconciliation of
Earnings per Share to FFO per Share:
Earnings per share – Diluted $ 1.59 $ 1.61 $ 3.20 $ 3.00
Eliminate per share amounts excluded from FFO: Depreciation and
amortization allocable to common shareholders 0.73 0.72 1.46 1.43
Gains on sale of real estate investments, including our equity
share from investments and other (0.01 ) 0.01
(0.01 ) - FFO per share (a) $ 2.31 $
2.34 $ 4.65 $ 4.43
Computation of
Funds Available for Distribution ("FAD"):
FFO allocable to common shares $ 401,923 $ 406,366 $ 808,623
$ 770,795 Eliminate effect of items included in FFO but not FAD:
Share-based compensation expense in excess of cash paid 4,085 8,137
799 2,165 Foreign currency exchange loss (gain), including our
equity share from investments 25,440 (6,537 ) 31,006 1,381
Application of EITF D-42 14,638 15,537 14,638 26,873 Less: Capital
expenditures to maintain real estate facilities (26,490 )
(30,552 ) (53,540 ) (44,945 ) FAD (a) $
419,596 $ 392,951 $ 801,526 $ 756,269
Distributions paid to common shareholders and restricted
share units $ 348,372 $ 312,494 $ 696,585 $
607,557 Distribution payout ratio 83.0 %
79.5 % 86.9 % 80.3 % Distributions per
common share $ 2.00 $ 1.80 $ 4.00 $ 3.50
(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 Month Ended
June 30,
June 30, 2017 2016 2017 2016
Self-storage revenues for: Same Store Facilities $
550,018 $ 532,227 $ 1,087,163 $ 1,048,533 Non Same Store Facilities
74,181 62,160 144,814
120,440 Self-storage revenues 624,199 594,387
1,231,977 1,168,973 Self-storage cost of operations for:
Same Store Facilities 147,305 139,735 296,312 283,076 Non Same
Store Facilities 23,890 17,952
46,861 34,474 Self-storage cost of operations
171,195 157,687 343,173 317,550 Self-storage net operating
income for: Same Store Facilities 402,713 392,492 790,851 765,457
Non Same Store Facilities 50,291 44,208
97,953 85,966 Self-storage net
operating income (a) 453,004 436,700 888,804 851,423 Ancillary
operating revenues 40,113 39,801 77,882 77,001 Ancillary cost of
operations (11,383 ) (14,317 ) (22,307 ) (27,740 ) Depreciation and
amortization (110,177 ) (107,013 ) (221,106 ) (212,141 ) General
and administrative expense (14,992 ) (18,321 )
(40,020 ) (41,368 ) Operating income on our income statement
$ 356,565 $ 336,850 $ 683,253 $ 647,175
(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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