PSA Public Storage

Public Storage (NYSE:PSA) announced today operating results for the fourth quarter and year ended December 31, 2019.

Operating Results for the Three Months Ended December 31, 2019

For the three months ended December 31, 2019, net income allocable to our common shareholders was $327.3 million or $1.87 per diluted common share, compared to $530.1 million or $3.04 per diluted common share in 2018 representing a decrease of $202.8 million or $1.17 per diluted common share. The decrease is due primarily to (i) $183.1 million in aggregate gains due to Shurgard Self Storage SA’s (“Shurgard’s”) initial public offering and the sale of our facility in West London to Shurgard in October 2018, (ii) a $15.7 million decrease due to the impact of foreign currency exchange gains and losses associated with our euro denominated debt and (iii) a $6.2 million allocation to our preferred shareholders associated with our preferred share redemption activities in the three months ended December 31, 2019, offset partially by (iv) a $10.3 million increase in self-storage net operating income (described below) and (v) a reduction in general and administrative expense attributable to $8.1 million in incremental share-based compensation expense in the three months ended December 31, 2018 for the planned retirement of our former CEO and CFO.

The $10.3 million increase in self-storage net operating income is a result of a $0.7 million increase in our Same Store Facilities (as defined below) and a $9.6 million increase in our non-Same Store Facilities (as defined below). Revenues for the Same Store Facilities increased 1.1% or $6.6 million in the three months ended December 31, 2019 as compared to 2018, due primarily to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities increased by 4.6% or $5.9 million in the three months ended December 31, 2019 as compared to 2018, due primarily to a 40% ($3.7 million) increase in marketing expenses, increased property manager payroll and increased property tax expense. The increase in net operating income of $9.6 million for the non-Same Store Facilities is due primarily to the impact of facilities acquired in 2018 and 2019 and the fill-up of recently developed and expanded facilities.

Operating Results for the Year Ended December 31, 2019

In 2019, net income allocable to our common shareholders was $1,272.8 million or $7.29 per diluted common share, compared to $1,488.9 million or $8.54 per diluted common share in 2018 representing a decrease of $216.1 million or $1.25 per diluted common share. The decrease is due primarily to (i) $183.1 million in aggregate gains due to Shurgard’s initial public offering and the sale of our facility in West London to Shurgard in October 2018, (ii) our $37.7 million equity share of gains recorded by PS Business Parks during 2018, (iii) a $10.3 million decrease due to the impact of foreign currency exchange gains associated with our euro denominated debt and (iv) a $32.7 million allocation to our preferred shareholders associated with our preferred share redemption activities in 2019. These impacts were offset partially by a $30.1 million increase in self-storage net operating income (described below) and a reduction in general and administrative expense attributable to $30.7 million in incremental share-based compensation expense in 2018 for the planned retirement of our former CEO and CFO.

The $30.1 million increase in self-storage net operating income is a result of a $2.6 million increase in our Same Store Facilities and $27.5 million increase in our non-Same Store Facilities. Revenues for the Same Store Facilities increased 1.4% or $33.3 million in 2019 as compared to 2018, due primarily to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities increased by 5.0% or $30.6 million in 2019 as compared to 2018, due primarily to a 47.2% ($15.3 million) increase in marketing expenses and increased property taxes. The increase in net operating income of $27.5 million for the non-Same Store Facilities is due primarily to the impact of facilities acquired in 2018 and 2019 and the fill-up of recently developed and expanded facilities.

Funds from Operations

For the three months ended December 31, 2019, funds from operations (“FFO”) was $2.72 per diluted common share, as compared to $2.77 in 2018, representing a decrease of 1.8%. FFO is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts and generally represents net income before depreciation and amortization expense, gains and losses and impairment charges with respect to real estate assets. A reconciliation of GAAP diluted net income per share to FFO per share, and additional descriptive information regarding this non-GAAP measure, is attached.

For the year ended December 31, 2019, FFO was $10.58 per diluted common share, as compared to $10.45 in 2018, representing an increase of 1.2%.

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 or reductions in accruals due to the departure of senior executives and (iv) certain other non-cash and/or nonrecurring income or expense items. We review Core FFO per share to evaluate our ongoing operating performance, and we believe it is used by investors and REIT analysts in a similar manner. However, Core FFO per share is not a substitute for net income per share. Because other REITs may not compute Core FFO per share in the same manner as we do, may not use the same terminology or may not present such a measure, Core FFO per share may not be comparable among REITs.

The following table reconciles from FFO per share to Core FFO per share (unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year ended December 31,

 

 

 

 

 

 

 

 

Percentage

 

 

 

 

 

 

 

Percentage

 

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share

$

2.72

 

$

2.77

 

(1.8)%

 

$

10.58

 

$

10.45

 

1.2%

Eliminate the per share impact of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

items excluded from Core FFO, including

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

our equity share from investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange loss (gain)

 

0.06

 

 

(0.03)

 

 

 

 

(0.04)

 

 

(0.10)

 

 

Application of EITF D-42

 

0.06

 

 

-

 

 

 

 

0.21

 

 

-

 

 

Shurgard - IPO costs and casualty loss

 

-

 

 

0.02

 

 

 

 

-

 

 

0.03

 

 

Acceleration/(Forfeiture) of share-based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

compensation expense due to the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

departure of senior executives

 

-

 

 

0.05

 

 

 

 

(0.01)

 

 

0.18

 

 

Other items

 

-

 

 

-

 

 

 

 

0.01

 

 

-

 

 

Core FFO per share

$

2.84

 

$

2.81

 

1.1%

 

$

10.75

 

$

10.56

 

1.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property Operations – Same Store Facilities

The Same Store Facilities represent those facilities that have been owned and operated on a stabilized level of occupancy, revenues and cost of operations since January 1, 2017. 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 2017, 2018 and 2019. We believe the Same Store information is used by investors and REIT analysts in a similar manner. The following table summarizes the historical operating results of these 2,159 facilities (139.3 million net rentable square feet) that represent approximately 82% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at December 31, 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Operating Data for the Same

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Store Facilities (2,159 facilities)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year ended December 31,

 

 

 

 

 

 

 

Percentage

 

 

 

 

 

 

 

Percentage

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollar amounts in thousands, except for per square foot data)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

$

572,192

 

$

565,417

 

1.2%

 

$

2,290,721

 

$

2,258,099

 

1.4%

Late charges and administrative fees

 

25,905

 

 

26,073

 

(0.6)%

 

 

103,851

 

 

103,199

 

0.6%

Total revenues (a)

 

598,097

 

 

591,490

 

1.1%

 

 

2,394,572

 

 

2,361,298

 

1.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property taxes

 

37,387

 

 

36,286

 

3.0%

 

 

233,453

 

 

223,088

 

4.6%

On-site property manager payroll

 

27,562

 

 

25,943

 

6.2%

 

 

118,450

 

 

115,531

 

2.5%

Supervisory payroll

 

8,377

 

 

7,887

 

6.2%

 

 

37,771

 

 

37,179

 

1.6%

Repairs and maintenance

 

11,330

 

 

11,709

 

(3.2)%

 

 

46,078

 

 

44,896

 

2.6%

Snow removal

 

861

 

 

719

 

19.7%

 

 

3,954

 

 

3,592

 

10.1%

Utilities

 

10,031

 

 

10,404

 

(3.6)%

 

 

42,209

 

 

43,457

 

(2.9)%

Marketing

 

12,853

 

 

9,178

 

40.0%

 

 

47,622

 

 

32,344

 

47.2%

Other direct property costs

 

15,709

 

 

15,459

 

1.6%

 

 

63,572

 

 

62,042

 

2.5%

Allocated overhead

 

11,671

 

 

12,254

 

(4.8)%

 

 

48,809

 

 

49,144

 

(0.7)%

Total cost of operations (a)

 

135,781

 

 

129,839

 

4.6%

 

 

641,918

 

 

611,273

 

5.0%

Net operating income (b)

$

462,316

 

$

461,651

 

0.1%

 

$

1,752,654

 

$

1,750,025

 

0.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

77.3%

 

 

78.0%

 

(0.9)%

 

 

73.2%

 

 

74.1%

 

(1.2)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average for the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square foot occupancy

 

93.1%

 

 

92.5%

 

0.6%

 

 

93.5%

 

 

93.1%

 

0.4%

Realized annual rental income per (c):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupied square foot

$

17.66

 

$

17.55

 

0.6%

 

$

17.60

 

$

17.41

 

1.1%

Available square foot (“REVPAF”)

$

16.44

 

$

16.23

 

1.3%

 

$

16.45

 

$

16.21

 

1.5%

At December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square foot occupancy

 

 

 

 

 

 

 

 

 

91.8%

 

 

91.3%

 

0.5%

Annual contract rent per occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

square foot (d)

 

 

 

 

 

 

 

 

$

18.12

 

$

18.03

 

0.5%

(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 net 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 data)

Total revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

586,004

 

$

599,244

 

$

611,227

 

$

598,097

 

$

2,394,572

2018

$

577,310

 

$

587,793

 

$

604,705

 

$

591,490

 

$

2,361,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of operations:

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

168,359

 

$

166,913

 

$

170,865

 

$

135,781

 

$

641,918

2018

$

162,034

 

$

158,857

 

$

160,543

 

$

129,839

 

$

611,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

64,945

 

$

65,671

 

$

65,450

 

$

37,387

 

$

233,453

2018

$

61,858

 

$

62,571

 

$

62,373

 

$

36,286

 

$

223,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repairs and maintenance, including

 

 

 

 

 

 

 

 

 

 

 

 

snow removal expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

13,369

 

$

11,687

 

$

12,785

 

$

12,191

 

$

50,032

2018

$

12,124

 

$

12,081

 

$

11,855

 

$

12,428

 

$

48,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing:

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

8,751

 

$

12,084

 

$

13,934

 

$

12,853

 

$

47,622

2018

$

6,855

 

$

8,090

 

$

8,221

 

$

9,178

 

$

32,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVPAF:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

16.08

 

$

16.48

 

$

16.79

 

$

16.44

 

$

16.45

2018

$

15.84

 

$

16.17

 

$

16.60

 

$

16.23

 

$

16.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average realized annual

 

 

 

 

 

 

 

 

 

 

 

 

rent per occupied square foot:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

17.38

 

$

17.53

 

$

17.82

 

$

17.66

 

$

17.60

2018

$

17.19

 

$

17.23

 

$

17.69

 

$

17.55

 

$

17.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average occupancy levels

 

 

 

 

 

 

 

 

for the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

92.5%

 

 

94.0%

 

 

94.2%

 

 

93.1%

 

 

93.5%

2018

 

92.1%

 

 

93.8%

 

 

93.8%

 

 

92.5%

 

 

93.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table sets forth selected market trends in our Same Store Facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Store Facilities Operating Trends by Market (Unaudited)

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

2019

 

 

2018

 

Change

 

 

2019

 

 

2018

 

Change

 

(Amounts in thousands, except for per square foot data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

$

91,070

 

$

89,024

 

2.3%

 

$

362,057

 

$

352,672

 

2.7%

San Francisco

 

50,904

 

 

49,847

 

2.1%

 

 

203,195

 

 

199,162

 

2.0%

New York

 

37,861

 

 

37,482

 

1.0%

 

 

151,526

 

 

148,676

 

1.9%

Washington DC

 

28,495

 

 

27,907

 

2.1%

 

 

113,607

 

 

110,642

 

2.7%

Seattle-Tacoma

 

26,914

 

 

26,566

 

1.3%

 

 

107,639

 

 

106,261

 

1.3%

Miami

 

28,016

 

 

28,433

 

(1.5)%

 

 

112,734

 

 

114,428

 

(1.5)%

Atlanta

 

21,205

 

 

21,293

 

(0.4)%

 

 

85,885

 

 

84,450

 

1.7%

Chicago

 

29,760

 

 

29,075

 

2.4%

 

 

118,293

 

 

117,094

 

1.0%

Dallas-Ft. Worth

 

20,463

 

 

20,610

 

(0.7)%

 

 

82,281

 

 

83,155

 

(1.1)%

Orlando-Daytona

 

15,131

 

 

14,996

 

0.9%

 

 

60,640

 

 

59,901

 

1.2%

Houston

 

16,701

 

 

17,510

 

(4.6)%

 

 

67,962

 

 

71,266

 

(4.6)%

Philadelphia

 

14,858

 

 

14,417

 

3.1%

 

 

59,120

 

 

56,747

 

4.2%

Tampa

 

11,426

 

 

11,543

 

(1.0)%

 

 

46,083

 

 

46,377

 

(0.6)%

West Palm Beach

 

10,990

 

 

10,923

 

0.6%

 

 

43,959

 

 

43,630

 

0.8%

Portland

 

9,909

 

 

10,052

 

(1.4)%

 

 

40,163

 

 

40,622

 

(1.1)%

All other markets

 

184,394

 

 

181,812

 

1.4%

 

 

739,428

 

 

726,215

 

1.8%

Total revenues

$

598,097

 

$

591,490

 

1.1%

 

$

2,394,572

 

$

2,361,298

 

1.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

$

77,281

 

$

75,221

 

2.7%

 

$

298,725

 

$

292,281

 

2.2%

San Francisco

 

41,652

 

 

41,192

 

1.1%

 

 

163,878

 

 

162,202

 

1.0%

New York

 

29,970

 

 

30,097

 

(0.4)%

 

 

107,992

 

 

107,351

 

0.6%

Washington DC

 

22,314

 

 

21,802

 

2.3%

 

 

84,329

 

 

82,745

 

1.9%

Seattle-Tacoma

 

22,449

 

 

21,357

 

5.1%

 

 

84,315

 

 

83,375

 

1.1%

Miami

 

24,781

 

 

26,164

 

(5.3)%

 

 

84,269

 

 

87,277

 

(3.4)%

Atlanta

 

16,671

 

 

16,643

 

0.2%

 

 

63,630

 

 

62,519

 

1.8%

Chicago

 

18,906

 

 

18,801

 

0.6%

 

 

63,228

 

 

64,906

 

(2.6)%

Dallas-Ft. Worth

 

16,315

 

 

16,628

 

(1.9)%

 

 

56,623

 

 

58,461

 

(3.1)%

Orlando-Daytona

 

11,855

 

 

11,879

 

(0.2)%

 

 

44,116

 

 

44,066

 

0.1%

Houston

 

10,280

 

 

11,753

 

(12.5)%

 

 

42,380

 

 

47,071

 

(10.0)%

Philadelphia

 

10,712

 

 

10,430

 

2.7%

 

 

41,773

 

 

40,097

 

4.2%

Tampa

 

8,803

 

 

8,947

 

(1.6)%

 

 

32,416

 

 

33,378

 

(2.9)%

West Palm Beach

 

8,215

 

 

8,446

 

(2.7)%

 

 

32,192

 

 

32,397

 

(0.6)%

Portland

 

7,927

 

 

8,034

 

(1.3)%

 

 

30,511

 

 

31,548

 

(3.3)%

All other markets

 

134,185

 

 

134,257

 

(0.1)%

 

 

522,277

 

 

520,351

 

0.4%

Total net operating income

$

462,316

$

461,651

0.1%

$

1,752,654

$

1,750,025

0.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

2019

 

2018

 

Change

 

 

2019

 

2018

 

Change

Weighted average square foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

occupancy:

 

 

 

 

 

 

 

 

 

Los Angeles

 

95.4%

 

 

94.6%

 

0.8%

 

 

95.2%

 

 

95.0%

 

0.2%

San Francisco

 

93.8%

 

 

93.5%

 

0.3%

 

 

94.3%

 

 

94.4%

 

(0.1)%

New York

 

93.7%

 

 

93.8%

 

(0.1)%

 

 

94.1%

 

 

94.3%

 

(0.2)%

Washington DC

 

92.5%

 

 

91.8%

 

0.8%

 

 

93.4%

 

 

92.4%

 

1.1%

Seattle-Tacoma

 

92.3%

 

 

92.0%

 

0.3%

 

 

93.1%

 

 

93.2%

 

(0.1)%

Miami

 

93.1%

 

 

92.4%

 

0.8%

 

 

93.0%

 

 

92.9%

 

0.1%

Atlanta

 

92.2%

 

 

93.0%

 

(0.9)%

 

 

93.0%

 

 

93.2%

 

(0.2)%

Chicago

 

92.4%

 

 

90.1%

 

2.6%

 

 

92.1%

 

 

90.3%

 

2.0%

Dallas-Ft. Worth

 

91.9%

 

 

91.2%

 

0.8%

 

 

92.0%

 

 

91.4%

 

0.7%

Orlando-Daytona

 

93.3%

 

 

93.2%

 

0.1%

 

 

94.1%

 

 

94.5%

 

(0.4)%

Houston

 

90.9%

 

 

89.8%

 

1.2%

 

 

89.7%

 

 

90.9%

 

(1.3)%

Philadelphia

 

94.6%

 

 

94.7%

 

(0.1)%

 

 

95.3%

 

 

94.9%

 

0.4%

Tampa

 

92.3%

 

 

91.7%

 

0.7%

 

 

92.6%

 

 

92.9%

 

(0.3)%

West Palm Beach

 

93.9%

 

 

93.4%

 

0.5%

 

 

93.9%

 

 

93.8%

 

0.1%

Portland

 

92.6%

 

 

92.8%

 

(0.2)%

 

 

94.0%

 

 

94.0%

 

0.0%

All other markets

 

92.9%

 

 

92.3%

 

0.7%

 

 

93.5%

 

 

92.9%

 

0.6%

Total weighted average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

square foot occupancy

 

93.1%

 

 

92.5%

 

0.6%

 

 

93.5%

 

 

93.1%

 

0.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized annual rent per

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

occupied square foot:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

$

26.25

 

$

25.83

 

1.6%

 

$

26.11

 

$

25.47

 

2.5%

San Francisco

 

26.96

 

 

26.42

 

2.0%

 

 

26.73

 

 

26.14

 

2.3%

New York

 

26.16

 

 

25.84

 

1.2%

 

 

26.05

 

 

25.51

 

2.1%

Washington DC

 

21.79

 

 

21.51

 

1.3%

 

 

21.51

 

 

21.27

 

1.1%

Seattle-Tacoma

 

20.41

 

 

20.19

 

1.1%

 

 

20.20

 

 

19.94

 

1.3%

Miami

 

20.13

 

 

20.60

 

(2.3)%

 

 

20.31

 

 

20.63

 

(1.6)%

Atlanta

 

13.43

 

 

13.28

 

1.1%

 

 

13.44

 

 

13.15

 

2.2%

Chicago

 

15.22

 

 

15.24

 

(0.1)%

 

 

15.17

 

 

15.33

 

(1.0)%

Dallas-Ft. Worth

 

13.57

 

 

13.76

 

(1.4)%

 

 

13.63

 

 

13.88

 

(1.8)%

Orlando-Daytona

 

14.19

 

 

14.10

 

0.6%

 

 

14.12

 

 

13.90

 

1.6%

Houston

 

13.09

 

 

13.91

 

(5.9)%

 

 

13.52

 

 

14.01

 

(3.5)%

Philadelphia

 

16.84

 

 

16.33

 

3.1%

 

 

16.65

 

 

16.04

 

3.8%

Tampa

 

14.04

 

 

14.23

 

(1.3)%

 

 

14.12

 

 

14.13

 

(0.1)%

West Palm Beach

 

18.49

 

 

18.48

 

0.1%

 

 

18.50

 

 

18.37

 

0.7%

Portland

 

18.56

 

 

18.75

 

(1.0)%

 

 

18.52

 

 

18.71

 

(1.0)%

All other markets

 

14.25

 

 

14.13

 

0.8%

 

 

14.20

 

 

14.03

 

1.2%

Total realized rent per

occupied square foot

$

17.66

 

$

17.55

 

0.6%

 

$

17.60

 

$

17.41

 

1.1%

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

2019

 

2018

 

Change

 

 

2019

 

2018

 

Change

REVPAF:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Los Angeles

$

25.04

 

$

24.43

 

2.5%

 

$

24.87

 

$

24.20

 

2.8%

San Francisco

 

25.27

 

 

24.70

 

2.3%

 

 

25.20

 

 

24.67

 

2.1%

New York

 

24.50

 

 

24.23

 

1.1%

 

 

24.50

 

 

24.05

 

1.9%

Washington DC

 

20.16

 

 

19.75

 

2.1%

 

 

20.09

 

 

19.65

 

2.2%

Seattle-Tacoma

 

18.84

 

 

18.58

 

1.4%

 

 

18.81

 

 

18.57

 

1.3%

Miami

 

18.75

 

 

19.03

 

(1.5)%

 

 

18.88

 

 

19.16

 

(1.5)%

Atlanta

 

12.38

 

 

12.36

 

0.2%

 

 

12.50

 

 

12.25

 

2.0%

Chicago

 

14.07

 

 

13.73

 

2.5%

 

 

13.97

 

 

13.84

 

0.9%

Dallas-Ft. Worth

 

12.47

 

 

12.55

 

(0.6)%

 

 

12.54

 

 

12.68

 

(1.1)%

Orlando-Daytona

 

13.24

 

 

13.15

 

0.7%

 

 

13.29

 

 

13.14

 

1.1%

Houston

 

11.90

 

 

12.50

 

(4.8)%

 

 

12.13

 

 

12.73

 

(4.7)%

Philadelphia

 

15.94

 

 

15.47

 

3.0%

 

 

15.86

 

 

15.22

 

4.2%

Tampa

 

12.96

 

 

13.05

 

(0.7)%

 

 

13.08

 

 

13.13

 

(0.4)%

West Palm Beach

 

17.35

 

 

17.26

 

0.5%

 

 

17.37

 

 

17.23

 

0.8%

Portland

 

17.18

 

 

17.40

 

(1.3)%

 

 

17.40

 

 

17.58

 

(1.0)%

All other markets

 

13.25

 

 

13.04

 

1.6%

 

 

13.28

 

 

13.03

 

1.9%

Total REVPAF

$

16.44

 

$

16.23

 

1.3%

 

$

16.45

 

$

16.21

 

1.5%

Property Operations – Non-Same Store Facilities

In addition to our Same Store Facilities, at December 31, 2019 we had 324 facilities that were not stabilized with respect to occupancies or rental rates since January 1, 2017 or that we did not own as of January 1, 2017. The following table summarizes operating data with respect to these 324 facilities (unaudited). Additional data and metrics with respect to these facilities is included in the MD&A in our December 31, 2019 Form 10-K.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-SAME STORE

Three Months Ended December 31,

 

Year ended December 31,

FACILITIES

 

2019

 

 

2018

 

Change

 

 

2019

 

 

2018

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollar amounts in thousands, except for per square foot data)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired Facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017 Acquisitions

$

 

7,773

 

$

 

7,319

 

$

 

454

 

 

$

 

30,473

 

$

 

28,704

 

 

$

 

1,769

 

2018 Acquisitions

 

4,143

 

 

2,879

 

 

1,264

 

 

 

16,029

 

 

5,167

 

 

 

10,862

 

2019 Acquisitions

 

5,861

 

 

-

 

 

5,861

 

 

 

12,704

 

 

-

 

 

 

12,704

 

 

 

17,777

 

 

10,198

 

 

7,579

 

 

 

59,206

 

 

33,871

 

 

 

25,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed and expanded facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed in 2013 - 2015

 

7,288

 

 

6,842

 

 

446

 

 

 

28,331

 

 

26,725

 

 

 

1,606

 

Developed in 2016 and 2017

 

11,633

 

 

9,655

 

 

1,978

 

 

 

43,358

 

 

34,233

 

 

 

9,125

 

Developed in 2018 and 2019

 

5,089

 

 

1,805

 

 

3,284

 

 

 

15,230

 

 

3,392

 

 

 

11,838

 

Completed Expansions

 

13,649

 

 

10,653

 

 

2,996

 

 

 

49,214

 

 

41,879

 

 

 

7,335

 

Expansions in process

 

3,508

 

 

3,811

 

 

(303

)

 

 

14,438

 

 

15,465

 

 

 

(1,027

)

 

 

41,167

 

 

32,766

 

 

8,401

 

 

 

150,571

 

 

121,694

 

 

 

28,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-same store facilities

 

19,986

 

 

19,794

 

 

192

 

 

 

80,203

 

 

80,744

 

 

 

(541

)

Total revenues

 

78,930

 

 

62,758

 

 

16,172

 

 

 

289,980

 

 

236,309

 

 

 

53,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of operations before

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired Facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017 Acquisitions

 

2,571

 

 

2,225

 

 

346

 

 

 

10,203

 

 

9,669

 

 

 

534

 

2018 Acquisitions

 

1,632

 

 

1,276

 

 

356

 

 

 

7,197

 

 

2,141

 

 

 

5,056

 

2019 Acquisitions

 

2,242

 

 

-

 

 

2,242

 

 

 

5,072

 

 

-

 

 

 

5,072

 

 

 

6,445

 

 

3,501

 

 

2,944

 

 

 

22,472

 

 

11,810

 

 

 

10,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed and expanded facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed in 2013 - 2015

 

1,772

 

 

1,714

 

 

58

 

 

 

8,284

 

 

8,031

 

 

 

253

 

Developed in 2016 and 2017

 

3,714

 

 

5,015

 

 

(1,301

)

 

 

18,188

 

 

17,984

 

 

 

204

 

Developed in 2018 and 2019

 

2,765

 

 

1,722

 

 

1,043

 

 

 

11,195

 

 

4,136

 

 

 

7,059

 

Completed Expansions

 

5,387

 

 

2,823

 

 

2,564

 

 

 

21,579

 

 

13,756

 

 

 

7,823

 

Expansions in process

 

913

 

 

733

 

 

180

 

 

 

4,114

 

 

3,963

 

 

 

151

 

 

 

14,551

 

 

12,007

 

 

2,544

 

 

 

63,360

 

 

47,870

 

 

 

15,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-same store facilities

 

5,694

 

 

4,684

 

 

1,010

 

 

 

24,829

 

 

24,778

 

 

 

51

 

Total cost of operations

 

26,690

 

 

20,192

 

 

6,498

 

 

 

110,661

 

 

84,458

 

 

 

26,203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired Facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017 Acquisitions

 

5,202

 

 

5,094

 

 

108

 

 

 

20,270

 

 

19,035

 

 

 

1,235

 

2018 Acquisitions

 

2,511

 

 

1,603

 

 

908

 

 

 

8,832

 

 

3,026

 

 

 

5,806

 

2019 Acquisitions

 

3,619

 

 

-

 

 

3,619

 

 

 

7,632

 

 

-

 

 

 

7,632

 

 

 

11,332

 

 

6,697

 

 

4,635

 

 

 

36,734

 

 

22,061

 

 

 

14,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed and expanded facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed in 2013 - 2015

 

5,516

 

 

5,128

 

 

388

 

 

 

20,047

 

 

18,694

 

 

 

1,353

 

Developed in 2016 and 2017

 

7,919

 

 

4,640

 

 

3,279

 

 

 

25,170

 

 

16,249

 

 

 

8,921

 

Developed in 2018 and 2019

 

2,324

 

 

83

 

 

2,241

 

 

 

4,035

 

 

(744

)

 

 

4,779

 

Completed Expansions

 

8,262

 

 

7,830

 

 

432

 

 

 

27,635

 

 

28,123

 

 

 

(488

)

Expansions in process

 

2,595

 

 

3,078

 

 

(483

)

 

 

10,324

 

 

11,502

 

 

 

(1,178

)

 

 

26,616

 

 

20,759

 

 

5,857

 

 

 

87,211

 

 

73,824

 

 

 

13,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-same store facilities

 

14,292

 

 

15,110

 

 

(818

)

 

 

55,374

 

 

55,966

 

 

 

(592

)

Net operating income (a)

$

 

52,240

 

$

 

42,566

 

$

 

9,674

 

 

$

 

179,319

 

$

 

151,851

 

 

$

 

27,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

See attached reconciliation of self-storage NOI to net income.

Investing and Capital Activities

During the three months ended December 31, 2019, we acquired twelve self-storage facilities (three in South Carolina, two each in Indiana, North Carolina and Washington and one each in Arizona, Texas and Virginia) with 0.9 million net rentable square feet for $121.1 million. During 2019, we acquired 44 self-storage facilities (twelve in Virginia, six in Florida, three each in Georgia, Indiana, North Carolina, South Carolina and Texas, two each in Arizona, Massachusetts and Washington, and one each in Colorado, Kentucky, Michigan, Minnesota and Tennessee) with 3.1 million net rentable square feet for $429.9 million. Subsequent to December 31, 2019, we acquired or were under contract to acquire 14 self-storage facilities (four in Ohio, three in California, two each in New York and Tennessee, and one each in Indiana, Massachusetts and Nebraska) with 1.1 million net rentable square feet for $245.3 million.

During the three months ended December 31, 2019, we opened three newly developed facilities and various expansion projects (0.5 million net rentable square feet – 0.2 million each in Florida and Minnesota, and 0.1 million in Washington) costing $83.6 million. During 2019, we opened eleven newly developed facilities and various expansion projects (3.7 million net rentable square feet – 1.5 million in Texas, 0.5 million in Minnesota, 0.3 million each in Colorado, Florida and North Carolina, 0.2 million each in Georgia, Tennessee and Washington, and 0.1 million each in California and Michigan) costing $379.1 million. At December 31, 2019, we had various facilities in development (1.3 million net rentable square feet) estimated to cost $209 million and various expansion projects (3.1 million net rentable square feet) estimated to cost $410 million. Our aggregate 4.4 million net rentable square foot pipeline of development and expansion facilities includes 1.4 million in California, 1.2 million in Florida, 0.4 million in Minnesota, 0.3 million in Texas, 0.2 million each in Missouri, Virginia and Washington, and 0.5 million in other states. The remaining $477 million of development costs for these projects is expected to be incurred primarily in the next 18 months.

On November 15, 2019, we issued our 4.7% Series J Preferred Shares for gross proceeds of $258.8 million.

On November 26, 2019, we called our 5.875% Series A Preferred Shares for redemption. The shares were redeemed on December 30, 2019.

On December 20, 2019, we issued our 4.75% Series K Preferred Shares for gross proceeds of $230 million.

On January 24, 2020, we completed a public offering of €500 million ($552 million) of Euro denominated Senior Unsecured Notes, bearing interest at a fixed rate of 0.875% and maturing on January 24, 2032.

As we reported in an SEC form 8-K on February 14, 2020, we submitted a non-binding proposal to acquire 100% of the issued stapled securities of National Storage REIT (“NSR”), an Australia-based publicly-traded REIT (ASX:NSR) that owns and operates 167 self-storage facilities in Australia and New Zealand, for a cash purchase price of A$2.40 per share. Our proposal was subject to a number of conditions, including due diligence. Any transaction would be subject to processes for acquisition of widely held entities under Australian law, including securityholder approval. There is no assurance that Public Storage will reach a definitive agreement or consummate a transaction with NSR or that if such an agreement is reached, it will be on terms consistent with our non-binding proposal.

Distributions Declared

On February 21, 2020, our Board of Trustees declared a regular common quarterly dividend of $2.00 per common share. The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on March 31, 2020 to shareholders of record as of March 16, 2020.

Fourth Quarter Conference Call

A conference call is scheduled for February 26, 2020 at 9:00 a.m. (PST) to discuss the fourth quarter earnings results. The domestic dial-in number is (866) 406-5408, and the international dial-in number is (973) 582-2770 (conference ID number for either domestic or international is 1995740). A simultaneous audio webcast may be accessed by using the link at www.publicstorage.com under “About Us, Investor Relations, News and Events, Events Calendar.” A replay of the conference call may be accessed through March 11, 2020 by calling (800) 585-8367 (domestic), (404) 537-3406 (international) or by using the link at www.publicstorage.com under “About Us, Investor Relations, News and Events, Events Calendar.” All forms of replay utilize conference ID number 1995740.

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. At December 31, 2019, we had: (i) interests in 2,483 self-storage facilities located in 38 states with approximately 169 million net rentable square feet in the United States, (ii) an approximate 35% common equity interest in Shurgard Self Storage SA (Euronext Brussels:SHUR) which owned 234 self-storage facilities located in seven Western European nations with approximately 13 million net rentable square feet operated under the “Shurgard” brand and (iii) an approximate 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 28 million rentable square feet of commercial space at December 31, 2019. Our headquarters are located in Glendale, California.

Additional information about Public Storage is available on our website, www.publicstorage.com.

We expect to release our 2019 Annual Report on Form 10-K within approximately one business day.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this press release, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words “expects,” “believes,” “anticipates,” “should,” “estimates” and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to, those described in Part 1, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2019 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, acquisition and expansion 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; the risk that our existing self-storage facilities may be at a disadvantage in competing with newly developed facilities with more visual and customer appeal; difficulties in our ability to successfully evaluate, finance, integrate into our existing operations and manage properties that we acquire directly or through the acquisition of entities that own and operate self-storage facilities; increased reliance on Google as a customer acquisition channel; 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 legal and regulatory environment, including changes in federal, state and local laws and regulations governing environmental issues, taxes, our tenant reinsurance business, pricing of our self-storage space and labor; 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; risks due to a potential November 2020 California ballot initiative (or other equivalent actions) that could remove the property tax protections of Proposition 13 with respect to our California real estate and result in substantial increases in our California property tax expense; changes in U.S. 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 operations or our business, customer and employee relationships or result in fraudulent payments; 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 and cost overruns on our projects to develop or expand our facilities; ongoing litigation and other legal and regulatory actions that may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business; and economic uncertainty due to the impact of war or terrorism. These forward-looking statements speak only as of the date of this press release. All of our forward-looking statements, including those in this press release, are qualified in their entirety by this statement. We expressly disclaim any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, new estimates, or other factors, events or circumstances after the date of this press release, except where expressly required by law. Given these risks and uncertainties, you should not rely on any forward-looking statements in this press release, or which management may make orally or in writing from time to time, as predictions of future events nor guarantees of future performance.

 

PUBLIC STORAGE

SELECTED INCOME STATEMENT DATA

(Amounts in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2019

 

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage facilities

 

$

 

677,027

 

 

$

 

654,248

 

 

$

 

2,684,552

 

 

$

 

2,597,607

 

Ancillary operations

 

 

40,472

 

 

 

38,212

 

 

 

162,271

 

 

 

156,673

 

 

 

 

717,499

 

 

 

692,460

 

 

 

2,846,823

 

 

 

2,754,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage cost of operations

 

 

162,471

 

 

 

150,031

 

 

 

752,579

 

 

 

695,731

 

Ancillary cost of operations

 

 

10,113

 

 

 

10,343

 

 

 

44,204

 

 

 

43,991

 

Depreciation and amortization

 

 

134,885

 

 

 

121,374

 

 

 

512,918

 

 

 

483,646

 

General and administrative

 

 

20,308

 

 

 

28,442

 

 

 

71,983

 

 

 

118,720

 

Interest expense

 

 

12,647

 

 

 

7,953

 

 

 

45,641

 

 

 

32,542

 

 

 

 

340,424

 

 

 

318,143

 

 

 

1,427,325

 

 

 

1,374,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other increase (decrease) to net income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

6,424

 

 

 

7,550

 

 

 

28,436

 

 

 

26,442

 

Equity in earnings of unconsolidated real estate entities (a)

13,916

 

 

 

12,966

 

 

 

69,547

 

 

 

103,495

 

Gain on sale of real estate

 

 

-

 

 

 

36,078

 

 

 

341

 

 

 

37,903

 

Gain due to Shurgard public offering

 

 

-

 

 

 

151,616

 

 

 

-

 

 

 

151,616

 

Foreign currency exchange (loss) gain

 

 

(10,318

)

 

 

5,379

 

 

 

7,829

 

 

 

18,117

 

Net income

 

 

387,097

 

 

 

587,906

 

 

 

1,525,651

 

 

 

1,717,223

 

Allocation to noncontrolling interests

 

 

(1,082

)

 

 

(1,701

)

 

 

(5,117

)

 

 

(6,192

)

Net income allocable to Public Storage shareholders

 

 

386,015

 

 

 

586,205

 

 

 

1,520,534

 

 

 

1,711,031

 

Allocation of net income to:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shareholders – distributions

 

 

(51,614

)

 

 

(54,078

)

 

 

(210,179

)

 

 

(216,316

)

Preferred shareholders – redemptions

 

 

(6,153

)

 

 

-

 

 

 

(32,693

)

 

 

-

 

Restricted share units

 

 

(997

)

 

 

(2,025

)

 

 

(4,895

)

 

 

(5,815

)

Net income allocable to common shareholders

 

$

 

327,251

 

 

$

 

530,102

 

 

$

 

1,272,767

 

 

$

 

1,488,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share – Basic

 

$

 

1.88

 

 

$

 

3.05

 

 

$

 

7.30

 

 

$

 

8.56

 

Net income per common share – Diluted

 

$

 

1.87

 

 

$

 

3.04

 

 

$

 

7.29

 

 

$

 

8.54

 

Weighted average common shares – Basic

 

 

174,383

 

 

 

174,075

 

 

 

174,287

 

 

 

173,969

 

Weighted average common shares – Diluted

 

 

174,590

 

 

 

174,466

 

 

 

174,530

 

 

 

174,297

 

(a)

The reduction in equity in earnings for the year ended December 31, 2019 reflects a $35.3 million reduction in our equity earnings from PSB due primarily to a reduction in our equity share of PSB’s gains on sale, offset partially by a $1.3 million increase in equity in earnings from Shurgard. The increase in equity in earnings for Shurgard reflects i) our $5.2 million equity share of costs of the IPO and casualty losses incurred by Shurgard in 2018 and ii) a $10.1 million reduction in our equity share of depreciation, offset partially by iii) an approximate $14.0 million reduction in our equity share of core FFO from Shurgard. The reductions in our equity share of Core FFO and depreciation from Shurgard is due primarily to Shurgard’s IPO on October 15, 2018, which reduced our equity interest from 49% to approximately 35%, and resulted in dilution from approximately €199 million in Shurgard’s IPO proceeds that remained uninvested in real estate at December 31, 2019.

PUBLIC STORAGE

SELECTED BALANCE SHEET DATA

(Amounts in thousands, except share and per share data)

 

 

 

December 31, 2019

 

December 31, 2018

ASSETS

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Cash and equivalents

 

$

 

409,743

 

 

$

 

361,218

 

 

 

 

 

 

 

 

Operating real estate facilities:

 

 

 

 

 

 

Land and buildings, at cost

 

 

16,289,146

 

 

 

15,296,844

 

Accumulated depreciation

 

 

(6,623,475

)

 

 

(6,140,072

)

 

 

 

9,665,671

 

 

 

9,156,772

 

Construction in process

 

 

141,934

 

 

 

285,339

 

Investments in unconsolidated real estate entities

 

 

767,816

 

 

 

783,988

 

Goodwill and other intangible assets, net

 

 

205,936

 

 

 

209,856

 

Other assets

 

 

174,344

 

 

 

131,097

 

Total assets

 

$

 

11,365,444

 

 

$

 

10,928,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior unsecured notes

 

$

 

1,875,218

 

 

$

 

1,384,880

 

Mortgage notes

 

 

27,275

 

 

 

27,403

 

Accrued and other liabilities

 

 

383,284

 

 

 

371,259

 

Total liabilities

 

 

2,285,777

 

 

 

1,783,542

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Public Storage shareholders’ equity:

 

 

 

 

 

 

Cumulative Preferred Shares, $0.01 par value, 100,000,000 shares

 

 

 

 

 

 

authorized, 162,600 shares issued (in series) and outstanding,

 

 

 

 

 

 

(161,000 at December 31, 2018) at liquidation preference

 

 

4,065,000

 

 

 

4,025,000

 

Common Shares, $0.10 par value, 650,000,000 shares authorized,

 

 

 

 

 

 

174,418,615 shares issued and outstanding, (174,130,881 shares

 

 

 

 

 

 

at December 31, 2018)

 

 

17,442

 

 

 

17,413

 

Paid-in capital

 

 

5,710,934

 

 

 

5,718,485

 

Accumulated deficit

 

 

(665,575

)

 

 

(577,360

)

Accumulated other comprehensive loss

 

 

(64,890

)

 

 

(64,060

)

Total Public Storage shareholders’ equity

 

 

9,062,911

 

 

 

9,119,478

 

Noncontrolling interests

 

 

16,756

 

 

 

25,250

 

Total equity

 

 

9,079,667

 

 

 

9,144,728

 

Total liabilities and equity

 

$

 

11,365,444

 

 

$

 

10,928,270

 

PUBLIC STORAGE

SELECTED FINANCIAL DATA

 

Computation of Funds from Operations and Funds Available for Distribution

(Unaudited – amounts in thousands except per share data)

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of FFO per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income allocable to common shareholders

 

$

 

327,251

 

 

$

 

530,102

 

 

$

 

1,272,767

 

 

$

 

1,488,900

 

Eliminate items excluded from FFO:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

133,897

 

 

 

121,374

 

 

 

511,413

 

 

 

483,646

 

Depreciation from unconsolidated real estate investments

19,161

 

 

 

21,630

 

 

 

71,725

 

 

 

79,868

 

Depreciation allocated to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

and restricted share unitholders

 

 

(903

)

 

 

(822

)

 

 

(4,208

)

 

 

(3,646

)

Gains on sale of real estate, including equity

 

 

 

 

 

 

 

 

 

 

 

 

investment share

 

 

(4,516

)

 

 

(189,802

)

 

 

(5,896

)

 

 

(227,332

)

FFO allocable to common shares (a)

 

$

 

474,890

 

 

$

 

482,482

 

 

$

 

1,845,801

 

 

$

 

1,821,436

 

Diluted weighted average common shares

 

 

174,590

 

 

 

174,466

 

 

 

174,530

 

 

 

174,297

 

FFO per share (a)

 

$

 

2.72

 

 

$

 

2.77

 

 

$

 

10.58

 

 

$

 

10.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Earnings per Share to FFO per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share—Diluted

 

$

 

1.87

 

 

$

 

3.04

 

 

$

 

7.29

 

 

$

 

8.54

 

Eliminate per share amounts excluded from FFO per share:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

0.87

 

 

 

0.81

 

 

 

3.32

 

 

 

3.21

 

Gains on sale of real estate and Shurgard IPO

 

 

(0.02

)

 

 

(1.08

)

 

 

(0.03

)

 

 

(1.30

)

FFO per share (a)

 

$

 

2.72

 

 

$

 

2.77

 

 

$

 

10.58

 

 

$

 

10.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of Funds Available for Distribution ("FAD"):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO allocable to common shares

 

$

 

474,890

 

 

$

 

482,482

 

 

$

 

1,845,801

 

 

$

 

1,821,436

 

Eliminate effect of items included in FFO but not FAD:

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense in excess

 

 

 

 

 

 

 

 

 

 

of cash paid

4,866

 

 

 

16,602

 

 

 

13,671

 

 

 

57,589

 

Foreign currency exchange loss (gain)

 

 

10,318

 

 

 

(5,379

)

 

 

(7,829

)

 

 

(18,117

)

Impact of EITF D-42, including equity investment share

 

 

10,706

 

 

 

-

 

 

 

37,246

 

 

 

-

 

Less: Capital expenditures to maintain real estate facilities (b)

(57,140

)

 

 

(45,990

)

 

 

(192,539

)

 

 

(139,397

)

 

 

 

 

 

 

 

 

 

 

 

 

 

FAD (a)

 

$

 

443,640

 

 

$

 

447,715

 

 

$

 

1,696,350

 

 

$

 

1,721,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions paid to common shareholders and restricted

 

 

 

 

 

 

 

 

 

 

 

 

share units

 

$

 

349,754

 

 

$

 

349,203

 

 

$

 

1,398,570

 

 

$

 

1,396,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution payout ratio

 

 

78.8

%

 

 

78.0

%

 

 

82.4

%

 

 

81.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions per common share

 

$

 

2.00

 

 

$

 

2.00

 

 

$

 

8.00

 

 

$

 

8.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 GAAP net income before depreciation and amortization, real estate gains or losses and impairment charges, which are excluded because they are based upon historical 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.

(b) Capital expenditures for 2019 include certain projects that are not traditional like-for-like replacements of existing components, and in certain circumstances upgrade existing components before the end of their functional lives. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Overview” and “Liquidity and Capital Resources – Capital Expenditure Requirements” in our December 31, 2019 Form 10-K for further information.

PUBLIC STORAGE

SELECTED FINANCIAL DATA

Reconciliation of Self-Storage Net Operating Income to

Net Income

(Unaudited – amounts in thousands)

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage revenues for:

 

 

 

 

 

 

 

 

 

 

 

 

Same Store Facilities

 

$

 

598,097

 

 

$

 

591,490

 

 

$

 

2,394,572

 

 

$

 

2,361,298

 

Acquired facilities

 

 

17,777

 

 

 

10,198

 

 

 

59,206

 

 

 

33,871

 

Developed and expanded facilities

 

 

41,167

 

 

 

32,766

 

 

 

150,571

 

 

 

121,694

 

Other non-same store facilities

 

 

19,986

 

 

 

19,794

 

 

 

80,203

 

 

 

80,744

 

Self-storage revenues

 

 

677,027

 

 

 

654,248

 

 

 

2,684,552

 

 

 

2,597,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage cost of operations for:

 

 

 

 

 

 

 

 

 

 

 

 

Same Store Facilities

 

 

135,781

 

 

 

129,839

 

 

 

641,918

 

 

 

611,273

 

Acquired facilities

 

 

6,445

 

 

 

3,501

 

 

 

22,472

 

 

 

11,810

 

Developed and expanded facilities

 

 

14,551

 

 

 

12,007

 

 

 

63,360

 

 

 

47,870

 

Other non-same store facilities

 

 

5,694

 

 

 

4,684

 

 

 

24,829

 

 

 

24,778

 

Self-storage cost of operations

 

 

162,471

 

 

 

150,031

 

 

 

752,579

 

 

 

695,731

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage NOI for:

 

 

 

 

 

 

 

 

 

 

 

 

Same Store Facilities

 

 

462,316

 

 

 

461,651

 

 

 

1,752,654

 

 

 

1,750,025

 

Acquired facilities

 

 

11,332

 

 

 

6,697

 

 

 

36,734

 

 

 

22,061

 

Developed and expanded facilities

 

 

26,616

 

 

 

20,759

 

 

 

87,211

 

 

 

73,824

 

Other non-same store facilities

 

 

14,292

 

 

 

15,110

 

 

 

55,374

 

 

 

55,966

 

Self-storage NOI (a)

 

 

514,556

 

 

 

504,217

 

 

 

1,931,973

 

 

 

1,901,876

 

Ancillary revenues

 

 

40,472

 

 

 

38,212

 

 

 

162,271

 

 

 

156,673

 

Ancillary cost of operations

 

 

(10,113

)

 

 

(10,343

)

 

 

(44,204

)

 

 

(43,991

)

Depreciation and amortization

 

 

(134,885

)

 

 

(121,374

)

 

 

(512,918

)

 

 

(483,646

)

General and administrative expense

 

 

(20,308

)

 

 

(28,442

)

 

 

(71,983

)

 

 

(118,720

)

Interest and other income

 

 

6,424

 

 

 

7,550

 

 

 

28,436

 

 

 

26,442

 

Interest expense

 

 

(12,647

)

 

 

(7,953

)

 

 

(45,641

)

 

 

(32,542

)

Equity in earnings of unconsolidated real estate entities

 

 

13,916

 

 

 

12,966

 

 

 

69,547

 

 

 

103,495

 

Gain on sale of real estate

 

 

-

 

 

 

36,078

 

 

 

341

 

 

 

37,903

 

Gain due to Shurgard public offering

 

 

-

 

 

 

151,616

 

 

 

-

 

 

 

151,616

 

Foreign currency exchange (loss) gain

 

 

(10,318

)

 

 

5,379

 

 

 

7,829

 

 

 

18,117

 

Net income on our income statement

 

$

 

387,097

 

 

$

 

587,906

 

 

$

 

1,525,651

 

 

$

 

1,717,223

 

(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 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, 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 net income presented on our income statement.

 

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Ryan Burke (818) 244-8080, Ext. 1141