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Section 1: 8-K (8-K)

psa-20190730 8K

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 8-K

____________________

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


Date of Report (Date of earliest event reported): July 30, 2019

____________________

Public  Storage

(Exact Name of Registrant as Specified in its Charter)

____________________



 

 

Maryland

001-33519

95-3551121

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

701 Western Avenue, Glendale, California

91201-2349

(Address of Principal Executive Offices)

(Zip Code)



Registrant's telephone number, including area code (818) 244-8080

N/A

(Former name or former address, if changed since last report)

____________________

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:



Title of Class

 

Trading Symbol

 

Name of exchange on which registered

Common Shares, $0.10 par value

 

PSA

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.625% Cum Pref Share, Series U, $0.01 par value

 

PSAPrU

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.375% Cum Pref Share, Series V, $0.01 par value

 

PSAPrV

 

New York Stock Exchange


 

 

Depositary Shares Each Representing 1/1,000 of a 5.200% Cum Pref Share, Series W, $0.01 par value

 

PSAPrW

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.200% Cum Pref Share, Series X, $0.01 par value

 

PSAPrX

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.875% Cum Pref Share, Series A, $0.01 par value

 

PSAPrA

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.400% Cum Pref Share, Series B, $0.01 par value

 

PSAPrB

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.125% Cum Pref Share, Series C, $0.01 par value

 

PSAPrC

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.950% Cum Pref Share, Series D, $0.01 par value

 

PSAPrD

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.900% Cum Pref Share, Series E, $0.01 par value

 

PSAPrE

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.150% Cum Pref Share, Series F, $0.01 par value

 

PSAPrF

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.050% Cum Pref Share, Series G, $0.01 par value

 

PSAPrG

 

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.600% Cum Pref Share, Series H, $0.01 par value

 

PSAPrH

 

New York Stock Exchange



Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).



Emerging growth company



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


 

 

The information in Item 2.02 of this Form 8-K and the Exhibit attached hereto pursuant to Item 9.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 2.02Results of Operations and Financial Condition and Exhibits

On July 30, 2019, Public Storage announced its financial results for the quarter ended June 30, 2019.  The full text of the press release issued in connection with the announcement is included in Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01Financial Statements and Exhibits

(d)Exhibits

Exhibit No.

 

Description



 

99.1

 

Public Storage Earnings Press Release dated July 30, 2019.




 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



4

 



PUBLIC STORAGE



 



By:   /s/ H. Thomas Boyle               


Date: July 30, 2019

H. Thomas Boyle
Chief Financial Officer






(Back To Top)

Section 2: EX-99.1 (EX-99.1)

psa-20190630 Press Release

 

News Release



Public Storage

701 Western Avenue

Glendale, CA 91201-2349

PublicStorage.com







 

 



For Release

Immediately



Date

July 30,  2019



Contact

Ryan Burke



 

(818) 244-8080, Ext. 1141



 

 



Public Storage Reports Results for the Three and Six Months Ended June 30, 2019

GLENDALE,  CaliforniaPublic Storage (NYSE:PSA) announced today operating results for the three and six months ended June 30, 2019.       

Operating Results for the Three Months Ended June 30, 2019

For the three months ended June 30, 2019, net income allocable to our common shareholders was $306.4 million or $1.76 per diluted common share, compared to $348.3 million or $2.00 per diluted common share in 2018 representing a decrease of $41.9 million or $0.24 per diluted common share.  The decrease is due primarily to (i) a $27.2 million decrease due to the impact of foreign currency exchange gains and losses associated with our euro denominated debt, (ii) our $24.0 million equity share of a gain on sale of assets recorded by PS Business Parks in the three months ended June 30, 2018, and (iii) an $8.9 million allocation to our preferred shareholders associated with our preferred share redemption activities in the three months ended June 30, 2019. These decreases were offset partially by (iv) a $7.9 million increase in self-storage net operating income (described below), and (v) a reduction in general and administrative expense attributable to $7.8 million in incremental share-based compensation expense in the three months ended June 30, 2018 for the planned retirement of our former CEO and CFO. 



The $7.9 million increase in self-storage net operating income is a result of a $3.4 million increase in our Same Store Facilities (as defined below) and a $4.5 million increase in our Non Same Store Facilities (as defined below).  Revenues for the Same Store Facilities increased 1.9% or $11.5 million in the three months ended June 30, 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 5.1% or $8.1 million in the three months ended June 30, 2019 as compared to 2018, due primarily to increased property taxes and higher marketing expenses.  The increase in net operating income of $4.5 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.

Operating Results for the Six Months Ended June 30, 2019

For the six months ended June 30, 2019, net income allocable to our common shareholders was $608.2 million or $3.49 per diluted common share, compared to $636.1 million or $3.65 per diluted common share in 2018 representing a decrease of $27.9 million or $0.16 per diluted common share.  The decrease is due primarily to (i) our $34.9 million equity share of gains recorded by PS Business Parks in the six months ended June 30, 2018, (ii) a $17.4 million allocation to our preferred shareholders associated with our preferred share redemption activities in the six months ended June 30, 2019 and (iii) a $7.6 million decrease due to the impact of foreign currency exchange gains associated with our euro denominated debt. These decreases were offset partially by (iv) a $15.3 million increase in self-storage net operating income (described below) and (v) a reduction in general and administrative expense attributable to $15.6 million in incremental share-based compensation expense in the six months ended June 30, 2018 for the planned retirement of our former CEO and CFO. 



The $15.3 million increase in self-storage net operating income is a result of a $5.7 million increase in our Same Store Facilities and a $9.6 million increase in our Non Same Store Facilities.  Revenues for the Same Store Facilities increased 1.7% or $20.2 million in the six months ended June 30, 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 4.5% or $14.4 million in the six months ended June 30, 2019 as compared to 2018, due primarily to increased property taxes and higher marketing expenses.  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.   



1

 


 

 

Funds from Operations

For the three months ended June 30, 2019, funds from operations (“FFO”) was $2.57 per diluted common share, as compared to $2.65 in the same period in 2018, representing a decrease of 3.0%.  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 six months ended June 30, 2019, FFO was $5.09 per diluted common share, as compared to $5.02 in the same period in 2018, representing an increase of 1.4%.

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 June 30,

 

Six Months Ended June 30,



 

 

 

 

 

 

 

Percentage

 

 

 

 

 

 

 

Percentage



 

2019

 

2018

 

Change

 

2019

 

2018

 

Change



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share

$

2.57 

 

$

2.65 

 

(3.0)%

 

$

5.09 

 

$

5.02 

 

1.4% 

Eliminate the per share impact of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

items excluded from Core FFO, including

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

our equity share from investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange loss (gain)

 

0.03 

 

 

(0.13)

 

 

 

 

(0.01)

 

 

(0.06)

 

 

Application of EITF D-42

 

0.05 

 

 

 -

 

 

 

 

0.10 

 

 

 -

 

 

(Forfeiture)/Acceleration of share-based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

compensation expense due to the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

departure of senior executives

 

(0.01)

 

 

0.04 

 

 

 

 

(0.01)

 

 

0.09 

 

 

Other items

 

 -

 

 

0.01 

 

 

 

 

0.01 

 

 

 -

 

 

Core FFO per share

$

2.64 

 

$

2.57 

 

2.7% 

 

$

5.18 

 

$

5.05 

 

2.6% 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 







2

 


 

 

Property Operations – Same Store Facilities

The Same Store Facilities represent the 2,165 facilities that have been owned and operated on a stabilized level of occupancy, revenues and cost of operations since January 1, 2017.  Accordingly, our Same Store Facilities exclude (i) facilities acquired after December 31, 2016, (ii) newly developed or expanded facilities, (iii) facilities where expansion is under construction or that we expect to commence by December 31, 2019, (iv) facilities whose operating trends are significantly affected by factors such as casualty events, and (v) facilities which were otherwise not stabilized at December 31, 2016 (such as recently developed facilities acquired from third parties before December 31, 2016).  The composition of our Same Store Facilities allows us to more effectively evaluate the ongoing performance of our self-storage portfolio in 2017, 2018, and 2019 and exclude the impact of fill-up of unstabilized facilities, which can significantly affect operating trends. 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 2,165 facilities (139.8 million net rentable square feet) that represent approximately 84% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at June 30, 2019.  





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Operating Data for the Same

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Store Facilities (2,165 facilities)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three Months Ended June 30,

 

Six Months Ended June 30,



 

 

 

 

 

 

Percentage

 

 

 

 

 

 

 

Percentage



2019

 

2018

 

Change

 

2019

 

2018

 

Change



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

$

576,681 

 

$

565,717 

 

1.9% 

 

$

1,139,311 

 

$

1,119,833 

 

1.7% 

Late charges and administrative fees

 

25,374 

 

 

24,868 

 

2.0% 

 

 

51,491 

 

 

50,809 

 

1.3% 

Total revenues (a)

 

602,055 

 

 

590,585 

 

1.9% 

 

 

1,190,802 

 

 

1,170,642 

 

1.7% 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property taxes

 

66,076 

 

 

62,940 

 

5.0% 

 

 

131,429 

 

 

125,166 

 

5.0% 

On-site property manager payroll

 

30,283 

 

 

29,461 

 

2.8% 

 

 

60,546 

 

 

59,757 

 

1.3% 

Supervisory payroll

 

9,937 

 

 

9,826 

 

1.1% 

 

 

19,717 

 

 

19,958 

 

(1.2)%

Repairs and maintenance

 

11,434 

 

 

11,478 

 

(0.4)%

 

 

22,047 

 

 

21,440 

 

2.8% 

Snow removal

 

301 

 

 

661 

 

(54.5)%

 

 

3,102 

 

 

2,880 

 

7.7% 

Utilities

 

9,670 

 

 

10,152 

 

(4.7)%

 

 

20,698 

 

 

21,632 

 

(4.3)%

Marketing

 

12,126 

 

 

8,115 

 

49.4% 

 

 

20,906 

 

 

14,994 

 

39.4% 

Other direct property costs

 

16,260 

 

 

15,310 

 

6.2% 

 

 

32,699 

 

 

31,146 

 

5.0% 

Allocated overhead

 

11,648 

 

 

11,688 

 

(0.3)%

 

 

25,778 

 

 

25,503 

 

1.1% 

Total cost of operations (a)

 

167,735 

 

 

159,631 

 

5.1% 

 

 

336,922 

 

 

322,476 

 

4.5% 

Net operating income (b)

$

434,320 

 

$

430,954 

 

0.8% 

 

$

853,880 

 

$

848,166 

 

0.7% 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

72.1% 

 

 

73.0% 

 

(1.2)%

 

 

71.7% 

 

 

72.5% 

 

(1.1)%



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average for the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square foot occupancy

 

94.0% 

 

 

93.8% 

 

0.2% 

 

 

93.2% 

 

 

93.0% 

 

0.2% 

Realized annual rental income per (c):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupied square foot

$

17.55 

 

$

17.25 

 

1.7% 

 

$

17.48 

 

$

17.23 

 

1.5% 

Available square foot (“REVPAF”)

$

16.50 

 

$

16.19 

 

1.9% 

 

$

16.30 

 

$

16.02 

 

1.7% 

At June 30:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Square foot occupancy

 

 

 

 

 

 

 

 

 

94.1% 

 

 

93.6% 

 

0.5% 

Annual contract rent per occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

square foot (d)

 

 

 

 

 

 

 

 

$

18.01 

 

$

17.81 

 

1.1% 



(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 NOI to net income.  

3

 


 

 

(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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

588,747 

 

$

602,055 

 

 

 

 

 

 

 

 

 

2018

$

580,057 

 

$

590,585 

 

$

607,598 

 

$

594,302 

 

$

2,372,542 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of operations:

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

169,187 

 

$

167,735 

 

 

 

 

 

 

 

 

 

2018

$

162,845 

 

$

159,631 

 

$

161,324 

 

$

130,477 

 

$

614,277 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

65,353 

 

$

66,076 

 

 

 

 

 

 

 

 

 

2018

$

62,226 

 

$

62,940 

 

$

62,750 

 

$

36,550 

 

$

224,466 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repairs and maintenance, including

 

 

 

 

 

 

 

 

 

 

 

 

snow removal expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

13,414 

 

$

11,735 

 

 

 

 

 

 

 

 

 

2018

$

12,181 

 

$

12,139 

 

$

11,903 

 

$

12,475 

 

$

48,698 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing:

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

8,780 

 

$

12,126 

 

 

 

 

 

 

 

 

 

2018

$

6,879 

 

$

8,115 

 

$

8,246 

 

$

9,205 

 

$

32,445 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVPAF:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

16.10 

 

$

16.50 

 

 

 

 

 

 

 

 

 

2018

$

15.86 

 

$

16.19 

 

$

16.62 

 

$

16.25 

 

$

16.23 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average realized annual

 

 

 

 

 

 

 

 

 

 

 

 

rent per occupied square foot:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

$

17.41 

 

$

17.55 

 

 

 

 

 

 

 

 

 

2018

$

17.21 

 

$

17.25 

 

$

17.72 

 

$

17.57 

 

$

17.44 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average occupancy levels

 

 

 

 

 

 

 

 

for the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

92.5% 

 

 

94.0% 

 

 

 

 

 

 

 

 

 

2018

 

92.1% 

 

 

93.8% 

 

 

93.8% 

 

 

92.5% 

 

 

93.1% 



 

 

 

 

 

 

 

 

 

 

 

 

 

 



4

 


 

 

Property Operations – Non Same Store Facilities

In addition to the 2,165 same-store facilities, we have 291 facilities that were not stabilized with respect to occupancies, revenues or cost of operations since January 1, 2017 or that we did not own as of January 1, 2017, including 81 facilities that were acquired from third parties, 76 newly developed facilities, 62 facilities that have been expanded or are targeted for expansion, and 72 facilities that are unstabilized due to the impact of casualties and other factors (collectively, the “Non Same Store Facilities”).  Operating data, metrics, and further commentary with respect to these facilities, including detail by vintage, is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Self-Storage Operations” in our June 30, 2019 Form 10-Q. 

Investing and Capital Activities

During the three months ended June 30, 2019, we acquired 10 self-storage facilities (four in Florida, two in Virginia and one each in Arizona, Colorado, Michigan and Texas) with 0.7 million net rentable square feet for $116.7 million. During the six months ended June 30, 2019, we acquired 22 self-storage facilities (eleven in Virginia, five in Florida, and one each in Arizona, Colorado, Georgia, Kentucky, Michigan and Texas) with 1.4 million net rentable square feet for $198.0 million.  Subsequent to June 30, 2019, we acquired or were under contract to acquire ten self-storage facilities (two each in Georgia and Texas and one each in Florida, Indiana, Minnesota, North Carolina, Tennessee and Virginia) with 0.8 million net rentable square feet for $86.5 million.

During the three months ended June 30, 2019, we opened two newly developed facilities and various expansion projects (1.1 million net rentable square feet – 0.3 million in North Carolina, 0.2 million each in Georgia, Tennessee and Texas and 0.1 million each in Colorado and Michigan) costing $89.7 million. During the six months ended June 30, 2019, we opened six newly developed facilities and various expansion projects (2.7 million net rentable square feet – 1.5 million in Texas, 0.3 million in North Carolina, 0.2 million each in Colorado, Georgia and Tennessee and 0.1 million each in California, Florida and Michigan) costing $223.2 million.  At June 30, 2019, we had various facilities in development (1.1 million net rentable square feet) estimated to cost $189 million and various expansion projects (2.7 million net rentable square feet) estimated to cost $332 million.  Our aggregate 3.8 million net rentable square foot pipeline of development and expansion facilities includes 1.2 million in Florida, 0.7 million in Minnesota, 0.6 million in California, 0.4 million in Washington, 0.2 million each in Colorado, Missouri, Texas and Virginia and 0.1 million in New York.  The remaining $329 million of development costs for these projects is expected to be incurred primarily in the next 18 months.

On May 23, 2019, we called our 6.00% Series Z Preferred Shares for redemption. The shares were redeemed at liquidation value on June 27, 2019 for $287.5 million.  

On April 12, 2019, we completed a public offering of $500 million in aggregate principal amount of senior notes bearing interest at an annual rate of 3.385% maturing on May 1, 2029.

On April 19, 2019, we amended our $500 million revolving line of credit.  This amendment (i) extends the maturity date from March 31, 2020 to April 19, 2024, (ii) decreases the current effective borrowing spread over LIBOR from 0.850% to 0.70%, and (iii) decreases the current effective facility fee from 0.080% to 0.070%.  All other terms remain substantially the same. 

Distributions Declared

On July 24, 2019, our Board of Trustees declared a regular common quarterly dividend of $2.00 per common share.  The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on September 27, 2019 to shareholders of record as of September 12, 2019.

Second Quarter Conference Call

A conference call is scheduled for July 31, 2019 at 9:00 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 7560077). A simultaneous audio webcast may be accessed by using the link at www.publicstorage.com under “About Us, Investor Relations, News and Events, Event Calendar.”  A replay of the conference call may be accessed through August 14, 2019 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, Event Calendar.” All forms of replay utilize conference ID number 7560077.

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 June 30, 2019, we had: (i) interests in 2,456 self-storage facilities located in 38 states with approximately 166 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 231 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

5

 


 

 

PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 28 million rentable square feet of commercial space at June 30, 2019Our headquarters are located in Glendale, California. 

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

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements in this press release, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words “expects,” “believes,” “anticipates,” “should,” “estimates” and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results and performance to be materially different from those expressed or implied in the forward-looking statements.  Factors and risks that may impact future results and performance include, but are not limited to, those described in Part 1, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 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 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; risks due to a potential November 2020 statewide ballot initiative (or other equivalent actions) that could remove the protections of Proposition 13 with respect to our real estate and result in substantial increases in our assessed values and property tax bills in California; 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.

 

6

 


 

PUBLIC STORAGE

SELECTED INCOME STATEMENT DATA

(Amounts in thousands, except per share data)

(Unaudited)

 

 

 







 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

June 30,

 

June 30,



 

2019

 

2018

 

2019

 

2018



 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage facilities

 

$

669,339 

 

$

645,206 

 

$

1,319,747 

 

$

1,276,743 

Ancillary operations

 

 

41,611 

 

 

40,322 

 

 

80,241 

 

 

78,709 



 

 

710,950 

 

 

685,528 

 

 

1,399,988 

 

 

1,355,452 



 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Self-storage cost of operations

 

 

196,083 

 

 

179,876 

 

 

389,739 

 

 

362,063 

Ancillary cost of operations

 

 

11,653 

 

 

11,101 

 

 

22,198 

 

 

21,741 

Depreciation and amortization

 

 

126,859 

 

 

119,777 

 

 

248,800 

 

 

237,756 

General and administrative

 

 

15,264 

 

 

31,329 

 

 

34,767 

 

 

62,849 

Interest expense

 

 

12,254 

 

 

8,388 

 

 

20,397 

 

 

16,495 



 

 

362,113 

 

 

350,471 

 

 

715,901 

 

 

700,904 



 

 

 

 

 

 

 

 

 

 

 

 

Other increase (decrease) to net income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

8,582 

 

 

6,328 

 

 

15,547 

 

 

11,872 

Equity in earnings of unconsolidated real estate entities

18,914 

 

 

41,963 

 

 

36,586 

 

 

72,758 

Gain on sale of real estate

 

 

341 

 

 

 -

 

 

341 

 

 

424 

Foreign currency exchange (loss) gain

 

 

(5,218)

 

 

21,944 

 

 

2,573 

 

 

10,126 

Net income

 

 

371,456 

 

 

405,292 

 

 

739,134 

 

 

749,728 

Allocation to noncontrolling interests

 

 

(1,400)

 

 

(1,490)

 

 

(2,557)

 

 

(2,929)

Net income allocable to Public Storage shareholders

 

 

370,056 

 

 

403,802 

 

 

736,577 

 

 

746,799 

Allocation of net income to:

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shareholders – distributions

 

 

(53,525)

 

 

(54,077)

 

 

(108,537)

 

 

(108,158)

Preferred shareholders – redemptions

 

 

(8,861)

 

 

 -

 

 

(17,394)

 

 

 -

Restricted share units 

 

 

(1,259)

 

 

(1,425)

 

 

(2,492)

 

 

(2,522)

Net income allocable to common shareholders

 

$

306,411 

 

$

348,300 

 

$

608,154 

 

$

636,119 



 

 

 

 

 

 

 

 

 

 

 

 

Per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share – Basic

 

$

1.76 

 

$

2.00 

 

$

3.49 

 

$

3.66 

Net income per common share – Diluted

 

$

1.76 

 

$

2.00 

 

$

3.49 

 

$

3.65 

Weighted average common shares – Basic

 

 

174,253 

 

 

173,932 

 

 

174,215 

 

 

173,912 

Weighted average common shares – Diluted

 

 

174,542 

 

 

174,224 

 

 

174,459 

 

 

174,186 



 

7

 


 

PUBLIC STORAGE

SELECTED BALANCE SHEET DATA

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

 

 

 







 

 

 

 

 

 



 

June 30, 2019

 

December 31, 2018

ASSETS

 

(Unaudited)

 

 

 



 

 

 

 

 

 

Cash and equivalents

 

$

360,331 

 

$

361,218 



 

 

 

 

 

 

Operating real estate facilities:

 

 

 

 

 

 

Land and buildings, at cost

 

 

15,781,745 

 

 

15,296,844 

Accumulated depreciation

 

 

(6,375,132)

 

 

(6,140,072)



 

 

9,406,613 

 

 

9,156,772 

Construction in process

 

 

191,874 

 

 

285,339 

Investments in unconsolidated real estate entities

 

 

778,523 

 

 

783,988 

Goodwill and other intangible assets, net

 

 

210,178 

 

 

209,856 

Other assets

 

 

165,772 

 

 

131,097 

Total assets

 

$

11,113,291 

 

$

10,928,270 



 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 



 

 

 

 

 

 

Senior unsecured notes

 

$

1,879,850 

 

$

1,384,880 

Mortgage notes

 

 

28,260 

 

 

27,403 

Accrued and other liabilities

 

 

410,671 

 

 

371,259 

Total liabilities

 

 

2,318,781 

 

 

1,783,542 



 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Public Storage shareholders’ equity:

 

 

 

 

 

 

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

 

 

 

 

 

 

authorized, 149,500 shares issued (in series) and outstanding,

 

 

 

 

 

 

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

 

 

3,737,500 

 

 

4,025,000 

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

 

 

 

 

 

 

174,294,523 shares issued and outstanding, (174,130,881 shares

 

 

 

 

 

 

at December 31, 2018)

 

 

17,429 

 

 

17,413 

Paid-in capital

 

 

5,729,945 

 

 

5,718,485 

Accumulated deficit

 

 

(648,391)

 

 

(577,360)

Accumulated other comprehensive loss

 

 

(67,549)

 

 

(64,060)

Total Public Storage shareholders’ equity

 

 

8,768,934 

 

 

9,119,478 

Noncontrolling interests

 

 

25,576 

 

 

25,250 

Total equity

 

 

8,794,510 

 

 

9,144,728 

Total liabilities and equity

 

$

11,113,291 

 

$

10,928,270 





 

8

 


 

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 Months Ended



 

June 30,

 

June 30,



 

2019

 

2018

 

2019

 

2018



 

 

 

 

 

 

 

 

 

 

 

 

Computation of FFO per Share:

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Net income allocable to common shareholders

 

$

306,411 

 

$

348,300 

 

$

608,154 

 

$

636,119 

Eliminate items excluded from FFO:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

126,859 

 

 

119,777 

 

 

248,800 

 

 

237,756 

Depreciation from unconsolidated real estate investments

17,247 

 

 

19,308 

 

 

34,761 

 

 

38,623 

Depreciation allocated to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

and restricted share unitholders

 

 

(1,088)

 

 

(1,014)

 

 

(2,286)

 

 

(1,932)

Gains on sale of real estate, including our equity share

 

 

 

 

 

 

 

 

 

 

 

 

from investments

 

 

(992)

 

 

(23,873)

 

 

(992)

 

 

(35,764)

FFO allocable to common shares (a)

 

$

448,437 

 

$

462,498 

 

$

888,437 

 

$

874,802 

Diluted weighted average common shares

 

 

174,542 

 

 

174,224 

 

 

174,459 

 

 

174,186 

FFO per share (a)

 

$

2.57 

 

$

2.65 

 

$

5.09 

 

$

5.02 



 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Earnings per Share to FFO per Share:

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share—Diluted

 

$

1.76 

 

$

2.00 

 

$

3.49 

 

$

3.65 

Eliminate per share amounts excluded from FFO:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization allocable to

 

 

 

 

 

 

 

 

 

 

 

 

common shareholders

 

 

0.82 

 

 

0.79 

 

 

1.61 

 

 

1.58 

Gains on sale of real estate, including our equity share

 

 

 

 

 

 

 

 

 

 

 

 

from investments

 

 

(0.01)

 

 

(0.14)

 

 

(0.01)

 

 

(0.21)

FFO per share (a)

 

$

2.57 

 

$

2.65 

 

$

5.09 

 

$

5.02 



 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

FFO allocable to common shares

 

$

448,437 

 

$

462,498 

 

$

888,437 

 

$

874,802 

Eliminate effect of items included in FFO but not FAD:

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense in excess

 

 

 

 

 

 

 

 

 

 

of cash paid

5,456 

 

 

17,080 

 

 

2,363 

 

 

22,989 

Foreign currency exchange loss (gain)

 

 

5,218 

 

 

(21,944)

 

 

(2,573)

 

 

(10,126)

Application of EITF D-42

 

 

8,861 

 

 

 -

 

 

17,394 

 

 

 -

Less: Capital expenditures to maintain real estate facilities

(42,354)

 

 

(28,883)

 

 

(72,559)

 

 

(53,227)



 

 

 

 

 

 

 

 

 

 

 

 

FAD (a)

 

$

425,618 

 

$

428,751 

 

$

833,062 

 

$

834,438