Public Storage Reports Results for the Quarter Ended June 30, 2014

GLENDALE, Calif.--()--Public Storage (NYSE:PSA) announced today operating results for the quarter ended June 30, 2014.

Operating Results for the Three Months Ended June 30, 2014

For the three months ended June 30, 2014, net income allocable to our common shareholders was $218.4 million or $1.26 per diluted common share, compared to $207.7 million or $1.20 per diluted common share for the same period in 2013, representing an increase of $10.7 million or $0.06 per diluted common share. This increase is due primarily to a $38.9 million increase in self-storage net operating income, offset partially by a $15.5 million increase in depreciation and amortization associated with the 127 self-storage facilities acquired since January 2013.

The increase in our self-storage net operating income was the result of a $21.2 million increase for our Same Store Facilities combined with a $17.7 million increase for our non-Same Store Facilities. Revenues for the Same Store Facilities increased 5.3% or $22.6 million in the quarter ended June 30, 2014 as compared to the same period in 2013, due to higher realized annual rent per occupied square foot and higher average occupancy. Cost of operations for the Same Store Facilities increased by 1.2% or $1.5 million in the quarter ended June 30, 2014 as compared to the same period in 2013, due primarily to increases in property taxes offset partially by lower on-site property manager payroll. The increase in net operating income for the non-Same Store Facilities is due primarily to the impact of the acquisition of 127 self-storage facilities since January 2013.

Operating Results for the Six Months Ended June 30, 2014

For the six months ended June 30, 2014, net income allocable to our common shareholders was $392.4 million or $2.27 per diluted common share, compared to $369.6 million or $2.14 per diluted common share for the same period in 2013, representing an increase of $22.8 million or $0.13 per diluted common share. This increase is due primarily to a $69.8 million increase in self-storage net operating income, offset partially by a $33.5 million increase in depreciation and amortization associated with the 127 self-storage facilities acquired since January 2013.

The increase in our self-storage net operating income was the result of a $37.2 million increase for our Same Store Facilities combined with a $32.6 million increase for our non-Same Store Facilities. Revenues for the Same Store Facilities increased 5.2% or $43.9 million in the six months ended June 30, 2014 as compared to the same period in 2013, due to higher realized annual rent per occupied square foot and higher average occupancy. Cost of operations for the Same Store Facilities increased by 2.6% or $6.8 million in the six months ended June 30, 2014 as compared to the same period in 2013, due primarily to increases in property taxes, snow removal, and utilities expense, offset partially by lower advertising and selling costs. The increase in net operating income for the non-Same Store Facilities is due primarily to the impact of the acquisition of 127 self-storage facilities since January 2013.

Funds from Operations

For the three months ended June 30, 2014, funds from operations (“FFO”) was $1.99 per diluted common share, as compared to $1.83 for the same period in 2013, representing an increase of 8.7%, or $0.16 per share. FFO is a non-GAAP (generally accepted accounting principles) term defined by the National Association of Real Estate Investment Trusts and generally represents net income before depreciation, gains and losses and impairment charges with respect to real estate assets.

For the six months ended June 30, 2014, FFO was $3.73 per diluted common share, as compared to $3.40 for the same period in 2013, representing an increase of 9.7%, or $0.33 per share.

We also present “Core FFO per share,” a non-GAAP measure that represents FFO per share excluding the impact of (i) foreign currency exchange losses of $1.7 million and $4.0 million for the three and six months ended June 30, 2014, respectively, (a gain of $5.9 million and a loss of $6.8 million for the same periods in 2013), and (ii) other items, comprised primarily of a $7.8 million accrual related to a legal settlement included in ancillary cost of operations for the six months ended June 30, 2014, a $4.1 million reduction in ancillary cost of operations associated with recognition of a deferred tax asset in the three and six months ended June 30, 2014, and our $1.4 million equity share of charges incurred by Shurgard Europe in closing a facility during the six months ended June 30, 2013. We believe Core FFO per share is a helpful measure used by investors and REIT analysts to understand our performance. 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
2014 2013 Change 2014 2013 Change
 
FFO per share $ 1.99 $ 1.83 8.7 % $ 3.73 $ 3.40 9.7 %
Eliminate the per share impact of items excluded from Core FFO:
Foreign currency exchange loss (gain) 0.01 (0.03 ) 0.02 0.04
Other items   (0.03 )   -     0.03   0.01
Core FFO per share $ 1.97   $ 1.80   9.4 % $ 3.78 $ 3.45 9.6 %
 

Property Operations – Same Store Facilities

The Same Store Facilities represent those facilities that have been owned and operated on a stabilized basis since January 1, 2012 and therefore provide meaningful comparisons for 2013 and 2014. The following table summarizes the historical operating results of these 1,983 facilities (125.5 million net rentable square feet) that represent approximately 89% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at June 30, 2014.

                                   

Selected Operating Data for the Same

Store Facilities (1,983 facilities)

(unaudited):

Three Months Ended June 30, Six Months Ended June 30,
Percentage Percentage
2014 2013 Change 2014 2013 Change
 
(Dollar amounts in thousands, except for weighted average data)
Revenues:
Rental income $ 431,362 $ 409,340 5.4 % $ 849,851 $ 807,645 5.2 %
Late charges and administrative fees   21,435     20,839   2.9 %   43,568     41,843   4.1 %
Total revenues (a)   452,797     430,179   5.3 %   893,419     849,488   5.2 %
 
Cost of operations:
Property taxes 46,986 44,972 4.5 % 94,588 90,605 4.4 %
On-site property manager payroll 25,081 26,130 (4.0 )% 51,904 52,502 (1.1 )%
Supervisory payroll 8,734 8,868 (1.5 )% 17,587 18,168 (3.2 )%
Repairs and maintenance 9,237 8,915 3.6 % 16,932 16,600 2.0 %
Snow removal 204 366 (44.3 )% 7,257 3,707 95.8 %
Utilities 9,038 8,785 2.9 % 19,591 18,266 7.3 %
Advertising and selling expense 6,047 6,580 (8.1 )% 12,530 14,239 (12.0 )%
Other direct property costs 13,152 12,703 3.5 % 25,823 25,580 0.9 %
Allocated overhead   8,306     8,016   3.6 %   20,102     19,873   1.2 %
Total cost of operations (a)   126,785     125,335   1.2 %   266,314     259,540   2.6 %
Net operating income (b) $ 326,012   $ 304,844   6.9 % $ 627,105   $ 589,948   6.3 %
 
Gross margin 72.0 % 70.9 % 1.6 % 70.2 % 69.4 % 1.2 %
 
Weighted average for the period:
Square foot occupancy 94.7 % 94.0 % 0.7 % 93.7 % 92.9 % 0.9 %
Realized annual rental income per:
Occupied square foot (c) $ 14.52 $ 13.88 4.6 % $ 14.45 $ 13.86 4.3 %
Available square foot (“REVPAF”) (c) $ 13.75 $ 13.05 5.4 % $ 13.54 $ 12.87 5.2 %
At June 30:
Square foot occupancy 95.1 % 94.9 % 0.2 %

Annual contract rent per occupied square foot (d)

$ 15.29 $ 14.63 4.5 %
 
          (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 Same Store net operating income ("NOI") to operating income.

 
(c) Realized annual rent per occupied square foot is computed by dividing annualized rental income, before late charges and administrative fees, by the weighted average occupied square feet for the period. Realized annual rent per available square foot (“REVPAF”) is computed by dividing annualized rental income, before late charges and administrative fees, by the total available rentable square feet for the period. These measures exclude late charges and administrative fees in order to provide a better measure of our ongoing level of revenue. Late charges are dependent upon the level of delinquency, and administrative fees are dependent upon the level of move-ins. In addition, the rates charged for late charges and administrative fees can vary independently from rental rates. These measures take into consideration promotional discounts, which reduce rental income.
 
(d) Contract rent represents the applicable contractual monthly rent charged to our tenants, excluding the impact of promotional discounts, late charges, and administrative fees.
 

The following table summarizes selected quarterly financial data with respect to the Same Store Facilities (unaudited):

                               
Three Months Ended
March 31 June 30 September 30 December 31 Full Year
 
(Amounts in thousands, except for per square foot amounts)
Total revenues:
2014 $ 440,622 $ 452,797
2013 $ 419,309 $ 430,179 $ 451,525 $ 443,055 $ 1,744,068
 
Total cost of operations:
2014 $ 139,529 $ 126,785
2013 $ 134,205 $ 125,335 $ 127,753 $ 102,116 $ 489,409
 
Property taxes:
2014 $ 47,602 $ 46,986
2013 $ 45,633 $ 44,972 $ 44,594 $ 27,781 $ 162,980
 
Repairs and maintenance, including snow removal expenses:
2014 $ 14,748 $ 9,441
2013 $ 11,026 $ 9,281 $ 9,870 $ 9,986 $ 40,163
 
Advertising and selling expense:
2014 $ 6,483 $ 6,047
2013 $ 7,659 $ 6,580 $ 8,600 $ 4,957 $ 27,796
 
REVPAF:
2014 $ 13.34 $ 13.75
2013 $ 12.70 $ 13.05 $ 13.67 $ 13.44 $ 13.21
 
Weighted average realized annual rent per occupied square foot:
2014 $ 14.41 $ 14.52
2013 $ 13.81 $ 13.88 $ 14.49 $ 14.45 $ 14.16
 
Weighted average occupancy levels:
2014 92.6 % 94.7 %
2013 91.9 % 94.0 % 94.4 % 93.0 % 93.3 %
 

Investing and Capital Activities

As of June 30, 2014, we had development and expansion projects in process which will add approximately 2.1 million net rentable square feet of storage space at a total cost of approximately $242 million. A total of $61 million in costs were incurred through June 30, 2014 with respect to these projects, with approximately $70 million of the remaining costs expected to be incurred in the last six months of 2014, and the remainder in 2015.

During the six months ended June 30, 2014, we acquired six self-storage facilities (one in Texas and five in North Carolina), with an aggregate of 431,000 net rentable square feet, for approximately $37 million. On July 1, 2014, we acquired 25 properties (19 located in Florida, three in Maryland and one each in North Carolina, New Jersey and Virginia) containing in aggregate 1.8 million net rentable square feet for approximately $240 million in cash. We have four additional self-storage facilities with 374,000 net rentable square feet (two in Virginia, one in North Carolina, and one in South Carolina) under contract, for an aggregate purchase price of approximately $40 million, with estimated closing dates in the fourth quarter of 2014.

On June 4, 2014, we issued our 6.00% Series Z Preferred Shares for gross proceeds of approximately $288 million.

In July 2014, Shurgard Europe completed the following financing transactions: (i) amended its bank loan to, among other things, expand the outstanding borrowings from €82.9 million to €125 million and extend the maturity to January 2018, (ii) issued €300 million (issued in three equal tranches of 7, 10 and 12 year maturities) of unsecured Senior Notes, and (iii) fully repaid its €311 million shareholder loan. As a result, we received a total of $205 million for our 49% share of the shareholder loan and used $200 million to repay a portion of our outstanding term loan bringing its balance down to $122 million as of July 31, 2014.

Distributions Declared

On July 31, 2014, our Board of Trustees declared a regular common quarterly dividend of $1.40 per common share. The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on September 30, 2014 to shareholders of record as of September 15, 2014.

Second Quarter Conference Call

A conference call is scheduled for August 1, 2014 at 10:00 a.m. (PDT) to discuss the second quarter earnings results. The domestic dial-in number is (866) 406-5408 and the international dial-in number is (973) 582-2770 (conference ID number for either domestic or international is 71621154). A simultaneous audio web cast may be accessed by using the link at www.publicstorage.com under “Company Info, Investor Relations, Upcoming Events.” A replay of the conference call may be accessed through August 15, 2014 by calling (800) 585-8367 (domestic) or (404) 537-3406 (international) or by using the link at www.publicstorage.com under “Company Info, Investor Relations, Webcasts.” All forms of replay utilize conference ID number 71621154.

About Public Storage

Public Storage, a member of the S&P 500 and FT Global 500, is a REIT that primarily acquires, develops, owns and operates self-storage facilities. The Company’s headquarters are located in Glendale, California. At June 30, 2014, we had interests in 2,208 self-storage facilities located in 38 states with approximately 142 million net rentable square feet in the United States and 188 storage facilities located in seven Western European nations with approximately ten million net rentable square feet operated under the “Shurgard” brand. We also own a 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 29.7 million rentable square feet of commercial space, primarily flex, multitenant office and industrial space, at June 30, 2014.

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

Forward-Looking Statements

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 are described from time to time in our filings with the Securities and Exchange Commission, including in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, our other Quarterly Reports on Form 10-Q and current reports on Form 8-K. These risks include, but are not limited to, the following: general risks associated with the ownership and operation of real estate, including changes in demand for our storage facilities, potential liability for environmental contamination, adverse changes in tax, real estate and zoning laws and regulations and the impact of natural disasters; risks associated with downturns in the national and local economies in the markets in which we operate; 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 related to our participation in joint ventures; risks associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations that could adversely affect our earnings and cash flows; the impact of the regulatory environment as well as national, state and local laws and regulations including, without limitation, those governing REITs; risks associated with a possible failure by us to qualify as a REIT under the Internal Revenue Code of 1986, as amended; disruptions or shutdowns of our automated processes and systems; changes in federal tax laws related to the taxation of REITs, which could impact our status as a REIT; difficulties in raising capital at a reasonable cost; delays in the development process; and economic uncertainty due to the impact of war or terrorism. We 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.

                       

PUBLIC STORAGE

SELECTED INCOME STATEMENT DATA

(Amounts in thousands, except per share data)

(Unaudited)

 
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013

2014

2013

 
Operating Revenues:
Self-storage facilities $ 500,803 $ 451,576 $ 986,390 $ 891,241
Ancillary operations   37,234     33,802     71,271     65,037  
  538,037     485,378     1,057,661     956,278  
 
Operating Expenses:
Self-storage cost of operations 142,427 132,137 298,495 273,130
Ancillary cost of operations (a) 8,127 10,434 26,578 19,830
Depreciation and amortization 106,443 90,937 215,464 181,938
General and administrative   15,377     14,085     34,366     32,338  
  272,374     247,593     574,903     507,236  
 
Operating income 265,663 237,785 482,758 449,042
 
Other income (expense):
Interest and other income (b) 1,000 5,516 3,402 11,097
Interest expense (2,063 ) (647 ) (5,543 ) (4,144 )
Equity in earnings of unconsolidated real estate
entities (c) 14,135 13,101 28,739 24,744
Gain on real estate sales 1,219 - 1,219 -
Foreign currency exchange (loss) gain   (1,675 )   5,924     (4,023 )   (6,813 )
Net income 278,279 261,679 506,552 473,926
Allocation to noncontrolling interests   (1,445 )   (1,216 )   (2,522 )   (2,240 )
Net income allocable to Public Storage shareholders 276,834 260,463 504,030 471,686
Allocation of net income to:
Preferred shareholders (57,672 ) (51,907 ) (110,179 ) (100,497 )
Restricted share units   (810 )   (871 )   (1,447 )   (1,568 )
Net income allocable to common shareholders $ 218,352   $ 207,685   $ 392,404   $ 369,621  
 

Per common share:

Net income per common share – Basic $ 1.27   $ 1.21   $ 2.28   $ 2.15  
Net income per common share – Diluted $ 1.26   $ 1.20   $ 2.27   $ 2.14  
Weighted average common shares – Basic   172,282     171,625     172,096     171,535  
Weighted average common shares – Diluted   173,181     172,647     172,995     172,580  
 
          (a)     Amounts for the three and six months ended June 30, 2014 include a $4.1 million reduction associated with the recognition of a deferred tax asset. Amounts for the six months ended June 30, 2014 include a $7.8 million accrual related to a legal settlement.
 
(b)

Amounts for the three and six months ended June 30, 2014 decreased from the same period in 2013 due primarily to the sale of 51% of our loan receivable from Shurgard Europe to our joint venture partner on January 28, 2014.

 
(c) In July 2014, Shurgard Europe refinanced its existing debt, including its €311.0 million shareholder loan, with third party financing. Our ongoing equity earnings in Shurgard Europe will be negatively impacted approximately $1.4 million per quarter, compared to the amounts for the three months ended June 30, 2014, due to our 49% equity share of increased third party interest expense.
                   

PUBLIC STORAGE

SELECTED BALANCE SHEET DATA

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

 
June 30, 2014 December 31, 2013
ASSETS (Unaudited)
 
Cash and cash equivalents $ 387,983 $ 19,169
 
Operating real estate facilities:
Land and buildings, at cost 12,394,185 12,286,256
Accumulated depreciation   (4,287,703 )   (4,098,814 )
8,106,482 8,187,442
Construction in process 60,561 52,336
Investments in unconsolidated real estate entities 854,759 856,182
Goodwill and other intangible assets, net 225,097 246,854
Loan receivable from Shurgard Europe (a) 207,928 428,139
Other assets   103,647     86,144  
Total assets $ 9,946,457   $ 9,876,266  
 
 
 
LIABILITIES AND EQUITY
Borrowings on bank credit facility $ - $ 50,100
Term loan 322,000 700,000
Notes payable 74,987 88,953
Accrued and other liabilities   237,985     218,358  
Total liabilities 634,972 1,057,411
 
Equity:
Public Storage shareholders’ equity:
Cumulative Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 165,400 shares issued (in series) and outstanding (142,500 at December 31, 2013), at liquidation preference 4,135,000 3,562,500
Common Shares, $0.10 par value, 650,000,000 shares authorized, 172,339,168 shares issued and outstanding (171,776,291 shares at December 31, 2013) 17,234 17,178
Paid-in capital 5,545,947 5,531,034
Accumulated deficit (408,375 ) (318,482 )
Accumulated other comprehensive loss   (4,568 )   (500 )
Total Public Storage shareholders’ equity 9,285,238 8,791,730
Noncontrolling interests   26,247     27,125  
Total equity   9,311,485     8,818,855  
Total liabilities and equity $ 9,946,457   $ 9,876,266  
 
(a)     The loan receivable from Shurgard Europe was repaid in July 2014.
 
 

Shurgard Europe Same Store Selected Operating Data

The Shurgard Europe Same Store Pool represents Shurgard Europe’s 174 facilities (9.2 million net rentable square feet) that have been operated on a stabilized basis since January 1, 2012 and therefore provide meaningful comparisons for 2013 and 2014. These 174 facilities represent approximately 92% of the aggregate net rentable square feet of Shurgard Europe’s self-storage portfolio. Our pro-rata share of the operating results for these facilities is included in “equity in earnings of unconsolidated real estate entities” on our income statement.

                                   

Selected Operating Data for the Shurgard

Europe Same Store Pool (174 facilities)

(unaudited):

Three Months Ended June 30, Six Months Ended June 30,
Percentage Percentage
2014 2013 Change 2014 2013 Change
(Dollar amounts in thousands, utilizing constant exchange rates (a))
 
Rental income, late charges and administrative fees $ 53,383 $ 51,737 3.2 % $ 105,820 $ 103,507 2.2 %
Cost of operations   23,250     23,327   (0.3 )%   45,818     45,615   0.4 %
Net operating income $ 30,133   $ 28,410   6.1 % $ 60,002   $ 57,892   3.6 %
 
Gross margin 56.4 % 54.9 % 2.7 % 56.7 % 55.9 % 1.4 %
 
Weighted average for the period:
Square foot occupancy 85.6 % 79.8 % 7.3 % 84.2 % 79.9 % 5.4 %
Realized annual rent, prior to late charges and administrative fees, per:
Occupied square foot (b) $ 26.49 $ 27.54 (3.8 )% $ 26.69 $ 27.54 (3.1 )%
Available square foot (“REVPAF”) (b) $ 22.67 $ 21.98 3.1 % $ 22.47 $ 22.01 2.1 %
 
At June 30:
Square foot occupancy 86.4 % 81.0 % 6.7 %
Annual contract rent per occupied square
foot (b) $ 28.45 $ 29.98 (5.1 )%
 
Average Euro to U.S. Dollar exchange rates: (a)
Constant exchange rates used herein 1.371 1.371 - 1.371 1.371 -
Actual historical exchange rates 1.371 1.305 5.1 % 1.371 1.313 4.4 %
 
          (a)     In order to isolate changes in the underlying operations from the impact of exchange rates, the amounts in this table are presented on a constant exchange rate basis. The amounts for the three and six months ended June 30, 2013 have been restated using the actual exchange rates for the three and six months ended June 30, 2014.
 
(b) 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.
 
 
                       

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,
2014 2013 2014 2013
 

Computation of FFO per Share:

 
Net income allocable to common shareholders $ 218,352 $ 207,685 $ 392,404 $ 369,621
Eliminate items excluded from FFO:
Depreciation and amortization 106,443 90,937 215,464 181,938
Depreciation from unconsolidated real estate investments 21,062 18,158 40,733 37,061
Depreciation allocated to noncontrolling interests and restricted share unitholders (811 ) (979 ) (1,939 ) (1,994 )

Gains on sale of real estate investments, including our equity share from investments, and other

  (1,205 )   -     (1,292 )   -  
FFO allocable to common shares (a) $ 343,841   $ 315,801   $ 645,370   $ 586,626  
Diluted weighted average common shares   173,181     172,647     172,995     172,580  
FFO per share (a) $ 1.99   $ 1.83   $ 3.73   $ 3.40  
 

Reconciliation of Earnings per Share to FFO per Share:

 
Earnings per share - diluted $ 1.26 $ 1.20 $ 2.27 $ 2.14
Eliminate per share amounts excluded from FFO:

Depreciation and amortization, including amounts from investments and excluding amounts allocated to noncontrolling interests and restricted share unitholders

0.74 0.63 1.47 1.26

Gains on sale of real estate investments, including our equity share from investments, and other

  (0.01 )   -     (0.01 )   -  
FFO per share (a) $ 1.99   $ 1.83   $ 3.73   $ 3.40  
 
 

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

 
FFO allocable to common shares $ 343,841 $ 315,801 $ 645,370 $ 586,626
Eliminate effect of items included in FFO but not FAD:
Non-cash share-based compensation expense 7,077 7,005 13,364 12,899
Foreign currency exchange loss (gain) 1,675 (5,924 ) 4,023 6,813
Less: Capital expenditures to maintain real estate facilities   (19,761 )   (24,946 )   (32,897 )   (32,764 )
 

FAD (a)

$ 332,832   $ 291,936   $ 629,860   $ 573,574  
 
Distributions paid to common shareholders $ 241,237   $ 214,628   $ 482,126   $ 429,014  
 
Distribution payout ratio   72.5 %   73.5 %   76.5 %   74.8 %
 
Distributions per common share $ 1.40   $ 1.25   $ 2.80   $ 2.50  
          (a)    

FFO and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts and, along with FAD, are considered helpful measures of REIT performance by REITS and many REIT analysts. FFO represents net income before real estate depreciation, gains or losses, and impairment charges, which are excluded because they are based upon historical real estate costs and assume that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. FAD represents FFO, adjusted to exclude certain non-cash charges and to deduct capital expenditures. FFO and FFO per share are not a substitute for net income or earnings per share. FFO and FAD are not substitutes for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows. In addition, other REITS may compute these measures differently, so comparisons among REITS may not be helpful.

 
 
                       

PUBLIC STORAGE

SELECTED FINANCIAL DATA

 

Reconciliation of Same Store Data and Self-Storage Net Operating Income to

Operating Income

(Unaudited – amounts in thousands)

 
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
 
Revenues for:
Same Store Facilities $ 452,797 $ 430,179 $ 893,419 $ 849,488
Non Same Store Facilities: (a)
2014 acquisitions 479 - 479 -
2013 acquisitions 23,572

337

45,771 377
2012 acquisitions

6,779

5,285 13,213 10,242
Other  

17,176

   

15,775

    33,508     31,134  
Self-storage revenues 500,803 451,576 986,390 891,241
 
Self-storage cost of operations for:
Same Store Facilities 126,785 125,335 266,314 259,540
Non Same Store Facilities: (a)
2014 acquisitions 192 - 192 -
2013 acquisitions 7,728 151 16,372 160
2012 acquisitions 2,330 2,007 4,695 3,898
Other   5,392     4,644     10,922     9,532  
Self-storage cost of operations   142,427     132,137     298,495     273,130  
 
Net operating income for:
Same Store Facilities 326,012 304,844 627,105 589,948
Non Same Store Facilities: (a)
2014 acquisitions 287 - 287 -
2013 acquisitions 15,844

186

29,399 217
2012 acquisitions

4,449

3,278 8,518 6,344
Other  

11,784

   

11,131

    22,586     21,602  
Self-storage net operating income (b) 358,376 319,439 687,895 618,111
Ancillary operating revenues 37,234 33,802 71,271 65,037
Ancillary cost of operations (8,127 ) (10,434 ) (26,578 ) (19,830 )
Depreciation and amortization (106,443 ) (90,937 ) (215,464 ) (181,938 )
General and administrative expense   (15,377 )   (14,085 )   (34,366 )   (32,338 )
Operating income on our income statement $ 265,663   $ 237,785   $ 482,758   $ 449,042  
 
          (a)     We have 212 additional self-storage facilities that are not Same Store Facilities, including six facilities acquired in 2014, 121 facilities acquired in 2013 and 24 facilities acquired in 2012. The average square foot occupancy during the three months ended June 30, 2014, is 90% for the facilities acquired in 2014, 89% for the facilities acquired in 2013, 89% for the facilities acquired in 2012 and 85% for the other non same store facilities.
 
(b) Net operating income or “NOI” is a non-GAAP financial measure that excludes the impact of depreciation and amortization expense. We believe that NOI is a meaningful measure of operating performance, because we utilize NOI in making decisions with respect to capital allocations, in determining current property values, in evaluating property performance and in comparing period-to-period and market-to-market property operating results. In addition, we believe the investment community utilizes NOI in determining operating performance and real estate values, and does not consider depreciation expense because it is based upon historical cost. NOI is not a substitute for net income, net operating cash flow, or other related GAAP financial measures, in evaluating our operating results. This table reconciles from NOI for our self-storage facilities to the operating income presented on our income statement.
 

Contacts

Public Storage
Clemente Teng
(818) 244-8080, Ext. 1141

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Contacts

Public Storage
Clemente Teng
(818) 244-8080, Ext. 1141