Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Public Storage | psa-20140731x8k.htm |
Public Storage
701 Western Avenue
Glendale, CA 91201-2349
www.publicstorage.com
|
For Release |
Immediately |
|
Date |
July 31, 2014 |
|
Contact |
Clemente Teng |
|
|
(818) 244-8080, Ext. 1141 |
Public Storage Reports Results for the Quarter Ended June 30, 2014
GLENDALE, California – 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.
1
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% | |||||
2
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. |
3
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.
4
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.
5
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. |
6
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.
7
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. |
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, |
|||||||||||
|
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. |
9
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. |
10