Market Overview

Public Storage Reports Results for the Three and Six Months Ended June 30, 2018

Share:

Public Storage (NYSE:PSA) announced today operating results for the
three and six months ended June 30, 2018.

Operating Results for the Three Months Ended
June 30, 2018

For the three months ended June 30, 2018, net income allocable to our
common shareholders was $348.3 million or $2.00 per diluted common
share, compared to $276.7 million or $1.59 per diluted common share in
2017 representing an increase of $71.6 million or $0.41 per diluted
common share. The increase is due primarily to (i) a $12.3 million
increase in self-storage net operating income (described below), (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, (iii) a $47.4
million increase due to the impact of foreign currency exchange gains
and losses associated with our euro denominated debt and (iv) a $14.6
million allocation to preferred shareholders associated with preferred
share redemptions in the three months ended June 30, 2017. These
increases were offset partially by a $13.0 million increase in general
and administrative expense due to the acceleration of share-based
compensation expense accruals for our CEO and CFO in 2018 as a result of
their upcoming retirement and the reversal of share-based compensation
accruals forfeited by retiring executives in 2017.

The $12.3 million increase in self-storage net operating income is a
result of a $4.7 million increase in our Same Store Facilities (as
defined below) and a $7.6 million increase in our Non Same Store
Facilities (as defined below). Revenues for the Same Store Facilities
increased 1.5% or $8.5 million in the three months ended June 30, 2018
as compared to 2017, due primarily to higher realized annual rent per
occupied square foot. Cost of operations for the Same Store Facilities
increased by 2.6% or $3.8 million in the three months ended June 30,
2018 as compared to 2017, due primarily to increased property taxes. The
increase in net operating income of $7.6 million for the Non Same Store
Facilities is due primarily to the impact of 137 self-storage facilities
acquired and developed since January 2016.

Operating Results for the Six Months Ended June
30, 2018

For the six months ended June 30, 2018, net income allocable to our
common shareholders was $636.1 million or $3.65 per diluted common
share, compared to $557.8 million or $3.20 in 2017 representing an
increase of $78.3 million or $0.45 per diluted common share. The
increase is due primarily to (i) a $25.9 million increase in
self-storage net operating income, (ii) our $34.9 million equity share
of gains recorded by PS Business Parks in the six months ended June 30,
2018, (iii) a $41.1 million increase due to the impact of foreign
currency exchange gains and losses associated with our euro denominated
debt and (iv) a $14.6 million allocation to preferred shareholders
associated with preferred share redemptions in the six months ended June
30, 2017. These increases were offset partially by a $21.0 million
increase in general and administrative expense due to the acceleration
of share-based compensation expense accruals for our CEO and CFO in 2018
as a result of their upcoming retirement and the reversal of share-based
compensation accruals forfeited by retiring executives in 2017.

The $25.9 million increase in self-storage net operating income is a
result of an $11.2 million increase in our Same Store Facilities and
$14.7 million increase in our Non Same Store Facilities. Revenues for
the Same Store Facilities increased 1.8% or $20.0 million in the six
months ended June 30, 2018 as compared to 2017, due primarily to higher
realized annual rent per occupied square foot. Cost of operations for
the Same Store Facilities increased by 3.0% or $8.8 million in the six
months ended June 30, 2018 as compared to 2017, due primarily to
increased property taxes, property manager payroll, and allocated
overhead. The increase in net operating income of $14.7 million for the
Non Same Store Facilities is due primarily to the impact of 137
self-storage facilities acquired and developed since January 2016.

Funds from Operations

For the three months ended June 30, 2018, funds from operations ("FFO")
was $2.65 per diluted common share, as compared to $2.31 in 2017,
representing an increase of 14.7%. 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, 2018, FFO was $5.02 per diluted common
share, as compared to $4.65 in 2017, representing an increase of 8.0%.

We also present "Core FFO per share," a non-GAAP measure that represents
FFO per share excluding the impact of (i) foreign currency exchange
gains and losses, (ii) EITF D-42 charges related to the redemption of
preferred securities and (iii) accelerations of accruals due to the
upcoming retirement of our CEO and CFO and reversals of accruals with
respect to share-based awards forfeited by retiring senior executive
officers. 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
2018 2017 Change 2018 2017 Change
 
FFO per share $ 2.65 $ 2.31 14.7 % $ 5.02 $ 4.65 8.0 %
Eliminate the per share impact of

items excluded from Core FFO, including our equity share from
investments:

Foreign currency exchange (gain) loss (0.13 ) 0.15 (0.06 ) 0.18
Application of EITF D-42 - 0.08 - 0.08

Acceleration (reversal) of share-based compensation expense due to
executive officer retirement

0.04 (0.03 ) 0.09 (0.03 )
Other items   0.01     -     -     -  
Core FFO per share $ 2.57   $ 2.51   2.4 % $ 5.05   $ 4.88   3.5 %
 

Property Operations – Same Store Facilities

The Same Store Facilities represent those facilities that have been
owned and operated on a stabilized level of occupancy, revenues and cost
of operations since January 1, 2016. We review the operations of our
Same Store Facilities, which excludes facilities whose operating trends
are significantly affected by factors such as casualty events, as well
as recently developed or acquired facilities, to more effectively
evaluate the ongoing performance of our self-storage portfolio in 2016,
2017 and 2018. We believe the Same Store information is used by
investors and REIT analysts in a similar manner. The Same Store pool
decreased from 2,052 facilities at March 31, 2018 to 2,048 facilities at
June 30, 2018. The following table summarizes the historical operating
results of these 2,048 facilities (131.3 million net rentable square
feet) that represent approximately 82% of the aggregate net rentable
square feet of our U.S. consolidated self-storage portfolio at June 30,
2018.

                                   

Selected Operating Data for the Same

Store Facilities (2,048 facilities)

(unaudited):

Three Months Ended June 30, Six Months Ended June 30,
Percentage Percentage
2018 2017 Change 2018 2017 Change
 
(Dollar amounts in thousands, except for per square foot amounts)
Revenues:
Rental income $ 534,997 $ 526,249 1.7 % $ 1,058,876 $ 1,039,210 1.9 %
Late charges and administrative fees   23,654     23,887   (1.0 )%   48,318     47,998   0.7 %
Total revenues (a)   558,651     550,136   1.5 %   1,107,194     1,087,208   1.8 %
 
Cost of operations:
Property taxes 59,174 56,066 5.5 % 117,566 111,928 5.0 %
On-site property manager payroll 27,847 27,554 1.1 % 56,511 55,061 2.6 %
Supervisory payroll 9,296 9,895 (6.1 )% 18,891 20,035 (5.7 )%
Repairs and maintenance 10,948 11,203 (2.3 )% 20,352 20,873 (2.5 )%
Snow removal 654 194 237.1 % 2,787 2,216 25.8 %
Utilities 9,556 9,339 2.3 % 20,379 19,552 4.2 %
Advertising and selling 7,706 8,138 (5.3 )% 14,229 14,937 (4.7 )%
Other direct property costs 14,521 14,247 1.9 % 29,557 28,520 3.6 %
Allocated overhead   11,100     10,335   7.4 %   24,182     22,533   7.3 %
Total cost of operations (a)   150,802     146,971   2.6 %   304,454     295,655   3.0 %
Net operating income (b) $ 407,849   $ 403,165   1.2 % $ 802,740   $ 791,553   1.4 %
 
Gross margin 73.0 % 73.3 % (0.4 )% 72.5 % 72.8 % (0.4 )%
 
Weighted average for the period:
Square foot occupancy 94.0 % 94.6 % (0.6 )% 93.1 % 93.8 % (0.7 )%
Realized annual rental income per (c):
Occupied square foot $ 17.35 $ 16.95 2.4 % $ 17.32 $ 16.87 2.7 %
Available square foot ("REVPAF")

$

16.30 $ 16.03 1.7 % $ 16.13 $ 15.83 1.9 %
At June 30:
Square foot occupancy 93.7 % 94.7 % (1.1 )%

Annual contract rent per occupied square foot (d)

$ 17.93 $ 17.63 1.7 %
 
      (a)     Revenues and cost of operations do not include ancillary revenues
and expenses generated at the facilities with respect to tenant
reinsurance and retail sales.
 
(b) See attached reconciliation of self-storage net operating income
("NOI") to operating income.
 
(c) Realized annual rent per occupied square foot is computed by
dividing annualized rental income, before late charges and
administrative fees, by the weighted average occupied square feet
for the period. Realized annual rent per available square foot
("REVPAF") is computed by dividing annualized rental income, before
late charges and administrative fees, by the total available
rentable square feet for the period. These measures exclude late
charges and administrative fees in order to provide a better measure
of our ongoing level of revenue. Late charges are dependent upon the
level of delinquency and administrative fees are dependent upon the
level of move-ins. In addition, the rates charged for late charges
and administrative fees can vary independently from rental rates.
These measures take into consideration promotional discounts, which
reduce rental income.
 
(d) 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):

                                 
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:
2018 $ 548,543 $ 558,651
2017 $ 537,072 $ 550,136 $ 568,429 $ 555,588 $ 2,211,225
 
Total cost of operations:
2018 $ 153,652 $ 150,802
2017 $ 148,684 $ 146,971 $ 148,198 $ 118,351 $ 562,204
 
Property taxes:
2018 $ 58,392 $ 59,174
2017 $ 55,862 $ 56,066 $ 55,855 $ 32,332 $ 200,115
 

Repairs and maintenance, including snow removal expenses:

2018 $ 11,537 $ 11,602
2017 $ 11,692 $ 11,397 $ 11,421 $ 11,983 $ 46,493
 
Advertising and selling expense:
2018 $ 6,523 $ 7,706
2017 $ 6,799 $ 8,138 $ 6,972 $ 6,802 $ 28,711
 
REVPAF:
2018 $ 15.96 $ 16.30
2017 $ 15.63 $ 16.03 $ 16.54 $ 16.17 $ 16.09
 

Weighted average realized annual rent per occupied square foot:

2018 $ 17.30 $ 17.35
2017 $ 16.79 $ 16.95 $ 17.49 $ 17.37 $ 17.15
 

Weighted average occupancy levels for the period:

2018 92.3 % 94.0 %
2017 93.1 % 94.6 % 94.6 % 93.1 % 93.8 %
 

Property Operations – Non Same Store Facilities

The Non Same Store Facilities at June 30, 2018 represent 355 facilities
that were not stabilized with respect to occupancies or rental rates
since January 1, 2016 or that we did not own as of January 1, 2016. The
following table summarizes operating data with respect to the Non Same
Store Facilities (unaudited). Additional data and metrics with respect
to these facilities is included in the MD&A in our June 30, 2018 Form
10-Q.

                                   
NON SAME STORE Three Months Ended June 30, Six Months Ended June 30,
FACILITIES 2018 2017 Change 2018 2017 Change
(Dollar amounts in thousands, except for per square foot amounts)
Revenues:
2018 acquisitions $ 459 $ - $ 459 $ 526 $ - $ 526
2017 acquisitions 7,116 799 6,317 13,976 1,138 12,838
2016 acquisitions 9,761 9,031 730 19,190 17,612 1,578
2016 - 2018 new developments 8,618 3,630 4,988 15,738 5,957 9,781
2013 - 2015 new developments 6,591 6,151 440 12,992 11,949 1,043
Other facilities   54,010   54,452   (442 )   107,127   108,113   (986 )
Total revenues   86,555   74,063   12,492     169,549   144,769   24,780  
 

Cost of operations before depreciation and amortization expense:

2018 acquisitions 165 - 165 187 - 187
2017 acquisitions 2,459 229 2,230 4,966 380 4,586
2016 acquisitions 3,521 3,502 19 7,158 6,984 174
2016 - 2018 new developments 4,937 2,918 2,019 8,992 5,214 3,778
2013 - 2015 new developments 2,098 1,913 185 4,197 3,780 417
Other facilities   15,894   15,662   232     32,109   31,160   949  
Total cost of operations   29,074   24,224   4,850     57,609   47,518   10,091  
 
Net operating income:
2018 acquisitions 294 - 294 339 - 339
2017 acquisitions 4,657 570 4,087 9,010 758 8,252
2016 acquisitions 6,240 5,529 711 12,032 10,628 1,404
2016 - 2018 new developments 3,681 712 2,969 6,746 743 6,003
2013 - 2015 new developments 4,493 4,238 255 8,795 8,169 626
Other facilities   38,116   38,790   (674 )   75,018   76,953   (1,935 )
Net operating income (a) $ 57,481 $ 49,839 $ 7,642   $ 111,940 $ 97,251 $ 14,689  
 
(a)     See attached reconciliation of self-storage net operating income
("NOI") to operating income.
 

Investing and Capital Activities

During the three months ended June 30, 2018, we acquired three
self-storage facilities (one each in Indiana, Kentucky and South
Carolina) with 0.2 million net rentable square feet for $16.0 million.
For the six months ended June 30, 2018, we acquired five self-storage
facilities (one each in Indiana, Kentucky, Nebraska, South Carolina and
Tennessee) with 0.4 million net rentable square feet for $33.9 million.
Subsequent to June 30, 2018, we acquired or were under contract to
acquire fourteen self-storage facilities (six in Minnesota, two in
Texas, one each in Colorado, Florida, Kentucky, Ohio, South Carolina and
Tennessee) with 0.8 million net rentable square feet for $95.2 million.

During the three months ended June 30, 2018, we completed seven newly
developed facilities and various expansion projects (1.2 million net
rentable square feet) costing $135 million. For the six months ended
June 30, 2018, we completed eleven newly developed facilities and
various expansion projects (1.7 million net rentable square feet)
costing an aggregate of $195 million. At June 30, 2018, we had various
facilities in development (2.2 million net rentable square feet)
estimated to cost $315 million and various expansion projects (3.9
million net rentable square feet) estimated to cost $364 million. The
remaining $445 million of development costs for these projects is
expected to be incurred primarily in the next 18 months.

As previously reported, Shurgard Europe is considering an initial public
offering. On July 13, 2018, we received a cash distribution from
Shurgard Europe totaling $145.4 million, representing our 49% share of
an aggregate dividend totaling $296.8 million. The dividend was funded
by Shurgard Europe in part through proceeds from a bank loan. During the
three months ended June 30, 2018, Shurgard Europe acquired five
self-storage facilities in Sweden (0.3 million net rentable square feet)
for an aggregate of $46 million.

Distributions Declared

On July 25, 2018, 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, 2018 to shareholders of
record as of September 12, 2018.

Second Quarter Conference Call

A conference call is scheduled for August 2, 2018 at 11:00 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
5787104). A simultaneous audio webcast may be accessed by using the link
at www.publicstorage.com
under "Company Info, Investor Relations, News and Events, Events
Calendar." A replay of the conference call may be accessed through
August 15, 2018 by calling (800) 585-8367 (domestic), (404) 537-3406
(international) or by using the link at www.publicstorage.com
under "Company Info, Investor Relations, News and Events, Events
Calendar." All forms of replay utilize conference ID number 5787104.

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, 2018, we had interests in 2,402 self-storage
facilities located in 38 states with approximately 160 million net
rentable square feet in the United States and 228 storage facilities
located in seven Western European nations with approximately 12 million
net rentable square feet operated under the "Shurgard" brand. We also
own a 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB)
which owned and operated approximately 28 million rentable square feet
of commercial space at June 30, 2018.

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 March 1, 2018 and in our other filings with
the SEC and the following: general risks associated with the ownership
and operation of real estate, including changes in demand, risk related
to development of self-storage facilities, potential liability for
environmental contamination, natural disasters and adverse changes in
laws and regulations governing property tax, real estate and zoning;
risks associated with downturns in the national and local economies in
the markets in which we operate, including risks related to current
economic conditions and the economic health of our customers; the impact
of competition from new and existing self-storage and commercial
facilities and other storage alternatives; difficulties in our ability
to successfully evaluate, finance, integrate into our existing
operations and manage acquired and developed properties; risks
associated with international operations including, but not limited to,
unfavorable foreign currency rate fluctuations, changes in tax laws, and
local and global economic uncertainty that could adversely affect our
earnings and cash flows; risks related to our participation in joint
ventures; the impact of the regulatory environment as well as national,
state and local laws and regulations including, without limitation,
those governing environmental, taxes, our tenant reinsurance business
and labor, and risks related to the impact of new laws and regulations;
risks of increased tax expense associated either with a possible failure
by us to qualify as a REIT, or with challenges to the determination of
taxable income for our taxable REIT subsidiaries; changes in federal or
state tax laws related to the taxation of REITs and other corporations;
security breaches or a failure of our networks, systems or technology
could adversely impact our business, customer and employee
relationships; risks associated with the self-insurance of certain
business risks, including property and casualty insurance, employee
health insurance and workers compensation liabilities; difficulties in
raising capital at a reasonable cost; delays in the development process;
ongoing litigation and other legal and regulatory actions which may
divert management's time and attention, require us to pay damages and
expenses or restrict the operation of our business; and economic
uncertainty due to the impact of war or terrorism. These forward-looking
statements speak only as of the date of this press release. All of our
forward-looking statements, including those in this press release, are
qualified in their entirety by this statement. We expressly disclaim any
obligation to update publicly or otherwise revise any forward-looking
statements, whether as a result of new information, new estimates, or
other factors, events or circumstances after the date of this press
release, except where expressly required by law. Given these risks and
uncertainties, you should not rely on any forward-looking statements in
this press release, or which management may make orally or in writing
from time to time, as predictions of future events nor guarantees of
future performance.

                       

PUBLIC STORAGE

SELECTED INCOME STATEMENT DATA

(Amounts in thousands, except per share data)

(Unaudited)

 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Revenues:
Self-storage facilities $ 645,206 $ 624,199 $ 1,276,743 $ 1,231,977
Ancillary operations   40,322     40,113     78,709     77,882  
  685,528     664,312     1,355,452     1,309,859  
 
Expenses:
Self-storage cost of operations 179,876 171,195 362,063 343,173
Ancillary cost of operations 11,101 11,383 21,741 22,307
Depreciation and amortization 119,777 110,177 237,756 221,106
General and administrative   31,329     14,992     62,849     40,020  
  342,083     307,747     684,409     626,606  
 
Operating income 343,445 356,565 671,043 683,253
 
Other income (expense):
Interest and other income 6,328 4,155 11,872 8,153
Interest expense (8,388 ) (1,116 ) (16,495 ) (2,164 )
Equity in earnings of unconsolidated real estate entities 41,963 20,068 72,758 40,017
Gain on real estate investment sales - 975 424 975
Foreign currency exchange gain (loss)   21,944     (25,440 )   10,126     (31,006 )
Net income 405,292 355,207 749,728 699,228
Allocation to noncontrolling interests   (1,490 )   (1,505 )   (2,929 )   (3,084 )
Net income allocable to Public Storage shareholders 403,802 353,702 746,799 696,144
Allocation of net income to:
Preferred shareholders – distributions (54,077 ) (61,281 ) (108,158 ) (121,402 )
Preferred shareholders – redemptions - (14,638 ) - (14,638 )
Restricted share units   (1,425 )   (1,102 )   (2,522 )   (2,292 )
Net income allocable to common shareholders $ 348,300   $ 276,681   $ 636,119   $ 557,812  
 

Per common share:

Net income per common share – Basic $ 2.00   $ 1.59   $ 3.66   $ 3.22  
Net income per common share – Diluted $ 2.00   $ 1.59   $ 3.65   $ 3.20  
Weighted average common shares – Basic   173,932     173,602     173,912     173,483  
Weighted average common shares – Diluted   174,224     174,075     174,186     174,072  
 
 
                         

PUBLIC STORAGE

SELECTED BALANCE SHEET DATA

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

 
June 30, 2018 December 31, 2017
ASSETS (Unaudited)
 
Cash and equivalents $ 338,419 $ 433,376
 
Operating real estate facilities:
Land and buildings, at cost 14,944,632 14,665,989
Accumulated depreciation   (5,923,687 )   (5,700,331 )
9,020,945 8,965,658
Construction in process 234,044 264,441
Investments in unconsolidated real estate entities 762,247 724,173
Goodwill and other intangible assets, net 207,390 214,957
Other assets   129,917     130,287  
Total assets $ 10,692,962   $ 10,732,892  
 
 
LIABILITIES AND EQUITY
 
Senior unsecured notes $ 1,392,516 $ 1,402,109
Mortgage notes 28,318 29,213
Accrued and other liabilities   351,336     337,201  
Total liabilities 1,772,170 1,768,523
 
Equity:
Public Storage shareholders' equity:

Cumulative Preferred Shares, $0.01 par value, 100,000,000 shares
authorized, 161,000 shares issued (in series) and outstanding,
(161,000 at December 31, 2017) at liquidation preference

4,025,000 4,025,000

Common Shares, $0.10 par value, 650,000,000 shares authorized,
173,937,035 shares issued and outstanding, (173,853,370 shares at
December 31, 2017)

17,394 17,385
Paid-in capital 5,673,078 5,648,399
Accumulated deficit (735,065 ) (675,711 )
Accumulated other comprehensive loss   (84,601 )   (75,064 )
Total Public Storage shareholders' equity 8,895,806 8,940,009
Noncontrolling interests   24,986     24,360  
Total equity   8,920,792     8,964,369  
Total liabilities and equity $ 10,692,962   $ 10,732,892  
 
 
                       

PUBLIC STORAGE

SELECTED FINANCIAL DATA

Computation of Funds from Operations and Funds Available for
Distribution

(Unaudited – amounts in thousands)

 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017

Computation of FFO per Share:

 
Net income allocable to common shareholders $ 348,300 $ 276,681 $ 636,119 $ 557,812
Eliminate items excluded from FFO:
Depreciation and amortization 119,777 110,177 237,756 221,106
Depreciation from unconsolidated real estate investments 19,308 17,368 38,623 34,581

Depreciation allocated to noncontrolling interests and restricted
share unitholders

(1,014 ) (837 ) (1,932 ) (1,799 )

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

  (23,873 )   (1,466 )   (35,764 )   (3,077 )
FFO allocable to common shares (a) $ 462,498   $ 401,923   $ 874,802   $ 808,623  
Diluted weighted average common shares   174,224     174,075     174,186     174,072  
FFO per share (a) $ 2.65   $ 2.31   $ 5.02   $ 4.65  
 

Reconciliation of Earnings per Share to
FFO per Share:

 
Earnings per share—Diluted $ 2.00 $ 1.59 $ 3.65 $ 3.20
Eliminate per share amounts excluded from FFO:

Depreciation and amortization allocable to common shareholders

0.79 0.73 1.58 1.46

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

  (0.14 )   (0.01 )   (0.21 )   (0.01 )
FFO per share (a) $ 2.65   $ 2.31   $ 5.02   $ 4.65  
 

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

 
FFO allocable to common shares $ 462,498 $ 401,923 $ 874,802 $ 808,623
Eliminate effect of items included in FFO but not FAD:

Share-based compensation expense in excess of cash paid

17,080 4,085 22,989 799
Foreign currency exchange (gain) loss (21,944 ) 25,440 (10,126 ) 31,006

Application of EITF D-42, including our equity share from
investments

- 14,638 - 14,638
Less: Capital expenditures to maintain real estate facilities   (28,883 )   (26,490 )   (53,227 )   (53,540 )
 
FAD (a) $ 428,751   $ 419,596   $ 834,438   $ 801,526  
 

Distributions paid to common shareholders and restricted share
units

$ 348,984   $ 348,372   $ 697,995   $ 696,585  
 
Distribution payout ratio   81.4 %   83.0 %   83.6 %   86.9 %
 
Distributions per common share $ 2.00   $ 2.00   $ 4.00   $ 4.00  
 
      (a)     FFO and FFO per share are non-GAAP measures defined by the National
Association of Real Estate Investment Trusts and, along with the
non-GAAP measure FAD, are considered helpful measures of REIT
performance by REITs and many REIT analysts. FFO represents net
income before real estate depreciation, gains or losses and
impairment charges, which are excluded because they are based upon
historical real estate costs and assume that building values
diminish ratably over time, while we believe that real estate values
fluctuate due to market conditions. FAD represents FFO adjusted to
exclude certain non-cash charges and to deduct capital expenditures.
We utilize FAD in evaluating our ongoing cash flow available for
investment, debt repayment and common distributions. We believe
investors and analysts utilize FAD in a similar manner. FFO and FFO
per share are not a substitute for net income or earnings per share.
FFO and FAD are not substitutes for GAAP net cash flow in evaluating
our liquidity or ability to pay dividends, because they exclude
investing and financing activities presented on our statements of
cash flows. In addition, other REITs may compute these measures
differently, so comparisons among REITs may not be helpful.
 
 
                       

PUBLIC STORAGE

SELECTED FINANCIAL DATA

 

Reconciliation of Self-Storage Net Operating Income to

Operating Income

(Unaudited – amounts in thousands)

 
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
 
Self-storage revenues for:
Same Store Facilities $ 558,651 $ 550,136 $ 1,107,194 $ 1,087,208
Non Same Store Facilities   86,555     74,063     169,549     144,769  
Self-storage revenues 645,206 624,199 1,276,743 1,231,977
 
Self-storage cost of operations for:
Same Store Facilities 150,802 146,971 304,454 295,655
Non Same Store Facilities   29,074     24,224     57,609     47,518  
Self-storage cost of operations 179,876 171,195 362,063 343,173
 
Self-storage net operating income for:
Same Store Facilities 407,849 403,165 802,740 791,553
Non Same Store Facilities   57,481     49,839     111,940     97,251  
Self-storage net operating income (a) 465,330 453,004 914,680 888,804
Ancillary revenues 40,322 40,113 78,709 77,882
Ancillary cost of operations (11,101 ) (11,383 ) (21,741 ) (22,307 )
Depreciation and amortization (119,777 ) (110,177 ) (237,756 ) (221,106 )
General and administrative expense   (31,329 )   (14,992 )   (62,849 )   (40,020 )
Operating income on our income statement $ 343,445   $ 356,565   $ 671,043   $ 683,253  
 
      (a)     Net operating income or "NOI" is a non-GAAP financial measure that
excludes the impact of depreciation and amortization expense, which
is based upon historical real estate costs and assumes that building
values diminish ratably over time, while we believe that real estate
values fluctuate due to market conditions. We utilize NOI in
determining current property values, evaluating property
performance, and in evaluating operating trends. We believe that
investors and analysts utilize NOI in a similar manner. NOI is not a
substitute for net income, net operating cash flow, or other related
GAAP financial measures, in evaluating our operating results. This
table reconciles from NOI for our self-storage facilities to the
operating income presented on our income statement.
 

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