10-KPeriod: FY2012

Public Storage Annual Report, Year Ended Dec 31, 2012

Filed February 26, 2013For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA), a leading real estate investment trust (REIT), filed its 2012 10-K report on February 25, 2013, detailing its operations and financial condition. The company primarily operates self-storage facilities across the U.S. and Europe, alongside an investment in commercial real estate through PS Business Parks, Inc. (PSB). The report highlights the company's robust financial performance driven by its "Same Store Facilities" which showed strong revenue and net operating income growth. PSA emphasizes its strategy of improving existing property performance, strategic acquisitions, and disciplined development, while also leveraging permanent capital sources like preferred securities for financing. Key financial highlights for 2012 include continued revenue growth and strong operating cash flow. The company's substantial real estate portfolio, managed through sophisticated information networks and a strong brand presence, positions it well within a fragmented self-storage market. Despite facing various risks inherent to real estate and economic conditions, Public Storage demonstrates a stable financial footing, characterized by a low debt ratio and a commitment to REIT status and shareholder distributions.

Financial Highlights

30 data points
Beta

Revenue

$1.84B

Net Income

$943.03M

51.2% Net Margin

EPS (Diluted)

$3.90

Total Assets

$8.79B

Cash & Equivalents

$17.24M

Free Cash Flow

$1.29B

Financial Statements
Beta
Revenue$1.84B
Operating Income$871.98M
Interest Expense$19.81M
Net Income$943.03M
EPS (Basic)$3.93
EPS (Diluted)$3.90
Shares Outstanding (Basic)170.56M
Shares Outstanding (Diluted)171.66M

Key Highlights

  • 1Public Storage operates a vast portfolio, including 2,078 U.S. self-storage facilities and a significant stake in Shurgard Europe, making it a dominant player in both domestic and international self-storage markets.
  • 2The company's "Same Store Facilities" demonstrated robust performance, with revenues increasing by 4.9% in 2012, driven by higher average rental rates and a reduction in promotional discounts.
  • 3PSA's strategic focus on improving existing facility performance, acquiring new properties, and developing new space is a core growth driver, complemented by its investment in commercial real estate via PS Business Parks, Inc. (PSB).
  • 4The company has a strong liquidity position, with significant cash flow from operations and access to a $300 million revolving credit line, reinforcing its ability to fund ongoing operations and growth initiatives.
  • 5Public Storage maintains a conservative balance sheet with a low Debt Ratio of approximately 4% as of December 31, 2012, indicating a low reliance on debt financing.
  • 6The company emphasizes its REIT status, highlighting its commitment to meeting REIT requirements and distributing taxable income to shareholders, which has historically led to consistent dividend payments.
  • 7Significant risk factors include general real estate market risks, economic downturns, competition, and operational challenges, including potential environmental liabilities and cybersecurity threats.

Frequently Asked Questions

Public Storage's primary business is the ownership and operation of self-storage facilities. As of December 31, 2012, it was the largest owner and operator of self-storage facilities in the United States, with 2,078 facilities, and also held a significant interest in Shurgard Europe, the largest owner and operator in Western Europe. The company also has an investment in commercial real estate through PS Business Parks, Inc. (PSB).

Public Storage employs a multi-faceted growth strategy including improving existing facilities, acquiring new properties, and developing new space. It finances its growth primarily through permanent capital sources, such as retained cash flow and the issuance of preferred securities, maintaining a conservative debt-to-capitalization ratio and avoiding reliance on short-term debt for long-term investments.

For the year ended December 31, 2012, Public Storage reported an increase in net income allocable to common shareholders to $669.7 million ($3.90 per diluted share) from $561.7 million ($3.29 per diluted share) in 2011. This growth was driven by improved property operations, a reduction in preferred stock dividend costs, and foreign currency exchange gains. Same-store revenues saw a 4.9% increase, reflecting higher rental rates and reduced discounts.

Investors should be aware of several key risks, including general real estate market risks (demand fluctuations, competition), economic downturns affecting tenant financial health, risks associated with property development and acquisitions, environmental liabilities, potential cybersecurity threats, and risks related to its international operations through Shurgard Europe, such as currency fluctuations and differing regulatory environments. The company's concentration in California also presents specific regional risks.