10-KPeriod: FY2014

Public Storage Annual Report, Year Ended Dec 31, 2014

Filed February 25, 2015For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) is the largest owner and operator of self-storage facilities in the United States, with a significant presence in major metropolitan areas. The company also holds interests in European self-storage facilities through Shurgard Europe and commercial properties via its investment in PS Business Parks, Inc. (PSB). In 2014, PSA focused on improving operating performance of existing facilities, acquiring new properties (though at a slower pace than the previous year), and developing new facilities, which represented a growing part of its growth strategy. The company's financial strategy relies heavily on issuing preferred securities to finance growth due to REIT distribution requirements, though it also evaluates the use of medium-term debt. PSA maintains a strong balance sheet with low debt levels and continues to provide consistent dividends to its shareholders, demonstrating a commitment to returning value.

Financial Highlights

35 data points
Beta

Revenue

$2.18B

71.8% Gross Margin

Net Income

$1.15B

52.8% Net Margin

EPS (Diluted)

$5.25

Total Assets

$9.82B

Cash & Equivalents

$187.70M

Free Cash Flow

$1.60B

Financial Statements
Beta
Revenue$2.18B
Cost of Revenue$613.32M
Gross Profit$1.56B
Operating Expenses$1.12B
Operating Income$1.06B
Interest Expense$6.78M
Net Income$1.15B
EPS (Basic)$5.27
EPS (Diluted)$5.25
Shares Outstanding (Basic)172.25M
Shares Outstanding (Diluted)173.14M

Key Highlights

  • 1Public Storage is the largest self-storage operator in the U.S., operating 2,250 facilities and holding 146 million net rentable square feet.
  • 2The company has diversified operations with a 49% stake in Shurgard Self Storage Europe and a 42% stake in PS Business Parks, Inc. (PSB).
  • 3In 2014, PSA acquired 44 facilities for approximately $431 million, a decrease from the significant acquisitions in 2013 ($1.2 billion).
  • 4A development pipeline of new self-storage facilities and expansions is underway, projected to add 3.5 million net rentable square feet at an estimated cost of $411 million.
  • 5PSA reported strong performance in its Same Store Facilities, with revenues increasing by 5.4% driven by higher realized rents and occupancy.
  • 6The company's financing strategy heavily utilizes preferred securities to fund growth, with $762.5 million issued in 2014.
  • 7PSA declared and paid quarterly distributions totaling $5.60 per common share in 2014, reflecting its commitment to shareholder returns as a REIT.

Frequently Asked Questions

Public Storage's primary business is the ownership, development, and operation of self-storage facilities. It holds the dominant market position in the United States as the largest owner and operator of such facilities.

Beyond its core U.S. self-storage operations, Public Storage diversifies through its significant equity interests in Shurgard Self Storage Europe, which operates facilities across Western Europe, and PS Business Parks, Inc. (PSB), which owns and operates commercial properties.

Public Storage's growth strategies include improving the performance of existing facilities, acquiring new facilities, developing new facilities and expanding existing ones, and participating in the growth of its investments in PSB and Shurgard Europe.

As a REIT, Public Storage distributes most of its taxable income to shareholders, limiting retained cash for investment. It primarily finances growth through the issuance of preferred securities, and occasionally uses short-term bank debt as bridge financing. The company is also evaluating raising capital through medium or long-term debt instruments.