10-KPeriod: FY2015

Public Storage Annual Report, Year Ended Dec 31, 2015

Filed February 29, 2016For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) demonstrated strong operational performance in 2015, reporting increased net income and Funds From Operations (FFO) per diluted share. The company, the largest owner and operator of self-storage facilities in the U.S., saw revenue growth driven by higher rental rates across its same-store portfolio, which represents a significant portion of its U.S. operations. Expansion through both acquisitions and development continues to be a key strategy, with substantial investments made in new facilities and a robust development pipeline. The company's financial strategy focuses on accessing capital through a diversified mix of equity and debt, while maintaining a conservative financial profile. PSA successfully issued preferred shares in early 2016 and has begun utilizing unsecured debt as a capital source. Investments in unconsolidated entities like PS Business Parks (PSB) and Shurgard Europe provide diversification. Overall, PSA appears well-positioned, leveraging its strong brand, economies of scale, and strategic market presence to drive growth and shareholder returns.

Financial Highlights

34 data points
Beta

Revenue

$2.38B

73.3% Gross Margin

Net Income

$1.32B

55.3% Net Margin

EPS (Diluted)

$6.07

Total Assets

$9.78B

Cash & Equivalents

$104.28M

Free Cash Flow

$1.75B

Financial Statements
Beta
Revenue$2.38B
Cost of Revenue$635.50M
Gross Profit$1.75B
Operating Expenses$1.15B
Operating Income$1.23B
Interest Expense$610K
Net Income$1.32B
EPS (Basic)$6.10
EPS (Diluted)$6.07
Shares Outstanding (Basic)172.70M
Shares Outstanding (Diluted)173.51M

Key Highlights

  • 1Public Storage (PSA) is the largest owner and operator of self-storage facilities in the U.S., operating 2,277 facilities across 38 states.
  • 2The company reported a significant increase in net income allocable to common shareholders and FFO per diluted share for 2015 compared to 2014.
  • 3Revenue growth was primarily driven by a 6.5% increase in rental income for same-store facilities due to higher realized annual rent per occupied square foot.
  • 4PSA continues its growth strategy through both acquisitions (17 facilities in 2015) and development, with a $486 million development pipeline for new space.
  • 5The company has a diversified capital strategy, utilizing retained cash flow, preferred securities, and increasingly, unsecured debt.
  • 6Investments in unconsolidated real estate entities, PS Business Parks (42% interest) and Shurgard Europe (49% interest), provide diversification benefits.
  • 7PSA maintained a strong balance sheet with a low Debt Ratio of approximately 2% as of December 31, 2015, and strong credit ratings from Standard & Poor's ('A') and Moody's ('A2').

Frequently Asked Questions

Public Storage's core business is the acquisition, development, ownership, and operation of self-storage facilities. As of December 31, 2015, it is the largest owner and operator of self-storage facilities in the United States, with direct and indirect equity interests in 2,277 facilities encompassing 148 million net rentable square feet across 38 states.

In 2015, Public Storage showed strong financial performance with an increase in net income allocable to common shareholders to $1.053 billion (or $6.07 per diluted share) from $908.2 million (or $5.25 per diluted share) in 2014. Funds From Operations (FFO) per diluted common share also increased to $8.79 in 2015 from $7.98 in 2014.

Public Storage pursues growth through several strategies: improving the operating performance of existing facilities, acquiring new facilities, developing new self-storage facilities and expanding existing ones, and participating in the growth of its investments in PS Business Parks (PSB) and Shurgard Europe.

As a REIT, Public Storage typically distributes most of its taxable income, limiting retained cash for reinvestment. It finances its growth primarily through retained operating cash flow, issuance of preferred securities, and increasingly, medium and long-term debt. The company also has a $500 million revolving line of credit for bridge financing and aims to maintain a conservative, investment-grade financial profile.