10-QPeriod: Q2 FY2008

Public Storage Quarterly Report for Q2 Ended Jun 30, 2008

Filed August 11, 2008For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) reported strong results for the second quarter of 2008, with net income more than doubling year-over-year, driven by a significant gain from the disposition of a majority stake in its European operations (Shurgard Europe) and improved operating performance in its domestic self-storage facilities. The company's domestic Same Store Facilities showed a 3.2% increase in rental income and a 4.0% increase in Net Operating Income (NOI) before depreciation and amortization, indicating resilience in its core business. While revenue from Shurgard Europe operations declined due to the deconsolidation, the overall financial picture was boosted by the substantial gain recognized from that transaction. The company also benefited from lower amortization expenses related to intangible assets acquired in prior years. Liquidity remains strong, with a substantial cash balance of $775 million at quarter-end, bolstered by the Shurgard Europe divestiture. Despite a challenging economic environment, PSA's management is focused on operational efficiency, strategic acquisitions, and prudent capital management to navigate the market.

Financial Highlights

17 data points
Beta

Revenue

$418.49M

Net Income

$133.81M

32.0% Net Margin

EPS (Diluted)

$-0.01

Cash & Equivalents

$775.00M

Free Cash Flow

$511.19M

Financial Statements
Beta
Revenue$418.49M
Interest Expense$9.60M
Net Income$133.81M
EPS (Basic)$0.40
EPS (Diluted)$-0.01
Shares Outstanding (Basic)168.03M
Shares Outstanding (Diluted)168.48M

Key Highlights

  • 1Net income surged to $133.8 million for the three months ended June 30, 2008, a significant increase from $77.1 million in the prior year's period.
  • 2The gain on disposition of a 51% interest in Shurgard Europe contributed $341.9 million to net income for the six-month period.
  • 3Domestic Same Store Facilities rental income increased by 3.2% year-over-year, reaching $335.4 million.
  • 4Net Operating Income (NOI) before depreciation and amortization for domestic Same Store Facilities grew by 4.0% to $223.2 million.
  • 5Cash and cash equivalents increased significantly to $775.0 million as of June 30, 2008, largely due to proceeds from the Shurgard Europe transaction.
  • 6The company maintained a strong balance sheet with total assets of $10.3 billion and shareholders' equity of $9.0 billion.
  • 7Despite a challenging economic climate, Public Storage's core self-storage operations demonstrated stable performance, with overall occupancy remaining high.

Frequently Asked Questions

The significant increase in net income was primarily driven by a gain of $341.9 million recognized from the disposition of a 51% interest in Shurgard Europe, coupled with improved operating performance in domestic self-storage facilities and lower amortization expenses.

Domestic Same Store Facilities demonstrated resilience, with rental income increasing by 3.2% to $335.4 million and Net Operating Income (NOI) before depreciation and amortization growing by 4.0% to $223.2 million, indicating healthy performance in the core business.

Public Storage maintains a strong liquidity position, with cash and cash equivalents totaling $775.0 million at June 30, 2008. This liquidity was significantly enhanced by the proceeds from the Shurgard Europe transaction.

Public Storage deconsolidated Shurgard Europe effective March 31, 2008, following the sale of a majority stake. Its results are now accounted for under the equity method. The transaction resulted in a substantial gain recognized in the six-month period.