10-QPeriod: Q2 FY2012

Public Storage Quarterly Report for Q2 Ended Jun 30, 2012

Filed August 6, 2012For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) reported its financial results for the quarter and six months ended June 30, 2012. The company demonstrated revenue growth in its core self-storage operations, driven by increases in rental rates and occupancy. "Same store" facilities, which provide a stable performance comparison, showed a 5.1% revenue increase for the quarter and 4.9% for the six months, attributed to higher realized rents per occupied square foot. The company also saw growth in its "non-same store" facilities, reflecting successful integration of recent acquisitions. However, net income allocable to common shareholders saw a slight decrease for the quarter and a more significant decrease for the six-month period compared to the prior year. This was largely due to substantial foreign currency exchange losses related to its Euro-denominated loan receivable from Shurgard Europe, which negatively impacted earnings. Despite this, Public Storage maintained a strong liquidity position with substantial cash reserves and an undrawn credit facility, allowing it to continue its strategy of selective acquisitions and capital allocation.

Financial Highlights

31 data points
Beta

Revenue

$455.79M

Net Income

$198.93M

43.6% Net Margin

EPS (Diluted)

$0.77

Total Assets

$9.18B

Cash & Equivalents

$438.48M

Free Cash Flow

$326.29M

Financial Statements
Beta
Revenue$455.79M
Operating Income$212.02M
Interest Expense$5.07M
Net Income$198.93M
EPS (Basic)$0.78
EPS (Diluted)$0.77
Shares Outstanding (Basic)170.50M
Shares Outstanding (Diluted)171.56M

Key Highlights

  • 1Revenue from "Same Store Facilities" increased by 5.1% and 4.9% for the three and six months ended June 30, 2012, respectively, driven by higher rental rates and occupancy.
  • 2Net income allocable to Public Storage shareholders decreased year-over-year for both the quarter and six-month period, primarily due to significant foreign currency exchange losses on the Shurgard Europe loan.
  • 3Funds From Operations (FFO) per diluted common share was $1.38 for the quarter and $2.73 for the six months, a slight decrease from the prior year, also impacted by foreign currency fluctuations and preferred stock redemptions.
  • 4The company acquired ten operating self-storage facilities for $88.1 million during the first six months of 2012.
  • 5Public Storage maintained a strong balance sheet with total assets of $9.18 billion and total equity of $8.17 billion as of June 30, 2012.
  • 6The company has a substantial cash position of $438.5 million as of June 30, 2012, providing ample liquidity.
  • 7Several series of preferred shares were redeemed or called for redemption, indicating active capital management, with $1.2 billion in preferred securities issued during the six months ended June 30, 2012.

Frequently Asked Questions

The core self-storage operations showed positive performance, with "Same Store Facilities" revenue increasing by 5.1% and 4.9% for the three and six months ended June 30, 2012, respectively. This growth was driven by higher realized rents per occupied square foot and improved occupancy levels. Acquisitions of "non-same store" facilities also contributed positively.

The primary factor negatively impacting net income was foreign currency exchange losses, totaling $23.7 million and $11.5 million for the three and six-month periods, respectively. These losses stemmed from the translation of the Euro-denominated loan receivable from Shurgard Europe into U.S. dollars due to unfavorable exchange rate movements.

Public Storage maintains a strong liquidity position with $438.5 million in cash and cash equivalents as of June 30, 2012, and an undrawn $300 million credit facility. The company is actively managing its capital by issuing preferred securities, redeeming existing preferred shares, and making selective acquisitions, indicating a strategy focused on growth and maintaining financial flexibility.

The company's debt level is relatively low, representing 4.5% of its equity book value. It has plans to repay upcoming debt maturities rather than refinance with additional debt. Public Storage strategically uses preferred securities to finance growth, noting their lack of maturity and redemption requirements which offer financial flexibility. Active redemption and issuance of preferred shares is ongoing.