10-QPeriod: Q1 FY2015

Public Storage Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 6, 2015For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) reported solid financial and operational results for the first quarter ended March 31, 2015. Net income increased to $212.6 million, or $1.23 per diluted share, up from $174.1 million, or $1.01 per diluted share, in the prior year. This growth was primarily driven by a $41.7 million increase in self-storage operating income, indicating strong performance in its core business. Key performance indicators like Funds From Operations (FFO) per share also showed improvement, rising 9.8% to $1.91. Same-store facilities, representing the bulk of PSA's portfolio, experienced a 6.1% revenue increase, driven by higher rental rates and occupancy. The company continues to expand its footprint through strategic acquisitions and development projects, although it notes that new developments can temporarily dilute earnings until stabilized.

Financial Highlights

34 data points
Beta

Revenue

$564.88M

69.5% Gross Margin

Net Income

$283.25M

50.1% Net Margin

EPS (Diluted)

$1.23

Total Assets

$9.77B

Cash & Equivalents

$152.80M

Free Cash Flow

$382.49M

Financial Statements
Beta
Revenue$564.88M
Cost of Revenue$172.01M
Gross Profit$392.87M
Operating Expenses$303.32M
Operating Income$261.56M
Net Income$283.25M
EPS (Basic)$1.23
EPS (Diluted)$1.23
Shares Outstanding (Basic)172.52M
Shares Outstanding (Diluted)173.37M

Key Highlights

  • 1Net income increased by $38.5 million to $212.6 million for the three months ended March 31, 2015, compared to the same period in 2014.
  • 2Funds From Operations (FFO) per diluted common share increased by 9.8% to $1.91 from $1.74 for the comparable periods.
  • 3Total revenues from self-storage operations grew by 9.3% to $530.6 million, driven by both Same Store and Non Same Store Facilities.
  • 4Same Store Facilities revenue increased by 6.1%, primarily due to a 5.6% rise in realized annual rental income per occupied square foot and a 0.9% increase in occupancy.
  • 5The company acquired four self-storage facilities for $32.3 million in the quarter and has plans for further acquisitions and development projects.
  • 6Total capital resources stood at approximately $848 million as of March 31, 2015, including $153 million in cash and $485 million in available borrowing capacity.
  • 7The company declared a regular common quarterly dividend of $1.70 per common share, an increase of $0.30 per share, reflecting improved property operations.

Frequently Asked Questions

The primary driver of Public Storage's earnings growth in the first quarter of 2015 was a significant increase in self-storage operating income, which rose by $41.7 million year-over-year. This was supported by strong performance in their Same Store Facilities, which saw a 6.1% revenue increase due to higher rental rates and improved occupancy.

Public Storage is expanding through both acquisitions and development. In the first quarter of 2015, they acquired four facilities for $32.3 million. They also have a substantial development pipeline, with projects underway that will add approximately 3.6 million net rentable square feet, at an estimated total cost of $436 million, with a significant portion of costs expected in 2015 and 2016.

The company anticipates continued rental income growth, expecting it to stem from annual rent increases to existing tenants, higher rental rates for new tenants, and potentially lower promotional discounts. They believe current trends in move-ins, move-outs, and occupancy levels support this outlook, despite short-term volatility.

As of March 31, 2015, Public Storage had approximately $848 million in capital resources, including cash and credit facility capacity. They had capital commitments of about $552 million, including development spending, preferred share redemption, and property acquisitions. The company believes it has sufficient resources and multiple options to raise additional capital if needed.