10-QPeriod: Q3 FY2019

Public Storage Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 30, 2019For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) reported its third quarter 2019 results, showcasing continued revenue growth and solid operational performance. Total revenues for the nine months ended September 30, 2019, increased by 3.3% to $2.13 billion, driven by a 3.2% rise in self-storage facility revenues. Net income attributable to common shareholders for the nine months was $945.5 million, or $5.42 per diluted share, a slight decrease from the prior year primarily due to a substantial equity share of gains recorded by PS Business Parks in the prior year and preferred share redemption activities. However, Funds From Operations (FFO) per diluted share increased to $7.86 from $7.68, indicating robust operational cash flow generation. The company's balance sheet remains strong, with total assets growing to $11.41 billion. Cash and equivalents significantly increased to $541.4 million, providing ample liquidity. The company continued its strategic growth through acquisitions and development, adding new facilities and expanding existing ones. Management highlighted increased marketing expenses and property taxes as key drivers for the rise in operating costs for same-store facilities. The company reiterated its commitment to returning capital to shareholders through consistent dividends and authorized share repurchase programs.

Financial Highlights

35 data points
Beta

Revenue

$729.34M

70.9% Gross Margin

Net Income

$399.42M

54.8% Net Margin

EPS (Diluted)

$1.93

Total Assets

$11.41B

Cash & Equivalents

$541.36M

Free Cash Flow

$552.46M

Financial Statements
Beta
Revenue$729.34M
Cost of Revenue$212.26M
Gross Profit$517.07M
Operating Expenses$371.00M
Interest Expense$12.60M
Net Income$399.42M
EPS (Basic)$1.94
EPS (Diluted)$1.93
Shares Outstanding (Basic)174.33M
Shares Outstanding (Diluted)174.61M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2019, increased by 3.3% to $2.13 billion, primarily driven by self-storage facility revenues.
  • 2Net income attributable to common shareholders for the nine months was $945.5 million ($5.42 per diluted share), a slight decrease compared to the prior year.
  • 3Funds From Operations (FFO) per diluted share increased by 2.3% to $7.86 for the nine months ended September 30, 2019.
  • 4Cash and equivalents significantly increased to $541.4 million as of September 30, 2019, enhancing liquidity.
  • 5The company actively engaged in growth initiatives, acquiring new facilities and developing/expanding existing ones, adding approximately 3.2 million net rentable square feet of self-storage space in the nine-month period.
  • 6Same-store facilities revenue increased by 1.5% for the nine months, driven by higher rent per occupied square foot, although offset by increased marketing expenses and property taxes.
  • 7The company maintained a strong balance sheet with total assets of $11.41 billion and a prudent approach to debt management, with no substantial principal payments due until 2022.

Frequently Asked Questions

For the nine months ended September 30, 2019, Public Storage reported a 3.3% increase in total revenue to $2.13 billion, driven by a 3.2% rise in self-storage facility revenues. The company expects continued moderate revenue growth, primarily from annual rent increases to existing tenants, though this is subject to factors like demand, competition, and local economic conditions.

Operating costs for same-store facilities increased by 5.1% for the nine months ended September 30, 2019, primarily due to a significant increase in marketing expenses (50.1%) and a 5.0% rise in property taxes. Management is actively increasing marketing spend to drive demand and is managing other costs like payroll and repairs.

Public Storage's growth strategy focuses on both acquiring existing facilities and developing new ones. In the first nine months of 2019, they acquired 32 self-storage facilities and completed development and redevelopment activities that added 3.2 million net rentable square feet. They also have a significant pipeline of development projects underway.

The company maintains a strong liquidity position with $541.4 million in cash and equivalents as of September 30, 2019. They have a $500 million revolving credit facility with no outstanding borrowings at the time of the report. Debt levels remain manageable, with total debt of $1.9 billion at September 30, 2019, and no substantial principal payments due until 2022, supporting their financial flexibility.