10-QPeriod: Q1 FY2020

Public Storage Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 30, 2020For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) reported its first quarter 2020 financial results, which were largely stable despite the emerging impacts of the COVID-19 pandemic. Revenue for the quarter saw a modest increase, driven by both same-store and non-same-store facilities, though the company noted anticipated headwinds for the remainder of the year due to the pandemic. Management highlighted that their self-storage facilities were deemed essential and remained operational. However, they observed reduced demand, lower move-in rates, and a temporary halt to existing tenant rent increases. The company is implementing operational adjustments, including temporary wage increases for property managers and enhanced safety measures. Despite these challenges, rent collections remained largely stable, though bad debt is a potential concern. Liquidity remains strong, with ample cash and available credit. Looking ahead, Public Storage anticipates potential reductions in year-over-year same-store rental income and net operating income for the rest of 2020. The company continues to monitor development projects and acquisition opportunities, with flexibility to adjust plans based on market conditions and capital availability. The overall financial position appears solid, but the near-term outlook is subject to the evolving impact of the COVID-19 pandemic.

Financial Highlights

33 data points
Beta

Revenue

$719.04M

Net Income

$366.16M

50.9% Net Margin

EPS (Diluted)

$1.79

Total Assets

$11.83B

Cash & Equivalents

$718.43M

Free Cash Flow

$462.95M

Financial Statements
Beta
Revenue$719.04M
Operating Expenses$392.06M
Interest Expense$13.62M
Net Income$366.16M
EPS (Basic)$1.80
EPS (Diluted)$1.79
Shares Outstanding (Basic)174.45M
Shares Outstanding (Diluted)174.62M

Key Highlights

  • 1Revenue increased by 3.7% to $716.0 million for the three months ended March 31, 2020, compared to $689.0 million for the same period in 2019.
  • 2Net income allocable to common shareholders was $313.1 million, or $1.79 per diluted share, an increase from $301.7 million, or $1.73 per diluted share, in the prior year.
  • 3Funds From Operations (FFO) per diluted common share increased by 3.6% to $2.61 for the first quarter of 2020, up from $2.52 in the prior year.
  • 4The company acquired nine self-storage facilities for $186.2 million during the quarter.
  • 5Total assets grew to $11.8 billion as of March 31, 2020, up from $11.4 billion at December 31, 2019.
  • 6Cash and equivalents significantly increased to $718.4 million as of March 31, 2020, from $409.7 million at December 31, 2019.
  • 7The company initiated measures to mitigate the impact of COVID-19, including temporary wage increases for property managers and enhanced safety protocols.

Frequently Asked Questions

While the company's self-storage facilities were deemed essential and remained operational, the COVID-19 pandemic led to reduced demand, lower move-in rental rates, and a temporary pause on existing tenant rent increases. These factors are anticipated to negatively impact revenue and net operating income for the remainder of 2020. However, rent collections remained stable in Q1, and the company implemented operational measures to support employees and ensure safety.

Public Storage maintained a strong liquidity position. Cash and equivalents increased substantially to $718.4 million. The company also has $484.1 million in available borrowing capacity under its revolving credit facility, and approximately $200 million in expected retained operating cash flow for the next year, exceeding identified capital needs.

Revenue increased by 3.7% to $716.0 million. This growth was driven by a $9.5 million increase in self-storage net operating income, which included a $0.3 million increase from Same Store Facilities and a $9.2 million increase from non-Same Store Facilities. Non-Same Store Facilities benefited from acquisitions and the stabilization of recently developed and expanded properties.

Public Storage continues to pursue growth through acquisitions and development. In Q1 2020, they acquired nine facilities for $186.2 million. While acquisition volume was robust early in the year, the company anticipates a short-term decline due to COVID-19-related economic uncertainty. They have a development pipeline of 12 new facilities and expansions for 36 existing ones. The company will continue to monitor projects and acquisition opportunities, adjusting plans based on market conditions and capital availability.