10-QPeriod: Q3 FY2020

Public Storage Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 4, 2020For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) reported its third-quarter 2020 financial results, showing a decrease in net income attributable to common shareholders for both the three and nine-month periods ended September 30, 2020, compared to the same periods in 2019. This decrease was primarily influenced by foreign currency exchange losses related to Euro-denominated debt and an increase in depreciation and amortization expense. Despite these headwinds, the company's core self-storage operations demonstrated resilience, particularly in Same Store Facilities, which saw a slight revenue decrease of 2.7% and 1.5% for the respective periods, driven by improvements in occupancy trends and a resumption of rental rate increases for existing tenants, partially offset by reduced late fees and administrative charges. The company also highlighted its active development and acquisition pipeline, underscoring a commitment to growth despite the ongoing economic uncertainties presented by the COVID-19 pandemic.

Financial Highlights

33 data points
Beta

Revenue

$734.54M

Net Income

$324.87M

44.2% Net Margin

EPS (Diluted)

$1.41

Total Assets

$11.39B

Cash & Equivalents

$293.95M

Free Cash Flow

$528.27M

Financial Statements
Beta
Revenue$734.54M
Operating Expenses$395.23M
Interest Expense$14.28M
Net Income$324.87M
EPS (Basic)$1.41
EPS (Diluted)$1.41
Shares Outstanding (Basic)174.50M
Shares Outstanding (Diluted)174.63M

Key Highlights

  • 1Net income allocable to common shareholders decreased by $90.5 million and $139.3 million for the three and nine months ended September 30, 2020, respectively, compared to the prior year.
  • 2Self-storage revenues for Same Store Facilities decreased by 2.7% for the three months and 1.5% for the nine months ended September 30, 2020, year-over-year.
  • 3The company experienced significant foreign currency exchange losses of $41.9 million and $52.3 million in the three and nine-month periods, respectively, primarily due to Euro-denominated debt.
  • 4Despite revenue pressures, occupancy levels in Same Store Facilities improved year-over-year, showing a 1.4% increase for the three-month period.
  • 5Public Storage maintained a strong liquidity position with approximately $1.2 billion in expected capital resources for the upcoming year, exceeding identified capital needs.
  • 6The company continued to actively pursue growth through acquisitions, with 54 self-storage facilities under contract or acquired post-period end for $686.9 million.
  • 7The COVID-19 pandemic continues to be a significant factor impacting operations, with the company implementing safety measures and adapting to a remote work environment for corporate staff.

Frequently Asked Questions

The COVID-19 pandemic negatively impacted Public Storage's business and results of operations. While self-storage facilities were deemed essential and remained open, the company experienced reduced demand, a decrease in late charges and administrative fees, and foreign currency exchange losses. However, occupancy levels improved, and the company implemented safety measures and a remote work environment for corporate staff.

Public Storage noted an improvement in demand and a reduction in move-outs during the third quarter, leading to increased rental rates for new tenants and a resumption of rate increases for existing long-term tenants. While these trends offer a more optimistic outlook, the company acknowledges the ongoing uncertainty and potential for future revenue pressures due to factors like moderating move-out trends and potential economic downturns.

Public Storage continues to focus on growth through both acquisitions and development. Post-period, the company entered into contracts to acquire 54 self-storage facilities for $686.9 million. They also maintain a robust development pipeline with 12 new facilities and 26 expansions planned, underscoring a commitment to expanding their portfolio despite market uncertainties.

Public Storage maintains a strong financial profile with a $500 million revolving credit facility (undrawn as of the reporting date) and significant access to capital markets. They expect approximately $1.2 billion in capital resources for the next year, exceeding their identified capital needs. The company's debt is well-laddered with no material maturities until September 2022, providing financial flexibility.