10-QPeriod: Q3 FY2021

Public Storage Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 1, 2021For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) reported strong financial results for the nine months ended September 30, 2021, showcasing significant growth in revenue and net income. The company experienced a substantial increase in net income allocable to common shareholders, rising to $1.174 billion from $806.2 million in the prior year period, translating to diluted EPS of $6.70 compared to $4.62. This growth was primarily driven by a $316.7 million increase in self-storage net operating income, bolstered by a 9.4% revenue increase from Same Store Facilities and strong performance in acquired and newly developed properties. The company also highlighted a robust cash flow from operations, increasing to $1.81 billion for the nine months ended September 30, 2021. This strong operational performance, combined with strategic capital raises, positions PSA well for continued growth. Management's focus on maximizing cash flows from existing facilities while pursuing strategic acquisitions and development remains a key theme.

Financial Highlights

32 data points
Beta

Revenue

$894.93M

Net Income

$490.09M

54.8% Net Margin

EPS (Diluted)

$2.52

Total Assets

$15.28B

Cash & Equivalents

$958.25M

Free Cash Flow

$684.26M

Financial Statements
Beta
Revenue$894.93M
Operating Expenses$480.70M
Interest Expense$23.74M
Net Income$490.09M
EPS (Basic)$2.53
EPS (Diluted)$2.52
Shares Outstanding (Basic)174.93M
Shares Outstanding (Diluted)175.81M

Key Highlights

  • 1Net income allocable to common shareholders increased significantly to $1.174 billion for the first nine months of 2021, up from $806.2 million in the same period of 2020.
  • 2Diluted earnings per common share grew to $6.70 for the nine months ended September 30, 2021, from $4.62 in the prior year.
  • 3Total revenues for the nine months increased by 15.4% to $2.49 billion, driven by a strong performance in self-storage facilities.
  • 4Same Store Facilities revenue grew by 9.4% for the nine months, reflecting higher rental rates and occupancy.
  • 5The company executed significant acquisition activity, including the $1.8 billion ezStorage portfolio and has a $1.5 billion acquisition of the All Storage portfolio under contract.
  • 6Funds from Operations (FFO) per diluted common share increased by 35.0% to $9.69 for the nine months ended September 30, 2021, compared to $7.18 in the prior year.
  • 7Public Storage raised $3.3 billion in debt offerings and $747.5 million in preferred share offerings during the first nine months of 2021 to support growth and refinancing efforts.

Frequently Asked Questions

The primary driver of Public Storage's revenue growth is the strong performance of its self-storage facilities, particularly the Same Store Facilities segment. This segment saw a 9.4% increase in revenue for the nine months ended September 30, 2021, driven by higher rental rates and improved occupancy levels. Additionally, growth from acquired and newly developed facilities contributed significantly.

Public Storage is funding its growth through a combination of strong operating cash flow, strategic debt issuances, and preferred equity offerings. During the first nine months of 2021, the company raised $3.3 billion in debt and $747.5 million in preferred shares. They are also actively pursuing acquisitions and development projects, as evidenced by the ezStorage acquisition and the pending All Storage acquisition.

The company expects continued year-over-year revenue growth supported by stable customer demand leading to strength in rental rates. At September 30, 2021, in-place contractual rent was 11.9% higher year-over-year, comprising a 1.2% increase in occupancy and a 10.7% increase in annual contract rent per occupied foot. Occupancy levels remain high, with Same Store Facilities at 95.7% at quarter-end.

Public Storage has effectively managed its costs, with a 7.4% decrease in cost of operations for Same Store Facilities during the nine months ended September 30, 2021, compared to the prior year. This reduction was primarily due to decreased marketing expenses, lower on-site property manager payroll, and favorable changes in property tax timing. The company also noted investments in energy-saving technology like solar power and LED lights contributing to lower utility expenses.