10-QPeriod: Q3 FY2022

Public Storage Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 1, 2022For Securities:PSAPSA-PRPSA-PFPSA-PGPSA-PHPSA-PIPSA-PJPSA-PMPSA-PNPSA-POPSA-PPPSA-PQPSA-PSPSA-PKPSA-PL

Summary

Public Storage (PSA) reported strong financial performance for the nine months ended September 30, 2022, driven by significant gains from the sale of its equity investment in PS Business Parks, Inc. (PSB) and robust growth in its same-store self-storage operations. Revenues from same-store facilities increased by 15.4%, reflecting higher rental rates and strong occupancy. The company also saw substantial growth in its acquired and newly developed facilities, indicating successful strategic expansion. Despite inflationary pressures on operating costs, PSA demonstrated effective cost management and implemented initiatives to mitigate these impacts. The company's balance sheet shows an increase in total assets, primarily due to growth in real estate facilities. Liabilities decreased due to a reduction in notes payable. PSA also repurchased shares and paid significant dividends, including a special dividend following the PSB sale, demonstrating a commitment to returning capital to shareholders. The company maintains a strong liquidity position and access to capital markets, positioning it well for continued growth and to navigate potential economic uncertainties.

Financial Highlights

33 data points
Beta

Revenue

$1.09B

Net Income

$2.77B

254.5% Net Margin

EPS (Diluted)

$15.38

Total Assets

$17.45B

Cash & Equivalents

$883.79M

Free Cash Flow

$927.02M

Financial Statements
Beta
Revenue$1.09B
Operating Expenses$561.43M
Interest Expense$34.11M
Net Income$2.77B
EPS (Basic)$15.47
EPS (Diluted)$15.38
Shares Outstanding (Basic)175.28M
Shares Outstanding (Diluted)176.33M

Key Highlights

  • 1Significant gain of $2.1 billion recognized from the sale of the equity investment in PS Business Parks, Inc. (PSB).
  • 2Total revenues increased by 22.2% for the three months and 25.0% for the nine months ended September 30, 2022, compared to the prior year periods.
  • 3Same-store self-storage revenues increased by 14.7% for the three months and 15.4% for the nine months ended September 30, 2022, driven by a 17.2% and 16.6% increase in realized annual rent per occupied square foot, respectively.
  • 4Net operating income (NOI) from same-store facilities increased by 17.0% for the three months and 18.6% for the nine months ended September 30, 2022.
  • 5Funds From Operations (FFO) per diluted share increased by 29.1% to $4.66 for the three months and 35.0% to $13.08 for the nine months ended September 30, 2022.
  • 6Total assets increased to $17.45 billion as of September 30, 2022, from $17.38 billion as of December 31, 2021, driven by growth in real estate facilities.
  • 7Total liabilities decreased to $7.33 billion as of September 30, 2022, from $7.96 billion as of December 31, 2021, primarily due to a reduction in notes payable.

Frequently Asked Questions

The primary driver of the significant increase in net income was the gain of approximately $2.1 billion recognized from the sale of Public Storage's equity investment in PS Business Parks, Inc. (PSB) in July 2022.

The core self-storage operations performed strongly. Same-store facility revenues grew by 15.4% for the nine months ended September 30, 2022, driven by a 16.6% increase in realized annual rent per occupied square foot, indicating successful pricing strategies. Net operating income (NOI) from these same-store facilities also saw a healthy increase of 18.6%.

Public Storage continues to pursue growth through strategic acquisitions and development. The company acquired 338 facilities with 30.1 million net rentable square feet for $6.4 billion since the beginning of 2020 and has ongoing development projects. Subsequent to the reporting period, they were under contract to acquire an additional 33 facilities.

The company is implementing various initiatives to manage inflationary impacts on operating costs, including enhancements in operational processes and technology to reduce payroll hours, achieving economies of scale, and investing in solar power and LED lights to lower utility usage. They are also strategically increasing rental rates to existing tenants.