GLENDALE, Calif.--(BUSINESS WIRE)--
Public Storage (NYSE:PSA) announced today operating results for the
second quarter ended June 30, 2009.
Operating Results for the Three Months
Ended June 30, 2009
Net income to our shareholders for the three months ended June 30, 2009
was $199.2 million compared to $133.8 million for the same period in
2008, representing an increase of $65.4 million. This increase is
primarily due to (i) a $33.2 million foreign exchange gain during the
quarter ended June 30, 2009, (ii) a $25.4 million reduction in general
and administrative expenses due to incentive compensation incurred in
the quarter ended June 30, 2008 related to our disposition of an
interest in Shurgard Europe, and (iii) an $11.0 million reduction in
depreciation and amortization, primarily due to reduced intangible
amortization, offset by (iv) a reduction in Same Store facility
operations and (v) an impairment charge included in discontinued
operations with respect to intangible assets totaling $8.2 million in
the quarter ended June 30, 2009.
Revenues for the Same Store Facilities decreased 3.5% or $12.6 million
in the quarter ended June 30, 2009 as compared to the same period in
2008, due to a 2.9% reduction in realized rent per occupied square foot,
combined with a 1.1% reduction in average occupancies. Cost of
operations for the Same Store Facilities declined 3.4% or $4.1 million
in the quarter ended June 30, 2009 as compared to the same period in
2008, due primarily to a $2.6 million reduction in media advertising and
a $1.5 million reduction in repairs and maintenance, offset by a 4.3%
($1.5 million) increase in property tax expense.
For the three months ended June 30, 2009, net income allocable to our
common shareholders (after allocating net income to our preferred and
equity shareholders) was $135.5 million or $0.80 per common share on a
diluted basis compared to $68.0 million or $0.40 per common share on a
diluted basis for the same period in 2008, representing an increase of
$67.5 million or $0.40 per common share on a diluted basis. These
increases are primarily due to the impact of the factors described above.
Weighted average diluted common shares were 168,528,000 and 168,479,000,
respectively, for the three months ended June 30, 2009 and 2008.
Operating Results for the Six Months
Ended June 30, 2009
Net income to our shareholders for the six months ended June 30, 2009
was $416.2 million compared to $646.2 million for the same period in
2008, representing a decrease of $230.0 million. This decrease is
primarily due to (i) a gain of $341.8 million in the six months ended
June 30, 2008 related to our disposition of an interest in Shurgard
Europe and (ii) an impairment charge included in discontinued operations
with respect to intangible assets totaling $8.2 million in the six
months ended June 30, 2009, (iii) a foreign exchange gain of $41.0
million during the same period in 2008, and (iv) a reduction in Same
Store operations, partially offset by (v) a $72.0 million reduction in
earnings allocated to our preferred partnership unitholders in the first
quarter of 2009 associated with the redemption of securities, (vi) a
reduction in general and administrative expenses due to $27.9 million in
incentive compensation incurred in the six months ended June 30, 2008
related to our disposition of an interest in Shurgard Europe, and (vii)
a $26.5 million reduction in depreciation and amortization related to
our domestic assets, primarily representing reduced intangible
amortization.
Revenues for the Same Store Facilities decreased 2.2% or $15.4 million
in the six months ended June 30, 2009 as compared to the same period in
2008, due to a 1.5% reduction in realized rent per occupied square foot,
combined with a 1.1% reduction in average occupancies. Cost of
operations for the Same Store Facilities declined 1.2% or $2.9 million
in the six months ended June 30, 2009 as compared to the same period in
2008, due primarily to a $1.4 million reduction in media advertising and
a $2.2 million reduction in repairs and maintenance, offset by a 4.1%
($2.9 million) increase in property tax expense.
For the six months ended June 30, 2009, net income allocable to our
common shareholders (after allocating net income to our preferred and
equity shareholders) was $295.0 million or $1.75 per common share on a
diluted basis compared to $512.8 million or $3.04 per common share on a
diluted basis for the same period in 2008, representing a decrease of
$217.8 million or $1.29 per common share on a diluted basis. These
decreases are primarily due to the impact of the factors described above.
Weighted average diluted common shares were 168,501,000 and 168,731,000,
respectively, for the six months ended June 30, 2009 and 2008.
Funds from Operations
For the three months ended June 30, 2009, funds from operations ("FFO")
increased to $1.40 per common share on a diluted basis as compared to
$1.10 per common share for the same period in 2008, representing an
increase of $0.30 per common share, or 27.3%.
For the three months ended June 30, 2009, FFO was impacted by (i) a
foreign currency exchange gain totaling $33.2 million (compared to an
exchange loss of $2,000 for the same period in 2008) and (ii) an
impairment charge with respect to an intangible asset resulting from an
eminent domain proceeding totaling $8.2 million. For the three months
ended June 30, 2008, FFO was impacted as a result of incentive
compensation with respect to our disposition of an interest in Shurgard
Europe included in general and administrative expense totaling $25.4
million.
For the six months ended June 30, 2009, FFO increased to $2.91 per
common share on a diluted basis as compared to $2.49 per common share
for the same period in 2008, representing an increase of $0.42 per
share, or 16.9%.
For the six months ended June 30, 2009, FFO has been impacted by (i) a
foreign currency exchange loss totaling $1.5 million (compared to a gain
of $41.0 million for the same period in 2008), (ii) an impairment charge
with respect to an intangible asset resulting from an eminent domain
proceeding totaling $8.2 million, (iii) costs incurred to terminate and
wind down our truck rental operations of $3.5 million, (iv) a $78.2
million reduction in the allocation of net income to our preferred
shareholders and unitholders pursuant to the redemption of our preferred
securities, combined with our pro-rata share ($16.3 million) of PS
Business Park's ("PSB") earnings representing the benefit from its
preferred securities repurchases which is included in equity in
earnings, and (v) a gain on the early redemption of debt totaling $4.1
million. FFO for the six months ended June 30, 2008 was also impacted by
incentive compensation with respect to our disposition of an interest in
Shurgard Europe included in general and administrative expense totaling
$27.9 million.
The following table provides a summary of the impact of these items that
occurred during the three and six months ended June 30, 2009 and 2008:
Three Months Ended June 30, Six Months Ended June 30,
Percentage Percentage
2009 2008 Change 2009 2008 Change
FFO per
common share
prior to
adjustments $ 1.25 $ 1.25 - $ 2.41 $ 2.42 (0.4 )%
for the
following
items
Foreign
currency
exchange 0.20 - (0.01 ) 0.24
(loss) gain,
net
Impairment
charge on
intangible
asset
resulting (0.05 ) - (0.05 ) -
from an
eminent
domain
proceeding
Costs
incurred to
terminate - - (0.02 ) -
truck rental
operations
Increased
income
allocated to
common
shareholders,
and from
preferred
equity - - 0.56 -
shareholders,
pursuant to
preferred
redemptions,
including our
equity share
from PSB
Gain on early
redemption of - - 0.02 -
debt
Incremental
incentive
compensation
incurred in
connection
with the - (0.15 ) - (0.17 )
disposition
of an
interest in
Shurgard
Europe
FFO per
common share, $ 1.40 $ 1.10 27.3 % $ 2.91 $ 2.49 16.9 %
as reported
Property Operations - Same Store
Facilities
The Same Store group of facilities represents those 1,899 facilities
that we have owned, and have been operated on a stabilized basis, since
January 1, 2007 and therefore provide meaningful comparisons for 2007,
2008, and 2009. The following table summarizes the historical operating
results of these 1,899 facilities (117.5 million net rentable square
feet) that represent approximately 93% of the aggregate net rentable
square feet of our U.S. consolidated self-storage portfolio at June 30,
2009.
Selected
Operating
Data for the
Same Store
Facilities
(1,899 Three Months Ended June 30, Six Months Ended June 30,
Facilities):
Percentage Percentage
2009 2008 Change 2009 2008 Change
(Dollar amounts in thousands, except for weighted average data)
Revenues:
Rental $ 330,854 $ 344,703 (4.0 )% $ 662,393 $ 680,256 (2.6 )%
income
Late charges
and admin 15,985 14,758 8.3 % 31,631 29,196 8.3 %
fees
collected
Total 346,839 359,461 (3.5 )% 694,024 709,452 (2.2 )%
revenues (a)
Cost of
operations:
Property 36,659 35,156 4.3 % 74,421 71,505 4.1 %
taxes
Direct
property 23,339 23,329 0.0 % 47,699 47,706 0.0 %
payroll
Media 7,224 9,836 (26.6 )% 15,382 16,783 (8.3 )%
advertising
Other
advertising 5,967 5,027 18.7 % 10,581 9,453 11.9 %
and
promotion
Utilities 7,899 8,360 (5.5 )% 17,497 17,797 (1.7 )%
Repairs and 9,159 10,679 (14.2 )% 19,875 22,077 (10.0 )%
maintenance
Telephone
reservation 2,817 3,318 (15.1 )% 5,611 6,441 (12.9 )%
center
Property 2,566 2,911 (11.9 )% 5,264 6,124 (14.0 )%
insurance
Other costs
of 20,796 21,910 (5.1 )% 45,103 46,496 (3.0 )%
management
Total cost
of 116,426 120,526 (3.4 )% 241,433 244,382 (1.2 )%
operations
(a)
Net
operating $ 230,413 $ 238,935 (3.6 )% $ 452,591 $ 465,070 (2.7 )%
income
Gross margin 66.4 % 66.5 % (0.2 )% 65.2 % 65.6 % (0.6 )%
Weighted
average for
the period:
Square foot
occupancy 90.0 % 91.0 % (1.1 )% 88.9 % 89.9 % (1.1 )%
(b)
Realized
annual rent
per occupied $ 12.52 $ 12.90 (2.9 )% $ 12.69 $ 12.88 (1.5 )%
square foot
(c)(d)
REVPAF (e) $ 11.27 $ 11.74 (4.0 )% $ 11.28 $ 11.58 (2.6 )%
(d)
Weighted
average June
30:
Square foot 90.7 % 91.7 % (1.1 )%
occupancy
In place
annual rent
per occupied $ 13.61 $ 14.20 (4.2 )%
square foot
(f)
Total net
rentable
square feet 117,462 117,462 -
(in
thousands)
See attached reconciliation of these amounts to our consolidated
self-storage revenues and operating expenses. Revenues and cost of
operations do not include ancillary revenues and expenses generated at
the facilities with respect to tenant reinsurance, retail sales and truck
a) rentals. "Other costs of management" included in cost of operations
principally represents all the indirect costs incurred in the operations
of the facilities. Indirect costs principally include supervisory costs
and corporate overhead cost incurred to support the operating activities
of the facilities.
b) Square foot occupancies represent weighted average occupancy levels over
the entire period.
Realized annual rent per occupied square foot is computed by annualizing
the result of dividing rental income (which excludes late charges and
c) administrative fees) by the weighted average occupied square feet for the
period. Realized annual rent per occupied square foot takes into
consideration promotional discounts and other items that reduce rental
income from the contractual amounts due.
Late charges and administrative fees are excluded from the computation of
realized annual rent per occupied square foot and REVPAF. Exclusion of
these amounts provides a better measure of our ongoing level of revenue,
d) by excluding the volatility of late charges, which are dependent
principally upon the level of tenant delinquency, and administrative
fees, which are dependent principally upon the absolute level of move-ins
for a period.
Realized annual rent per available foot or "REVPAF" is computed by
e) dividing rental income (which excludes late charges and administrative
fees) by the total available net rentable square feet for the period.
In place annual rent per occupied square foot represents annualized
f) contractual rents per occupied square foot without reductions for
promotional discounts and excludes late charges and administrative fees.
The following table summarizes additional selected financial data with
respect to the Same Store Facilities (unaudited):
Three Months Ended
March 31 June 30 September 30 December 31 Full Year
Total
revenues (in
000's):
2009 $ 347,185 $ 346,839 $ 694,024
2008 $ 349,991 $ 359,461 $ 368,976 $ 357,202 $ 1,435,630
Total cost
of
operations
(in 000's):
2009 $ 125,007 $ 116,426 $ 241,433
2008 $ 123,856 $ 120,526 $ 113,972 $ 104,442 $ 462,796
Property
taxes (in
000's):
2009 $ 37,762 $ 36,659 $ 74,421
2008 $ 36,349 $ 35,156 $ 36,161 $ 28,159 $ 135,825
Media
advertising
(in 000's):
2009 $ 8,158 $ 7,224 $ 15,382
2008 $ 6,947 $ 9,836 $ 2,148 $ 922 $ 19,853
Other
advertising
and
promotion
(in 000's):
2009 $ 4,614 $ 5,967 $ 10,581
2008 $ 4,426 $ 5,027 $ 4,645 $ 4,137 $ 18,235
REVPAF:
2009 $ 11.29 $ 11.27 $ 11.28
2008 $ 11.43 $ 11.74 $ 12.03 $ 11.65 $ 11.71
Weighted
average
realized
annual rent
per occupied
square foot
for the
period:
2009 $ 12.84 $ 12.52 $ 12.69
2008 $ 12.87 $ 12.90 $ 13.29 $ 13.27 $ 13.08
Weighted
average
square foot
occupancy
levels for
the period:
2009 87.9 % 90.0 % 88.9 %
2008 88.8 % 91.0 % 90.5 % 87.8 % 89.5 %
Shurgard Europe
As previously announced, on March 31, 2008, an institutional investor
acquired a 51% interest in Shurgard Europe's operations. We own the
remaining 49% interest and we are the managing member of the newly
formed joint venture that now owns Shurgard Europe's operations. As a
result of this transaction, we began accounting for our investment in
Shurgard Europe under the equity method effective March 31, 2008.
Shurgard Europe has an interest in 184 facilities (9.8 million net
rentable square feet) located in seven Western European countries.
Included in this total are 72 facilities (3.6 million net rentable
square feet) that are owned by two joint ventures in which Shurgard
Europe has a 20% interest.
The two joint ventures collectively had approximately EUR233 million ($328
million) of outstanding debt at June 30, 2009. The loans are payable to
various banks and are non-recourse to Shurgard Europe. The maturity
dates of each of the JV loans were recently extended. One of the JV
loans, totaling EUR112 million ($158 million), is now due May 2012 and the
other JV loan, totaling EUR121 million ($170 million), is due July 2010.
Our existing EUR391.9 million ($550.5 million at June 30, 2009) loan to
Shurgard Europe was extended for an additional year to March 31, 2010
and will continue to accrue interest at 7.5% per annum. The loan
currently is not hedged for future currency exchange fluctuations;
accordingly, the amount of U.S. Dollars that will be received on
repayment will depend upon the currency exchange rates at the time. In
addition, Shurgard Europe exercised its option and extended our
commitment through March 31, 2010 to provide up to EUR305 million of
additional loans to Shurgard Europe which has since been reduced to EUR185
million due to the refinancing of one of the JV loans. Borrowings are to
be used to either fund the acquisition of Shurgard Europe's partner's
interest in the joint ventures and/or repay Shurgard Europe's pro rata
share of the joint ventures' debt. The acquisitions of the joint venture
partner's interests are subject to our approval and Shurgard Europe's
pro rata share of the aggregate joint venture debt is approximately EUR50
million. In March 2009, Shurgard Europe's joint venture partner gave us
its exit notice indicating its intent to sell its interest in one of the
joint ventures. In June 2009, the joint venture partner withdrew its
exit notice.
Liquidity Position
At June 30, 2009, we had approximately $585 million of unrestricted cash
on hand and have access to an additional $300 million line of credit.
The line of credit does not expire until March 27, 2012. We have no
significant capital commitments at June 30, 2009, other than outstanding
debt maturities.
At June 30, 2009, outstanding debt totaled $524 million. We have no
significant debt maturities until 2011 ($131 million of maturities) and
2013 ($251 million of maturities).
Our retained operating cash flow continues to provide a significant
source of capital to fund our activities. During the six months ended
June 30, 2009, our funds from operations available to distribute to
common shareholders ("FAD") exceeded our regular common distributions by
approximately $193 million. Our ability to continue to retain operating
cash flow in the future will be contingent upon a number of factors
including, but not limited to, the growth in our operations and our
distribution requirements to maintain our REIT status.
Distributions Declared
On August 6, 2009, our Board of Trustees declared a regular common
dividend of $0.55 per common share, a dividend of $0.6125 per share on
the Equity Shares, Series A and dividends with respect to our various
series of preferred shares. All the dividends are payable on September
30, 2009 to shareholders of record as of September 15, 2009.
Second Quarter Conference Call
A conference call is scheduled for Friday, August 7, 2009, at 10:00 a.m.
(PDT) to discuss the second quarter ended June 30, 2009 earnings
results. The domestic dial-in number is (866) 406-5408, and the
international dial-in number is (973) 582-2770 (conference ID number for
either domestic or international is 18935172). A simultaneous audio web
cast may be accessed by using the link at www.publicstorage.com
under "Company Info, Investor Relations" (conference ID number
18935172). A replay of the conference call may be accessed through
August 21, 2009 by calling (800) 642-1687 (domestic) or (706) 645-9291
(international) or by using the link at www.publicstorage.com
under "Company Info, Investor Relations." All forms of replay utilize
conference ID number 18935172.
About Public Storage
Public Storage, a member of the S&P 500 and The Forbes Global 2000, is a
fully integrated, self-administered and self-managed real estate
investment trust that primarily acquires, develops, owns and operates
self-storage facilities. The Company's headquarters are located in
Glendale, California. At June 30, 2009, the Company had interests in
2,010 self-storage facilities located in 38 states with approximately
127 million net rentable square feet in the United States and 185
storage facilities located in seven Western European nations with
approximately ten million net rentable square feet. The Company also
owns a 46% common equity interest in PS Business Parks (NYSE:PSB) which
owned and operated approximately 19.6 million rentable square feet of
commercial space, primarily flex, multitenant office and industrial
space, at June 30, 2009.
Additional information about Public Storage is available on our website, www.publicstorage.com.
Forward-Looking Statements
All statements in this press release, other than statements of
historical fact, are forward-looking statements which may be identified
by the use of the words "expects," "believes," "anticipates," "should,"
"estimates" and similar expressions. These forward-looking statements
involve known and unknown risks and uncertainties, which may cause
Public Storage's actual results and performance to be materially
different from those expressed or implied in the forward-looking
statements. Factors and risks that may impact future results and
performance are described from time to time in Public Storage's filings
with the Securities and Exchange Commission, including in Item 1A, "Risk
Factors" in Public Storage's Annual Report on Form 10-K for the fiscal
year ended December 31, 2008, Form 10-Q for the period ended June 30,
2009 expected to be filed on or before August 10, 2009, our other
Quarterly Reports on Form 10-Q and current reports on Form 8-K. These
risks include, but are not limited to, the following: general risks
associated with the ownership and operation of real estate, including
changes in demand for our storage facilities, potential liability for
environmental contamination, adverse changes in tax, real estate and
zoning laws and regulations, and the impact of natural disasters; risks
associated with downturns in the national and local economies in the
markets in which we operate; the impact of competition from new and
existing storage and commercial facilities and other storage
alternatives; difficulties in our ability to successfully evaluate,
finance, integrate into our existing operations and manage acquired and
developed properties; risks related to our participation in joint
ventures; risks associated with international operations including, but
not limited to, unfavorable foreign currency rate fluctuations that
could adversely affect our earnings and cash flows; the impact of the
regulatory environment as well as national, state, and local laws and
regulations including, without limitation, those governing REITs; risks
associated with a possible failure by us to qualify as a REIT under the
Internal Revenue Code of 1986, as amended; disruptions or shutdowns of
our automated processes and systems; difficulties in raising capital at
a reasonable cost; delays in filling up our newly-developed facilities;
and economic uncertainty due to the impact of war or terrorism. Public
Storage disclaims any obligation to update publicly or otherwise revise
any forward-looking statements, whether as a result of new information,
new estimates, or other factors, events or circumstances after the date
of this press release, except where expressly required by law.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
(Unaudited)
Comparisons of our revenues and expenses for the six months ended June 30, 2009
to the same period in 2008 are significantly impacted by the acquisition by an
institutional investor of a 51% interest in Shurgard Europe on March 31, 2008,
which resulted in the deconsolidation of Shurgard Europe as of that date.
Statement of Financial Accounting Standards No. 160, "Noncontrolling Interests
in Consolidated Financial Statements - an amendment of ARB No. 51", EITF 03-6-1,
"Participating Securities and the Two-Class Method under FASB Statement No.
128", and certain other associated standards became effective January 1, 2009.
As a result, adjustments have been made from the amounts previously presented
for the three and six months ended June 30, 2008. The nature of these
adjustments are described more fully in Note 2 to our March 31, 2009 Financial
Statements included in our Form 10-Q for the quarter ended March 31, 2009.
Three Months Ended June 30, Six Months Ended June 30,
2009 2008 2009 2008
(Amounts in thousands, except per share amounts)
Revenues:
Self-storage $ 371,630 $ 380,770 $ 742,869 $ 805,043
Ancillary operations 28,106 26,710 53,941 56,747
(b)
Interest and other 7,516 11,014 15,149 13,858
income (a)
407,252 418,494 811,959 875,648
Expenses:
Cost of operations:
Self-storage 124,478 128,124 257,952 284,779
Ancillary operations 10,374 12,064 20,027 23,368
(b)
Depreciation and 83,796 94,829 168,762 217,069
amortization (c)
General and 8,199 33,173 17,878 48,089
administrative (d)
Interest expense 7,288 9,601 15,416 26,088
234,135 277,791 480,035 599,393
Income from continuing
operations before
equity in earnings of
real estate entities,
gain (loss) on
disposition of real 173,117 140,703 276,255
estate investments or 331,924
early redemption of
debt and foreign
currency exchange gain
(loss)
Equity in earnings of
real estate entities 7,398 4,632 30,209 7,361
(a)
Gain (loss) on
disposition of real - (92 ) 2,722 341,773
estate investments
Gain on early - - 4,114 -
redemption of debt
Foreign currency
exchange gain (loss) 33,205 (2 ) (1,528 ) 40,969
(e)
Income from continuing 213,720 145,241 367,441 666,358
operations
Discontinued (8,333 ) (1,286 ) (8,625 ) (2,462 )
operations (b)
Net income 205,387 143,955 358,816 663,896
Net income allocable
(to) from
noncontrolling equity
interests:
Preferred unitholders,
based upon (1,813 ) (5,403 ) (5,830 ) (10,806 )
distributions paid
Preferred unitholders,
based upon redemptions - - 72,000 -
(f)
Other noncontrolling
interests in (4,402 ) (4,739 ) (8,812 ) (6,935 )
subsidiaries
Net income allocable
to Public Storage $ 199,172 $ 133,813 $ 416,174 $ 646,155
Shareholders
Allocation of net
income to Public
Storage Shareholders:
Preferred
shareholders, based on $ 58,108 $ 60,333 $ 116,216 $ 120,666
distributions paid
Preferred
shareholders, based on - - (6,218 ) -
redemptions
Equity Shares, Series 5,131 5,356 10,262 10,712
A
Restricted share units 446 146 932 1,971
Common shareholders 135,487 67,978 294,982 512,806
$ 199,172 $ 133,813 $ 416,174 $ 646,155
Per common share:
Net income per share - $ 0.80 $ 0.40 $ 1.75 $ 3.05
Basic
Net income per share - $ 0.80 $ 0.40 $ 1.75 $ 3.04
Diluted
Weighted average 168,348 168,028 168,330 168,307
common shares - Basic
Weighted average
common shares - 168,528 168,479 168,501 168,731
Diluted
Commencing March 31, 2008, we account for our investment in Shurgard
Europe using the equity method of accounting. Our equity in earnings of
Shurgard Europe for the three and six months ended June 30, 2009 and the
six months ended June 30, 2008 totaling $1,709,000, $3,608,000 and
$1,457,000, respectively, are comprised of (i) losses of $4,049,000,
$7,300,000 and $4,819,000, respectively, representing our 49% pro-rata
(a) share of Shurgard Europe's net loss for the respective periods and (ii)
income of $5,758,000, $10,908,000, and $6,276,000, respectively,
representing our 49% pro-rata share of the interest income and trademark
license fees received from Shurgard Europe for the respective periods
(such amounts are presented as equity in earnings of real estate
entities rather than interest and other income). Equity in earnings for
the six months ended June 30, 2009 includes $16.3 million in income
related to PS Business Parks' repurchases of its preferred securities.
During the first quarter of 2009, we discontinued the containerized
storage and truck rental operations and, accordingly, the historical
operations from these activities have been reclassified for all periods
presented from ancillary operations to discontinued operations. During
the second quarter of 2009, we reclassified the historical operations of
a self-storage facility that is expected to be disposed of pursuant to a
(b) condemnation proceeding within the next year. In addition to the
historical revenues and expenses of this self-storage facility,
discontinued operations includes an impairment charge totaling $8.2
million related to the intangible assets of this facility recorded in
the quarter ended June 30, 2009. Discontinued operations for the six
months ended June 30, 2009 includes $3.5 million in costs associated
with the disposal of trucks, as well as a gain on disposition of a
discontinued self-storage facility of approximately $4.2 million.
Depreciation and amortization expense for the three and six months ended
June 30, 2009 decreased when compared to the same periods in 2008
primarily due to reductions in amortization expense related to domestic
(c) intangible assets, primarily those obtained in the Shurgard Merger. In
addition, depreciation and amortization expense for the six months ended
June 30, 2009 compared to the same period in 2008, was impacted by the
deconsolidation of Shurgard Europe.
For the three and six months ended June 30, 2008, general and
(d) administrative expense includes additional incentive compensation
totaling $25.4 million and $27.9 million, respectively, associated with
the disposition of an interest in Shurgard Europe.
Our foreign currency exchange gains and losses are primarily related to
our loan to Shurgard Europe which is denominated in Euros. When
(e) converting the Euro denominated loan to U.S. Dollars, exchange gains or
losses may arise due to fluctuation in the exchange rates between the
value of the U.S. Dollar and the Euro.
During the six months ended June 30, 2009, we repurchased various series
of our preferred shares and units for an aggregate of $170.5 million.
This amount was approximately $78.2 million lower than the original
(f) issue proceeds of the preferred equity acquired and, accordingly, we
recorded an allocation of income from the preferred shareholders and
unitholders to the common shareholders of $78.2 million. These
repurchases are expected to reduce ongoing distributions to the
preferred shareholders and unitholders by $16.1 million per year.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
June 30, December 31,
2009 2008
(Amounts in thousands, except share and per share
data)
(Unaudited)
ASSETS
Cash and cash $ 584,860 $ 680,701
equivalents
Operating real estate
facilities:
Land and buildings, at 10,250,653 10,207,022
cost
Accumulated depreciation (2,568,215 ) (2,405,473 )
7,682,438 7,801,549
Construction in process 12,703 20,340
7,695,141 7,821,889
Investment in real 562,732 544,598
estate entities
Goodwill 174,634 174,634
Intangible assets, net 40,511 52,005
Loan receivable from 550,499 552,361
Shurgard Europe
Other assets 95,459 109,857
Total assets $ 9,703,836 $ 9,936,045
LIABILITIES AND EQUITY
Notes payable $ 524,440 $ 643,811
Accrued and other 219,697 212,353
liabilities
Total liabilities 744,137 856,164
Redeemable
noncontrolling interests 12,872 12,777
in subsidiaries
Equity:
Public Storage
shareholders' equity:
Cumulative Preferred
Shares of beneficial
interest, $0.01 par
value, 100,000,000
shares authorized, 3,399,777 3,424,327
886,140 shares issued
(in series) and
outstanding (887,122 at
December 31, 2008), at
liquidation preference
Common Shares of
beneficial interest,
$0.10 par value,
650,000,000 shares 16,837 16,829
authorized, 168,355,703
shares issued and
outstanding (168,279,732
at December 31, 2008)
Equity Shares of
beneficial interest,
Series A, $0.01 par
value, 100,000,000 - -
shares authorized,
8,377.193 shares issued
and outstanding
Paid-in capital 5,673,201 5,590,093
Retained earnings (258,732 ) (290,323 )
(deficit)
Accumulated other (18,090 ) (31,931 )
comprehensive loss
Total Public Storage 8,812,993 8,708,995
shareholders' equity
Equity of permanent
noncontrolling interests
in subsidiaries:
Preferred partnership 100,000 325,000
units
Other interests 33,834 33,109
Total equity 8,946,827 9,067,104
Total liabilities and $ 9,703,836 $ 9,936,045
equity
Shurgard Europe Same Store Selected
Operating Data
The Shurgard Europe Same Store represents those 94 facilities that they
have owned, and have been operated on a stabilized basis, since January
1, 2007 and therefore provide meaningful comparisons for 2007, 2008, and
2009. The following table reflects the operating results of these 94
facilities. As described more fully in "Shurgard Europe" above, we
deconsolidated Shurgard Europe as of March 31, 2008.
Selected
Operating
Data for
the 94
facilities
operated by
Shurgard
Europe on a Three Months Ended June 30, Six Months Ended June 30,
stabilized
basis since
January 1,
2007:
(unaudited)
Percentage Percentage
2009 2008 Change 2009 2008 Change
(a) (a)
(Dollar amounts in thousands, except weighted average data,
utilizing constant exchange rates)
Revenues:
Rental $ 27,815 $ 29,224 (4.8 )% $ 54,422 $ 57,052 (4.6 )%
income
Late
charges and 451 517 (12.8 )% 886 996 (11.0 )%
admin fees
collected
Total 28,266 29,741 (5.0 )% 55,308 58,048 (4.7 )%
revenues
Cost of
operations:
Property 1,460 1,422 2.7 % 2,833 2,748 3.1 %
taxes
Direct
property 3,387 3,315 2.2 % 6,671 6,468 3.1 %
payroll
Advertising
and 1,498 1,073 39.6 % 2,941 1,802 63.2 %
promotion
Utilities 640 694 (7.8 )% 1,504 1,364 10.3 %
Repairs and 725 803 (9.7 )% 1,527 1,562 (2.2 )%
maintenance
Property 179 188 (4.8 )% 343 363 (5.5 )%
insurance
Other costs
of 4,127 3,986 3.5 % 7,860 7,923 (0.8 )%
management
Total cost
of 12,016 11,481 4.7 % 23,679 22,230 6.5 %
operations
Net
operating 16,250 18,260 (11.0 )% 31,629 35,818 (11.7 )%
income
Gross 57.5 % 61.4 % (6.4 )% 57.2 % 61.7 % (7.3 )%
margin
Weighted
average for
the period:
Square foot
occupancy 86.1 % 86.9 % (0.9 )% 85.4 % 87.3 % (2.2 )%
(b)
Realized
annual rent
per $ 25.04 $ 26.07 (4.0 )% $ 24.70 $ 25.33 (2.5 )%
occupied
square foot
(c)(d)
REVPAF (d) $ 21.56 $ 22.65 (4.8 )% $ 21.09 $ 22.11 (4.6 )%
(e)
Weighted
average at
June 30:
Square foot 87.0 % 87.4 % (0.5 )%
occupancy
In place
annual rent
per $ 26.63 $ 27.66 (3.7 )%
occupied
square foot
(f)
Total net
rentable
square feet 5,160 5,160 -
(in
thousands)
For comparative purposes, these amounts are presented on a constant
exchange rate basis. The amounts for the three and six months ended June
30, 2008 have been restated using the actual exchange rate for the same
(a) periods in 2009. The exchange rate for the Euro relative to the U.S.
Dollar averaged 1.361 and 1.334 for the three and six months ended June
30, 2009, respectively, as compared to 1.563 and 1.530, respectively, for
the same periods in 2008.
(b) Square foot occupancies represent weighted average occupancy levels over
the entire period.
Realized annual rent per occupied square foot is computed by annualizing
the result of dividing rental income before late charges and
(c) administrative fees by the weighted average occupied square feet for the
period. Realized annual rent per occupied square foot takes into
consideration promotional discounts and other items that reduce rental
income from the contractual amounts due.
Late charges and administrative fees are excluded from the computation of
realized annual rent per occupied square foot and REVPAF. Exclusion of
these amounts provides a better measure of our ongoing level of revenue,
(d) by excluding the volatility of late charges, which are dependent
principally upon the level of tenant delinquency, and administrative fees,
which are dependent principally upon the absolute level of move-ins for a
period.
Realized annual rent per available foot or "REVPAF" is computed by
(e) dividing rental income before late charges and admin fees by the total
available net rentable square feet for the period.
In place annual rent per occupied square foot represents annualized
(f) contractual rents per occupied square foot without reductions for
promotional discounts and excludes late charges and administrative fees.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Computation of Funds from Operations
(Unaudited)
Funds from operations ("FFO") is a term defined by the National Association of
Real Estate Investment Trusts ("NAREIT"). FFO is a non-GAAP (generally accepted
accounting principles) financial measure. FFO is generally defined as net income
before depreciation with respect to real estate assets and gains and losses on
real estate assets. FFO is presented because management and many analysts
consider FFO to be one measure of the performance of real estate companies. In
addition, we believe that FFO is helpful to investors as an additional measure
of the performance of a REIT, because net income includes the impact of
depreciation, which assumes that the value of real estate diminishes predictably
over time, while we believe that the value of real estate fluctuates due to
market conditions and in response to inflation. FFO computations do not consider
scheduled principal payments on debt, capital improvements, distributions, and
other obligations of the Company. FFO is not a substitute for our cash flow or
net income as a measure of our liquidity or operating performance or our ability
to pay dividends. Other REITs may not compute FFO in the same manner;
accordingly, FFO may not be comparable among REITs. The following table
reconciles from net income to Funds from Operations, and sets forth the
computation of Funds from Operations per share:
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
(Amounts in thousands, except per share data)
Computation of Funds
from Operations
("FFO") allocable to
Common Shares:
Net Income $ 205,387 $ 143,955 $ 358,816 $ 663,896
Add back -
depreciation and 83,796 94,829 168,762 217,069
amortization
Add back -
depreciation and
amortization included 488 557 722 808
in Discontinued
Operations
Eliminate -
depreciation with (54 ) (64 ) (114 ) (125 )
respect to non-real
estate assets
Eliminate - loss
(gain) on sale of real - 92 (2,722 ) (341,773 )
estate investments
Eliminate - equity
share of PSB's real (675 ) - (675 ) -
estate gain
Eliminate - gain on
sale of real estate
included in - - (4,181 ) -
Discontinued
Operations
Add back -
Depreciation from 16,939 22,821 34,571 34,993
unconsolidated real
estate investments
Consolidated FFO
allocable to our 305,881 262,190 555,179 574,868
equity holders
Less: allocations of
FFO (to) from
noncontrolling equity
interests:
Preferred unitholders,
based upon (1,813 ) (5,403 ) (5,830 ) (10,806 )
distributions paid
Preferred unitholders, - - 72,000 -
based upon redemptions
Other noncontrolling
equity interests in (4,862 ) (4,949 ) (9,741 ) (11,113 )
subsidiaries
Consolidated FFO
allocable to Public 299,206 251,838 611,608 552,949
Storage shareholders
Less: allocations of
FFO (to) from:
Preferred
shareholders, based on (58,108 ) (60,333 ) (116,216 ) (120,666 )
distributions paid
Preferred
shareholders, based on - - 6,218 -
redemptions
Restricted share unit (834 ) (643 ) (1,670 ) (1,547 )
holders
Equity Shares, Series (5,131 ) (5,356 ) (10,262 ) (10,712 )
A
Remaining FFO
allocable to Common $ 235,133 $ 185,506 $ 489,678 $ 420,024
Shares
Weighted average
shares:
Regular common shares 168,348 168,028 168,330 168,307
Weighted average share
options outstanding 180 451 171 424
using treasury method
Weighted average
common shares for
purposes of computing 168,528 168,479 168,501 168,731
fully-diluted FFO per
common share
FFO per diluted common $ 1.40 $ 1.10 $ 2.91 $ 2.49
share
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Computation of Funds Available for Distribution
(Unaudited)
Funds available for distribution ("FAD") represents FFO, plus (i) impairment
charges with respect to real estate assets, (ii) the non-cash portion of
share-based compensation expense, (iii) non-cash allocations to or from
preferred equity holders, less (iv) capital expenditures to maintain our
facilities and (v) elimination of any gain or loss on foreign exchange. The
distribution payout ratio is computed by dividing the distribution paid by FAD.
FAD is presented because many analysts consider it to be a measure of the
performance and liquidity of real estate companies and because we believe that
FAD is helpful to investors as an additional measure of the performance of a
REIT. FAD is not a substitute for our cash flow or net income as a measure of
our liquidity, operating performance, or our ability to pay dividends. FAD does
not take into consideration required principal payments on debt. Other REITs may
not compute FAD in the same manner; accordingly, FAD may not be comparable among
REITs. The following table reconciles from FFO to FAD, and sets forth the
computation of our distribution payout ratio:
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
(Amounts in thousands)
Computation of Funds
Available for
Distribution ("FAD"):
FFO allocable to Common $ 235,133 $ 185,506 $ 489,678 $ 420,024
Shares
Add: Non-cash
share-based compensation 3,480 3,484 6,093 6,258
expense
Eliminate: Non-cash
foreign currency (33,205 ) 2 1,528 (40,969 )
exchange losses (gains)
Eliminate: Non-cash
intangible impairment 8,205 - 8,205 -
charge included in
discontinued operations
Less: Allocation of FFO
from preferred
unitholders and
preferred shareholders - - (94,502 ) -
based upon redemptions,
including our equity
share of PSB's
redemption activities
Less: Aggregate capital (24,076 ) (24,697 ) (32,575 ) (31,571 )
expenditures
Funds available for $ 189,537 $ 164,295 $ 378,427 $ 353,742
distribution ("FAD")
Distribution to common $ 92,594 $ 92,432 $ 185,176 $ 184,809
shareholders
Distribution payout 48.9 % 56.3 % 48.9 % 52.2 %
ratio
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Reconciliation of Same Store revenues, cost of operations, and net operating
income to
Total Self-Storage revenues, Self-Storage cost of operations, and net income of
the Company
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
(Amounts in thousands)
Revenues for:
Same Store facilities $ 346,839 $ 359,461 $ 694,024 $ 709,452
Other domestic 24,791 21,309 48,845 40,869
facilities (a)
Shurgard Europe's
facilities, which were - - - 54,722
deconsolidated March
31, 2008
Self-storage revenues $ 371,630 $ 380,770 $ 742,869 $ 805,043
(b)
Self-storage cost of
operations for:
Same Store facilities $ 116,426 $ 120,526 $ 241,433 $ 244,382
Other facilities (a) 8,052 7,598 16,519 15,743
Shurgard Europe's
facilities, which were - - - 24,654
deconsolidated March
31, 2008
Self-storage cost of $ 124,478 $ 128,124 $ 257,952 $ 284,779
operations (b)
Net operating income
for:
Same Store facilities $ 230,413 $ 238,935 $ 452,591 $ 465,070
Other facilities (a) 16,739 13,711 32,326 25,126
Shurgard Europe's
facilities, which were - - - 30,068
deconsolidated March
31, 2008
Consolidated net 247,152 252,646 484,917 520,264
operating income (c)
Ancillary revenues 28,106 26,710 53,941 56,747
Interest and other 7,516 11,014 15,149 13,858
income
Ancillary cost of (10,374 ) (12,064 ) (20,027 ) (23,368 )
operations
Depreciation and (83,796 ) (94,829 ) (168,762 ) (217,069 )
amortization
General and (8,199 ) (33,173 ) (17,878 ) (48,089 )
administrative expense
Interest expense (7,288 ) (9,601 ) (15,416 ) (26,088 )
Equity in earnings of 7,398 4,632 30,209 7,361
real estate entities
Gain (loss) on
disposition of real - (92 ) 2,722 341,773
estate investments
Gain on redemption of - - 4,114 -
debt
Foreign exchange gain 33,205 (2 ) (1,528 ) 40,969
(loss)
Discontinued (8,333 ) (1,286 ) (8,625 ) (2,462 )
operations
Consolidated net $ 205,387 $ 143,955 $ 358,816 $ 663,896
income of the Company
(a) We consolidate the operating results of additional self-storage
facilities that are not Same Store Facilities.
Self-storage revenues and cost of operations do not include revenues
(b) and expenses generated at the facilities with respect to tenant
reinsurance, retail sales and truck rentals.
We present net operating income "NOI," which is a non-GAAP (generally
accepted accounting principles) financial measure that excludes the
impact of depreciation and amortization expense. Although depreciation
and amortization is a component of GAAP net income, we believe that NOI
is a meaningful measure of operating performance, because we utilize
(c) NOI in making decisions with respect to capital allocations, segment
performance, and comparing period-to-period and market-to-market
property operating results. In addition, the investment community
utilizes NOI in determining real estate values, and does not consider
depreciation expense as it is based upon historical cost. NOI is not a
substitute for net operating income after depreciation and amortization
in evaluating our operating results.
Source: Public Storage
Contact: Public Storage
Clemente Teng, 818-244-8080