GLENDALE, Calif.--(BUSINESS WIRE)--
Public Storage (NYSE:PSA) announced today operating results for the
fourth quarter ended December 31, 2009.
Operating Results for the Three Months
Ended December 31, 2009
Net income for the three months ended December 31, 2009 was $187.7
million compared to $162.0 million for the same period in 2008,
representing an increase of $25.7 million. This increase is primarily
due to a $25.6 million aggregate reduction in depreciation and
amortization and our equity share of depreciation expense, primarily due
to reduced amortization of tenant intangible assets that were acquired
in connection with the Shurgard Merger in 2006, offset partially by a
$9.3 million reduction in net operating income with respect to our Same
Store Facilities described below.
Revenues for the Same Store Facilities decreased 3.9% or $13.8 million
in the quarter ended December 31, 2009 as compared to the same period in
2008, due to a 3.8% reduction in realized rent per occupied square foot,
combined with a 0.5% reduction in average occupancies. Cost of
operations for the Same Store Facilities declined 4.4% or $4.5 million
in the quarter ended December 31, 2009 as compared to the same period in
2008. Net operating income for our Same Store Facilities decreased 3.7%
or $9.3 million in the quarter ended December 31, 2009 as compared to
the same period in 2008.
For the three months ended December 31, 2009, net income allocable to
our common shareholders was $117.5 million or $0.70 per common share on
a diluted basis compared to $121.5 million or $0.72 per common share for
the same period in 2008, representing a decrease of $4.0 million or
$0.02 per common share on a diluted basis. This decrease is primarily
due to a $33.9 million reduction in earnings allocated to our preferred
shareholders in the quarter ended December 31, 2008 associated with the
repurchase of preferred securities, offset partially by the net impact
of the factors described above.
Operating Results for the Year Ended
December 31, 2009
Net income for the year ended December 31, 2009 was $790.5 million
compared to $973.9 million for the same period in 2008, representing a
decrease of $183.4 million. This decrease is primarily due to (i) a gain
of $344.7 million in the year ended December 31, 2008 related to our
disposition of an interest in Shurgard Europe, (ii) a $37.9 million
reduction in net operating income with respect to our Same Store
Facilities described below, and (iii) an impairment charge included in
discontinued operations with respect to intangible assets totaling $8.2
million in the year ended December 31, 2009, partially offset by (iv) a
$49.9 million reduction in depreciation and amortization related to our
domestic assets, primarily representing reduced intangible amortization,
(v) a foreign exchange gain of $9.7 million during the year ended
December 31, 2009 as compared to a loss of $25.4 million during the same
period in 2008, (vi) a gain on disposition of $30.3 million related to
an equity offering by PSB described below, and (vii) a reduction in
general and administrative expenses due to $27.9 million in incentive
compensation incurred in the year ended December 31, 2008 related to our
disposition of an interest in Shurgard Europe.
Revenues for the Same Store Facilities decreased 3.2% or $46.1 million
in the year ended December 31, 2009 as compared to the same period in
2008, due to a 2.8% reduction in realized rent per occupied square foot,
combined with a 0.9% reduction in average occupancies. Cost of
operations for the Same Store Facilities decreased 1.8% or $8.2 million
in the year ended December 31, 2009 as compared to the same period in
2008. Net operating income for our Same Store Facilities decreased 3.9%
or $37.9 million for the year ended December 31, 2009 as compared to the
same period in 2008.
For the year ended December 31, 2009, net income allocable to our common
shareholders was $586.0 million or $3.47 per common share on a diluted
basis compared to $705.8 million or $4.18 per common share for the same
period in 2008, representing a decrease of $119.8 million or $0.71 per
common share on a diluted basis. These decreases are primarily due to
the net impact of the factors described above, offset by a $44.4 million
reduction in earnings allocated to our preferred unitholders and
preferred shareholders in the year ended December 31, 2009 as compared
to the same period in 2008 associated with the redemption of preferred
securities occurring in both periods.
Funds from Operations
For the three months ended December 31, 2009, funds from operations
("FFO") was $1.27 per common share as compared to $1.48 per common share
for the same period in 2008, representing a decrease of $0.21 per common
share.
For the three months ended December 31, 2009, FFO was impacted by a
foreign currency exchange loss totaling $10.2 million as compared to an
exchange loss of $13.2 million for the same period in 2008.
FFO for the three months ended December 31, 2008 was also impacted by
(i) changes in accounting estimates with respect to our tenant insurance
operations reflecting an increase in ancillary cost of operations
totaling $1.2 million, (ii) write-offs of development costs for
cancelled projects included in general and administrative expense
totaling $1.5 million, along with our equity share of Shurgard Europe's
development cost write-offs totaling $1.2 million, and (iii) a reduction
in the allocation of net income to our preferred shareholders pursuant
to the aforementioned preferred share repurchases, combined with our
equity share of PSB's preferred stock repurchases, aggregating $35.8
million.
For the year ended December 31, 2009, FFO was $5.61 per common share on
a diluted basis as compared to $5.05 per common share for the same
period in 2008, representing an increase of $0.56 per share.
For the year ended December 31, 2009, FFO has been impacted by (i) a
foreign currency exchange gain totaling $9.7 million as compared to a
loss of $25.4 million for the same period in 2008, (ii) changes in
accounting estimates with respect to our tenant insurance operations
reflected as a reduction in ancillary cost of operations totaling $2.0
million ($5.8 million for the same period in 2008), (iii) an impairment
charge with respect to an intangible asset resulting from an eminent
domain proceeding totaling $8.2 million, (iv) costs incurred to
terminate and wind down our truck rental operations of $3.5 million, (v)
a $78.2 million reduction in the allocation of net income to our
preferred shareholders and unitholders pursuant to the repurchase of our
preferred securities, and our pro-rata share ($16.3 million) of PSB's
earnings from preferred securities repurchases which is included in
equity in earnings, and (vi) a gain on the early retirement of debt
totaling $4.1 million.
FFO for the year ended December 31, 2008 was also impacted by (i) a loss
with respect to damage to our facilities, and tenant insurance claims
expense, caused by Hurricane Ike aggregating $1.1 million, (ii)
write-offs of development costs for cancelled projects included in
general and administrative expense totaling $1.5 million, along with our
equity share of Shurgard Europe's development cost write-offs totaling
$1.2 million, (iii) a reduction in the allocation of net income to our
preferred shareholders combined with our equity share of PSB's preferred
stock repurchases, aggregating $35.8 million, and (iv) 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 months and years ended December 31, 2009 and
2008:
Three Months Ended December 31, Year Ended December 31,
Percentage Percentage
2009 2008 Change 2009 2008 Change
FFO per
common share
prior to
adjustments $ 1.33 $ 1.38 (3.6 )% $ 5.03 $ 5.16 (2.5 )%
for the
following
items
Foreign
currency (0.06 ) (0.08 ) 0.06 (0.15 )
exchange gain
(loss)
Change in
accounting
estimate - - (0.01 ) 0.01 0.03
ancillary
operations.
Impairment
charge on
intangible
asset
resulting - - (0.05 ) -
from an
eminent
domain
proceeding
Casualty loss
and tenant
insurance
loss - - (0.01 )
associated -
with
Hurricane Ike
Costs
incurred to
terminate - - (0.02 ) -
truck rental
operations
Cancellation
of (0.02 ) - (0.02 )
development
projects
Increased
income
allocated to
common
shareholders,
and from
preferred
equity - 0.21
shareholders, 0.56 0.21
pursuant to
preferred
repurchases,
including our
equity share
from PSB
Gain on early
retirement of - - 0.02 -
debt
Incremental
incentive
compensation
incurred in
connection
with the - (0.17 )
disposition - -
of an
interest in
Shurgard
Europe
FFO per
common share, $ 1.27 $ 1.48 (14.2 )% $ 5.61 $ 5.05 11.1 %
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 December
31, 2009.
Selected
Operating
Data for the
Same Store Three Months Ended December 31, Year Ended December 31,
Facilities
(1,899
Facilities):
Percentage Percentage
2009 2008 Change 2009 2008 Change
(Dollar amounts in thousands, except for weighted average data)
Revenues:
Rental $ 327,401 $ 342,028 (4.3 )% $ 1,324,747 $ 1,375,484 (3.7 )%
income
Late charges
and admin
fees 15,969 15,174 5.2 % 64,768 60,146 7.7 %
collected
(a)
Total 343,370 357,202 (3.9 )% 1,389,515 1,435,630 (3.2 )%
revenues (b)
Cost of
operations:
Property 28,218 28,159 0.2 % 139,776 135,825 2.9 %
taxes
Direct
property 23,242 23,735 (2.1 )% 94,262 94,303 0.0 %
payroll
Media 983 922 6.6 % 19,795 19,853 (0.3 )%
advertising
Other
advertising 4,556 4,137 10.1 % 20,079 18,235 10.1 %
and
promotion
Utilities 7,904 8,376 (5.6 )% 34,636 36,411 (4.9 )%
Repairs and 9,489 10,854 (12.6 )% 38,356 42,696 (10.2 )%
maintenance
Telephone
reservation 2,539 2,956 (14.1 )% 11,040 12,580 (12.2 )%
center
Property 2,257 2,625 (14.0 )% 9,761 11,391 (14.3 )%
insurance
Other costs
of 20,706 22,678 (8.7 )% 86,908 91,502 (5.0 )%
management
Total cost
of 99,894 104,442 (4.4 )% 454,613 462,796 (1.8 )%
operations
(b)
Net
operating $ 243,476 $ 252,760 (3.7 )% $ 934,902 $ 972,834 (3.9 )%
income
Gross margin 70.9 % 70.8 % 0.1 % 67.3 % 67.8 % (0.7 )%
Weighted
average for
the period:
Square foot
occupancy 87.4 % 87.8 % (0.5 )% 88.7 % 89.5 % (0.9 )%
(c)
Realized
annual rent
per occupied $ 12.76 $ 13.27 (3.8 )% $ 12.71 $ 13.08 (2.8 )%
square foot
(d)(e)
REVPAF (f) $ 11.15 $ 11.65 (4.3 )% $ 11.28 $ 11.71 (3.7 )%
(e)
Weighted
average
December 31:
Square foot 87.1 % 87.1 % -
occupancy
In place
annual rent
per occupied $ 13.46 $ 14.02 (4.0 )%
square foot
(g)
Total net
rentable
square feet 117,462 117,462 -
(in
thousands)
a) Late charges and administrative fees have increased primarily due to
increases in the related fee rates rather than any increase in tenant
delinquency.
b) 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 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.
c) Square foot occupancies represent weighted average occupancy levels
over the entire period.
d) Realized annual rent per occupied square foot is computed by
annualizing the result of dividing rental income (which excludes late
charges and 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.
e) 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, by excluding the volatility of late charges, which are
dependent principally upon the level of tenant delinquency and the
associated fee rates, and administrative fees, which are dependent
principally upon the absolute level of move-ins for a period.
f) Realized annual rent per available foot or "REVPAF" is computed by
dividing rental income (which excludes late charges and administrative
fees) by the total available net rentable square feet for the period.
g) In place annual rent per occupied square foot represents annualized
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 Total
Total
revenues (in
000's):
2009 $ 347,185 $ 346,839 $ 352,121 $ 343,370 $ 1,389,515
2008 $ 349,991 $ 359,461 $ 368,976 $ 357,202 $ 1,435,630
Total cost of
operations
(in 000's):
2009 $ 125,007 $ 116,426 $ 113,286 $ 99,894 $ 454,613
2008 $ 123,856 $ 120,526 $ 113,972 $ 104,442 $ 462,796
Property
taxes (in
000's):
2009 $ 37,762 $ 36,659 $ 37,137 $ 28,218 $ 139,776
2008 $ 36,349 $ 35,156 $ 36,161 $ 28,159 $ 135,825
Media
advertising
(in 000's):
2009 $ 8,158 $ 7,224 $ 3,430 $ 983 $ 19,795
2008 $ 6,947 $ 9,836 $ 2,148 $ 922 $ 19,853
Other
advertising
and promotion
(in 000's):
2009 $ 4,614 $ 5,967 $ 4,942 $ 4,556 $ 20,079
2008 $ 4,426 $ 5,027 $ 4,645 $ 4,137 $ 18,235
REVPAF:
2009 $ 11.29 $ 11.27 $ 11.41 $ 11.15 $ 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 $ 12.73 $ 12.76 $ 12.71
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 % 89.6 % 87.4 % 88.7 %
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 joint
venture that 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.
At December 31, 2009 Shurgard Europe has an interest in 187 facilities
(10 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 EUR224 million ($321
million) of outstanding debt at December 31, 2009. The loans are payable
to various banks and are non-recourse to Shurgard Europe. One of the JV
loans, totaling EUR107 million ($153 million), is due May 2011 and the
other JV loan, totaling EUR117 million ($168 million), is due July 2010.
Effective October 31, 2009, we extended the maturity date to March 31,
2013 for our existing EUR391.9 million ($561.7 million at December 31,
2009) loan to Shurgard Europe. Under the terms of the extension, the
existing 7.5% rate of interest increased to 9.0% per annum (effective
November 1, 2009). All other material terms and covenants remain the
same. 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.
Our existing commitment to provide up to EUR185 million to 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, remains in place until March 31, 2010. 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 EUR45 million.
In December 2009, Shurgard Europe acquired a property in Central London
with 15,445 net rentable square feet for approximately $5.0 million and
assumed liabilities.
Liquidity Position
At December 31, 2009, we had approximately $764 million of unrestricted
cash and have access to an additional $300 million through our line of
credit. The line of credit expires March 27, 2012. We have no
significant capital commitments at December 31, 2009, other than
outstanding debt maturities and the aggregate redemption amount for our
Equity Shares, Series A, discussed below.
At December 31, 2009, outstanding debt totaled $519 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 year ended December
31, 2009, our funds from operations available to distribute to common
shareholders ("FAD") exceeded our regular common distributions by
approximately $430 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 February 26, 2010, our Board of Trustees declared a regular common
dividend of $0.65 per common share, representing an increase of $0.10
per share (an 18% increase) from the previous quarter's distribution.
Our consistent, long-term dividend policy has been to distribute only
our taxable income. Taxable income attributable to our common
shareholders has increased due to recent purchases of preferred
securities and equity stock, as well as reduced property depreciation,
offset in part by declines in operating income. Future changes in our
dividend will be impacted by these same factors, as well as property
acquisitions.
The Board also declared 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 March 31, 2010 to
shareholders of record as of March 15, 2010.
Redemption of Equity Shares, Series A
We are calling for redemption all outstanding depositary shares, each
representing 1/1,000 of an Equity Share, Series A (NYSE:PSA.A) on April
15, 2010 at $24.50 per share. The aggregate redemption amount to be paid
to all holders of the depositary shares is approximately $205 million.
Fourth Quarter Conference Call
A conference call is scheduled for Monday, March 1, 2010, at 10:00 a.m.
(PST) to discuss the fourth quarter ended December 31, 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 51455597). A simultaneous audio web
cast may be accessed by using the link at www.publicstorage.com
under "Company Info, Investor Relations" (conference ID number
51455597). A replay of the conference call may be accessed through March
15, 2010 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 51455597.
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 December 31, 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 188
storage facilities located in seven Western European nations with
approximately ten million net rentable square feet operated under the
"Shurgard" brand. The Company also owns a 41% 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 December 31, 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, 2009, to be filed on or before March 1, 2010,
our 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 year ended December 31, 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.
On January 1, 2009, accounting standards promulgated by the FASB became
effective which affected the classification of ownership interests other than
those of the Company, such as limited partnership interests in entities that are
consolidated in the financial statements of the Company. As a result, we have
reclassified these equity interests previously referred to as minority interests
on our balance sheet at December 31, 2008 to "permanent noncontrolling interests
in subsidiaries" or "redeemable noncontrolling interests in subsidiaries." The
nature of these adjustments is described more fully in Note 2 to our December
31, 2009 Consolidated Financial Statements included in our Form 10-K for the
year ended December 31, 2009, to be filed on or before March 1, 2010.
Three Months Ended December 31, Year Ended December 31,
2009 2008 2009 2008
(Amounts in thousands, except per share amounts)
Revenues:
Self-storage $ 369,216 $ 381,236 $ 1,490,292 $ 1,579,017
Ancillary 25,856 24,728 107,597 108,421
operations (a)
Interest and other 7,807 10,812 29,813 36,155
income (b)
402,879 416,776 1,627,702 1,723,593
Expenses:
Cost of
operations:
Self-storage 107,715 112,732 486,928 519,090
Ancillary 8,491 9,404 36,011 36,528
operations (a) (c)
Depreciation and 85,563 103,828 340,233 411,981
amortization (d)
General and 9,203 5,841 35,735 62,809
administrative (e)
Interest expense 7,211 8,757 29,916 43,944
218,183 240,562 928,823 1,074,352
Income from
continuing
operations before
equity in earnings
of real estate
entities, gain
(loss) on
disposition of 184,696 176,214 698,879 649,241
real estate
investments, net,
gain on early
retirement of
debt, foreign
currency exchange
gain (loss) and
casualty loss
Equity in earnings
of real estate 14,211 6,712 53,244 20,391
entities (b) (f)
Gain (loss) on
disposition of
real estate 131 (6,252 ) 33,426 336,545
investments, net
(i)
Gain on early - - 4,114 -
retirement of debt
Foreign currency
exchange gain (10,239 ) (13,159 ) 9,662 (25,362 )
(loss) (g)
Casualty loss - - - (525 )
Income from
continuing 188,799 163,515 799,325 980,290
operations
Discontinued (1,110 ) (1,481 ) (8,869 ) (6,418 )
operations (a)
Net income 187,689 162,034 790,456 973,872
Net income
allocable (to)
from
noncontrolling
interests in
subsidiaries:
Preferred
unitholders based (1,812 ) (5,403 ) (9,455 ) (21,612 )
upon distributions
paid
Preferred
unitholders based - - 72,000 -
upon repurchases
(h)
Other
noncontrolling (4,739 ) (4,941 ) (18,380 ) (17,084 )
interests in
subsidiaries
Net income
allocable to $ 181,138 $ 151,690 $ 834,621 $ 935,176
Public Storage
Shareholders
Allocation of net
income to Public
Storage
Shareholders:
Preferred
shareholders based $ 58,107 $ 58,722 $ 232,431 $ 239,721
on distributions
paid
Preferred
shareholders based - (33,851 ) (6,218 ) (33,851 )
on repurchases (h)
Equity Shares, 5,131 5,131 20,524 21,199
Series A
Restricted share 409 150 1,918 2,304
units
Common 117,491 121,538 585,966 705,803
shareholders
$ 181,138 $ 151,690 $ 834,621 $ 935,176
Per common share:
Net income per $ 0.70 $ 0.72 $ 3.48 $ 4.19
share - Basic
Net income per $ 0.70 $ 0.72 $ 3.47 $ 4.18
share - Diluted
Weighted average
common shares - 168,398 168,254 168,358 168,250
Basic
Weighted average
common shares - 169,027 168,679 168,768 168,675
Diluted
(a) During 2009, we discontinued the containerized storage and truck
rental operations as well as a self-storage facility that is expected to
be disposed of pursuant to a condemnation proceeding within the next
year. As a result, the historical operations from these activities have
been reclassified for all periods presented from ancillary or
self-storage operations to discontinued operations. Included in
discontinued operations for the year ended December 31, 2009 is an $8.2
million impairment charge with respect to intangible self-storage
assets, gains on disposition of storage facilities of approximately $6.0
million, as well as $3.5 million in costs associated with the disposal
of trucks.
(b) Commencing March 31, 2008, we account for our investment in Shurgard
Europe using the equity method of accounting. In addition to our 49%
pro-rata share of the net loss of Shurgard Europe, our equity in
earnings of Shurgard Europe includes our 49% pro-rata share of the
interest income on the EUR391.9 million note due from Shurgard Europe as
well as trademark license fees received from Shurgard Europe for the
respective periods after March 31, 2008. Interest and other income
includes 51% of the interest income and trademark license fees received
from Shurgard Europe for the respective periods after March 31, 2008.
(c) Due to changes in accounting estimates, ancillary cost of operations
reflects an increase of $1.2 million for the three months ended December
31, 2008 and reductions of $2.0 million and $5.8 million for the years
ended December 31, 2009 and 2008, respectively.
(d) Depreciation and amortization expense for the three months and year
ended December 31, 2009 decreased when compared to the same periods in
2008 primarily due to reductions in amortization expense related to
domestic intangible assets obtained in the Shurgard Merger, as well as
to the deconsolidation of Shurgard Europe on March 31, 2008.
(e) For the year ended December 31, 2008, general and administrative
expense includes additional incentive compensation totaling $27.9
million associated with the disposition of an interest in Shurgard
Europe.
(f) Equity in earnings for the years ended December 31, 2009 and 2008
includes $16.3 million and $1.9 million, respectively, in additional
equity income related to PSB's repurchases of its preferred securities.
(g) Our foreign currency exchange gains and losses are primarily related
to our loan to Shurgard Europe which is denominated in Euros. When
converting the Euro denominated loan to U.S. Dollars, exchange gains or
losses arise due to fluctuation in the exchange rates between the value
of the U.S. Dollar and the Euro.
(h) During 2008 and 2009, we repurchased various series of our preferred
shares and units for amounts that were lower than the original 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. For the year ended December 31, 2009, this
allocation totaled $78.2 million and for each of the three months and
year ended December 31, 2008, the allocation totaled $33.9 million.
(i) In applying FASB ASC Topic 323, "Investments - Equity Method and
Joint Ventures" we recognized a $30.3 million gain associated with PSB's
common equity issuance during the year ended December 31, 2009. Gain on
disposition of real estate investments for the year ended December 31,
2008 includes a $344.7 million gain on our disposition of a 51% interest
in Shurgard Europe, as well as a $9.3 million loss upon disposition of
an equity investment recorded in the quarter ended December 31, 2008.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
December 31, December 31,
2009 2008
(Amounts in thousands, except share and per share
data)
ASSETS
(Unaudited)
Cash and cash equivalents $ 763,789 $ 680,701
Operating real estate
facilities:
Land and buildings, at 10,292,955 10,207,022
cost
Accumulated depreciation (2,734,449 ) (2,405,473 )
7,558,506 7,801,549
Construction in process 3,527 20,340
7,562,033 7,821,889
Investment in real estate 612,316 544,598
entities
Goodwill 174,634 174,634
Intangible assets, net 38,270 52,005
Loan receivable from 561,703 552,361
Shurgard Europe
Other assets 92,900 109,857
Total assets $ 9,805,645 $ 9,936,045
LIABILITIES AND EQUITY
Notes payable $ 518,889 $ 643,811
Accrued and other 212,253 212,353
liabilities
Total liabilities 731,142 856,164
Redeemable noncontrolling 13,122 12,777
interests in subsidiaries
Equity:
Public Storage
shareholders' equity:
Cumulative Preferred
Shares of beneficial
interest, $0.01 par
value, 100,000,000 shares
authorized, 886,140 3,399,777 3,424,327
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 16,842 16,829
authorized, 168,405,539
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 5,680,549 5,590,093
Accumulated deficit (153,759 ) (290,323 )
Accumulated other (15,002 ) (31,931 )
comprehensive loss
Total Public Storage 8,928,407 8,708,995
shareholders' equity
Equity of permanent
noncontrolling interests
in subsidiaries:
Preferred partnership 100,000 325,000
units
Other interests 32,974 33,109
Total equity 9,061,381 9,067,104
Total liabilities and $ 9,805,645 $ 9,936,045
equity
Shurgard Europe Same Store Selected
Operating Data
The Shurgard Europe Same Store properties represent 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.
Three Months Ended December 31, Year Ended December 31,
Selected
Operating
Data for
the 94
facilities
operated by
Shurgard Percentage Percentage
Europe on a 2009 2008 (a) Change 2009 2008 (a) Change
stabilized
basis since
January 1,
2007:
(unaudited)
(Dollar amounts in thousands, except weighted average data,
utilizing constant exchange rates)
Revenues:
Rental $ 31,048 $ 31,681 (2.0 )% $ 115,785 $ 120,030 (3.5 )%
income
Late
charges and 492 483 1.9 % 1,892 2,018 (6.2 )%
admin fees
collected
Total 31,540 32,164 (1.9 )% 117,677 122,048 (3.6 )%
revenues
Cost of
operations:
Property 1,266 1,433 (11.7 )% 5,661 5,659 0.0 %
taxes
Direct
property 3,659 3,771 (3.0 )% 13,767 13,852 (0.6 )%
payroll
Advertising
and 591 866 (31.8 )% 4,662 3,579 30.3 %
promotion
Utilities 714 770 (7.3 )% 2,849 2,846 0.1 %
Repairs and 791 1,026 (22.9 )% 3,157 3,353 (5.8 )%
maintenance
Property 195 203 (3.9 )% 711 760 (6.4 )%
insurance
Other costs
of 4,724 4,486 5.3 % 16,902 16,490 2.5 %
management
Total cost
of 11,940 12,555 (4.9 )% 47,709 46,539 2.5 %
operations
Net
operating $ 19,600 $ 19,609 0.0 % $ 69,968 $ 75,509 (7.3 )%
income
Gross 62.1 % 61.0 % 1.8 % 59.5 % 61.9 % (3.9 )%
margin
Weighted
average for
the period:
Square foot
occupancy 86.7 % 86.4 % 0.3 % 86.1 % 86.9 % (0.9 )%
(b)
Realized
annual rent
per $ 27.76 $ 28.42 (2.3 )% $ 26.06 $ 26.77 (2.7 )%
occupied
square foot
(c)(d)
REVPAF (d) $ 24.07 $ 24.56 (2.0 )% $ 22.44 $ 23.26 (3.5 )%
(e)
Weighted
average at
December
31:
Square foot 85.7 % 84.7 % 1.2 %
occupancy
In place
annual rent
per $ 30.03 $ 30.32 (1.0 )%
occupied
square foot
(f)
Total net
rentable
square feet 5,160 5,160 -
(in
thousands)
Average
Euro to
U.S. Dollar
exchange
rates: (a)
Constant
exchange 1.476 1.476 - 1.393 1.393 -
rates used
herein
Actual
historical 1.476 1.316 12.2 % 1.393 1.470 (5.2 )%
exchange
rates
(a) In order to isolate changes in the underlying operations from the
impact of exchange rates, the amounts in this table are presented on a
constant exchange rate basis. The amounts for the three months and year
ended December 31, 2008 have been restated using the actual exchange
rate for the same periods in 2009.
(b) Square foot occupancies represent weighted average occupancy levels
over the entire period.
(c) Realized annual rent per occupied square foot is computed by
annualizing the result of dividing rental income before late charges and
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.
(d) 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, 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.
(e) Realized annual rent per available foot or "REVPAF" is computed by
dividing rental income before late charges and admin fees by the total
available net rentable square feet for the period.
(f) In place annual rent per occupied square foot represents annualized
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 Year Ended
December 31, December 31,
2009 2008 2009 2008
(Amounts in thousands, except per share data)
Computation of Funds from
Operations ("FFO")
allocable to Common
Shares:
Net Income $ 187,689 $ 162,034 $ 790,456 $ 973,872
Add back - depreciation 85,563 103,828 340,233 411,981
and amortization
Add back - depreciation
and amortization included 456 462 1,894 2,220
in Discontinued
Operations
Eliminate - depreciation
with respect to non-real (10 ) (62 ) (160 ) (253 )
estate assets
Eliminate - (gain)/loss
on disposition of real (131 ) 6,252 (33,426 ) (336,545 )
estate investments
Eliminate - equity share - - (675 ) -
of PSB's real estate gain
Eliminate - gain on sale
of real estate included - - (6,018 ) -
in Discontinued
Operations
Add back - Depreciation
from unconsolidated real 11,442 18,727 62,471 74,918
estate investments
Consolidated FFO
allocable to our equity 285,009 291,241 1,154,775 1,126,193
holders
Less: allocations of FFO
(to) from noncontrolling
equity interests:
Preferred unitholders,
based upon distributions (1,812 ) (5,403 ) (9,455 ) (21,612 )
paid
Preferred unitholders, - - 72,000 -
based upon repurchases
Other noncontrolling
equity interests in (5,214 ) (5,114 ) (20,231 ) (21,904 )
subsidiaries
Consolidated FFO
allocable to Public 277,983 280,724 1,197,089 1,082,677
Storage shareholders
Less: allocations of FFO
(to) from:
Preferred shareholders,
based on distributions (58,107 ) (58,722 ) (232,431 ) (239,721 )
paid
Preferred shareholders, - 33,851 6,218 33,851
based on repurchases
Restricted share unit (768 ) (1,063 ) (3,285 ) (3,263 )
holders
Equity Shares, Series A (5,131 ) (5,131 ) (20,524 ) (21,199 )
Remaining FFO allocable $ 213,977 $ 249,659 $ 947,067 $ 852,345
to Common Shares
Weighted average shares:
Regular common shares 168,398 168,254 168,358 168,250
Weighted average share
options outstanding using 629 425 410 425
treasury method
Weighted average common
shares for purposes of 169,027 168,679 168,768 168,675
computing fully-diluted
FFO per common share
FFO per diluted common $ 1.27 $ 1.48 $ 5.61 $ 5.05
share
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Computation of Funds Available for Distribution
(Unaudited)
Funds available for distribution ("FAD") represents FFO, (i) adding back
impairment charges with respect to real estate assets, (ii) adding back the
non-cash portion of share-based compensation expense, (iii) eliminating non-cash
allocations to or from preferred equity holders, (iv) deducting capital
expenditures to maintain our facilities and (v) eliminating gains and losses on
foreign exchange. The distribution payout ratio is computed by dividing the
distribution paid to common shareholders, 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 Year Ended
December 31, December 31,
2009 2008 2009 2008
(Amounts in thousands)
Computation of Funds
Available for Distribution
("FAD"):
FFO allocable to Common $ 213,977 $ 249,659 $ 947,067 $ 852,345
Shares
Add: Non-cash share-based 3,338 2,828 12,791 12,591
compensation expense
Eliminate: Non-cash foreign
currency exchange (gain) 10,239 13,159 (9,662 ) 25,362
loss
Eliminate: Non-cash
intangible impairment charge
included in discontinued - - 8,205 -
operations
Less: Allocation of FFO from
preferred unitholders and
preferred shareholders based
upon repurchases, including - (35,774 ) (94,502 ) (35,774 )
our equity share of PSB's
repurchase activities
Less: Aggregate capital (9,903 ) (3,682 ) (62,352 ) (76,311 )
expenditures
Funds available for $ 217,651 $ 226,190 $ 801,547 $ 778,213
distribution ("FAD")
Distribution to common
shareholders:
Regular $ 92,620 $ 92,550 $ 370,404 $ 369,865
Special (a) - 100,958 - 100,958
Total distribution to common $ 92,620 $ 193,508 $ 370,404 $ 470,823
shareholders
Distribution payout ratio 42.6 % 85.6 % 46.2 % 60.5 %
Distribution payout ratio
(on regular dividends only) 42.6 % 40.9 % 46.2 % 47.5 %
(b)
a) A special dividend of $0.60 per common share was paid on December 30,
2008. This payout was primarily due to the gain on the sale of a 51%
interest in Shurgard Europe.
b) Supplemental payout ratio, excluding the impact of the special
dividend, which was primarily due to the gain on the sale of a 51%
interest in Shurgard Europe. This supplemental measure is presented to
portray ongoing dividends, excluding the dividend due to the gain on
sale of Shurgard, because FAD excludes the gain on sale of an interest
in Shurgard Europe.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Reconciliation of Same Store Data to
Consolidated Data of the Company
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
(Amounts in thousands)
Revenues for:
Same Store facilities $ 343,370 $ 357,202 $ 1,389,515 $ 1,435,630
Other domestic 25,846 24,034 100,777 88,665
facilities (a)
Shurgard Europe's
facilities, which were - - - 54,722
deconsolidated March
31, 2008
Self-storage revenues $ 369,216 $ 381,236 $ 1,490,292 $ 1,579,017
(b)
Self-storage cost of
operations for:
Same Store facilities $ 99,894 $ 104,442 $ 454,613 $ 462,796
Other facilities (a) 7,821 8,290 32,315 31,640
Shurgard Europe's
facilities, which were
deconsolidated March - - - 24,654
31, 2008
Self-storage cost of $ 107,715 $ 112,732 $ 486,928 $ 519,090
operations (b)
Net operating income
for:
Same Store facilities $ 243,476 $ 252,760 $ 934,902 $ 972,834
Other facilities (a) 18,025 15,744 68,462 57,025
Shurgard Europe's
facilities, which were
deconsolidated March - - - 30,068
31, 2008
Consolidated net 261,501 268,504 1,003,364 1,059,927
operating income (c)
Ancillary revenues 25,856 24,728 107,597 108,421
Interest and other 7,807 10,812 29,813 36,155
income
Ancillary cost of (8,491 ) (9,404 ) (36,011 ) (36,528 )
operations
Depreciation and (85,563 ) (103,828 ) (340,233 ) (411,981 )
amortization
General and (9,203 ) (5,841 ) (35,735 ) (62,809 )
administrative expense
Interest expense (7,211 ) (8,757 ) (29,916 ) (43,944 )
Equity in earnings of 14,211 6,712 53,244 20,391
real estate entities
Gain (loss) on
disposition of real 131 (6,252 ) 33,426 336,545
estate investments, net
Gain on early - - 4,114 -
retirement of debt
Foreign currency (10,239 ) (13,159 ) 9,662 (25,362 )
exchange gain (loss)
Casualty loss - - - (525 )
Discontinued operations (1,110 ) (1,481 ) (8,869 ) (6,418 )
Consolidated net income $ 187,689 $ 162,034 $ 790,456 $ 973,872
of the Company
(a) We consolidate the operating results of additional self-storage
facilities that are not Same Store Facilities.
(b) Self-storage revenues and cost of operations do not include revenues
and expenses generated at the facilities with respect to tenant
reinsurance, retail sales and truck rentals.
(c) We present net operating income or "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 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