Public Storage Reports Results for the Quarter Ended June 30, 2013

GLENDALE, Calif.--(BUSINESS WIRE)-- Public Storage (NYSE:PSA) announced today operating results for the quarter ended June 30, 2013.

Operating Results for the Three Months Ended June 30, 2013

For the three months ended June 30, 2013, net income allocable to our common shareholders was $207.7 million or $1.20 per diluted common share, compared to $132.3 million or $0.77 per diluted common share for the same period in 2012, representing an increase of $75.4 million or $0.43 per diluted common share. This increase is due primarily to (i) a $29.6 million increase from foreign currency exchange gains and losses incurred primarily in translating the value of our Euro-denominated loan receivable from Shurgard Europe into U.S. Dollars, (ii) a $28.5 million increase in self-storage net operating income, and (iii) a $16.8 million increase from reduced allocations of net income to preferred shareholders due to the application of EITF D-42 to our, and our equity share of PS Business Parks, Inc.’s (“PSB”), redemptions of preferred securities.

Our self-storage net operating income increased $28.5 million in the three months ended June 30, 2013 as compared to the same period in 2012, including $23.0 million for our Same Store Facilities and $5.5 million for our non-Same Store Facilities. Revenues for the Same Store Facilities increased 5.1% or $20.4 million in the quarter ended June 30, 2013 as compared to the same period in 2012, due to higher realized annual rent per occupied square foot and higher average occupancy. Cost of operations for the Same Store Facilities decreased by 2.0% or $2.5 million in the quarter ended June 30, 2013 as compared to the same period in 2012, due primarily to lower repairs and maintenance and advertising and selling costs. The increase in net operating income for the non-Same Store Facilities is due primarily to the impact of the acquisition of 24 self-storage facilities in 2012, combined with improved net operating income on the other properties in this group.

Operating Results for the Six Months Ended June 30, 2013

For the six months ended June 30, 2013, net income allocable to our common shareholders was $369.6 million or $2.14 per diluted common share, compared to $257.7 million or $1.50 per diluted common share for the same period in 2012, representing an increase of $111.9 million or $0.64 per diluted common share. This increase is due primarily to a $58.8 million increase in self-storage net operating income, combined with a $43.9 million increase from reduced allocations of net income to preferred shareholders due to the application of EITF D-42 to our, and our equity share of PSB’s, redemptions of preferred securities.

Our self-storage net operating income increased $58.8 million in the six months ended June 30, 2013 as compared to the same period in 2012, including $47.1 million for our Same Store Facilities and $11.7 million for our non-Same Store Facilities. Revenues for the Same Store Facilities increased 5.3% or $41.5 million in the six months ended June 30, 2013 as compared to the same period in 2012, due to higher realized annual rent per occupied square foot and higher average occupancy. Cost of operations for the Same Store Facilities decreased by 2.2% or $5.6 million in the six months ended June 30, 2013 as compared to the same period in 2012, due primarily to lower repairs and maintenance and advertising and selling costs. The increase in net operating income for the non-Same Store Facilities is due primarily to the impact of the acquisition of 24 self-storage facilities in 2012, combined with improved net operating income on the other properties in this group.

Funds from Operations

For the three months ended June 30, 2013, funds from operations (“FFO”) was $1.83 per diluted common share, as compared to $1.38 for the same period in 2012, representing an increase of $0.45 per share. FFO is a non-GAAP (generally accepted accounting principles) term defined by the National Association of Real Estate Investment Trusts, and generally represents net income before depreciation, gains and losses, and impairment charges with respect to real estate assets.

For the six months ended June 30, 2013, FFO was $3.40 per diluted common share, as compared to $2.73 for the same period in 2012, representing an increase of $0.67 per share.

In addition to FFO, we often discuss “Core FFO” per share which is also a non-GAAP measure that represents FFO per share, adjusted to exclude the impact of (i) foreign currency exchange gains and losses, representing a gain of $5.9 million and a loss of $6.8 million for the three and six months ended June 30, 2013, respectively (losses of $23.7 million and $11.5 million for the same periods in 2012), (ii) the impact of EITF D-42, including our equity share from PSB, representing charges totaling $16.8 million and $43.9 million, respectively, for the three and six months ended June 30, 2012 (none for the same periods in 2013), and (iii) our $1.4 million equity share of charges incurred by Shurgard Europe in closing a facility during the six months ended June 30, 2013. We believe Core FFO is a helpful measure in understanding our ongoing earnings. We also believe that the analyst community, likewise, reviews our Core FFO and Core FFO per share (or similar measures using different terminology). Core FFO is not a substitute for net income, earnings per share or cash flow from operations. Because other real estate investment trusts (“REITs”) may not compute Core FFO in the same manner as we do, may not use the same terminology, or may not present such a measure, Core FFO may not be comparable among REITs.

The following table reconciles from FFO per share to Core FFO per share (unaudited):

Property Operations – Same Store Facilities

The Same Store Facilities represent those facilities that have been owned and operated on a stabilized basis since January 1, 2011 and therefore provide meaningful comparisons for 2012 and 2013. The following table summarizes the historical operating results of these 1,949 facilities (122.8 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, 2013.

The following table summarizes selected quarterly financial data with respect to the Same Store Facilities (unaudited):

Investing and Capital Activities

During the three months ended June 30, 2013, we acquired one self-storage facility (80,000 net rentable square feet of self-storage space) located in Arizona for a total of approximately $8 million in cash, and completed expansions to existing self-storage facilities which added approximately 293,000 net rentable square feet of storage space at a cost of approximately $20 million. During the three months ending September 30, 2013, we expect to complete the acquisition of 29 self-storage facilities (21 in Florida, five in Massachusetts, two in California, and one in Rhode Island), with an aggregate of approximately 2.3 million net rentable square feet, at a total cost of approximately $374 million in cash. A total of $101 million of these acquisitions have been completed as of August 1, 2013, while the remainder are under contract and subject to customary closing conditions.

At June 30, 2013, we had a development pipeline of projects to expand existing self-storage facilities and develop new self-storage facilities, which will add approximately 1.4 million net rentable square feet of self-storage space. The aggregate cost of these projects is estimated at $198 million, of which $74 million had been incurred at June 30, 2013, with the remaining costs expected to be incurred primarily in the second half of 2013 and in 2014. Some of these projects are subject to significant contingencies such as entitlement approval.

Distributions Declared

On August 1, 2013, our Board of Trustees declared a regular common quarterly dividend of $1.25 per common share. The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on September 30, 2013 to shareholders of record as of September 13, 2013.

Second Quarter Conference Call

A conference call is scheduled for August 2, 2013 at 10:00 a.m. (PDT) to discuss the second quarter 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 16135101). A simultaneous audio web cast may be accessed by using the link at www.publicstorage.com under “Company Info, Investor Relations, Upcoming Events.” A replay of the conference call may be accessed through August 16, 2013 by calling (800) 585-8367 (domestic) or (404) 537-3406 (international) or by using the link at www.publicstorage.com under “Company Info, Investor Relations, Webcasts.” All forms of replay utilize conference ID number 16135101.

About Public Storage

Public Storage, a member of the S&P 500 and FT Global 500, is a REIT that primarily acquires, develops, owns and operates self-storage facilities. The Company’s headquarters are located in Glendale, California. At June 30, 2013, we had interests in 2,081 self-storage facilities located in 38 states with approximately 133 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. We also own a 41% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 28.2 million rentable square feet of commercial space, primarily flex, multitenant office and industrial space, at June 30, 2013.

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 our 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 our filings with the Securities and Exchange Commission, including in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, 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 self-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; changes in federal tax laws related to the taxation of REITs, which could impact our status as a REIT; difficulties in raising capital at a reasonable cost; delays in the development process; and economic uncertainty due to the impact of war or terrorism. We disclaim 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.

Shurgard Europe Same Store Selected Operating Data

The Shurgard Europe Same Store Pool represents Shurgard Europe’s 163 facilities (8.7 million net rentable square feet) that have been operated on a stabilized basis since January 1, 2011 and therefore provide meaningful comparisons for 2012 and 2013. These 163 facilities represent approximately 86% of the aggregate net rentable square feet of Shurgard Europe’s self-storage portfolio. Our pro-rata share of the operating results for these facilities is included in “equity in earnings of unconsolidated real estate entities” on our income statement.

Public Storage
Clemente Teng
(818) 244-8080, Ext. 1141

Source: Public Storage