Public Storage Reports Results for the Quarter Ended March 31, 2014

GLENDALE, Calif.--(BUSINESS WIRE)-- Public Storage (NYSE:PSA) announced today operating results for the quarter ended March 31, 2014.

Operating Results for the Three Months Ended March 31, 2014

For the three months ended March 31, 2014, net income allocable to our common shareholders was $174.1 million or $1.01 per diluted common share, compared to $161.9 million or $0.94 per diluted common share for the same period in 2013, representing an increase of $12.2 million or $0.07 per diluted common share. This increase is due primarily to a $30.8 million increase in self-storage net operating income, offset partially by an $18.0 million increase in depreciation and amortization associated with acquired real estate facilities.

Our self-storage net operating income increased $30.8 million in the three months ended March 31, 2014 as compared to the same period in 2013, including $16.0 million for our Same Store Facilities and $14.8 million for our non-Same Store Facilities. Revenues for the Same Store Facilities increased 5.1% or $21.3 million in the quarter ended March 31, 2014 as compared to the same period in 2013, due to higher realized annual rent per occupied square foot and higher average occupancy. Cost of operations for the Same Store Facilities increased by 4.0% or $5.3 million in the quarter ended March 31, 2014 as compared to the same period in 2013, due primarily to weather related increases in snow removal and utilities expense and increased property tax expense, offset partially by lower 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 121 self-storage facilities from third parties since January 1, 2013.

Funds from Operations

For the three months ended March 31, 2014, funds from operations (“FFO”) was $1.74 per diluted common share, as compared to $1.57 for the same period in 2013, representing an increase of $0.17 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.

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 losses, consisting of a loss of $2.3 million and $12.7 million for the three months ended March 31, 2014 and March 31, 2013, respectively, and (ii) other items, comprised primarily of a $7.8 million accrual related to a contingent legal settlement included in ancillary cost of operations for the three months ended March 31, 2014, and our $1.4 million share of charges incurred by Shurgard Europe in closing a facility during the same period in 2013. We believe Core FFO is a helpful measure in understanding our ongoing earnings and cash flow. We also believe that the analyst community 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, 2012 and therefore provide meaningful comparisons for 2013 and 2014. The Same Store pool increased from 1,949 facilities at December 31, 2013 to 1,983 facilities at March 31, 2014. The following table summarizes the historical operating results of these 1,983 facilities (125.5 million net rentable square feet) that represent approximately 89% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at March 31, 2014.

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 March 31, 2014 we completed two new development facilities and one expansion project adding 335,000 net rentable square feet at a cost of approximately $40 million. As of March 31, 2014, we had development and expansion projects in process which will add approximately 1.9 million net rentable square feet of storage space at a total cost of approximately $195 million. A total of $38 million in costs were incurred through March 31, 2014 with respect to these projects, with the remaining costs expected to be incurred primarily in the remainder of 2014.

In April 2014, we acquired a self-storage facility located in Austin, Texas with 86,000 net rentable square feet for approximately $6 million in cash and $5 million in assumed debt.

As of May 1, 2014, we are currently under contract, subject to contingencies, to acquire five self-storage facilities in North Carolina, with an aggregate of 342,000 in net rentable square feet, at a total cost of approximately $26 million in cash. We expect to complete the acquisition during the second quarter of 2014.

On January 28, 2014, our joint venture partner in Shurgard Europe acquired 51% of the loan receivable from Shurgard Europe at face value of €158.6 million ($216.2 million) in cash.

On March 17, 2014, we issued our 6.375% Series Y Preferred Shares for gross proceeds of $235 million and on April 10, 2014, we issued additional Series Y Preferred Shares at par for $50 million in gross proceeds.

During the three months ended March 31, 2014, we repaid our $50.1 million balance on our bank credit facility and repaid $328 million of our term loan. At May 1, 2014, the balance of our term loan is $322 million and no amounts are outstanding on our bank credit facility.

Distributions Declared

On May 1, 2014, our Board of Trustees declared a regular common quarterly dividend of $1.40 per common share. The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on June 30, 2014 to shareholders of record as of June 13, 2014.

First Quarter Conference Call

A conference call is scheduled for May 2, 2014 at 10:00 a.m. (PDT) to discuss the first 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 25942930). 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 May 16, 2014 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 25942930.

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 March 31, 2014, we had interests in 2,202 self-storage facilities located in 38 states with approximately 141 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 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 29.7 million rentable square feet of commercial space, primarily flex, multitenant office and industrial space, at March 31, 2014.

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, 2013, 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 174 facilities (9.2 million net rentable square feet) that have been operated on a stabilized basis since January 1, 2012 and therefore provide meaningful comparisons for 2013 and 2014. These 174 facilities represent approximately 92% 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