Public Storage Reports Results for the Fourth Quarter and Year Ended December 31, 2012 and Increases
Public Storage Reports Results for the Fourth Quarter and Year Ended December 31, 2012 and Increases Quarterly Common Dividend by 14% to $1.25 Per Share
GLENDALE, Calif.--(BUSINESS WIRE)-- Public Storage (NYS: PSA) announced today operating results for the fourth quarter and year ended December 31, 2012.
Operating Results for the Three Months Ended December 31, 2012
For the three months ended December 31, 2012, net income allocable to our common shareholders was $209.5 million or $1.22 per diluted common share, compared to $164.2 million or $0.96 per diluted common share for the same period in 2011, representing an increase of $45.3 million or $0.26 per diluted common share. This increase is due primarily to (i) a $32.1 million increase resulting from foreign currency exchange gains and losses incurred in translating the value of our Euro-denominated loan receivable from Shurgard Europe into U.S. Dollars and (ii) improved property operations (see below).
Revenues for the Same Store Facilities (see table below) increased 4.9% or $18.9 million in the quarter ended December 31, 2012 as compared to the same period in 2011, due to higher realized annual rent per occupied square foot and higher occupancy. Cost of operations for the Same Store Facilities decreased by 5.9% or $6.2 million in the quarter ended December 31, 2012 as compared to the same period in 2011, due primarily to lower repairs and maintenance and on-site property manager payroll. Net operating income for our Same Store Facilities increased 8.9% or $25.0 million in the quarter ended December 31, 2012 as compared to the same period in 2011. Net operating income for our non-Same Store facilities increased $5.9 million in the quarter ended December 31, 2012 as compared to the same period in 2011.
Operating Results for the Year Ended December 31, 2012
For the year ended December 31, 2012, net income allocable to our common shareholders was $669.7 million or $3.90 per diluted common share, compared to $561.7 million or $3.29 per diluted common share for the same period in 2011, representing an increase of $108.0 million or $0.61 per diluted common share. This increase is due to (i) improved property operations (see below), (ii) a $19.6 million reduction in distributions to preferred shareholders due primarily to lower average coupon rates, and (iii) a $16.2 million increase resulting from foreign currency exchange gains and losses incurred in translating our Euro-denominated loan receivable from Shurgard Europe into U.S. Dollars, offset partially by (iv) a $36.3 million decrease 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.
Revenues for the Same Store Facilities (see table below) increased 4.9% or $74.3 million in the year ended December 31, 2012 as compared to the same period in 2011, due primarily to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities decreased by 1.7% or $8.3 million in the year ended December 31, 2012 as compared to the same period in 2011 due primarily to lower repairs and maintenance and media advertising. Net operating income for our Same Store Facilities increased 7.9% or $82.6 million in the year ended December 31, 2012 as compared to the same period in 2011. Net operating income for our non-Same Store facilities increased $20.0 million in the year ended December 31, 2012 as compared to the same period in 2011.
Funds from Operations
For the three months ended December 31, 2012, funds from operations ("FFO") was $1.86 per diluted common share as compared to $1.50 for the same period in 2011, representing an increase of 24.0%.
For the quarter ended December 31, 2012, FFO was impacted by a foreign currency exchange gain of $11.4 million (compared to a $20.8 million loss for the same period in 2011) and a $12.0 million charge in applying EITF D-42 due to redemptions of preferred securities, including our equity share of PSB (compared to $3.5 million for the same period in 2011).
For the year ended December 31, 2012, FFO was $6.31 per diluted common share as compared to $5.67 for the same period in 2011, representing an increase of 11.3%.
For the year ended December 31, 2012, FFO was impacted by a foreign currency exchange gain of $8.9 million (compared to a $7.3 million loss for the same period in 2011) and a $68.9 million charge in applying EITF D-42 due to redemptions of preferred securities, including our equity share of PSB (compared to $32.6 million for the same period in 2011).
Our FFO was also impacted by impairment charges with respect to non-real estate assets, contingency accruals, our equity share of PSB's lease termination benefits, and costs associated with the acquisition of real estate facilities; the per-share impact of these items are included as "other items, net" in the table below.
The following table provides a summary of the per-share impact of the items noted above (unaudited):
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||
2012 | 2011 | Percentage Change | 2012 | 2011 | Percentage Change | ||||||||||||||||||||||||
FFO per diluted common share prior to adjustments for the following items | $ | 1.86 | $ | 1.66 | 12.0 | % | $ | 6.68 | $ | 5.93 | 12.6 | % | |||||||||||||||||
Foreign currency exchange gain (loss) | 0.07 | (0.12 | ) | 0.05 | (0.04 | ) | |||||||||||||||||||||||
Application of EITF D-42 | (0.07 | ) | (0.02 | ) | (0.40 | ) | (0.19 | ) | |||||||||||||||||||||
Other items, net | - | (0.02 | ) | (0.02 | ) | (0.03 | ) | ||||||||||||||||||||||
FFO per diluted common share, as reported | $ | 1.86 | $ | 1.50 | 24.0 | % | $ | 6.31 | $ | 5.67 | 11.3 | % | |||||||||||||||||
FFO is a 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. We present FFO because we, and many analysts, consider FFO to be one measure of the performance of real estate companies. We believe that FFO is helpful when measuring the performance of a real estate investment trust ("REIT") because FFO excludes depreciation, which is included in computing net income and assumes the value of real estate diminishes predictably over time, while we believe that real estate values fluctuate 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. Because other REITs may not compute FFO in the same manner; FFO may not be comparable among REITs. See the attached reconciliation of net income to FFO.
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, 2010 and therefore provide meaningful comparisons for 2011 and 2012. The following table summarizes the historical operating results of these 1,941 facilities (122.5 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, 2012.
Selected Operating Data for the Same Store Facilities (1,941 facilities) (unaudited): | Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||
2012 | 2011 | Percentage Change | 2012 | 2011 | Percentage Change | ||||||||||||||||||||||||
(Dollar amounts in thousands, except for weighted average data) | |||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||
Rental income | $ | 385,604 | $ | 366,284 | 5.3 | % | $ | 1,516,152 | $ | 1,442,684 | 5.1 | % | |||||||||||||||||
Late charges and administrative fees | 19,447 | 19,912 | (2.3 | )% | 80,168 | 79,371 | 1.0 | % | |||||||||||||||||||||
Total revenues (a) | 405,051 | 386,196 | 4.9 | % | 1,596,320 | 1,522,055 | 4.9 | % | |||||||||||||||||||||
Cost of operations: | |||||||||||||||||||||||||||||
Property taxes | 26,042 | 26,063 | (0.1 | )% | 151,605 | 147,259 | 3.0 | % | |||||||||||||||||||||
On-site property manager payroll | 22,969 | 24,553 | (6.5 | )% | 97,942 | 101,034 | (3.1 | )% | |||||||||||||||||||||
Repairs and maintenance | 8,901 | 12,519 | (28.9 | )% | 39,998 | 45,237 | (11.6 | )% | |||||||||||||||||||||
Utilities | 8,403 | 8,557 | (1.8 | )% | 36,255 | 37,732 | (3.9 | )% | |||||||||||||||||||||
Media advertising | 51 | 992 | (94.9 | )% | 6,326 | 10,542 | (40.0 | )% | |||||||||||||||||||||
Other advertising and selling expense | 7,455 | 7,544 | (1.2 | )% | 32,423 | 32,133 | 0.9 | % | |||||||||||||||||||||
Other direct property costs (b) | 8,765 | 8,722 | 0.5 | % | 35,257 | 35,937 | (1.9 | )% | |||||||||||||||||||||
Supervisory payroll (c) | 7,514 | 7,433 | 1.1 | % | 33,144 | 32,038 | 3.5 | % | |||||||||||||||||||||
Allocated overhead (d) | 8,361 | 8,249 | 1.4 | % | 35,802 | 35,129 | 1.9 | % | |||||||||||||||||||||
Total cost of operations (a) | 98,461 | 104,632 | (5.9 | )% | 468,752 | 477,041 | (1.7 | )% | |||||||||||||||||||||
Net operating income (e) | $ | 306,590 | $ | 281,564 | 8.9 | % | $ | 1,127,568 | $ | 1,045,014 | 7.9 | % | |||||||||||||||||
Gross margin | 75.7 | % | 72.9 | % | 3.8 | % | 70.6 | % | 68.7 | % | 2.8 | % | |||||||||||||||||
Weighted average for the period: | |||||||||||||||||||||||||||||
Square foot occupancy (f) | 91.8 | % | 90.2 | % | 1.8 | % | 91.8 | % | 91.2 | % | 0.7 | % | |||||||||||||||||
Realized annual rent, prior to late charges and administrative fees, per: | |||||||||||||||||||||||||||||
Occupied square foot (g) (h) | $ | 13.72 | $ | 13.26 | 3.5 | % | $ | 13.49 | $ | 12.92 | 4.4 | % | |||||||||||||||||
Available square foot ("REVPAF") (h) (i) | $ | 12.59 | $ | 11.96 | 5.3 | % | $ | 12.38 | $ | 11.78 | 5.1 | % | |||||||||||||||||
Weighted average at December 31: | |||||||||||||||||||||||||||||
Square foot occupancy | 91.4 | % | 89.6 | % | 2.0 | % | |||||||||||||||||||||||
In place annual rent per occupied square foot (j) | $ | 14.42 | $ | 14.02 | 2.9 | % | |||||||||||||||||||||||
(a) | Revenues and cost of operations do not include ancillary revenues and expenses generated at the facilities with respect to tenant reinsurance and retail sales. | ||
(b) | Other direct property costs include administrative expenses that are solely attributable to the self-storage facilities, such as property insurance, business license costs, bank charges related to processing the properties' cash receipts and the cost of operating each property's rental office including supplies and telephone data communication lines. | ||
(c) | Supervisory payroll expense represents compensation paid to the management personnel who directly and indirectly supervise the on-site property managers. | ||
(d) | Allocated overhead represents administrative expenses for shared general corporate functions, which are allocated to self-storage property operations to the extent their efforts are devoted to self-storage operations. Such functions include data processing, human resources, operational accounting and finance, marketing and costs of senior executives (other than the Chief Executive Officer and Chief Financial Officer, whose compensation is allocated to general and administrative expense). | ||
(e) | See attached reconciliation of Same Store NOI to our net income. | ||
(f) | Square foot occupancies represent weighted average occupancy levels over the entire period. | ||
(g) | Realized annual rent per occupied square foot is computed by dividing annualized rental income, before late charges and administrative fees, by the weighted average occupied square feet for the period. | ||
(h) | These measures exclude late charges and administrative fees in order to provide a better measure of our ongoing level of revenue. Late charges are dependent upon the level of delinquency, and administrative fees are dependent upon the level of move-ins. In addition, the rates charged for late charges and administrative fees can vary independently from rental rates. These measures take into consideration promotional discounts, which reduce rental income. | ||
(i) | Realized annual rent per available square foot ("REVPAF") is computed by dividing annualized rental income, before late charges and administrative fees, by the total available net rental square feet for the period. | ||
(j) | 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 selected quarterly 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): | |||||||||||||||||||||||||||
2012 | $ | 383,928 | $ | 394,700 | $ | 412,641 | $ | 405,051 | $ | 1,596,320 | |||||||||||||||||
2011 | $ | 366,497 | $ | 375,543 | $ | 393,819 | $ | 386,196 | $ | 1,522,055 | |||||||||||||||||
Total cost of operations (in 000's): | |||||||||||||||||||||||||||
