Public Storage Reports Results for the Quarter Ended March 31, 2013
Public Storage Reports Results for the Quarter Ended March 31, 2013
GLENDALE, Calif.--(BUSINESS WIRE)-- Public Storage (NYS: PSA) announced today operating results for the quarter ended March 31, 2013.
Operating Results for the Three Months Ended March 31, 2013
For the three months ended March 31, 2013, net income allocable to our common shareholders was $161.9 million or $0.94 per diluted common share, compared to $125.3 million or $0.73 per diluted common share for the same period in 2012, representing an increase of $36.6 million or $0.21 per diluted common share. This increase is due primarily to (i) a $30.3 million increase in self-storage net operating income and (ii) a $27.1 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, partially offset by (iii) a $24.9 million reduction 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.
Our self-storage net operating income increased $30.3 million in the three months ended March 31, 2013 as compared to the same period in 2012, including $24.2 million for our Same Store Facilities and $6.1 million for our non-Same Store Facilities. Revenues for the Same Store Facilities increased 5.4% or $21.1 million in the quarter ended March 31, 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 2.3% or $3.1 million in the quarter ended March 31, 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 March 31, 2013, funds from operations ("FFO") was $1.57 per diluted common share, as compared to $1.35 for the same period in 2012, representing an increase of $0.22 per share. FFO is a non-GAAP 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 gains and losses, representing a loss of $12.7 million and a gain of $12.2 million for the three months ended March 31, 2013 and 2012, respectively, and ii) the impact of EITF D-42 charges, including our equity share from PSB, representing a $27.1 million charge for the three months ended March 31, 2012 (none for the same period in 2013), and iii) our $1.4 million equity share of charges incurred by Shurgard Europe in closing a facility during the three months ended March 31, 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):
Three Months Ended March 31, | ||||||||||||||||||
2013 | 2012 | Percentage | ||||||||||||||||
FFO per share | $ | 1.57 | $ | 1.35 | 16.3 | % | ||||||||||||
Eliminate the per share impact of items excluded from Core FFO: | ||||||||||||||||||
Foreign currency exchange loss (gain) | 0.07 | (0.07 | ) | |||||||||||||||
Application of EITF D-42 | - | 0.16 | ||||||||||||||||
Shurgard Europe's facility closure charge | 0.01 | - | ||||||||||||||||
Core FFO per share | $ | 1.65 | $ | 1.44 | 14.6 | % | ||||||||||||
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 March 31, 2013.
Selected Operating Data for the Same Store | Three Months Ended March 31, | |||||||||||||||
2013 | 2012 | Percentage | ||||||||||||||
(Dollar amounts in thousands, except for | ||||||||||||||||
Revenues: | ||||||||||||||||
Rental income (a) | $ | 389,107 | $ | 368,681 | 5.5 | % | ||||||||||
Late charges and administrative fees | 20,497 | 19,818 | 3.4 | % | ||||||||||||
Total revenues (b) | 409,604 | 388,499 | 5.4 | % | ||||||||||||
Cost of operations: | ||||||||||||||||
Property taxes | 44,758 | 43,142 | 3.7 | % | ||||||||||||
On-site property manager payroll | 25,716 | 26,031 | (1.2 | )% | ||||||||||||
Supervisory payroll (c) | 9,106 | 8,990 | 1.3 | % | ||||||||||||
Repairs and maintenance | 7,508 | 10,387 | (27.7 | )% | ||||||||||||
Snow removal expenses | 3,316 | 1,848 | 79.4 | % | ||||||||||||
Utilities | 9,259 | 9,447 | (2.0 | )% | ||||||||||||
Advertising and selling expense | 7,453 | 10,531 | (29.2 | )% | ||||||||||||
Other direct property costs (a) (d) | 12,601 | 12,254 | 2.8 | % | ||||||||||||
Allocated overhead (e) | 11,641 | 11,781 | (1.2 | )% | ||||||||||||
Total cost of operations (b) | 131,358 | 134,411 | (2.3 | )% | ||||||||||||
Net operating income (f) | $ | 278,246 | $ | 254,088 | 9.5 | % | ||||||||||
Gross margin (a) | 67.9 | % | 65.4 | % | 3.8 | % | ||||||||||
Weighted average for the period: | ||||||||||||||||
Square foot occupancy (g) | 91.9 | % | 90.3 | % | 1.8 | % | ||||||||||
Realized annual rental income per: | ||||||||||||||||
Occupied square foot (a) (h) | $ | 13.79 | $ | 13.30 | 3.7 | % | ||||||||||
Available square foot ("REVPAF") (a) (h) | $ | 12.67 | $ | 12.01 | 5.5 | % | ||||||||||
Weighted average at March 31: | ||||||||||||||||
Square foot occupancy | 92.4 | % | 90.8 | % | 1.8 | % | ||||||||||
Annual contract rent per occupied square foot (i) | $ | 14.38 | $ | 13.96 | 3.0 | % | ||||||||||
(a) | In previous presentations, credit card fees were presented as a reduction to rental income; such fees are now classified as cost of operations under "other direct property costs." | |
(b) | Revenues and cost of operations do not include ancillary revenues and expenses generated at the facilities with respect to tenant reinsurance and retail sales. | |
(c) | Supervisory payroll expense represents compensation paid to management personnel who directly and indirectly supervise on-site property managers. | |
(d) | 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, credit card fees, and the cost of operating each property's rental office including supplies and telephone data communication lines. | |
(e) | 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). | |
(f) | See attached reconciliation of Same Store NOI to operating income. | |
(g) | Square foot occupancies represent weighted average occupancy levels over the entire period. | |
(h) | 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. 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 rentable square feet for the period. 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) | Contract rent represents the applicable contractual monthly rent charged to our tenants, excluding the impact of promotional discounts, 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): | |||||||||||||||||||||||||||||
2013 | $ | 409,604 | |||||||||||||||||||||||||||
2012 | $ | 388,499 | $ | 399,725 | $ | 418,085 | $ | 410,489 | $ | 1,616,798 | |||||||||||||||||||
Total cost of operations (in 000's): | |||||||||||||||||||||||||||||
2013 | $ | 131,358 | |||||||||||||||||||||||||||
2012 | $ | 134,411 | $ | 125,126 | $ | 122,987 | $ | 102,936 | $ | 485,460 | |||||||||||||||||||
Property taxes (in 000's): | |||||||||||||||||||||||||||||
2013 | $ | 44,758 | |||||||||||||||||||||||||||
2012 | $ | 43,142 | $ | 42,051 | $ | 40,703 | $ | 26,295 | $ | 152,191 | |||||||||||||||||||
Repairs and maintenance, including snow removal expenses (in 000's): | |||||||||||||||||||||||||||||
2013 | $ | 10,824 | |||||||||||||||||||||||||||
2012 | $ | 12,235 | $ | 10,443 | $ | 8,500 | $ | 8,901 | $ | 40,079 | |||||||||||||||||||
Advertising and selling expenses (in 000's): | |||||||||||||||||||||||||||||
2013 | $ | 7,453 | |||||||||||||||||||||||||||
2012 | $ | 10,531 | $ | 10,586 | $ | 10,216 | $ | 7,538 | $ | 38,871 | |||||||||||||||||||
REVPAF: | |||||||||||||||||||||||||||||
2013 | $ | 12.67 | |||||||||||||||||||||||||||
2012 | $ | 12.01 | $ | 12.37 | $ | 12.93 | $ | 12.73 | $ | 12.51 | |||||||||||||||||||
Weighted average realized annual rent per occupied square foot: | |||||||||||||||||||||||||||||
2013 | $ | 13.79 | |||||||||||||||||||||||||||
2012 | $ | 13.30 | $ | 13.39 | $ | 13.90 | $ | 13.83 | $ | 13.61 | |||||||||||||||||||
Weighted average occupancy levels: | |||||||||||||||||||||||||||||
2013 | 91.9 | % | |||||||||||||||||||||||||||
2012 | 90.3 | % | 92.4 | % | 93.0 | % | 92.1 | % | 91.9 | % | |||||||||||||||||||
Investing and Capital Activities
During the three months ended March 31, 2013, we acquired two self-storage facilities (149,000 net rentable square feet of self-storage space) located in Arizona and Georgia for a total of approximately $14 million in cash. We are under contract to acquire a facility (80,000 net rentable square feet of self-storage space) located in Arizona for approximately $8 million in cash.
On January 16, 2013, we issued our 5.20% Series W Preferred Shares for gross proceeds of $500 million, and on March 13, 2013, we issued our 5.20% Series X Preferred Shares for gross proceeds of $225 million.
Distributions Declared
On May 9, 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 June 27, 2013 to shareholders of record as of June 12, 2013.
First Quarter Conference Call
A conference call is scheduled for May 10, 2013 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 34505258). 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 co
