Public Storage Reports Results for the Fourth Quarter and Year Ended December 31, 2023
- Record revenues and net operating income for the fourth quarter and year ended December 31, 2023.
- Acquisition and integration of the 90,000-customer Simply Self Storage portfolio.
- Expansion of owned properties to over 3,000 during 2023.
- Reported net income allocable to common shareholders of $2.21 per diluted share for the fourth quarter.
- Core FFO of $4.20 per diluted share for the fourth quarter, a 1.0% increase from the same period in 2022.
- Achieved 79.7% Same Store direct net operating income margin for the fourth quarter.
- Acquired eleven self-storage facilities for $171.9 million in the fourth quarter.
- Opened five newly developed facilities and various expansion projects in the fourth quarter.
- Closed acquisitions of BREIT Simply Storage LLC and 37 self-storage facilities for $2.2 billion and $473.2 million, respectively.
- Issued $2.2 billion of unsecured senior notes in connection with the Simply Acquisition.
- Reported net income allocable to common shareholders of $11.06 per diluted share for the year ended December 31, 2023.
- Core FFO of $16.89 per diluted share for the year ended December 31, 2023, a 6.1% increase from 2022.
- Increased Same Store direct net operating income by 4.1% for the year ended December 31, 2023.
- Opened eleven newly developed facilities and various expansion projects in the year ended December 31, 2023.
- FFO was $3.78 per diluted common share for the fourth quarter, an 11.8% increase from the same period in 2022.
- FFO was $16.60 per diluted common share for the year ended December 31, 2023, a 0.9% increase from 2022.
- Core FFO per share was $4.20 for the fourth quarter, a 1.0% increase from the same period in 2022.
- Core FFO per share was $16.89 for the year ended December 31, 2023, a 6.1% increase from 2022.
- Net income allocable to common shareholders decreased by $2.2 billion for the year ended December 31, 2023, primarily due to a gain on sale of equity investment in PS Business Parks, Inc. in July 2022.
- Significant increase in interest expense for the three months and year ended December 31, 2023.
- Decrease in equity in earnings of unconsolidated real estate entities due to the sale of PS Business Parks, Inc. in July 2022.
- Decrease in diluted earnings per share by 52.9% for the year ended December 31, 2023.
- Decrease in gross margin (before indirect costs, depreciation, and amortization expense) by 1.7% for the fourth quarter.
- Decrease in gross margin (before depreciation and amortization expense) by 1.2% for the fourth quarter.
- Decrease in square foot occupancy by 0.7% for the fourth quarter.
- Increase in cost of operations for the Same Store Facilities by 8.2% for the fourth quarter.
- Decrease in gross margin (before indirect costs, depreciation, and amortization expense) by 1.0% for the year ended December 31, 2023.
Insights
The announcement by Public Storage (NYSE:PSA) regarding its financial results for the fourth quarter and full year ended December 31, 2023, demonstrates a robust performance characterized by record revenues and net operating income. The growth in Core Funds from Operations (FFO) per diluted share, a key metric for real estate investment trusts (REITs), suggests a stable income generation capacity. This 1.0% increase for the quarter and 6.1% for the year, particularly the 8.3% rise when excluding contributions from the sold equity investment in PS Business Parks, Inc., indicates a strong underlying business unaffected by this one-time event. The strategic acquisition of Simply Self Storage and the expansion of the company's property portfolio by nearly 30% underscore Public Storage's aggressive growth strategy, which could signal confidence to investors about future earnings potential.
However, the notable decrease in net income year-over-year, primarily due to the gain on sale of PS Business Parks, Inc. in 2022, should be carefully considered. This decrease, alongside increased interest expenses and depreciation, could raise concerns about the cost of capital and the sustainability of growth through acquisitions. The issuance of $2.2 billion in unsecured senior notes at various tranches and rates, particularly in the context of current interest rate trends, will impact the company's financial leverage and interest coverage ratios, important considerations for investors focused on the balance sheet strength and cost of debt financing.
The performance of Public Storage highlights significant trends within the self-storage industry. The company's ability to maintain a high Same Store direct net operating income margin of 79.7% indicates operational efficiency, even in the face of increased marketing and property tax expenses. The focus on high growth non-same store pool, which now comprises nearly 30% of the portfolio, suggests a strategic shift towards newer facilities that may offer higher revenue growth potential. This could be a response to evolving consumer storage needs and demographic trends driving demand for self-storage services.
Public Storage's expansion, including the opening of new facilities and the acquisition of existing ones, reflects confidence in the sector's growth prospects. However, the slight decline in occupancy rates and the increase in cost of operations for the Same Store Facilities raise questions about market saturation and operational cost controls. The increase in marketing expenses, in particular, suggests a competitive environment where customer acquisition costs are rising. For investors, these metrics serve as indicators of the company's positioning within the market and its ability to adapt to competitive pressures.
The issuance of $2.2 billion of unsecured senior notes by Public Storage, particularly in the current rising interest rate environment, is a critical move that requires careful analysis. The company's choice of varied maturities and rates, including Compounded SOFR + 0.60% for the 2-year tranche, reflects a strategic approach to managing interest rate risk and debt maturity profiles. This approach allows the company to spread out its debt obligations over time, potentially reducing refinancing risk.
However, the interest expense has increased, which could indicate higher debt service costs impacting future cash flows. The different rates for the tranches, especially the 30-year tranche at 5.350%, will have long-term implications on the company's interest payments and net income. Investors should monitor the company's debt-to-equity ratio and coverage ratios to assess the impact of these debt issuances on its financial stability. Additionally, the use of unsecured notes suggests confidence in Public Storage's creditworthiness, as these do not require collateral, offering investors insights into the credit market's view of the company's financial health.
“Public Storage achieved record revenues and net operating income, quickly acquired and integrated the 90,000-customer Simply Self Storage portfolio, and reached more than 3,000 owned properties during 2023. I want to thank the entire team for their focus and determination,” said Joe Russell, President and Chief Executive Officer. “We are well positioned in 2024 with our operating model transformation enhancing the industry’s highest margins, our high growth non-same store pool comprising nearly
Highlights for the Three Months Ended December 31, 2023
-
Reported net income allocable to common shareholders of
$2.21 -
Reported core FFO allocable to common shareholders (“Core FFO”) of
$4.20 1.0% relative to the same period in 2022. -
Achieved
79.7% Same Store (as defined below) direct net operating income margin. -
Acquired eleven self-storage facilities (0.8 million net rentable square feet) for
$171.9 million -
Opened five newly developed facilities and various expansion projects which together added 0.8 million net rentable square feet at a cost of
$190.3 million $766.2 million
Highlights for the Year Ended December 31, 2023
-
Reported net income allocable to common shareholders of
$11.06 -
Reported Core FFO of
$16.89 6.1% from 2022. Core FFO per diluted share increased8.3% excluding the contribution from our equity investment in PS Business Parks, Inc. (“PSB”), which we sold in July 2022. -
Increased Same Store direct net operating income by
4.1% , resulting from a4.7% increase in Same Store revenues. -
Closed acquisitions of BREIT Simply Storage LLC, a self-storage company that owns and operates 127 self-storage facilities (9.4 million net rentable square feet) and manages 25 self-storage facilities for third parties for
$2.2 billion $473.2 million -
Opened eleven newly developed facilities and various expansion projects which together added 1.7 million net rentable square feet at a cost of
$362.9 million -
In connection with the Simply Acquisition, issued
$2.2 billion 0.60% ,5.125% ,5.100% , and5.350% , respectively.
Operating Results for the Three Months Ended December 31, 2023
For the three months ended December 31, 2023, net income allocable to our common shareholders was
The
Operating Results for the Year Ended December 31, 2023
In 2023, net income allocable to our common shareholders was
The
Funds from Operations
Funds from Operations (“FFO”) and FFO per share are non-GAAP measures defined by Nareit. We believe that FFO and FFO per share are useful to REIT investors and analysts in measuring our performance because Nareit’s definition of FFO excludes items included in net income that do not relate to or are not indicative of our operating and financial performance. FFO represents net income before real estate-related depreciation and amortization, which is excluded because it is based upon historical costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. FFO also excludes gains or losses on sale of real estate assets and real estate impairment charges, which are also based upon historical costs and are impacted by historical depreciation. FFO and FFO per share are not a substitute for net income or earnings per share. FFO is not a substitute for net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes investing and financing activities presented on our consolidated statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful.
For the three months ended December 31, 2023, FFO was
For the year ended December 31, 2023, FFO was
We also present “Core FFO” and “Core FFO per share,” non-GAAP measures that represent FFO and FFO per share excluding the impact of (i) foreign currency exchange gains and losses, (ii) charges related to the redemption of preferred securities, and (iii) certain other non-cash and/or nonrecurring income or expense items primarily representing, with respect to the periods presented below, the impact of contingency resolution, casualties, due diligence costs incurred in pursuit of strategic transactions, unrealized gain on private equity investments, UPREIT reorganization costs, Simply integration costs, amortization of acquired non real estate-related intangibles from the Simply Acquisition, and our equity share of deferred tax benefits of a change in tax status, merger transaction costs, lease termination income, and severance of a senior executive from our equity investees. We review Core FFO and Core FFO per share to evaluate our ongoing operating performance, and we believe they are used by investors and REIT analysts in a similar manner. However, Core FFO and Core FFO per share are not substitutes for net income and net income per share. Because other REITs may not compute Core FFO or Core FFO per share in the same manner as we do, may not use the same terminology, or may not present such measures, Core FFO and Core FFO per share may not be comparable among REITs.
The following table reconciles net income to FFO and Core FFO and reconciles diluted earnings per share to FFO per share and Core FFO per share (unaudited):
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
Percentage Change |
|
|
2023 |
|
|
|
2022 |
|
|
Percentage Change |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(Amounts in thousands, except per share data) |
||||||||||||||||||||
Reconciliation of Net Income to FFO and Core FFO: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income allocable to common shareholders |
$ |
389,657 |
|
|
$ |
362,622 |
|
|
7.5 |
% |
|
$ |
1,948,741 |
|
|
$ |
4,142,288 |
|
|
(53.0 |
)% |
Eliminate items excluded from FFO: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate-related depreciation and amortization |
|
284,847 |
|
|
|
224,438 |
|
|
|
|
|
962,703 |
|
|
|
881,569 |
|
|
|
||
Real estate-related depreciation from unconsolidated real estate investments |
|
10,628 |
|
|
|
9,837 |
|
|
|
|
|
36,769 |
|
|
|
54,822 |
|
|
|
||
Real estate-related depreciation allocated to noncontrolling interests and restricted share unitholders |
|
(1,818 |
) |
|
|
(1,781 |
) |
|
|
|
|
(6,635 |
) |
|
|
(6,622 |
) |
|
|
||
Gains on sale of real estate investments, including our equity share from investments |
|
(17,051 |
) |
|
|
— |
|
|
|
|
|
(17,290 |
) |
|
|
(54,403 |
) |
|
|
||
Gain on sale of equity investment in PS Business Parks, Inc. |
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
(2,116,839 |
) |
|
|
||
FFO allocable to common shares |
$ |
666,263 |
|
|
$ |
595,116 |
|
|
12.0 |
% |
|
$ |
2,924,288 |
|
|
$ |
2,900,815 |
|
|
0.8 |
% |
Eliminate the impact of items excluded from Core FFO, including our equity share from investments: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency exchange loss (gain) |
|
71,121 |
|
|
|
138,956 |
|
|
|
|
|
51,197 |
|
|
|
(98,314 |
) |
|
|
||
Property losses and tenant claims due to casualties |
|
— |
|
|
|
(1,301 |
) |
|
|
|
|
— |
|
|
|
4,817 |
|
|
|
||
Other items |
|
2,869 |
|
|
|
(760 |
) |
|
|
|
|
447 |
|
|
|
(338 |
) |
|
|
||
Core FFO allocable to common shares |
$ |
740,253 |
|
|
$ |
732,011 |
|
|
1.1 |
% |
|
$ |
2,975,932 |
|
|
$ |
2,806,980 |
|
|
6.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation of Diluted Earnings per Share to FFO per Share and Core FFO per Share: |
|
|
|
|
|
|
|
|
|
|
|||||||||||
Diluted earnings per share |
$ |
2.21 |
|
|
$ |
2.06 |
|
|
7.3 |
% |
|
$ |
11.06 |
|
|
$ |
23.50 |
|
|
(52.9 |
)% |
Eliminate amounts per share excluded from FFO: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate-related depreciation and amortization |
|
1.67 |
|
|
|
1.32 |
|
|
|
|
|
5.64 |
|
|
|
5.27 |
|
|
|
||
Gains on sale of real estate investments, including our equity share from investments |
|
(0.10 |
) |
|
|
— |
|
|
|
|
|
(0.10 |
) |
|
|
(0.31 |
) |
|
|
||
Gain on sale of equity investment in PS Business Parks, Inc. |
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
(12.00 |
) |
|
|
||
FFO per share |
$ |
3.78 |
|
|
$ |
3.38 |
|
|
11.8 |
% |
|
$ |
16.60 |
|
|
$ |
16.46 |
|
|
0.9 |
% |
Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency exchange loss (gain) |
|
0.40 |
|
|
|
0.79 |
|
|
|
|
|
0.29 |
|
|
|
(0.57 |
) |
|
|
||
Property losses and tenant claims due to casualties |
|
— |
|
|
|
(0.01 |
) |
|
|
|
|
— |
|
|
|
0.03 |
|
|
|
||
Other items |
|
0.02 |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
||
Core FFO per share |
$ |
4.20 |
|
|
$ |
4.16 |
|
|
1.0 |
% |
|
$ |
16.89 |
|
|
$ |
15.92 |
|
|
6.1 |
% |
Exclude the contribution from our equity investment in PS Business Parks, Inc. to Core FFO per share |
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
(0.33 |
) |
|
|
||
Core FFO per share, excluding the impact of PS Business Parks, Inc. |
$ |
4.20 |
|
|
$ |
4.16 |
|
|
1.0 |
% |
|
$ |
16.89 |
|
|
$ |
15.59 |
|
|
8.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted weighted average common shares |
|
176,060 |
|
|
|
176,144 |
|
|
|
|
|
176,143 |
|
|
|
176,280 |
|
|
|
||
Property Operations – Same Store Facilities
The Same Store Facilities consist of facilities that have been owned and operated on a stabilized level of occupancy, revenues, and cost of operations since January 1, 2021. The composition of our Same Store Facilities allows us to more effectively evaluate the ongoing performance of our self-storage portfolio in 2021, 2022, and 2023 and exclude the impact of fill-up of unstabilized facilities, which can significantly affect operating trends. We believe the Same Store Facilities information is used by investors and analysts in a similar manner. However, because other REITs may not compute Same Store Facilities in the same manner as we do, may not use the same terminology, or may not present such a measure, Same Store Facilities may not be comparable among REITs. The following table summarizes the historical operating results (for all periods presented) of these 2,339 facilities (154.9 million net rentable square feet) that represent approximately
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
Percentage Change |
|
|
2023 |
|
|
|
2022 |
|
|
Percentage Change |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(Dollar amounts in thousands, except for per square foot data) |
||||||||||||||||||||
Revenues (a): |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental income |
$ |
822,269 |
|
|
$ |
817,327 |
|
|
0.6 |
% |
|
$ |
3,312,597 |
|
|
$ |
3,169,132 |
|
|
4.5 |
% |
Late charges and administrative fees |
|
29,164 |
|
|
|
27,658 |
|
|
5.4 |
% |
|
|
115,270 |
|
|
|
104,691 |
|
|
10.1 |
% |
Total revenues |
|
851,433 |
|
|
|
844,985 |
|
|
0.8 |
% |
|
|
3,427,867 |
|
|
|
3,273,823 |
|
|
4.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Direct cost of operations (a): |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property taxes |
|
69,222 |
|
|
|
68,140 |
|
|
1.6 |
% |
|
|
300,505 |
|
|
|
290,605 |
|
|
3.4 |
% |
On-site property manager payroll |
|
31,645 |
|
|
|
30,654 |
|
|
3.2 |
% |
|
|
126,830 |
|
|
|
123,372 |
|
|
2.8 |
% |
Repairs and maintenance |
|
17,181 |
|
|
|
15,714 |
|
|
9.3 |
% |
|
|
64,565 |
|
|
|
60,317 |
|
|
7.0 |
% |
Utilities |
|
10,194 |
|
|
|
10,417 |
|
|
(2.1 |
)% |
|
|
44,775 |
|
|
|
45,578 |
|
|
(1.8 |
)% |
Marketing |
|
21,202 |
|
|
|
14,142 |
|
|
49.9 |
% |
|
|
69,158 |
|
|
|
47,863 |
|
|
44.5 |
% |
Other direct property costs |
|
23,257 |
|
|
|
20,554 |
|
|
13.2 |
% |
|
|
90,990 |
|
|
|
83,615 |
|
|
8.8 |
% |
Total direct cost of operations |
|
172,701 |
|
|
|
159,621 |
|
|
8.2 |
% |
|
|
696,823 |
|
|
|
651,350 |
|
|
7.0 |
% |
Direct net operating income (b) |
|
678,732 |
|
|
|
685,364 |
|
|
(1.0 |
)% |
|
|
2,731,044 |
|
|
|
2,622,473 |
|
|
4.1 |
% |
Indirect cost of operations (a): |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Supervisory payroll |
|
(8,100 |
) |
|
|
(8,774 |
) |
|
(7.7 |
)% |
|
|
(33,846 |
) |
|
|
(36,327 |
) |
|
(6.8 |
)% |
Centralized management costs |
|
(14,605 |
) |
|
|
(16,433 |
) |
|
(11.1 |
)% |
|
|
(60,861 |
) |
|
|
(64,053 |
) |
|
(5.0 |
)% |
Share-based compensation |
|
(2,525 |
) |
|
|
(3,411 |
) |
|
(26.0 |
)% |
|
|
(10,739 |
) |
|
|
(14,675 |
) |
|
(26.8 |
)% |
Net operating income (c) |
$ |
653,502 |
|
|
$ |
656,746 |
|
|
(0.5 |
)% |
|
$ |
2,625,598 |
|
|
$ |
2,507,418 |
|
|
4.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross margin (before indirect costs, depreciation and amortization expense) |
|
79.7 |
% |
|
|
81.1 |
% |
|
(1.7 |
)% |
|
|
79.7 |
% |
|
|
80.1 |
% |
|
(0.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross margin (before depreciation and amortization expense) |
|
76.8 |
% |
|
|
77.7 |
% |
|
(1.2 |
)% |
|
|
76.6 |
% |
|
|
76.6 |
% |
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average for the period: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Square foot occupancy |
|
92.7 |
% |
|
|
93.4 |
% |
|
(0.7 |
)% |
|
|
93.3 |
% |
|
|
94.8 |
% |
|
(1.6 |
)% |
Realized annual rental income per (d): |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Occupied square foot |
$ |
22.90 |
|
|
$ |
22.60 |
|
|
1.3 |
% |
|
$ |
22.93 |
|
|
$ |
21.58 |
|
|
6.3 |
% |
Available square foot |
$ |
21.23 |
|
|
$ |
21.10 |
|
|
0.6 |
% |
|
$ |
21.38 |
|
|
$ |
20.45 |
|
|
4.5 |
% |
At December 31: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Square foot occupancy |
|
|
|
|
|
|
|
91.6 |
% |
|
|
92.3 |
% |
|
(0.8 |
)% |
|||||
Annual contract rent per occupied square foot (e) |
|
|
|
|
|
|
$ |
23.04 |
|
|
$ |
22.88 |
|
|
0.7 |
% |
|||||
(a) |
|
Revenues and cost of operations do not include tenant reinsurance and merchandise sales and expenses generated at the facilities. |
(b) |
|
Direct net operating income (“Direct NOI”), a subtotal within NOI, is a non-GAAP financial measure that excludes the impact of supervisory payroll, centralized management costs, and share-based compensation in addition to depreciation and amortization expense. We utilize direct net operating income in evaluating property performance and in evaluating property operating trends as compared to our competitors. |
(c) |
|
See reconciliation of self-storage NOI to net income provided below. |
(d) |
|
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. |
(e) |
|
Annual contract rent represents the agreed upon monthly rate that is paid by our tenants in place at the time of measurement. Contract rates are initially set in the lease agreement upon move-in, and we adjust them from time to time with notice. Contract rent excludes other fees that are charged on a per-item basis, such as late charges and administrative fees, does not reflect the impact of promotional discounts, and does not reflect the impact of rents that are written off as uncollectible. |
Property Operations – Non-Same Store Facilities
In addition to the 2,339 Same Store Facilities, we have 705 facilities that were not stabilized with respect to occupancies, revenues, or cost of operations since January 1, 2021 or that we did not own as of January 1, 2021, including 470 facilities that were acquired, 57 newly developed facilities, 88 facilities that have been expanded or are targeted for expansion, and 90 facilities that are unstabilized because they are undergoing fill-up or were damaged in casualty events (collectively, the “Non-Same Store Facilities”). Operating data, metrics, and further commentary with respect to these facilities, including detail by vintage, are included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Analysis of Net Income – Self-Storage Operations” in our December 31, 2023 Form 10-K.
Investing and Capital Activities
During the three months ended December 31, 2023, we closed the acquisition of eleven self-storage facilities (four in
During 2023, we added 164 self-storage facilities (12.1 million net rentable square feet) to our self-storage portfolio through acquisitions including 127 self-storage facilities from the Simply Acquisition (38 in
The Simply portfolio of 127 properties (9.4 million net rentable square feet) generated self-storage revenues of
During 2021, we acquired a portfolio of 48 properties (4.1 million net rentable square feet) operated under the brand name of ezStorage for
During 2021, we acquired a portfolio of 56 properties (7.5 million net rentable square feet) operated under the brand name of All Storage for
During the three months ended December 31, 2023, we opened five newly developed facilities and various expansion projects which together contributed 0.8 million net rentable square feet (0.4 million in
Outlook for the Year Ending December 31, 2024
Set forth below are our current expectations with respect to full year 2024 Core FFO per share and certain underlying assumptions. In reliance on the exception provided by applicable SEC rules, we do not provide guidance for GAAP net income per share, the most comparable GAAP financial measure, or a reconciliation of 2024 Core FFO per share to GAAP net income per share because we are unable to reasonably predict the following items which are included in GAAP net income: (i) gains or losses on sales of real estate investments, (ii) foreign currency exchange gains and losses, (iii) charges related to the redemption of preferred securities, and (iv) certain other significant non-cash and/or nonrecurring income or expense items. The actual amounts for any and all of these items could significantly impact our 2024 GAAP net income and, as disclosed in our historical financial results, have significantly impacted GAAP net income in prior periods. Our expectations on self-storage operations reflect the following updated 2024 Same Store and Non-Same Store pools for properties we owned at December 31, 2023: (i) 2,507 Same Store Facilities (170.0 million net rentable square feet) that we have owned and operated on a stabilized level of occupancy, revenues, and cost of operations since January 1, 2022, which generated NOI of
|
2024 Guidance |
|
|
Low |
High |
|
(Dollar amounts in thousands, except per share data) |
|
Same Store: |
|
|
Revenue growth |
(1.0)% |
|
Expense growth |
|
|
Net operating income growth |
(2.4)% |
|
|
|
|
Acquisitions |
|
|
Development openings |
|
|
Non-Same Store net operating income |
|
|
Ancillary net operating income |
|
|
General and administrative expense |
|
|
Interest expense |
|
|
Preferred dividends |
|
|
Capital expenditures |
|
|
|
|
|
Core FFO per share |
|
|
Core FFO per share growth from 2023 Core FFO per share |
(1.7)% |
|
|
|
|
Incremental Non-Same Store NOI to stabilization (2025 and beyond) |
|
|
Fourth Quarter Conference Call
A conference call is scheduled for February 21, 2024 at 9:00 a.m. (PT) to discuss the fourth quarter earnings results. The domestic dial-in number is (877) 407-9039, and the international dial-in number is (201) 689-8470. A simultaneous audio webcast may be accessed by using the link at www.publicstorage.com under “About Us, Investor Relations, News and Events, Event Calendar.” A replay of the conference call may be accessed through March 6, 2024 by calling (844) 512-2921 (domestic), (412) 317-6671 (international) (access ID number for either domestic or international is 13744115) or by using the link at www.publicstorage.com under “About Us, Investor Relations, News and Events, Event Calendar.”
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. At December 31, 2023, we had: (i) interests in 3,044 self-storage facilities located in 40 states with approximately 218 million net rentable square feet in
This press release, our Form 10-K for the year ended December 31, 2023, a financial supplement, and additional information about Public Storage are available on our website, www.publicstorage.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements relating to our 2024 outlook and all underlying assumptions; our expected acquisition, disposition, development, and redevelopment activity; supply and demand for our self-storage facilities; information relating to operating trends in our markets; expectations regarding operating expenses, including property tax changes; expectations regarding the impacts from inflation and a potential future recession; our strategic priorities; expectations with respect to financing activities, rental rates, cap rates, and yields; leasing expectations; our credit ratings; and all other statements other than statements of historical fact. Such statements are based on management’s beliefs and assumptions made based on information currently available to management and may be identified by the use of the words “outlook,” “guidance,” “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. Risks and uncertainties that may impact future results and performance include, but are not limited to those described in Part 1, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K that will be filed with the Securities and Exchange Commission (the “SEC”) on February 20, 2024 and in our other filings with the SEC. These include changes in demand for our facilities; impacts of natural disasters; adverse changes in laws and regulations including governing property tax, evictions, rental rates, minimum wage levels, and insurance; adverse economic effects from public health emergencies, international military conflicts, or similar events impacting public health and/or economic activity; increases in the costs of our primary customer acquisition channels; adverse impacts to us and our customers from high interest rates, inflation, unfavorable foreign currency rate fluctuations, or changes in federal or state tax laws related to the taxation of REITs; security breaches, including ransomware; or a failure of our networks, systems, or technology. These forward-looking statements speak only as of the date of this press release or as of the dates indicated in the statements. All of our forward-looking statements, including those in this press release, are qualified in their entirety by this cautionary statement. We expressly 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 these forward-looking statements, except when expressly required by law. Given these risks and uncertainties, you should not rely on any forward-looking statements in this press release, or which management may make orally or in writing from time to time, neither as predictions of future events nor guarantees of future performance.
PUBLIC STORAGE SELECTED CONSOLIDATED INCOME STATEMENT DATA (Amounts in thousands, except per share data) (Unaudited) |
|||||||||||||||
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Self-storage facilities |
$ |
1,092,588 |
|
|
$ |
1,028,353 |
|
|
$ |
4,259,613 |
|
|
$ |
3,946,028 |
|
Ancillary operations |
|
67,280 |
|
|
|
60,189 |
|
|
|
258,077 |
|
|
|
236,135 |
|
|
|
1,159,868 |
|
|
|
1,088,542 |
|
|
|
4,517,690 |
|
|
|
4,182,163 |
|
|
|
|
|
|
|
|
|
||||||||
Expenses: |
|
|
|
|
|
|
|
||||||||
Self-storage cost of operations |
|
267,872 |
|
|
|
241,256 |
|
|
|
1,061,950 |
|
|
|
980,209 |
|
Ancillary cost of operations |
|
22,959 |
|
|
|
18,401 |
|
|
|
85,996 |
|
|
|
72,698 |
|
Depreciation and amortization |
|
287,525 |
|
|
|
226,538 |
|
|
|
970,056 |
|
|
|
888,146 |
|
Real estate acquisition and development expense |
|
12,764 |
|
|
|
10,397 |
|
|
|
26,451 |
|
|
|
28,744 |
|
General and administrative |
|
23,172 |
|
|
|
19,575 |
|
|
|
80,632 |
|
|
|
71,672 |
|
Interest expense |
|
68,602 |
|
|
|
36,141 |
|
|
|
201,132 |
|
|
|
136,319 |
|
|
|
682,894 |
|
|
|
552,308 |
|
|
|
2,426,217 |
|
|
|
2,177,788 |
|
|
|
|
|
|
|
|
|
||||||||
Other increases (decreases) to net income: |
|
|
|
|
|
|
|
||||||||
Interest and other income |
|
16,209 |
|
|
|
14,173 |
|
|
|
85,590 |
|
|
|
40,567 |
|
Equity in earnings of unconsolidated real estate entities |
|
5,110 |
|
|
|
6,852 |
|
|
|
27,897 |
|
|
|
106,981 |
|
Foreign currency exchange (loss) gain |
|
(71,121 |
) |
|
|
(138,956 |
) |
|
|
(51,197 |
) |
|
|
98,314 |
|
Gain on sale of real estate |
|
17,090 |
|
|
|
— |
|
|
|
17,178 |
|
|
|
1,503 |
|
Gain on sale of equity investment in PS Business Parks, Inc. |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,128,860 |
|
Income before income tax expense |
|
444,262 |
|
|
|
418,303 |
|
|
|
2,170,941 |
|
|
|
4,380,600 |
|
Income tax expense |
|
(2,365 |
) |
|
|
(3,369 |
) |
|
|
(10,821 |
) |
|
|
(14,326 |
) |
Net income |
|
441,897 |
|
|
|
414,934 |
|
|
|
2,160,120 |
|
|
|
4,366,274 |
|
Allocation to noncontrolling interests |
|
(2,605 |
) |
|
|
(2,574 |
) |
|
|
(11,793 |
) |
|
|
(17,127 |
) |
Net income allocable to Public Storage shareholders |
|
439,292 |
|
|
|
412,360 |
|
|
|
2,148,327 |
|
|
|
4,349,147 |
|
Allocation of net income to: |
|
|
|
|
|
|
|
||||||||
Preferred shareholders – distributions |
|
(48,674 |
) |
|
|
(48,674 |
) |
|
|
(194,703 |
) |
|
|
(194,390 |
) |
Restricted share units |
|
(961 |
) |
|
|
(1,064 |
) |
|
|
(4,883 |
) |
|
|
(12,469 |
) |
Net income allocable to common shareholders |
$ |
389,657 |
|
|
$ |
362,622 |
|
|
$ |
1,948,741 |
|
|
$ |
4,142,288 |
|
|
|
|
|
|
|
|
|
||||||||
Per common share: |
|
|
|
|
|
|
|
||||||||
Net income per common share – Basic |
$ |
2.22 |
|
|
$ |
2.07 |
|
|
$ |
11.11 |
|
|
$ |
23.64 |
|
Net income per common share – Diluted |
$ |
2.21 |
|
|
$ |
2.06 |
|
|
$ |
11.06 |
|
|
$ |
23.50 |
|
Weighted average common shares – Basic |
|
175,532 |
|
|
|
175,345 |
|
|
|
175,472 |
|
|
|
175,257 |
|
Weighted average common shares – Diluted |
|
176,060 |
|
|
|
176,144 |
|
|
|
176,143 |
|
|
|
176,280 |
|
PUBLIC STORAGE SELECTED CONSOLIDATED BALANCE SHEET DATA (Amounts in thousands, except share and per share data) |
|||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
ASSETS |
(Unaudited) |
|
|
||||
|
|
|
|
||||
Cash and equivalents |
$ |
370,002 |
|
|
$ |
775,253 |
|
Real estate facilities, at cost: |
|
|
|
||||
Land |
|
5,628,488 |
|
|
|
5,273,073 |
|
Buildings |
|
21,836,750 |
|
|
|
18,946,053 |
|
|
|
27,465,238 |
|
|
|
24,219,126 |
|
Accumulated depreciation |
|
(9,423,974 |
) |
|
|
(8,554,155 |
) |
|
|
18,041,264 |
|
|
|
15,664,971 |
|
Construction in process |
|
345,453 |
|
|
|
372,992 |
|
|
|
18,386,717 |
|
|
|
16,037,963 |
|
|
|
|
|
||||
Investments in unconsolidated real estate entities |
|
390,180 |
|
|
|
275,752 |
|
Goodwill and other intangible assets, net |
|
387,267 |
|
|
|
232,517 |
|
Other assets |
|
275,050 |
|
|
|
230,822 |
|
Total assets |
$ |
19,809,216 |
|
|
$ |
17,552,307 |
|
|
|
|
|
||||
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
|
|
|
|
||||
Notes payable |
$ |
9,103,277 |
|
|
$ |
6,870,826 |
|
Accrued and other liabilities |
|
598,993 |
|
|
|
514,680 |
|
Total liabilities |
|
9,702,270 |
|
|
|
7,385,506 |
|
|
|
|
|
||||
Equity: |
|
|
|
||||
Public Storage shareholders’ equity: |
|
|
|
||||
Preferred Shares, |
|
4,350,000 |
|
|
|
4,350,000 |
|
Common Shares, |
|
17,567 |
|
|
|
17,527 |
|
Paid-in capital |
|
5,980,760 |
|
|
|
5,896,423 |
|
Accumulated deficit |
|
(267,910 |
) |
|
|
(110,231 |
) |
Accumulated other comprehensive loss |
|
(67,239 |
) |
|
|
(80,317 |
) |
Total Public Storage shareholders’ equity |
|
10,013,178 |
|
|
|
10,073,402 |
|
Noncontrolling interests |
|
93,768 |
|
|
|
93,399 |
|
Total equity |
|
10,106,946 |
|
|
|
10,166,801 |
|
Total liabilities and equity |
$ |
19,809,216 |
|
|
$ |
17,552,307 |
|
|
|
|
|
||||
PUBLIC STORAGE SELECTED FINANCIAL DATA
Computation of Funds Available for Distribution (“FAD”) (Unaudited – amounts in thousands except per share data) |
|||||||||||||||
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
FFO allocable to common shares |
$ |
666,263 |
|
|
$ |
595,116 |
|
|
$ |
2,924,288 |
|
|
$ |
2,900,815 |
|
Eliminate effect of items included in FFO but not FAD: |
|
|
|
|
|
|
|
||||||||
Share-based compensation expense in excess of cash paid |
|
6,347 |
|
|
|
8,268 |
|
|
|
27,616 |
|
|
|
39,876 |
|
Foreign currency exchange loss (gain) |
|
71,121 |
|
|
|
138,956 |
|
|
|
51,197 |
|
|
|
(98,314 |
) |
Less: Capital expenditures in real estate facilities |
|
(136,679 |
) |
|
|
(123,063 |
) |
|
|
(460,454 |
) |
|
|
(452,316 |
) |
FAD (a) |
$ |
607,052 |
|
|
$ |
619,277 |
|
|
$ |
2,542,647 |
|
|
$ |
2,390,061 |
|
|
|
|
|
|
|
|
|
||||||||
Distributions paid to common shareholders: |
|
|
|
|
|
|
|||||||||
Regular |
$ |
526,693 |
|
|
$ |
350,256 |
|
|
$ |
2,106,065 |
|
|
$ |
1,400,998 |
|
Special (b) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,302,414 |
|
Distributions paid to common shareholders |
$ |
526,693 |
|
|
$ |
350,256 |
|
|
$ |
2,106,065 |
|
|
$ |
3,703,412 |
|
Distribution payout ratio |
|
86.8 |
% |
|
|
56.6 |
% |
|
|
82.8 |
% |
|
|
155.0 |
% |
Distribution payout ratio (on regular dividends only) (c) |
|
86.8 |
% |
|
|
56.6 |
% |
|
|
82.8 |
% |
|
|
58.6 |
% |
Distributions per common share: |
|
|
|
|
|
|
|
||||||||
Regular |
$ |
3.00 |
|
|
$ |
2.00 |
|
|
$ |
12.00 |
|
|
$ |
8.00 |
|
Special (b) |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
13.15 |
|
(a) |
|
FAD represents FFO adjusted to exclude certain non-cash charges and to deduct capital expenditures. We utilize FAD in evaluating our ongoing cash flow available for investment, debt repayment, and common distributions. We believe investors and analysts utilize FAD in a similar manner. FAD is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes investing and financing activities presented on our statements of cash flows. In addition, other REITs may compute this measure differently, so comparisons among REITs may not be helpful. |
(b) |
|
A special dividend of |
(c) |
|
Supplemental payout ratio, excluding the impact of the special dividend, which was due to the gain on sale of our equity investment in PSB. This supplemental measure is presented to portray regular dividends, because FAD excludes the gain on sale of our equity investment in PSB. |
PUBLIC STORAGE SELECTED FINANCIAL DATA
Reconciliation of Self-Storage Net Operating Income to Net Income (Unaudited – amounts in thousands) |
|||||||||||||||
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
||||||||
Self-storage revenues for: |
|
|
|
|
|
|
|
||||||||
Same Store Facilities |
$ |
851,433 |
|
|
$ |
844,985 |
|
|
$ |
3,427,867 |
|
|
$ |
3,273,823 |
|
Acquired facilities |
|
144,355 |
|
|
|
91,986 |
|
|
|
450,653 |
|
|
|
327,245 |
|
Newly developed and expanded facilities |
|
67,217 |
|
|
|
61,788 |
|
|
|
262,450 |
|
|
|
230,999 |
|
Other non-same store facilities |
|
29,583 |
|
|
|
29,594 |
|
|
|
118,643 |
|
|
|
113,961 |
|
Self-storage revenues |
|
1,092,588 |
|
|
|
1,028,353 |
|
|
|
4,259,613 |
|
|
|
3,946,028 |
|
|
|
|
|
|
|
|
|
||||||||
Self-storage cost of operations for: |
|
|
|
|
|
|
|
||||||||
Same Store Facilities |
|
197,931 |
|
|
|
188,239 |
|
|
|
802,269 |
|
|
|
766,405 |
|
Acquired facilities |
|
44,182 |
|
|
|
27,652 |
|
|
|
144,498 |
|
|
|
109,744 |
|
Newly developed and expanded facilities |
|
19,594 |
|
|
|
16,667 |
|
|
|
78,531 |
|
|
|
67,805 |
|
Other non-same store facilities |
|
6,165 |
|
|
|
8,698 |
|
|
|
36,652 |
|
|
|
36,255 |
|
Self-storage cost of operations |
|
267,872 |
|
|
|
241,256 |
|
|
|
1,061,950 |
|
|
|
980,209 |
|
|
|
|
|
|
|
|
|
||||||||
Self-storage NOI for: |
|
|
|
|
|
|
|
||||||||
Same Store Facilities |
|
653,502 |
|
|
|
656,746 |
|
|
|
2,625,598 |
|
|
|
2,507,418 |
|
Acquired facilities |
|
100,173 |
|
|
|
64,334 |
|
|
|
306,155 |
|
|
|
217,501 |
|
Newly developed and expanded facilities |
|
47,623 |
|
|
|
45,121 |
|
|
|
183,919 |
|
|
|
163,194 |
|
Other non-same store facilities |
|
23,418 |
|
|
|
20,896 |
|
|
|
81,991 |
|
|
|
77,706 |
|
Self-storage NOI (a) |
|
824,716 |
|
|
|
787,097 |
|
|
|
3,197,663 |
|
|
|
2,965,819 |
|
Ancillary revenues |
|
67,280 |
|
|
|
60,189 |
|
|
|
258,077 |
|
|
|
236,135 |
|
Ancillary cost of operations |
|
(22,959 |
) |
|
|
(18,401 |
) |
|
|
(85,996 |
) |
|
|
(72,698 |
) |
Depreciation and amortization |
|
(287,525 |
) |
|
|
(226,538 |
) |
|
|
(970,056 |
) |
|
|
(888,146 |
) |
Real estate acquisition and development expense |
|
(12,764 |
) |
|
|
(10,397 |
) |
|
|
(26,451 |
) |
|
|
(28,744 |
) |
General and administrative expense |
|
(23,172 |
) |
|
|
(19,575 |
) |
|
|
(80,632 |
) |
|
|
(71,672 |
) |
Interest and other income |
|
16,209 |
|
|
|
14,173 |
|
|
|
85,590 |
|
|
|
40,567 |
|
Interest expense |
|
(68,602 |
) |
|
|
(36,141 |
) |
|
|
(201,132 |
) |
|
|
(136,319 |
) |
Equity in earnings of unconsolidated real estate entities |
|
5,110 |
|
|
|
6,852 |
|
|
|
27,897 |
|
|
|
106,981 |
|
Gain on sale of real estate |
|
17,090 |
|
|
|
— |
|
|
|
17,178 |
|
|
|
1,503 |
|
Gain on sale of equity investment in PS Business Parks, Inc. |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,128,860 |
|
Foreign currency exchange (loss) gain |
|
(71,121 |
) |
|
|
(138,956 |
) |
|
|
(51,197 |
) |
|
|
98,314 |
|
Income tax expense |
|
(2,365 |
) |
|
|
(3,369 |
) |
|
|
(10,821 |
) |
|
|
(14,326 |
) |
Net income on our income statement |
$ |
441,897 |
|
|
$ |
414,934 |
|
|
$ |
2,160,120 |
|
|
$ |
4,366,274 |
|
(a) |
|
Net operating income or “NOI” is a non-GAAP financial measure that excludes the impact of depreciation and amortization expense, which is based upon historical costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. We utilize NOI in determining current property values, evaluating property performance, and evaluating operating trends. We believe that investors and analysts utilize NOI in a similar manner. NOI is not a substitute for net income, operating cash flow, or other related GAAP financial measures, in evaluating our operating results. This table reconciles from NOI for our self-storage facilities to the net income presented on our income statement. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240220785696/en/
Ryan Burke
(818) 244-8080, Ext. 1141
Source: Public Storage
FAQ
What was Public Storage's ticker symbol mentioned in the press release?
What was the reported net income allocable to common shareholders for the fourth quarter?
What was the Core FFO per diluted share for the fourth quarter?
How many self-storage facilities did Public Storage acquire for $171.9 million in the fourth quarter?
What was the increase in Same Store direct net operating income for the year ended December 31, 2023?
