(Source: Business Wire)
Public Storage (NYSE:PSA) announced today operating results for the
third quarter ended September 30, 2009.
Operating Results for the Three Months
Ended September 30, 2009
Net income for the three months ended September 30, 2009 was $244.0
million compared to $147.9 million for the same period in 2008,
representing an increase of $96.1 million. This increase is primarily
due to a foreign currency exchange gain totaling $21.4 million in the
three months ended September 30, 2009 as compared to a foreign currency
exchange loss totaling $53.2 million in the same period in 2008 and a
gain on disposition of $30.3 million related to an equity offering by PS
Business Parks, Inc. ("PSB") described below, offset partially by a
$16.2 million reduction in net operating income with respect to our Same
Store Facilities described below.
Revenues for the Same Store Facilities decreased 4.6% or $16.9 million
in the quarter ended September 30, 2009 as compared to the same period
in 2008, due to a 4.2% reduction in realized rent per occupied square
foot, combined with a 1.0% reduction in average occupancies. Cost of
operations for the Same Store Facilities declined 0.6% or $0.7 million
in the quarter ended September 30, 2009 as compared to the same period
in 2008. Net operating income for our Same Store Facilities decreased
6.3% or $16.2 million in the quarter ended September 30, 2009 as
compared to the same period in 2008.
For the three months ended September 30, 2009, net income allocable to
our common shareholders (after allocating net income to our
noncontrolling interests, preferred and equity stock shareholders, and
holders of restricted stock units) was $173.5 million or $1.03 per
common share on a diluted basis compared to $71.5 million or $0.42 per
common share for the same period in 2008, representing an increase of
$102.0 million or $0.61 per common share on a diluted basis. These
increases are primarily due to the net impact of the factors described
above.
Operating Results for the Nine Months
Ended September 30, 2009
Net income for the nine months ended September 30, 2009 was $602.8
million compared to $811.8 million for the same period in 2008,
representing a decrease of $209.0 million. This decrease is primarily
due to (i) a gain of $341.8 million in the nine months ended September
30, 2008 related to our disposition of an interest in Shurgard Europe,
(ii) a $28.6 million reduction in net operating income with respect to
our Same Store Facilities described below, and (iii) an impairment
charge included in discontinued operations with respect to intangible
assets totaling $8.2 million in the nine months ended September 30,
2009, partially offset by (iv) a gain on disposition of $30.3 million
related to an equity offering by PSB described below, (v) a foreign
exchange gain of $19.9 million during the nine months ended September
30, 2009 as compared to a loss of $12.2 million during the same period
in 2008, (vi) a $31.6 million reduction in depreciation and amortization
related to our domestic assets, primarily representing reduced
intangible amortization, and (vii) a reduction in general and
administrative expenses due to $27.9 million in incentive compensation
incurred in the nine months ended September 30, 2008 related to our
disposition of an interest in Shurgard Europe.
Revenues for the Same Store Facilities decreased 3.0% or $32.3 million
in the nine months ended September 30, 2009 as compared to the same
period in 2008, due to a 2.5% reduction in realized rent per occupied
square foot, combined with a 1.0% reduction in average occupancies. Cost
of operations for the Same Store Facilities declined 1.0% or $3.6
million in the nine months ended September 30, 2009 as compared to the
same period in 2008. Net operating income for our Same Store Facilities
decreased 4.0% or $28.6 million for the nine months ended September 30,
2009 as compared to the same period in 2008.
For the nine months ended September 30, 2009, net income allocable to
our common shareholders (after allocating net income to our
noncontrolling interests, preferred and equity stock shareholders, and
holders of restricted stock units) was $468.5 million or $2.78 per
common share on a diluted basis compared to $584.3 million or $3.46 per
common share for the same period in 2008, representing a decrease of
$115.8 million or $0.68 per common share on a diluted basis. These
decreases are primarily due to the net impact of the factors described
above, offset by a $78.2 million reduction in earnings allocated to our
preferred partnership unitholders and preferred shareholders in the nine
months ended September 30, 2009 associated with the repurchase of
securities.
Funds from Operations
For the three months ended September 30, 2009, funds from operations
("FFO") increased to $1.44 per common share as compared to $1.08 per
common share for the same period in 2008, representing an increase of
$0.36 per common share.
For the three months ended September 30, 2009, FFO was impacted by (i) a
foreign currency exchange gain totaling $21.4 million (compared to an
exchange loss of $53.2 million for the same period in 2008) and (ii)
changes in accounting estimates with respect to our tenant insurance
operations reflected as a reduction in ancillary cost of operations
totaling $2.0 million ($7.0 million for the same period in 2008). FFO
for the three months ended September 30, 2008 was also impacted by a
loss with respect to damage to our facilities, and tenant insurance
claims expense, caused by Hurricane Ike aggregating $1.1 million.
For the nine months ended September 30, 2009, FFO increased to $4.35 per
common share on a diluted basis as compared to $3.57 per common share
for the same period in 2008, representing an increase of $0.78 per share.
For the nine months ended September 30, 2009, FFO has been impacted by
(i) a foreign currency exchange gain totaling $19.9 million (compared to
a loss of $12.2 million for the same period in 2008), (ii) an impairment
charge with respect to an intangible asset resulting from an eminent
domain proceeding totaling $8.2 million, (iii) changes in accounting
estimates with respect to our tenant insurance operations reflected as a
reduction in ancillary cost of operations totaling $2.0 million ($7.0
million for the same period in 2008), (iv) costs incurred to terminate
and wind down our truck rental operations of $3.5 million, (v) a $78.2
million reduction in the allocation of net income to our preferred
shareholders and unitholders pursuant to the repurchase of our preferred
securities, and our pro-rata share ($16.3 million) of PSB's earnings
from preferred securities repurchases which is included in equity in
earnings, and (vi) a gain on the early retirement of debt totaling $4.1
million. FFO for the nine months ended September 30, 2008 was also
impacted by (i) incentive compensation with respect to our disposition
of an interest in Shurgard Europe included in general and administrative
expense totaling $27.9 million and (ii) a loss with respect to damage to
our facilities, and tenant insurance claims expense, caused by Hurricane
Ike aggregating $1.1 million.
The following table provides a summary of the impact of these items that
occurred during the three and nine months ended September 30, 2009 and
2008:
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 PercentageChange 2009 2008 PercentageChange
FFO per common share prior to adjustments for the following items $ 1.30 $ 1.37 (5.1 ) % $ 3.71 $ 3.78 (1.9 )%
Foreign currency exchange gain (loss), net 0.13 (0.32 ) 0.12 (0.07 )
Change in accounting estimate -- ancillary operations 0.01 0.04 0.01 0.04
Impairment charge on intangible asset resulting from an eminent domain proceeding - - (0.05 ) -
Casualty loss and tenant insurance loss associated with Hurricane Ike - (0.01 ) - (0.01 )
Costs incurred to terminate truck rental operations - - (0.02 ) -
Increased income allocated to common shareholders, and from preferred equity shareholders, pursuant to preferred repurchases, including our equity share from PSB - - 0.56 -
Gain on early retirement of debt - - 0.02 -
Incremental incentive compensation incurred in connection with the disposition of an interest in Shurgard Europe - - - (0.17 )
FFO per common share, as reported $ 1.44 $ 1.08 33.3 % $ 4.35 $ 3.57 21.8 %
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Property Operations -- Same Store
Facilities
The Same Store group of facilities represents those 1,899 facilities
that we have owned, and have been operated on a stabilized basis, since
January 1, 2007 and therefore provide meaningful comparisons for 2007,
2008, and 2009. The following table summarizes the historical operating
results of these 1,899 facilities (117.5 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 September
30, 2009.
Selected Operating Data for the Same Store Facilities (1,899 Facilities): Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 PercentageChange 2009 2008 PercentageChange
(Dollar amounts in thousands, except for weighted average data)
Revenues:
Rental income $ 334,953 $ 353,200 (5.2 )% $ 997,346 $ 1,033,456 (3.5 )%
Late charges and admin fees collected (a) 17,168 15,776 8.8 % 48,799 44,972 8.5 %
Total revenues (b) 352,121 368,976 (4.6 )% 1,046,145 1,078,428 (3.0 )%
Cost of operations:
Property taxes 37,137 36,161 2.7 % 111,558 107,666 3.6 %
Direct property payroll 23,321 22,862 2.0 % 71,020 70,568 0.6 %
Media advertising 3,430 2,148 59.7 % 18,812 18,931 (0.6 )%
Other advertising and promotion 4,942 4,645 6.4 % 15,523 14,098 10.1 %
Utilities 9,235 10,238 (9.8 )% 26,732 28,035 (4.6 )%
Repairs and maintenance 8,992 9,765 (7.9 )% 28,867 31,842 (9.3 )%
Telephone reservation center 2,890 3,183 (9.2 )% 8,501 9,624 (11.7 )%
Property insurance 2,240 2,642 (15.2 )% 7,504 8,766 (14.4 )%
Other costs of management 21,099 22,328 (5.5 )% 66,202 68,824 (3.8 )%
Total cost of operations (b) 113,286 113,972 (0.6 )% 354,719 358,354 (1.0 )%
Net operating income $ 238,835 $ 255,004 (6.3 )% $ 691,426 $ 720,074 (4.0 )%
Gross margin 67.8 % 69.1 % (1.9 )% 66.1 % 66.8 % (1.0 )%
Weighted average for the period:
Square foot occupancy (c) 89.6 % 90.5 % (1.0 )% 89.2 % 90.1 % (1.0 )%
Realized annual rent per occupied square foot (d)(e) $ 12.73 $ 13.29 (4.2 )% $ 12.69 $ 13.02 (2.5 )%
REVPAF (f)(e) $ 11.41 $ 12.03 (5.2 )% $ 11.32 $ 11.73 (3.5 )%
Weighted average September 30:
Square foot occupancy 88.7 % 89.4 % (0.8 )%
In place annual rent per occupied square foot (g) $ 13.65 $ 14.37 (5.0 )%
Total net rentable square feet (in thousands) 117,462 117,462 -
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a) Late charges and administrative fees have increased primarily due to increases in the related fee rates rather than any increase in tenant delinquency.
b) See attached reconciliation of these amounts to our consolidated self-storage revenues and operating expenses. Revenues and cost of operations do not include ancillary revenues and expenses generated at the facilities with respect to tenant reinsurance, retail sales and truck rentals. "Other costs of management" included in cost of operations principally represents all the indirect costs incurred in the operations of the facilities. Indirect costs principally include supervisory costs and corporate overhead cost incurred to support the operating activities of the facilities.
c) Square foot occupancies represent weighted average occupancy levels over the entire period.