Public Storage Q1 2020 Earnings Report
Key Takeaways
Public Storage reported a net income of $313.1 million, or $1.79 per diluted common share, for the three months ended March 31, 2020, compared to $301.7 million, or $1.73 per diluted common share, in 2019. Funds from operations (FFO) was $2.61 per diluted common share, as compared to $2.52 in the same period in 2019.
Net income allocable to common shareholders increased by $11.4 million, or $0.06 per diluted common share, compared to 2019.
The increase in net income was primarily due to a $9.5 million increase in self-storage net operating income, an $8.5 million allocation to preferred shareholders, and an $8.1 million equity share of a gain on sale of real estate recorded by PS Business Parks.
Revenues for the Same Store Facilities increased 1.2% or $7.2 million compared to 2019, driven by higher realized annual rent per occupied square foot.
Cost of operations for the Same Store Facilities increased by 4.0% or $7.0 million compared to 2019, primarily due to increased marketing expenses and property tax expense.
Public Storage
Public Storage
Public Storage Revenue by Segment
Public Storage Revenue by Geographic Location
Forward Guidance
Due to the COVID-19 Pandemic, Public Storage anticipates reductions in year-over-year same-store rental income and net operating income in the remainder of 2020.
Positive Outlook
- Self-storage facilities qualify as “essential” businesses under all applicable business closure orders, and thus remain open.
- To date, we have observed no material degradation in rent collections.
- Our acquisition volume was robust in the early part of 2020, with $253.0 million in acquisitions during 2020 thus far including facilities currently under contract.
- Based upon our substantial current liquidity relative to our capital requirements noted below, and our strong financial profile and credit ratings, we do not expect such capital market dislocations to have a material impact upon our expected capital and growth plans over the next 12 months.
- The Board declared dividends with respect to our various series of preferred shares. All the dividends are payable on June 30, 2020 to shareholders of record as of June 15, 2020.
Challenges Ahead
- Significant reductions in demand for self-storage space, and as a result, our move-in volumes, despite lower move-in rental rates, have also declined significantly, offset partially by lower move-out volumes.
- Temporarily curtailed our existing tenant rate increase program, which will have a material adverse impact on our revenue growth.
- Bad debt losses (which are reflected as a reduction in revenues) could increase from historical levels of approximately 2% of rent.
- The COVID Pandemic could delay the estimated timing of completion of our existing pipeline of development and expansion projects.
- In the short-term, acquisition volume may decline due to economic uncertainty resulting from the COVID Pandemic, resulting in some third party sellers delaying the sale of their properties.