UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
_____________________
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 30 , 201 8

PUBLIC STORAGE
(Exact Name of Registrant as Specified in its Charter)

Maryland	001-33519	95-3551121	
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)	
701 Western Avenue, Glendale, California	91201-2349	
(Address of Principal Executive Offices)	(Zip Code)	
(818) 244-8080
(Registrant's telephone number, including area code)
﻿
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[  ]	Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
[  ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
[  ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
[  ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 
 
The information in Item 2.02 of this Form 8-K and the Exhibit attached hereto pursuant to Item 9.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 2.02 Results of Operations and Financial Condition and Exhibits
On October 30 , 2018, Public Storage announced its financial results for the quarter ended September 30 , 2018.  The full text of the press release issued in connection with the announcement is included in Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit 99.1 – Press Release dated October 30 , 2018

 
 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
﻿

4	 	
﻿	PUBLIC STORAGE	
﻿	 	
﻿	By:   /s/ John Reyes                 	

Date: October 30 , 201 8	John Reyes
Chief Financial Officer	
﻿

 
 
INDEX TO EXHIBITS

﻿	 	 	
﻿	 	 	
Exhibit No.	 	Description	
﻿	 	
99.1	 	Public Storage Earnings Press Release dated October 30 , 2018.	
﻿

 
News Release
﻿
Public Storage
701 Western Avenue
Glendale, CA 91201-2349
﻿ PublicStorage.com
﻿
﻿

﻿	 	 	
﻿	For Release	Immediately	
﻿	Date	October 30 , 2018	
﻿	Contact	Ryan Burke	
﻿	 	(818) 244-8080, Ext. 1141	
﻿	 	 	
﻿
Public Storage Reports Results for the Three and Nine Months   Ended   September 30 , 201 8
GLENDALE ,   California – Public Storage (NYSE:PSA) announced today operati ng results for the three and nine months ended September 30, 2018.       
Operating Results for the Three Months Ended September 30 , 2018
For the three months ended September 30, 2018, net income allocable to our common shareholders was $ 322.7 million or $ 1.85 per dilute d common share, compared to $279.7 million or $1.61 per diluted common share in 2017 representing an increase of $43 . 0 million or $0.24 per diluted common share.  The increase is due primarily to ( i) a $10.1 million increase in self-storage net operating income (described below), (ii) a $16.1 million increase due to the impact of foreign currency exchange gains and losses associated with o ur euro denominated debt, (iii ) a $14. 7 million allocation to preferred shareholders associated with preferred share redemptions in the three months ended September 30, 2017 , and (iv) a $7.8 million casualty loss and $5.2 million in incremental tenant reinsurance losses related to Hurricanes Harvey and Irma in the three months ended September 30, 2017 .     These i mpact s were offset partially by   a $7 .1 million increase in general and administrative expense due to the acceleration of share-based compensation expense accruals for our CEO and CFO in 2018 as a result of their upcoming retirement.
The $10.1 million increase in self-storage net operating income is a result of a $2. 5 million increase in our Same Store Facilities (as defined below) and a $7.6 million increase in our Non Same Store Facilities (as defined below).  Revenues for the Sam e Store Facilities increased 1.2 % or $ 6 . 6 millio n in the three months ended September 30, 2018 as compared to 2017, due primarily to higher realized annual rent per occupied square foot.  Cost of operations for the Same S tore Facilities increased by 2.8% or $4 . 1 millio n in the three months ended September 30, 2018 as compared to 2017, due primarily to increased property taxes .  The increase in net operating income of $7.6 million for the Non Same Store Facilities is due primarily to the impact of 153 self -storage facilities acquired and developed since January 2016.    
Operating Results for the Nine Months Ended September 30, 2018
For the nine months ended September 30, 2018, net income allocable to our common shareholders was $958.8 million or $5.50 per dilute d common share, compared to $837.5 million or $4.81   per diluted common share in 2017 representing an increase of $121. 3 million or $0.69 per diluted   common share.  The increase is due primarily to (i) a $35 .9 million increase in self-storage net operating income (described below) , (ii) our $34. 9 million equity share of gains recorded by PS Business Parks in the nine months ended September 30 , 2018, (iii) a $57 . 2 million increase due to the impact of foreign currency exchange gains and losses associated with our euro denominated debt ,   (iv) a $29.3 million allocation to preferred shareholders associated with preferred share redemptions in th e nine months ended September 30, 2017 , and ( v) a $7.8 million casualty loss and $5.2 million in incremental tenant reinsurance losses related to Hurricanes Harvey and Irma in the nine months ended September 30, 2017 .  These impact s were offset partially by a $28 .0 million increase in general and administrative expense due to the acceleration of share-based compensation expense accruals for our CEO and CFO in 2018 as a result of their upcoming retirement and the reversal of share - based compensation accruals forfeited by retiring executives in 2017.
The $3 5.9 million increase in self-storage net operating income is a result of a $13.7 million increase in our Same Store Facilities and $ 22.2 million increase in our Non Same Store Facilities.  Revenues for the Sam e Store Facilities increased 1.6 % or $26.6   million in the nine months ended September 30, 2018 as compared to 2017, due primarily to higher realized annual rent per occupied square foot.  Cost of operations for the Same Store Facilities increased by 2.9% or $12.9 million in the nine months ended September 30, 2018 as compared to 2017, due primarily to increased property taxes.  The increase in n et operating income of $22 . 2 million for the Non Same Store Facilities is due primarily to the impact of 153 self-storage facilities acquired and developed since January 2016 .

1

 
 
Funds from Operations
For the three months ended September 30, 2018, funds from operations (“FFO”) was $2.6 6 per diluted common share, as compared to $2.3 5 in 2017, representing an increase of 13 . 2 %.  FFO is a non-GAAP (generally accepted accounting principles) 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.
For the nine months ended September 30, 2018, FFO was $ 7.68 per diluted common share, as compared to $7.00 in 2017, representing an increase of 9.7 %.
We also present “Core FFO per share,” a non-GAAP measure that represents FFO per share excluding the impact of (i) foreign currency exchange gains and losses, (ii) EITF D-42 charges related to the redemption of preferred securities, (iii) accelerations of accruals due to the upcoming retirement of our CEO and CFO and reversals of accruals with respect to share - based awards forfeited by retiring senior executive officers and (iv) certain other non-cash and/or nonrecurring income or expense items .  We review Core FFO per share to evaluate our ongoing operating performance and we believe it is used by investors and REIT analysts in a similar manner.  However, Core FFO per share is not a substitute for net income per share.  Because other REITs may not compute Core FFO per share in the same manner as we do, may not use the same terminology or may not present such a measure, Core FFO per share may not be comparable among REITs .  
The following table reconciles from FFO per share to Core FFO per share (unaudited):
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	Percentage	
﻿	 	2018	 	2017	 	Change	 	2018	 	2017	 	Change	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
FFO per share	$	2.66 	 	$	2.35 	 	13.2% 	 	$	7.68 	 	$	7.00 	 	9.7% 	
Eliminate the per share impact of	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
items excluded from Core FFO, including	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
our equity share from investments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency exchange (gain) loss	 	(0.01)	 	 	0.08 	 	 	 	 	(0.07)	 	 	0.26 	 	 	
Application of EITF D-42	 	 -	 	 	0.10 	 	 	 	 	 -	 	 	0.18 	 	 	
Casualty losses and tenant claims due	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
to hurricanes	 	 -	 	 	0.07 	 	 	 	 	 -	 	 	0.07 	 	 	
Acceleration (reversal) of share-based	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
compensation expense due to	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
executive officer retirement	 	0.04 	 	 	 -	 	 	 	 	0.13 	 	 	(0.03)	 	 	
Other items	 	0.01 	 	 	0.01 	 	 	 	 	0.01 	 	 	 -	 	 	
Core FFO per share	$	2.70 	 	$	2.61 	 	3.4% 	 	$	7.75 	 	$	7.48 	 	3.6% 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿

2

 

Property Operations – Same Store Facilities
The Same Store Facilities represent those facilities that have been owned and operated on a stabilized level of occupancy, revenues and cost of operations since January 1, 2016.  We review the operations of our Same Store Facilities, which excludes facilities whose operating trends are significantly affected by factors such as casualty events, as well as recently developed or acquired facilities, to more effectively evaluate the ongoing performance of our self-storage portfolio in 2016, 2017 and 2018.  We believe the Same Store information is used by investors and REIT analysts in a similar manner.  The Same Store pool decreased from 2,048 facilities at June 30 , 2018 to 2,046 facilities at September 30, 2018. The following table summarizes the historical operating results of these 2,04 6 facilities (131. 2 million net rentable square feet) that represent approximately 82% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at September 30, 2018 .      
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selected Operating Data for the Same	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Store Facilities (2,046 facilities)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(unaudited):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended September 30,	 	Nine Months Ended September 30,	
﻿	 	 	 	 	 	 	Percentage	 	 	 	 	 	 	 	Percentage	
﻿	2018	 	2017	 	Change	 	2018	 	2017	 	Change	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	(Dollar amounts in thousands, except for per square foot amounts)	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Rental income	$	549,234 	 	$	542,535 	 	1.2% 	 	$	1,607,298 	 	$	1,580,888 	 	1.7% 	
Late charges and administrative fees	 	25,289 	 	 	25,434 	 	(0.6)%	 	 	73,557 	 	 	73,375 	 	0.2% 	
Total revenues (a)	 	574,523 	 	 	567,969 	 	1.2% 	 	 	1,680,855 	 	 	1,654,263 	 	1.6% 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property taxes	 	59,004 	 	 	55,822 	 	5.7% 	 	 	176,501 	 	 	167,685 	 	5.3% 	
On-site property manager payroll	 	28,608 	 	 	28,530 	 	0.3% 	 	 	85,066 	 	 	83,541 	 	1.8% 	
Supervisory payroll	 	8,928 	 	 	9,611 	 	(7.1)%	 	 	27,802 	 	 	29,628 	 	(6.2)%	
Repairs and maintenance	 	11,251 	 	 	11,407 	 	(1.4)%	 	 	31,580 	 	 	32,262 	 	(2.1)%	
Snow removal	 	 -	 	 	 -	 	0.0% 	 	 	2,787 	 	 	2,216 	 	25.8% 	
Utilities	 	10,871 	 	 	10,697 	 	1.6% 	 	 	31,238 	 	 	30,238 	 	3.3% 	
Advertising and selling	 	7,814 	 	 	6,966 	 	12.2% 	 	 	22,027 	 	 	21,885 	 	0.6% 	
Other direct property costs	 	14,814 	 	 	14,169 	 	4.6% 	 	 	44,350 	 	 	42,670 	 	3.9% 	
Allocated overhead	 	10,916 	 	 	10,877 	 	0.4% 	 	 	35,075 	 	 	33,388 	 	5.1% 	
Total cost of operations (a)	 	152,206 	 	 	148,079 	 	2.8% 	 	 	456,426 	 	 	443,513 	 	2.9% 	
Net operating income (b)	$	422,317 	 	$	419,890 	 	0.6% 	 	$	1,224,429 	 	$	1,210,750 	 	1.1% 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross margin	 	73.5% 	 	 	73.9% 	 	(0.5)%	 	 	72.8% 	 	 	73.2% 	 	(0.5)%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average for the period:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Square foot occupancy	 	94.0% 	 	 	94.6% 	 	(0.6)%	 	 	93.4% 	 	 	94.1% 	 	(0.7)%	
Realized annual rental income per (c):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Occupied square foot	$	17.83 	 	$	17.49 	 	1.9% 	 	$	17.49 	 	$	17.08 	 	2.4% 	
Available square foot (“REVPAF”)	$	16.75 	 	$	16.54 	 	1.3% 	 	$	16.34 	 	$	16.07 	 	1.7% 	
At September 30:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Square foot occupancy	 	 	 	 	 	 	 	 	 	92.1% 	 	 	93.2% 	 	(1.2)%	
Annual contract rent per occupied	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
square foot (d)	 	 	 	 	 	 	 	 	$	18.30 	 	$	18.04 	 	1.4% 	
﻿

	(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)		See attached reconciliation of self-storage net operating income (“NOI”) to operating income .  	

3

 
 
	(c)		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 . 	
	(d)		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):

﻿ 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	For the Quarter Ended	 	 	 	
﻿	March 31	 	June 30	 	September 30	 	December 31	 	Entire Year	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	(Amounts in thousands, except for per square foot amounts)	
Total revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2018	$	548,116 	 	$	558,216 	 	$	574,523 	 	 	 	 	 	 	
2017	$	536,618 	 	$	549,676 	 	$	567,969 	 	$	555,164 	 	$	2,209,427 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cost of operations:	 	 	 	 	 	 	 	 	 	 	 	 	
2018	$	153,532 	 	$	150,688 	 	$	152,206 	 	 	 	 	 	 	
2017	$	148,577 	 	$	146,857 	 	$	148,079 	 	$	118,261 	 	$	561,774 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property taxes:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2018	$	58,359 	 	$	59,138 	 	$	59,004 	 	 	 	 	 	 	
2017	$	55,831 	 	$	56,032 	 	$	55,822 	 	$	32,320 	 	$	200,005 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Repairs and maintenance, including	 	 	 	 	 	 	 	 	 	 	 	 	
snow removal expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2018	$	11,523 	 	$	11,593 	 	$	11,251 	 	 	 	 	 	 	
2017	$	11,684 	 	$	11,387 	 	$	11,407 	 	$	11,969 	 	$	46,447 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Advertising and selling expense:	 	 	 	 	 	 	 	 	 	 	 	 	
2018	$	6,516 	 	$	7,697 	 	$	7,814 	 	 	 	 	 	 	
2017	$	6,792 	 	$	8,127 	 	$	6,966 	 	$	6,794 	 	$	28,679 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
REVPAF:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2018	$	15.97 	 	$	16.31 	 	$	16.75 	 	 	 	 	 	 	
2017	$	15.63 	 	$	16.03 	 	$	16.54 	 	$	16.17 	 	$	16.09 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average realized annual	 	 	 	 	 	 	 	 	 	 	 	 	
rent per occupied square foot:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2018	$	17.30 	 	$	17.35 	 	$	17.83 	 	 	 	 	 	 	
2017	$	16.79 	 	$	16.95 	 	$	17.49 	 	$	17.37 	 	$	17.15 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average occupancy levels	 	 	 	 	 	 	 	 	
for the period:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2018	 	92.3% 	 	 	94.0% 	 	 	94.0% 	 	 	 	 	 	 	
2017	 	93.1% 	 	 	94.6% 	 	 	94.6% 	 	 	93.1% 	 	 	93.8% 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

4

 

Property Operations – Non Same Store Facilities
The N on Same Store Facilities at September 30, 2018 represent 373 facilities that were not stabilized with respect to occupancies or rental rates since January 1, 2016 or that we did not own as of January 1, 2016.  The following table summarizes operating data with respect to the Non Same Store Facilities (unaudited).  Additional data and metrics with respect to these facilities is included in the MD&A in our September 30, 2018 Form 10-Q .
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
NON SAME STORE	Three Months Ended September 30,	 	Nine Months Ended September 30,	
FACILITIES	2018	 	2017	 	Change	 	2018	 	2017	 	Change	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	(Dollar amounts in thousands, except for per square foot amounts)	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2018 acquisitions	$	1,762 	 	$	 -	 	$	1,762 	 	$	2,288 	 	$	 -	 	$	2,288 	
2017 acquisitions	 	7,409 	 	 	1,735 	 	 	5,674 	 	 	21,385 	 	 	2,873 	 	 	18,512 	
2016 acquisitions	 	10,031 	 	 	9,297 	 	 	734 	 	 	29,221 	 	 	26,909 	 	 	2,312 	
2016 - 2018 new developments	 	10,427 	 	 	5,124 	 	 	5,303 	 	 	26,165 	 	 	11,081 	 	 	15,084 	
2013 - 2015 new developments	 	6,891 	 	 	6,491 	 	 	400 	 	 	19,883 	 	 	18,440 	 	 	1,443 	
Other facilities	 	55,573 	 	 	55,622 	 	 	(49)	 	 	163,562 	 	 	164,649 	 	 	(1,087)	
    Total revenues	 	92,093 	 	 	78,269 	 	 	13,824 	 	 	262,504 	 	 	223,952 	 	 	38,552 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of operations before depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
and amortization expense:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2018 acquisitions	 	678 	 	 	 -	 	 	678 	 	 	865 	 	 	 -	 	 	865 	
2017 acquisitions	 	2,478 	 	 	633 	 	 	1,845 	 	 	7,444 	 	 	1,013 	 	 	6,431 	
2016 acquisitions	 	3,479 	 	 	3,364 	 	 	115 	 	 	10,637 	 	 	10,348 	 	 	289 	
2016 - 2018 new developments	 	6,391 	 	 	3,191 	 	 	3,200 	 	 	15,383 	 	 	8,405 	 	 	6,978 	
2013 - 2015 new developments	 	2,120 	 	 	2,275 	 	 	(155)	 	 	6,317 	 	 	6,055 	 	 	262 	
Other facilities	 	16,285 	 	 	15,773 	 	 	512 	 	 	48,628 	 	 	47,154 	 	 	1,474 	
    Total cost of operations	 	31,431 	 	 	25,236 	 	 	6,195 	 	 	89,274 	 	 	72,975 	 	 	16,299 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net operating income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
2018 acquisitions	 	1,084 	 	 	 -	 	 	1,084 	 	 	1,423 	 	 	 -	 	 	1,423 	
2017 acquisitions	 	4,931 	 	 	1,102 	 	 	3,829 	 	 	13,941 	 	 	1,860 	 	 	12,081 	
2016 acquisitions	 	6,552 	 	 	5,933 	 	 	619 	 	 	18,584 	 	 	16,561 	 	 	2,023 	
2016 - 2018 new developments	 	4,036 	 	 	1,933 	 	 	2,103 	 	 	10,782 	 	 	2,676 	 	 	8,106 	
2013 - 2015 new developments	 	4,771 	 	 	4,216 	 	 	555 	 	 	13,566 	 	 	12,385 	 	 	1,181 	
Other facilities	 	39,288 	 	 	39,849 	 	 	(561)	 	 	114,934 	 	 	117,495 	 	 	(2,561)	
    Net operating income (a)	$	60,662 	 	$	53,033 	 	$	7,629 	 	$	173,230 	 	$	150,977 	 	$	22,253 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿
	(a)		See attached reconciliation of self-storage net operating income (“NOI”) to operating income .  	
﻿
﻿
Investing and Capital   Activities
During the three months ended September 30, 2018, we acquired eleven self-storage facilities ( six in Minnesota, two in Texas and one each in Ohio, South Carolina and Tennessee ) with 0.7 million net rentable square feet for $ 73.8 million. For the nine months ended September 30, 2018, we acquired sixteen self-storage facilities ( six in Minnesota, two each in South Carolina, Tennessee and Texas, one each in Indiana, Kentucky, Ne braska and Ohio ) with 1.0 million net rentable square feet for $ 107.8 million. Subsequent to September 30, 2018, we acquired or were under contract to acquire nine self-storage facilities ( three in Georgi a, two in Colorado, one each in Florida, Indiana ,   Oklahoma and Washington ) with 0. 6 million net rentable square feet for $ 79 . 7 million.
During the three months ended September 30, 2018, we completed five newly developed facilities and various expansion projects (0.7 million net rentable square feet) costing $83 million.  For the nine months ended September 30, 2018, we completed sixteen newly developed facilities and various expansion projects (2.4 million net rentable square feet) costing an aggregate of $278 million. At September 30, 2018, we had various facilities in development (1.6 million net rentable square feet) estimated to cost $251 million and various expansion projects (3.8 million net rentable square feet) estimated to cost $346 million.  The remaining $343 million of development costs for these projects is expected to be incurred primarily in the next 18 months.
On July 13, 2018, we received a cash distribution from Shurgard Europe of $145.4 million.   

5

 
 
On October 15, 2018, Shurgard Europe completed an initial global offering (the “Offering”), and its shares commenced trading on Euronext Brussels under the “SHUR” symbol.   In the Offering, Shurgard Europe issued 21.7 million of its common shares to third parties at a price of €23 per share.   There is a potential “green shoe” for an additional €75 million in gross proceeds at a price of €23 per share.  Our equity interest, comprised of a direct and indirect pro-rata ownership interest in 31.3 million shares, decreased from 49% to 36.6% as a result of the Offering (35.2% assuming exercise of the “green shoe”).   While we did not sell any shares in the Offering, and we have no current plans to do so, we will record a gain on disposition in the three months ending December 31, 2018, as if we had sold a proportionate share of our investment in Shurgard Europe. Shurgard Europe ’s publicly reported information can be obtained on its website, https://corporate.shurgard.eu and on the website of the Luxembourg Stock Exchange, http://www.bourse.lu . 
On October 18, 2018, we sold our property in West London to Shurgard Europe for €36.5 million in cash, and will record a gain on disposition in the three months ending December 31, 2018.
Distributions Declared
On October 24 , 2018, our Board of Trustees declared a regular common quarterly dividend of $ 2.00 per common share.  The Board also declared dividends with respect to our various series of preferred shares. A ll the divi dends are payable on December 27 , 2018 to shareholders of record as of D ecember 12 , 2018.
Third Quarter Conference Call
A conference call is scheduled for October 31 , 201 8 at 10 :00 a.m. (PDT) to discuss the third 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 6166156 ). A simultaneous audio webcast may be accessed by using the link at www.publicstorage.com under “Company Info, Investor Relations, News and Events, Events Calendar.”  A replay of the conference call m ay be accessed through November 14 , 2018 by calling (800) 585-8367 (domestic), (404) 537-3406 (international) or by using the link at www.publicstorage.com under “Company Info, Investor Relations, News and Events, Events Calendar.” All forms of replay utilize conference ID number 6166156 .
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. The Company’s headquarters are located i n Glendale, California.  At September 30, 2018, we had interests in 2, 4 18 self-storage facilities located in 38 states with approximately 16 1 million net rentable square feet in the United States and 228 storage facilities located in seven Western European nations with approximately 12 million net rentable square feet operated under the “Shurgard” brand.  We also own a 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 2 8 million rentable square feet of commercial space at September 30, 2018 .
Additional information about Public Storage is 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.  All statements in this press release, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words “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.  Factors and risks 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 filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2018 and in our other filings with the SEC and the following: general risks associated with the ownership and operation of real estate, including changes in demand, risk related to development of self-storage facilities, potential liability for environmental contamination, natural disasters and adverse changes in laws and regulations governing property tax, real estate and zoning; risks associated with downturns in the national and local economies in the markets in which we operate, including risks related to current economic conditions and the economic health of our customers; the impact of competition from new and existing self-storage and commercial facilities and other storage alternatives; difficulties in our ability to successfully evaluate, finance, integrate into our existing operations and manage acquired and developed properties; risks associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations, changes in tax laws, and local and global economic uncertainty that could adversely affect our earnings and cash flows; risks related to our participation in joint ventures; the impact of the regulatory environment as well as national, state and local laws and regulations including, without limitation, those governing environmental, taxes, our tenant reinsurance business and labor, and risks related to the impact of new laws and regulations; risks of increased tax expense associated either with a possible failure by us to qualify as a REIT, or with challenges to the determination of taxable income for our taxable REIT subsidiaries; changes in federal or state tax laws related to the taxation of REITs and other corporations; security breaches or a failure of our networks, systems or technology could adversely impact our business, customer and employee relationships; risks

6

 
 
associated with the self-insurance of certain business risks, including property and casualty insurance, employee health insurance and workers compensation liabilities; difficulties in raising capital at a reasonable cost; delays in the development process; ongoing litigation and other legal and regulatory actions which may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business; and economic uncertainty due to the impact of war or terrorism. These forward-looking statements speak only as of the date of this press release.  All of our forward-looking statements, including those in this press release, are qualified in their entirety by this 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 this press release, except where 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, as predictions of future events nor guarantees of future performance.

7

 
PUBLIC STORAGE
SELECTED INCOME STATEMENT DATA
(Amounts in thousands, except per share data)
(Unaudited)

 
﻿
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended	 	Nine Months Ended	
﻿	 	September 30,	 	September 30,	
﻿	 	2018	 	2017	 	2018	 	2017	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues:	 	 	 	 	 	 	 	 	 	 	 	 	
Self-storage facilities	 	$	666,616 	 	$	646,238 	 	$	1,943,359 	 	$	1,878,215 	
Ancillary operations	 	 	39,752 	 	 	40,123 	 	 	118,461 	 	 	118,005 	
﻿	 	 	706,368 	 	 	686,361 	 	 	2,061,820 	 	 	1,996,220 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	
Self-storage cost of operations	 	 	183,637 	 	 	173,315 	 	 	545,700 	 	 	516,488 	
Ancillary cost of operations	 	 	11,907 	 	 	17,304 	 	 	33,648 	 	 	39,611 	
Depreciation and amortization	 	 	124,516 	 	 	113,320 	 	 	362,272 	 	 	334,426 	
General and administrative	 	 	27,429 	 	 	22,311 	 	 	90,278 	 	 	62,331 	
﻿	 	 	347,489 	 	 	326,250 	 	 	1,031,898 	 	 	952,856 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	358,879 	 	 	360,111 	 	 	1,029,922 	 	 	1,043,364 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Other income (expense):	 	 	 	 	 	 	 	 	 	 	 	 	
Interest and other income	 	 	7,020 	 	 	4,569 	 	 	18,892 	 	 	12,722 	
Interest expense	 	 	(8,094)	 	 	(2,389)	 	 	(24,589)	 	 	(4,553)	
Equity in earnings of unconsolidated real estate entities	17,771 	 	 	17,218 	 	 	90,529 	 	 	57,235 	
Gain on real estate investment sales	 	 	1,401 	 	 	 -	 	 	1,825 	 	 	975 	
Foreign currency exchange gain (loss)	 	 	2,612 	 	 	(13,446)	 	 	12,738 	 	 	(44,452)	
Casualty loss	 	 	 -	 	 	(7,789)	 	 	 -	 	 	(7,789)	
Net income	 	 	379,589 	 	 	358,274 	 	 	1,129,317 	 	 	1,057,502 	
Allocation to noncontrolling interests	 	 	(1,562)	 	 	(1,600)	 	 	(4,491)	 	 	(4,684)	
Net income allocable to Public Storage shareholders	 	 	378,027 	 	 	356,674 	 	 	1,124,826 	 	 	1,052,818 	
Allocation of net income to:	 	 	 	 	 	 	 	 	 	 	 	 	
Preferred shareholders – distributions	 	 	(54,080)	 	 	(61,055)	 	 	(162,238)	 	 	(182,457)	
Preferred shareholders – redemptions	 	 	 -	 	 	(14,692)	 	 	 -	 	 	(29,330)	
Restricted share units 	 	 	(1,268)	 	 	(1,210)	 	 	(3,790)	 	 	(3,502)	
Net income allocable to common shareholders	 	$	322,679 	 	$	279,717 	 	$	958,798 	 	$	837,529 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Per common share:	 	 	 	 	 	 	 	 	 	 	 	 	
Net income per common share – Basic	 	$	1.85 	 	$	1.61 	 	$	5.51 	 	$	4.83 	
Net income per common share – Diluted	 	$	1.85 	 	$	1.61 	 	$	5.50 	 	$	4.81 	
Weighted average common shares – Basic	 	 	173,975 	 	 	173,715 	 	 	173,933 	 	 	173,560 	
Weighted average common shares – Diluted	 	 	174,348 	 	 	174,240 	 	 	174,240 	 	 	174,128 	
﻿

8

 
PUBLIC STORAGE
SELECTED BALANCE SHEET DATA
(Amounts in thousands, except share and per share data)

 
﻿
﻿
﻿	 	 	 	 	 	 	
﻿	 	September 30, 2018	 	December 31, 2017	
ASSETS	 	(Unaudited)	 	 	 	
﻿	 	 	 	 	 	 	
Cash and equivalents	 	$	432,525 	 	$	433,376 	
﻿	 	 	 	 	 	 	
Operating real estate facilities:	 	 	 	 	 	 	
Land and buildings, at cost	 	 	15,135,893 	 	 	14,665,989 	
Accumulated depreciation	 	 	(6,041,262)	 	 	(5,700,331)	
﻿	 	 	9,094,631 	 	 	8,965,658 	
Construction in process	 	 	253,719 	 	 	264,441 	
Investments in unconsolidated real estate entities	 	 	619,405 	 	 	724,173 	
Goodwill and other intangible assets, net	 	 	209,317 	 	 	214,957 	
Other assets	 	 	138,343 	 	 	130,287 	
Total assets	 	$	10,747,940 	 	$	10,732,892 	
﻿	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	
Senior unsecured notes	 	$	1,390,080 	 	$	1,402,109 	
Mortgage notes	 	 	27,865 	 	 	29,213 	
Accrued and other liabilities	 	 	409,973 	 	 	337,201 	
Total liabilities	 	 	1,827,918 	 	 	1,768,523 	
﻿	 	 	 	 	 	 	
Equity:	 	 	 	 	 	 	
Public Storage shareholders’ equity:	 	 	 	 	 	 	
Cumulative Preferred Shares, $0.01 par value, 100,000,000 shares	 	 	 	 	 	 	
authorized, 161,000 shares issued (in series) and outstanding,	 	 	 	 	 	 	
(161,000 at December 31, 2017) at liquidation preference	 	 	4,025,000 	 	 	4,025,000 	
Common Shares, $0.10 par value, 650,000,000 shares authorized,	 	 	 	 	 	 	
174,059,645 shares issued and outstanding, (173,853,370 shares	 	 	 	 	 	 	
at December 31, 2017)	 	 	17,406 	 	 	17,385 	
Paid-in capital	 	 	5,697,308 	 	 	5,648,399 	
Accumulated deficit	 	 	(760,284)	 	 	(675,711)	
Accumulated other comprehensive loss	 	 	(84,339)	 	 	(75,064)	
Total Public Storage shareholders’ equity	 	 	8,895,091 	 	 	8,940,009 	
Noncontrolling interests	 	 	24,931 	 	 	24,360 	
Total equity	 	 	8,920,022 	 	 	8,964,369 	
Total liabilities and equity	 	$	10,747,940 	 	$	10,732,892 	
﻿

9

 
PUBLIC STORAGE
SELECTED FINANCIAL DATA
 
Computation of Funds from Operations and Funds Available for Distribution
(Unaudited – amounts in thousands)
 
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended	 	Nine Months Ended	
﻿	 	September 30,	 	September 30,	
﻿	 	2018	 	2017	 	2018	 	2017	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Computation of FFO per Share:	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Net income allocable to common shareholders	 	$	322,679 	 	$	279,717 	 	$	958,798 	 	$	837,529 	
Eliminate items excluded from FFO:	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	124,516 	 	 	113,320 	 	 	362,272 	 	 	334,426 	
Depreciation from unconsolidated real estate investments	19,615 	 	 	18,054 	 	 	58,238 	 	 	52,635 	
Depreciation allocated to noncontrolling interests	 	 	 	 	 	 	 	 	 	 	 	 	
and restricted share unitholders	 	 	(892)	 	 	(858)	 	 	(2,824)	 	 	(2,657)	
Gains on sale of real estate investments, including	 	 	 	 	 	 	 	 	 	 	 	 	
our equity share from investments	 	 	(1,766)	 	 	 -	 	 	(37,530)	 	 	(3,077)	
FFO allocable to common shares (a)	 	$	464,152 	 	$	410,233 	 	$	1,338,954 	 	$	1,218,856 	
Diluted weighted average common shares	 	 	174,348 	 	 	174,240 	 	 	174,240 	 	 	174,128 	
FFO per share (a)	 	$	2.66 	 	$	2.35 	 	$	7.68 	 	$	7.00 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Reconciliation of Earnings per Share to FFO per Share:	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings per share—Diluted	 	$	1.85 	 	$	1.61 	 	$	5.50 	 	$	4.81 	
Eliminate per share amounts excluded from FFO:	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization allocable to	 	 	 	 	 	 	 	 	 	 	 	 	
common shareholders	 	 	0.82 	 	 	0.75 	 	 	2.40 	 	 	2.21 	
Gains on sale of real estate investments, including	 	 	 	 	 	 	 	 	 	 	 	 	
our equity share from investments and other	 	 	(0.01)	 	 	(0.01)	 	 	(0.22)	 	 	(0.02)	
FFO per share (a)	 	$	2.66 	 	$	2.35 	 	$	7.68 	 	$	7.00 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Computation of Funds Available for Distribution ("FAD"):	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
FFO allocable to common shares	 	$	464,152 	 	$	410,233 	 	$	1,338,954 	 	$	1,218,856 	
Eliminate effect of items included in FFO but not FAD:	 	 	 	 	 	 	 	 	 	 	 	 	
Share-based compensation expense in excess of	 	 	 	 	 	 	 	 	 	 	
cash paid	17,998 	 	 	12,297 	 	 	40,987 	 	 	13,096 	
Foreign currency exchange (gain) loss	 	 	(2,612)	 	 	13,446 	 	 	(12,738)	 	 	44,452 	
Application of EITF D-42, including our equity	 	 	 	 	 	 	 	 	 	 	 	 	
share from investments	 	 	 -	 	 	17,552 	 	 	 -	 	 	32,190 	
Less: Capital expenditures to maintain real estate facilities	(40,180)	 	 	(28,985)	 	 	(93,407)	 	 	(82,525)	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
FAD (a)	 	$	439,358 	 	$	424,543 	 	$	1,273,796 	 	$	1,226,069 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Distributions paid to common shareholders and restricted	 	 	 	 	 	 	 	 	 	 	 	 	
share units	 	$	349,166 	 	$	348,555 	 	$	1,047,161 	 	$	1,045,140 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Distribution payout ratio	 	 	79.5% 	 	 	82.1% 	 	 	82.2% 	 	 	85.2% 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Distributions per common share	 	$	2.00 	 	$	2.00 	 	$	6.00 	 	$	6.00 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
	(a)		FFO and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts and, along with the non-GAAP measure FAD, are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents net income before real estate depreciation, gains or losses and impairment charges, which are excluded because they are based upon historical real estate costs and assume that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. 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.  FFO and FFO per share are not a substitute for net income or earnings per share.  FFO and FAD are not substitutes for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows.  In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful. 	

10

 
PUBLIC STORAGE
SELECTED FINANCIAL DATA
 
Reconciliation of Self-Storage Net Operating Income to
Operating Income
(Unaudited – amounts in thousands)
 
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	Three Months Ended	 	Nine Months Ended	
﻿	 	September 30,	 	September 30,	
﻿	 	2018	 	2017	 	2018	 	2017	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Self-storage revenues for:	 	 	 	 	 	 	 	 	 	 	 	 	
Same Store Facilities	 	$	574,523 	 	$	567,969 	 	$	1,680,855 	 	$	1,654,263 	
Non Same Store Facilities	 	 	92,093 	 	 	78,269 	 	 	262,504 	 	 	223,952 	
Self-storage revenues	 	 	666,616 	 	 	646,238 	 	 	1,943,359 	 	 	1,878,215 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Self-storage cost of operations for:	 	 	 	 	 	 	 	 	 	 	 	 	
Same Store Facilities	 	 	152,206 	 	 	148,079 	 	 	456,426 	 	 	443,513 	
Non Same Store Facilities	 	 	31,431 	 	 	25,236 	 	 	89,274 	 	 	72,975 	
Self-storage cost of operations	 	 	183,637 	 	 	173,315 	 	 	545,700 	 	 	516,488 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	
Self-storage net operating income for:	 	 	 	 	 	 	 	 	 	 	 	 	
Same Store Facilities	 	 	422,317 	 	 	419,890 	 	 	1,224,429 	 	 	1,210,750 	
Non Same Store Facilities	 	 	60,662 	 	 	53,033 	 	 	173,230 	 	 	150,977 	
Self-storage net operating income (a)	 	 	482,979 	 	 	472,923 	 	 	1,397,659 	 	 	1,361,727 	
Ancillary revenues	 	 	39,752 	 	 	40,123 	 	 	118,461 	 	 	118,005 	
Ancillary cost of operations	 	 	(11,907)	 	 	(17,304)	 	 	(33,648)	 	 	(39,611)	
Depreciation and amortization	 	 	(124,516)	 	 	(113,320)	 	 	(362,272)	 	 	(334,426)	
General and administrative expense	 	 	(27,429)	 	 	(22,311)	 	 	(90,278)	 	 	(62,331)	
Operating income on our income statement	 	$	358,879 	 	$	360,111 	 	$	1,029,922 	 	$	1,043,364 	
﻿
	(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 real estate 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 in evaluating operating trends.  We believe that investors and analysts utilize NOI in a similar manner.  NOI is not a substitute for net income, net 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 operating income presented on our income statement.	

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