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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2020

or

[   ]Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to ____________.

Commission File Number: 001-33519

Public Storage
(Exact name of registrant as specified in its charter)

Maryland

95-3551121

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification Number)

701 Western Avenue, Glendale, California

91201-2349

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (818) 244-8080.

Former name, former address and former fiscal, if changed since last report: N/A

Securities registered pursuant to Section 12b of the Act:

Title of Class

 

Trading Symbol

 

Name of each exchange on which registered

Common Shares, $0.10 par value

 

PSA

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.200% Cum Pref Share, Series W, $0.01 par value

PSAPrW

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.200% Cum Pref Share, Series X, $0.01 par value

PSAPrX

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.400% Cum Pref Share, Series B, $0.01 par value

PSAPrB

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.125% Cum Pref Share, Series C, $0.01 par value

PSAPrC

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.950% Cum Pref Share, Series D, $0.01 par value

PSAPrD

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.900% Cum Pref Share, Series E, $0.01 par value

PSAPrE

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.150% Cum Pref Share, Series F, $0.01 par value

PSAPrF

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.050% Cum Pref Share, Series G, $0.01 par value

PSAPrG

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.600% Cum Pref Share, Series H, $0.01 par value

PSAPrH

New York Stock Exchange


Depositary Shares Each Representing 1/1,000 of a 4.875% Cum Pref Share, Series I, $0.01 par value

PSAPrI

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.700% Cum Pref Share, Series J, $0.01 par value

PSAPrJ

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.750% Cum Pref Share, Series K, $0.01 par value

PSAPrK

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.625% Cum Pref Share, Series L, $0.01 par value

PSAPrL

New York Stock Exchange

0.875% Senior Notes due 2032

PSA32

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.

[X] Yes [   ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

[X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated

filer

Accelerated

filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

[X]

[ ]

[ ]

[ ]

[ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes [X] No

Indicate the number of the registrant’s outstanding common shares of beneficial interest, as of August 3, 2020:

Common Shares of beneficial interest, $0.10 par value per share – 174,802,792 shares


PUBLIC STORAGE

INDEX

PART I

FINANCIAL INFORMATION

Pages

Item 1.

Financial Statements (Unaudited)

Balance Sheets at June 30, 2020 and December 31, 2019

1

Statements of Income for the Three and Six Months Ended June 30, 2020 and 2019

2

Statements of Comprehensive Income for the Three and Six Months Ended
June 30, 2020 and 2019

3

Statements of Equity for the Three and Six Months Ended June 30, 2020 and 2019

4-7

Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019

8-9

Condensed Notes to Financial Statements

10-28

Item 2.

Management’s Discussion and Analysis of
Financial Condition and Results of Operations

29-63

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

63

Item 4.

Controls and Procedures

63

PART II

OTHER INFORMATION (Items 3, 4 and 5 are not applicable)

Item 1.

Legal Proceedings

64

Item 1A.

Risk Factors

64-65

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

65

Item 6.

Exhibits

65

 


PUBLIC STORAGE

BALANCE SHEETS

(Amounts in thousands, except share data)

June 30,

December 31,

2020

2019

ASSETS

(Unaudited)

Cash and equivalents

$

1,268,475 

$

409,743 

Real estate facilities, at cost:

Land

4,300,406 

4,186,873 

Buildings

12,397,440 

12,102,273 

16,697,846 

16,289,146 

Accumulated depreciation

(6,881,358)

(6,623,475)

9,816,488 

9,665,671 

Construction in process

153,382 

141,934 

9,969,870 

9,807,605 

Investments in unconsolidated real estate entities

753,358 

767,816 

Goodwill and other intangible assets, net

206,922 

205,936 

Other assets

159,430 

174,344 

Total assets

$

12,358,055 

$

11,365,444 

LIABILITIES AND EQUITY

Notes payable

$

2,457,871 

$

1,902,493 

Preferred shares called for redemption (Note 8)

495,000 

-

Accrued and other liabilities

394,986 

383,284 

Total liabilities

3,347,857 

2,285,777 

Commitments and contingencies (Note 12)

 

 

Equity:

Public Storage shareholders’ equity:

Preferred Shares, $0.01 par value, 100,000,000 shares authorized,

165,400 shares issued (in series) and outstanding, (162,600 at

December 31, 2019), at liquidation preference

4,135,000 

4,065,000 

Common Shares, $0.10 par value, 650,000,000 shares authorized,

174,498,918 shares issued and outstanding (174,418,615 shares at

December 31, 2019)

17,450 

17,442 

Paid-in capital

5,702,466 

5,710,934 

Accumulated deficit

(789,089)

(665,575)

Accumulated other comprehensive loss

(73,136)

(64,890)

Total Public Storage shareholders’ equity

8,992,691 

9,062,911 

Noncontrolling interests

17,507 

16,756 

Total equity

9,010,198 

9,079,667 

Total liabilities and equity

$

12,358,055 

$

11,365,444 

 


See accompanying notes.

1


PUBLIC STORAGE

STATEMENTS OF INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Revenues:

Self-storage facilities

$

664,542 

$

669,339 

$

1,338,743 

$

1,319,747 

Ancillary operations

44,743 

41,611 

86,624 

80,241 

709,285 

710,950 

1,425,367 

1,399,988 

Expenses:

Self-storage cost of operations

213,825 

196,083 

421,750 

389,739 

Ancillary cost of operations

11,782 

11,653 

22,727 

22,198 

Depreciation and amortization

137,618 

126,859 

273,518 

248,800 

General and administrative

20,294 

15,264 

41,358 

34,767 

Interest expense

14,145 

12,254 

27,766 

20,397 

397,664 

362,113 

787,119 

715,901 

Other increases to net income:

Interest and other income

5,831 

8,582 

12,310 

15,547 

Equity in earnings of unconsolidated real estate entities

17,655 

18,914 

41,623 

36,586 

Foreign currency exchange (loss) gain

(19,295)

(5,218)

(10,350)

2,573 

Gain on sale of real estate

-

341 

1,117 

341 

Net income

315,812 

371,456 

682,948 

739,134 

Allocation to noncontrolling interests

(889)

(1,400)

(1,869)

(2,557)

Net income allocable to Public Storage shareholders

314,923 

370,056 

681,079 

736,577 

Allocation of net income to:

Preferred shareholders - distributions

(52,952)

(53,525)

(104,957)

(108,537)

Preferred shareholders - redemptions (Note 8)

(15,069)

(8,861)

(15,069)

(17,394)

Restricted share units

(783)

(1,259)

(1,800)

(2,492)

Net income allocable to common shareholders

$

246,119 

$

306,411 

$

559,253 

$

608,154 

Net income per common share:

Basic

$

1.41 

$

1.76 

$

3.21 

$

3.49 

Diluted

$

1.41 

$

1.76 

$

3.20 

$

3.49 

Basic weighted average common shares outstanding

174,493 

174,253 

174,470 

174,215 

Diluted weighted average common shares outstanding

174,575 

174,542 

174,596 

174,459 

 

See accompanying notes.

2


PUBLIC STORAGE

STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Net income

$

315,812 

$

371,456 

$

682,948 

$

739,134 

Other comprehensive income (loss):

Aggregate foreign currency exchange loss

(14,426)

(6,796)

(18,596)

(916)

Adjust for aggregate foreign currency exchange

loss (gain) included in net income

19,295 

5,218 

10,350 

(2,573)

Other comprehensive income (loss):

4,869 

(1,578)

(8,246)

(3,489)

Total comprehensive income

320,681 

369,878 

674,702 

735,645 

Allocation to noncontrolling interests

(889)

(1,400)

(1,869)

(2,557)

Comprehensive income allocable to

Public Storage shareholders

$

319,792 

$

368,478 

$

672,833 

$

733,088 

 

See accompanying notes.

3


PUBLIC STORAGE

STATEMENT OF EQUITY

Three Months Ended June 30, 2020

(Amounts in thousands, except share and per share amounts)

(Unaudited)

Accumulated

Total

Cumulative

Other

Public Storage

Preferred

Common

Paid-in

Accumulated

Comprehensive

Shareholders’

Noncontrolling

Total

Shares

Shares

Capital

Deficit

Loss

Equity

Interests

Equity

Balances at March 31, 2020

$

4,065,000 

$

17,448 

$

5,709,861 

$

(701,226)

$

(78,005)

$

9,013,078 

$

17,130 

$

9,030,208 

Issuance of 22,600 preferred shares (Note 8)

565,000 

-

(15,830)

-

-

549,170 

-

549,170 

Redemption of 19,800 preferred shares (Note 8)

(495,000)

-

-

-

-

(495,000)

-

(495,000)

Issuance of common shares in connection with

share-based compensation (23,896 shares)

-

2 

1,921 

-

-

1,923 

-

1,923 

Share-based compensation expense, net of cash

paid in lieu of common shares

-

-

6,546 

-

-

6,546 

-

6,546 

Acquisition of noncontrolling interests

-

-

(32)

-

-

(32)

(1)

(33)

Contributions by noncontrolling interests

-

-

-

-

-

-

867 

867 

Net income

-

-

-

315,812 

-

315,812 

-

315,812 

Net income allocated to noncontrolling interests

-

-

-

(889)

-

(889)

889 

-

Distributions to:

Preferred shareholders (Note 8)

-

-

-

(52,952)

-

(52,952)

-

(52,952)

Noncontrolling interests

-

-

-

-

-

-

(1,378)

(1,378)

Common shareholders and restricted share

unitholders ($2.00 per share)

-

-

-

(349,834)

-

(349,834)

-

(349,834)

Other comprehensive income (Note 2)

-

-

-

-

4,869