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Public Storage(PSA) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) This section presents Public Storage's unaudited consolidated financial statements, detailing asset growth, net income decline, and cash flow from operations Consolidated Balance Sheets Total assets increased to $20.54 billion, liabilities rose to $11.07 billion due to notes payable, and total equity decreased Consolidated Balance Sheet Highlights (in thousands of USD) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $20,541,453 | $19,754,934 | | Cash and equivalents | $1,104,603 | $447,416 | | Real estate facilities, net | $18,430,821 | $18,360,653 | | Total Liabilities | $11,065,104 | $9,941,282 | | Notes payable | $10,440,279 | $9,353,034 | | Total Equity | $9,476,349 | $9,813,652 | Consolidated Statements of Income Total revenues slightly increased to $1.20 billion, but net income allocable to common shareholders significantly decreased to $309.0 million due to foreign currency losses Income Statement Summary (in thousands of USD, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,201,094 | $1,173,211 | $2,384,278 | $2,330,431 | | Self-storage facilities | $1,118,658 | $1,099,736 | $2,221,656 | $2,185,781 | | Net Income | $361,411 | $521,209 | $772,202 | $1,032,906 | | Foreign currency exchange (loss) gain | ($146,070) | $12,449 | ($214,765) | $49,992 | | Net Income (Common Shareholders) | $308,968 | $468,366 | $667,198 | $927,575 | | Diluted EPS | $1.76 | $2.66 | $3.79 | $5.26 | Consolidated Statements of Cash Flows Net cash from operating activities remained stable at $1.58 billion, while investing activities increased and financing activities decreased Cash Flow Summary - Six Months Ended June 30 (in thousands of USD) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $1,577,771 | $1,560,865 | | Net cash used in investing activities | ($624,797) | ($377,659) | | Acquisition of real estate facilities | ($303,277) | ($21,963) | | Net cash used in financing activities | ($295,787) | ($1,010,125) | | Net increase in cash and equivalents | $657,187 | $173,081 | Condensed Notes to Consolidated Financial Statements Notes detail the company's portfolio, Shurgard interest, significant real estate acquisitions, notes payable, and a potential major acquisition offer - As of June 30, 2025, Public Storage owned interests in 3,103 self-storage facilities in the U.S. and held a 35% common equity interest in Shurgard, which operates 321 facilities in Western Europe3738 - In the first six months of 2025, the company acquired 25 self-storage facilities for $303.3 million in cash and completed development activities costing $208.4 million44 - On June 30, 2025, PSOC issued $875 million in senior notes, and the company also entered into interest rate swaps with a notional amount of $475 million to convert fixed-rate debt to a variable rate6067 - Subsequent to the quarter end, the company acquired or was under contract for 47 facilities for $481.9 million and announced a non-binding offer to acquire Abacus Storage King in Australia/New Zealand for an estimated cost of $710 million120121 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting Same Store revenue growth, net income decrease due to foreign currency losses, Core FFO per share growth, liquidity, and strategic initiatives Results of Operations Q2 2025 net income allocable to common shareholders fell to $309.0 million due to foreign currency losses, while self-storage NOI modestly increased - Q2 2025 net income per diluted share was $1.76, a decrease from $2.66 in Q2 2024, mainly due to a $158.5 million increase in foreign currency losses135 - For the six months ended June 30, 2025, net income per diluted share was $3.79, down from $5.26 in the prior year, also primarily due to a $264.8 million increase in foreign currency losses137 Funds from Operations and Core Funds from Operations FFO per share for Q2 2025 decreased 20.0% to $3.44 due to foreign currency losses, while Core FFO per share increased 1.2% to $4.28 FFO and Core FFO per Share Reconciliation (in USD) | Metric | Q2 2025 | Q2 2024 | % Change | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Diluted EPS | $1.76 | $2.66 | (33.8)% | $3.79 | $5.26 | (27.9)% | | FFO per share | $3.44 | $4.30 | (20.0)% | $7.15 | $8.54 | (16.3)% | | Foreign currency loss (gain) per share | $0.82 | ($0.08) | - | $1.21 | ($0.29) | - | | Core FFO per share | $4.28 | $4.23 | 1.2% | $8.39 | $8.26 | 1.6% | Analysis of Net Income — Self-Storage Operations Self-storage operations analysis shows a 0.6% Same Store NOI decrease, while Acquired and Newly Developed facilities drove significant growth, and ancillary operations also contributed positively Self-Storage Net Operating Income (NOI) by Facility Group - Q2 2025 vs Q2 2024 (in thousands of USD) | Facility Group | Q2 2025 NOI | Q2 2024 NOI | % Change | | :--- | :--- | :--- | :--- | | Same Store Facilities | $716,552 | $720,870 | (0.6)% | | Acquired Facilities | $37,600 | $32,173 | 16.9% | | Newly Developed & Expanded | $30,607 | $26,298 | 16.4% | | Other Non-Same Store | $49,182 | $46,894 | 4.9% | | Total NOI | $833,941 | $826,235 | 0.9% | - Same Store revenue growth of 0.2% in Q2 was driven by a 0.6% increase in realized rent per occupied square foot, but offset by a 0.4% decrease in average occupancy154 - Same Store cost of operations increased 2.9% in Q2, primarily due to a 4.4% rise in property tax expense163164 - Ancillary operations NOI grew to $49.1 million in Q2 2025 from $45.9 million in Q2 2024, led by a 10.3% increase in tenant reinsurance premium revenue199 Liquidity and Capital Resources The company maintains strong liquidity with $1.1 billion cash and a $1.5 billion credit facility, supported by high credit ratings, and faces significant cash requirements for acquisitions, development, and debt repayments - The company has strong credit ratings of 'A' from S&P and 'A2' from Moody's for its senior notes216 - As of June 30, 2025, liquidity sources include $1.1 billion in cash and $1.48 billion available on its credit facility220 - Major committed cash requirements include $481.9 million for property acquisitions, $390.9 million for development, and $1.2 billion in debt repayments over the next year221 - The proposed acquisition of Abacus Storage King is estimated to cost Public Storage approximately $710 million, which is anticipated to be funded with Australian Dollar denominated unsecured debt221229 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk stems from its $10.4 billion debt with a 3.0% weighted average rate and foreign currency fluctuations related to its Shurgard investment and Euro-denominated notes - Total debt outstanding at June 30, 2025, is approximately $10.4 billion with a weighted average effective rate of 3.0%236237 - The company has foreign currency exposure from its investment in Shurgard (book value $387.9 million) and €1.6 billion of Euro-denominated debt, which acts as a natural hedge238 Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report240 - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025241 PART II OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings but believes the likelihood of a material loss is remote - The company states that the likelihood of any legal proceedings resulting in a material loss, either individually or in aggregate, is remote242 Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 were reported - No material changes to the risk factors disclosed in the 2024 Form 10-K were reported243 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase common shares during Q2 2025, with 10.6 million shares remaining available for repurchase under the existing program - No common shares were repurchased during Q2 2025. The company has authorization to repurchase an additional 10.6 million shares under its program245