Public Storage(US:PSA)2023-08-02 20:17Financial Performance - Revenues from Same Store Facilities increased by 6.3% ($51.1 million) for Q2 2023 and 8.0% ($126.5 million) for the first half of 2023 compared to the same periods in 2022[125]. - Net income allocable to common shareholders for Q2 2023 was $528.3 million ($3.00 per diluted share), down from $603.4 million ($3.42 per diluted share) in Q2 2022, a decrease of $75.1 million or 12.4%[133]. - Funds from Operations (FFO) for Q2 2023 was $4.29 per diluted share, a decrease of 6.3% from $4.58 per diluted share in Q2 2022[138]. - Core FFO for the first half of 2023 was $8.24 per diluted share, down 2.0% from $8.41 per diluted share in the same period of 2022[139]. - Total revenues from self-storage operations rose by 8.5% to $1,056,120,000 for the three months ended June 30, 2023, compared to $973,286,000 in 2022[145]. - Total revenues for the first half of 2023 reached $1,711,673,000, representing an 8.0% increase compared to $1,585,210,000 in 2022[173]. - Total revenues for the three months ended June 30, 2023, were $64.705 million, an increase of 15.2% compared to $56.177 million in the same period of 2022[182]. - Net income for the six months ended June 30, 2023, was $58.875 million, up 18.1% from $49.842 million in the prior year[182]. Operational Metrics - Net operating income from Acquired Facilities and Newly Developed and Expanded Facilities increased by 24.1% ($21.8 million) for Q2 2023 and 27.7% ($47.1 million) for the first half of 2023 compared to the same periods in 2022[126]. - Net operating income (NOI) for self-storage operations increased by 8.6% to $798,442,000 for the three months ended June 30, 2023, compared to $735,297,000 in 2022[145]. - Average square foot occupancy decreased to 93.7% for the three months ended June 30, 2023, down 2.1% from 95.7% in 2022[155]. - Average occupancy across Same Store Facilities was 93.7% as of June 30, 2023, down from 95.7% in 2022, indicating a decline of 2.1%[169]. - Average occupancy across all markets was 93.5% in 2023, down from 95.6% in 2022, reflecting a 2.2% decrease[172]. - Average square foot occupancy for the 2021 acquisitions was 85.2% as of June 30, 2023, a decrease of 0.9% from the previous year[174]. - Average occupancy for self-storage facilities was 88.4% for the three months ended June 30, 2023, compared to 91.5% in the same period of 2022[193]. Acquisitions and Developments - The company acquired 322 facilities since the beginning of 2021, totaling 28.0 million net rentable square feet for $6.0 billion[126]. - The company entered into a definitive agreement to acquire BREIT Simply Storage LLC for $2.2 billion, which includes 127 self-storage facilities[129]. - The company completed expansion projects on the ezStorage portfolio, adding 169,000 net rentable square feet at a cost of $26.4 million[177]. - The company plans to add 127 wholly-owned self-storage facilities (9.4 million net rentable square feet) as part of the Simply Acquisition announced on July 24, 2023[179]. - The company has 136 facilities in total, an increase of 11 from 125 in the previous year[183]. - As of June 30, 2023, the company had 25 additional facilities in development, totaling 2.5 million net rentable square feet with an aggregate development cost of approximately $554.0 million[189]. Expenses and Costs - The company experienced a $165.1 million decrease in foreign currency exchange gains for the first half of 2023 compared to the same period in 2022[135]. - Total direct cost of operations increased by 6.7% to $169,999 for the three months ended June 30, 2023, from $159,366 in 2022[162]. - Property tax expense increased by 3.6% and 4.3% for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022, with an expected growth of 5.3% for the full year 2023 due to higher assessed values[163]. - On-site property manager payroll expense rose by 3.1% and 2.8% for the three and six months ended June 30, 2023, respectively, primarily due to competitive labor conditions, with expectations of inflationary increases in 2023[164]. - Repairs and maintenance expense increased by 7.2% and 10.4% for the three and six months ended June 30, 2023, respectively, influenced by various factors including equipment malfunctions and local supply conditions[165]. - Marketing expense surged by 59.2% and 44.3% for the three and six months ended June 30, 2023, respectively, as the company increased online paid search programs to attract new tenants[166]. - Other direct property costs rose by 5.6% and 8.8% for the three and six months ended June 30, 2023, respectively, mainly due to increased credit card fees associated with higher revenues[167]. Future Outlook - The company expects weaker industry-wide demand for the remainder of 2023, with potential revenue growth rates declining significantly compared to previous years[158]. - The company expects a moderate increase in other direct property costs for the remainder of 2023, primarily driven by rising credit card fees[167]. - The company expects future growth to primarily come from customers of newly acquired and developed facilities, as well as additional tenants at existing unstabilized self-storage facilities[197]. - Annual operating retained cash flow increased from $200 million in previous years to approximately $1 billion in 2022, with an expected retained cash flow of $400 million for 2023[212]. Debt and Financing - The principal outstanding on the company's debt totaled approximately $6.9 billion as of June 30, 2023, with a weighted average effective rate of 2.3%[235]. - The company amended its revolving line of credit, increasing the borrowing limit from $500 million to $1.5 billion, with no outstanding borrowings as of August 2, 2023[215]. - The company plans to refinance $700 million of U.S. Dollar denominated unsecured notes and €100 million of Euro denominated unsecured notes maturing in April 2024[222]. Shareholder Returns - The company declared a quarterly dividend of $3.00 per common share, totaling approximately $526 million, representing a 50% increase from the previous year[227]. - The company has authorized the repurchase of up to 35 million common shares, with a total of 23,721,916 shares repurchased at an aggregate cost of approximately $679.1 million[234].