Public Storage(US:PSA)2024-02-20 22:05Financial Performance - In 2023, net income allocable to common shareholders was $1.9 billion or $11.06 per diluted common share, a decrease of $2.2 billion or $12.44 per diluted common share compared to 2022[161]. - Net income allocable to common shareholders decreased by 53.0% to $1,948,741 in 2023 from $4,142,288 in 2022[170]. - Total net income increased by 7.2% to $2,227,607 in 2023 from $2,077,673 in 2022[174]. - FFO allocable to common shares increased by 0.8% to $2,924,288 in 2023 compared to $2,900,815 in 2022[170]. - Core FFO allocable to common shares rose by 6.0% to $2,975,932 in 2023 from $2,806,980 in 2022[170]. - Total revenues for 2023 reached $3,427.867 million, a 4.7% increase from 2022[199]. - Total revenues for 2022 reached $3,273.8 million, a 15.2% increase from $2,841.6 million in 2021[203]. - Net operating income for 2023 was $2,625.598 million, reflecting a 4.7% growth compared to the previous year[199]. - Net operating income for 2022 was $2,507.4 million, reflecting an 18.5% growth compared to $2,116.9 million in 2021[203]. Revenue Sources - Revenues from Same Store Facilities increased by 4.7% ($154.0 million) in 2023, while Same Store cost of operations also increased by 4.7% ($35.9 million)[155]. - Same Store Facilities revenue increased by 4.7% to $3,427,867 in 2023 from $3,273,823 in 2022[174]. - Acquired Facilities revenue surged by 37.7% to $450,653 in 2023 compared to $327,245 in 2022[174]. - Total revenues from ancillary operations rose to $258.1 million in 2023, up from $236.1 million in 2022, reflecting a growth of $21.9 million[232]. Operational Metrics - The average square foot occupancy for Same Store Facilities was 93.3% in 2023, a decrease of 1.6% compared to 2022[184]. - Realized annual rent per occupied square foot increased by 6.3% to $22.93 in 2023 compared to $21.58 in 2022[182]. - Move-in volumes increased by 8.8% in 2023, which helped offset a 5.9% increase in move-out volumes[184]. - The average annual contract rent per square foot for tenants moving in was $18.12 in 2023, a decrease of 13.9% compared to 2022[190]. - Average occupancy across same store facilities was 93.3% in 2023, a slight decrease of 1.6% from 2022[198]. Acquisitions and Expansions - The company acquired BREIT Simply Storage LLC for $2.2 billion, adding 127 self-storage facilities (9.4 million square feet) to its portfolio[157]. - The company has acquired a total of 470 facilities since the beginning of 2021 for $8.5 billion, totaling 38.8 million net rentable square feet[156]. - The company completed expansion projects on four properties from the ezStorage portfolio, adding 169,000 net rentable square feet at a cost of $26.5 million[210]. - The company expects to add 1.3 million net rentable square feet of storage space through ongoing expansions at a direct development cost of $304.8 million[225]. Cost Management - The company experienced inflationary impacts on operations, including labor and utilities, and has implemented initiatives to manage these costs[159]. - Cost of operations (excluding depreciation and amortization) increased by 4.7% in 2023 compared to the previous year, driven primarily by higher property tax, marketing, and direct property costs[192]. - Property tax expense rose by 3.4% in 2023, attributed to higher assessed values[193]. - Marketing expenses surged by 44.5% in 2023, utilizing more online paid search programs to attract new tenants[194]. Debt and Financing - As of December 31, 2023, the company had $9.1 billion in notes payable outstanding, with a weighted average interest rate of approximately 3.1%[246]. - Interest expense for 2023 was $210.4 million, up from $142.4 million in 2022, primarily due to the issuance of $2.2 billion in notes payable[246]. - The company plans to refinance $810 million in scheduled principal repayments on unsecured notes due in April 2024[261]. - The company has a revolving line of credit with a borrowing capacity of $1.5 billion, with no outstanding borrowings as of February 20, 2024[255]. Risks and Challenges - The company faces risks from public health crises, economic downturns, and regulatory changes that could adversely impact demand for self-storage[83][86]. - Cybersecurity threats pose risks to the company's confidential information, potentially damaging its reputation and financial condition[94][98]. - High interest rates and challenging market conditions could limit the company's ability to raise capital at attractive terms[81]. - The company may incur adverse tax consequences if it fails to qualify as a REIT, which could lead to substantial U.S. federal corporate income taxes[109]. Future Outlook - The company anticipates that same store revenues in 2024 will be similar to those earned in 2023 due to stabilizing demand and fewer new self-storage completions[187]. - The company plans to continue leveraging internet advertising and other channels to support move-in volumes in 2024[194].