psa-20230930FALSE2023Q312/31000139331100013933112023-01-012023-09-300001393311us-gaap:CommonStockMember2023-01-012023-09-300001393311us-gaap:SeriesFPreferredStockMember2023-01-012023-09-300001393311us-gaap:SeriesGPreferredStockMember2023-01-012023-09-300001393311us-gaap:SeriesHPreferredStockMember2023-01-012023-09-300001393311psa:SeriesIPreferredStockMember2023-01-012023-09-300001393311psa:SeriesJPreferredStockMember2023-01-012023-09-300001393311psa:SeriesKPreferredStockMember2023-01-012023-09-300001393311psa:SeriesLPreferredStockMember2023-01-012023-09-300001393311psa:SeriesMPreferredStockMember2023-01-012023-09-300001393311psa:SeriesNPreferredStockMember2023-01-012023-09-300001393311psa:SeriesOPreferredStockMember2023-01-012023-09-300001393311psa:SeriesPPreferredStockMember2023-01-012023-09-300001393311psa:SeriesQPreferredStockMember2023-01-012023-09-300001393311psa:SeriesRPreferredStockMember2023-01-012023-09-300001393311psa:SeriesSPreferredStockMember2023-01-012023-09-300001393311psa:GuaranteeNotesDue2032Member2023-01-012023-09-300001393311psa:GuaranteeNotesDue2030Member2023-01-012023-09-3000013933112023-10-23xbrli:shares00013933112023-09-30iso4217:USD00013933112022-12-31iso4217:USDxbrli:shares0001393311psa:SelfStorageOperationsMember2023-07-012023-09-300001393311psa:SelfStorageOperationsMember2022-07-012022-09-300001393311psa:SelfStorageOperationsMember2023-01-012023-09-300001393311psa:SelfStorageOperationsMember2022-01-012022-09-300001393311psa:AncillaryOperationsMember2023-07-012023-09-300001393311psa:AncillaryOperationsMember2022-07-012022-09-300001393311psa:AncillaryOperationsMember2023-01-012023-09-300001393311psa:AncillaryOperationsMember2022-01-012022-09-3000013933112023-07-012023-09-3000013933112022-07-012022-09-3000013933112022-01-012022-09-300001393311us-gaap:PreferredStockMember2023-06-300001393311us-gaap:CommonStockMember2023-06-300001393311us-gaap:AdditionalPaidInCapitalMember2023-06-300001393311us-gaap:RetainedEarningsMember2023-06-300001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001393311us-gaap:ParentMember2023-06-300001393311us-gaap:NoncontrollingInterestMember2023-06-3000013933112023-06-300001393311us-gaap:CommonStockMember2023-07-012023-09-300001393311us-gaap:CommonStockMemberus-gaap:CommonStockMember2023-07-012023-09-300001393311us-gaap:AdditionalPaidInCapitalMemberus-gaap:CommonStockMember2023-07-012023-09-300001393311us-gaap:ParentMemberus-gaap:CommonStockMember2023-07-012023-09-300001393311us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001393311us-gaap:ParentMember2023-07-012023-09-300001393311us-gaap:NoncontrollingInterestMember2023-07-012023-09-300001393311us-gaap:RetainedEarningsMember2023-07-012023-09-300001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300001393311us-gaap:PreferredStockMember2023-09-300001393311us-gaap:CommonStockMember2023-09-300001393311us-gaap:AdditionalPaidInCapitalMember2023-09-300001393311us-gaap:RetainedEarningsMember2023-09-300001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300001393311us-gaap:ParentMember2023-09-300001393311us-gaap:NoncontrollingInterestMember2023-09-300001393311us-gaap:PreferredStockMember2022-06-300001393311us-gaap:CommonStockMember2022-06-300001393311us-gaap:AdditionalPaidInCapitalMember2022-06-300001393311us-gaap:RetainedEarningsMember2022-06-300001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001393311us-gaap:ParentMember2022-06-300001393311us-gaap:NoncontrollingInterestMember2022-06-3000013933112022-06-300001393311us-gaap:CommonStockMember2022-07-012022-09-300001393311us-gaap:CommonStockMemberus-gaap:CommonStockMember2022-07-012022-09-300001393311us-gaap:AdditionalPaidInCapitalMemberus-gaap:CommonStockMember2022-07-012022-09-300001393311us-gaap:ParentMemberus-gaap:CommonStockMember2022-07-012022-09-300001393311us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001393311us-gaap:ParentMember2022-07-012022-09-300001393311us-gaap:NoncontrollingInterestMember2022-07-012022-09-300001393311us-gaap:RetainedEarningsMember2022-07-012022-09-300001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001393311us-gaap:PreferredStockMember2022-09-300001393311us-gaap:CommonStockMember2022-09-300001393311us-gaap:AdditionalPaidInCapitalMember2022-09-300001393311us-gaap:RetainedEarningsMember2022-09-300001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001393311us-gaap:ParentMember2022-09-300001393311us-gaap:NoncontrollingInterestMember2022-09-3000013933112022-09-300001393311us-gaap:PreferredStockMember2022-12-310001393311us-gaap:CommonStockMember2022-12-310001393311us-gaap:AdditionalPaidInCapitalMember2022-12-310001393311us-gaap:RetainedEarningsMember2022-12-310001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001393311us-gaap:ParentMember2022-12-310001393311us-gaap:NoncontrollingInterestMember2022-12-310001393311us-gaap:CommonStockMemberus-gaap:CommonStockMember2023-01-012023-09-300001393311us-gaap:AdditionalPaidInCapitalMemberus-gaap:CommonStockMember2023-01-012023-09-300001393311us-gaap:ParentMemberus-gaap:CommonStockMember2023-01-012023-09-300001393311us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001393311us-gaap:ParentMember2023-01-012023-09-300001393311us-gaap:NoncontrollingInterestMember2023-01-012023-09-300001393311us-gaap:RetainedEarningsMember2023-01-012023-09-300001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300001393311us-gaap:PreferredStockMember2021-12-310001393311us-gaap:CommonStockMember2021-12-310001393311us-gaap:AdditionalPaidInCapitalMember2021-12-310001393311us-gaap:RetainedEarningsMember2021-12-310001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001393311us-gaap:ParentMember2021-12-310001393311us-gaap:NoncontrollingInterestMember2021-12-3100013933112021-12-310001393311us-gaap:PreferredStockMember2022-01-012022-09-300001393311us-gaap:PreferredStockMemberus-gaap:PreferredStockMember2022-01-012022-09-300001393311us-gaap:AdditionalPaidInCapitalMemberus-gaap:PreferredStockMember2022-01-012022-09-300001393311us-gaap:ParentMemberus-gaap:PreferredStockMember2022-01-012022-09-300001393311us-gaap:CommonStockMember2022-01-012022-09-300001393311us-gaap:CommonStockMemberus-gaap:CommonStockMember2022-01-012022-09-300001393311us-gaap:AdditionalPaidInCapitalMemberus-gaap:CommonStockMember2022-01-012022-09-300001393311us-gaap:ParentMemberus-gaap:CommonStockMember2022-01-012022-09-300001393311us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001393311us-gaap:ParentMember2022-01-012022-09-300001393311us-gaap:NoncontrollingInterestMember2022-01-012022-09-300001393311us-gaap:RetainedEarningsMember2022-01-012022-09-300001393311us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300001393311psa:PublicStorageMember2023-09-30psa:storage_facilityutr:sqftpsa:state0001393311psa:CommercialAndRetailSpaceMemberpsa:PublicStorageMember2023-09-300001393311psa:ShurgardSelfStorageSaMember2023-09-30xbrli:purepsa:country0001393311psa:SimplyAcquisitionMember2023-09-132023-09-130001393311psa:SimplyAcquisitionMember2023-09-130001393311psa:AcquisitionOfSelfStorageFacilitiesMember2023-01-012023-09-300001393311psa:ShurgardSelfStorageSaMember2023-07-012023-09-300001393311psa:ShurgardSelfStorageSaMember2022-07-012022-09-300001393311psa:ShurgardSelfStorageSaMember2023-01-012023-09-300001393311psa:ShurgardSelfStorageSaMember2022-01-012022-09-300001393311psa:PSBusinessParksMember2023-07-012023-09-300001393311psa:PSBusinessParksMember2022-07-012022-09-300001393311psa:PSBusinessParksMember2023-01-012023-09-300001393311psa:PSBusinessParksMember2022-01-012022-09-300001393311psa:ShurgardSelfStorageSaMember2022-12-31iso4217:EURxbrli:shares0001393311us-gaap:LicenseMemberpsa:ShurgardSelfStorageSaMember2023-01-012023-09-300001393311us-gaap:LicenseMemberpsa:ShurgardSelfStorageSaMember2022-01-012022-09-300001393311psa:PSBusinessParksMember2022-07-200001393311psa:PSBusinessParksMemberpsa:BlackstoneRealEstateMember2022-07-202022-07-200001393311psa:PSBusinessParksMemberpsa:BlackstoneRealEstateMember2022-07-012022-09-300001393311us-gaap:TradeNamesMember2023-09-300001393311us-gaap:TradeNamesMember2022-12-310001393311us-gaap:RevolvingCreditFacilityMember2023-06-110001393311us-gaap:RevolvingCreditFacilityMember2023-06-120001393311us-gaap:RevolvingCreditFacilityMember2023-06-122023-06-120001393311us-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberpsa:SecuredOvernightFinancingRateSOFRMember2023-06-122023-06-120001393311us-gaap:RevolvingCreditFacilityMembersrt:MaximumMemberpsa:SecuredOvernightFinancingRateSOFRMember2023-06-122023-06-120001393311us-gaap:RevolvingCreditFacilityMemberpsa:SecuredOvernightFinancingRateSOFRMember2023-09-302023-09-300001393311us-gaap:RevolvingCreditFacilityMembersrt:MinimumMember2023-09-302023-09-300001393311us-gaap:RevolvingCreditFacilityMembersrt:MaximumMember2023-09-302023-09-300001393311us-gaap:RevolvingCreditFacilityMember2023-09-302023-09-300001393311us-gaap:RevolvingCreditFacilityMember2023-09-300001393311us-gaap:RevolvingCreditFacilityMemberus-gaap:SubsequentEventMember2023-10-300001393311us-gaap:StandbyLettersOfCreditMember2023-09-300001393311us-gaap:StandbyLettersOfCreditMember2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueApril232024Memberpsa:SecuredOvernightFinancingRateSOFRMember2023-09-302023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueApril232024Member2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueApril232024Member2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueJuly252025Memberpsa:SecuredOvernightFinancingRateSOFRMember2023-09-302023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueJuly252025Member2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueJuly252025Member2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueFebruary152026Member2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueFebruary152026Member2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueNovember92026Member2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueNovember92026Member2022-12-310001393311psa:NotesDueSeptember152027Memberpsa:USDollarDenominatedUnsecuredDebtMember2023-09-300001393311psa:NotesDueSeptember152027Memberpsa:USDollarDenominatedUnsecuredDebtMember2022-12-310001393311psa:NotesDueMay12028Memberpsa:USDollarDenominatedUnsecuredDebtMember2023-09-300001393311psa:NotesDueMay12028Memberpsa:USDollarDenominatedUnsecuredDebtMember2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueNovember92028Member2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueNovember92028Member2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueJanuary152029Member2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueJanuary152029Member2022-12-310001393311psa:NotesDueMay12029Memberpsa:USDollarDenominatedUnsecuredDebtMember2023-09-300001393311psa:NotesDueMay12029Memberpsa:USDollarDenominatedUnsecuredDebtMember2022-12-310001393311psa:NotesDueMay12031Memberpsa:USDollarDenominatedUnsecuredDebtMember2023-09-300001393311psa:NotesDueMay12031Memberpsa:USDollarDenominatedUnsecuredDebtMember2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueNovember92031Member2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueNovember92031Member2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueAugust12033Member2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueAugust12033Member2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueAugust12053Member2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMemberpsa:NotesDueAugust12053Member2022-12-310001393311psa:USDollarDenominatedUnsecuredDebtMember2023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMember2022-12-310001393311psa:EuroDenominatedUnsecuredDebtMemberpsa:NotesDueApril122024Member2023-09-300001393311psa:EuroDenominatedUnsecuredDebtMemberpsa:NotesDueApril122024Member2022-12-310001393311psa:NotesDueNovember32025Memberpsa:EuroDenominatedUnsecuredDebtMember2023-09-300001393311psa:NotesDueNovember32025Memberpsa:EuroDenominatedUnsecuredDebtMember2022-12-310001393311psa:NotesDueSeptember92030Memberpsa:EuroDenominatedUnsecuredDebtMember2023-09-300001393311psa:NotesDueSeptember92030Memberpsa:EuroDenominatedUnsecuredDebtMember2022-12-310001393311psa:EuroDenominatedUnsecuredDebtMemberpsa:NotesDueJanuary242032Member2023-09-300001393311psa:EuroDenominatedUnsecuredDebtMemberpsa:NotesDueJanuary242032Member2022-12-310001393311psa:EuroDenominatedUnsecuredDebtMember2023-09-300001393311psa:EuroDenominatedUnsecuredDebtMember2022-12-310001393311us-gaap:MortgagesMember2023-09-30psa:real_estate_facility0001393311us-gaap:MortgagesMember2022-12-310001393311psa:NotesDueJuly252025Member2023-07-260001393311psa:NotesDueJanuary152029Member2023-07-260001393311psa:NotesDueAugust12033Member2023-07-260001393311psa:NotesDueAugust12053Member2023-07-260001393311psa:NotesDueJuly252025Memberpsa:SecuredOvernightFinancingRateSOFRMember2023-07-262023-07-260001393311psa:NotesDueOnJuly252025January152029August12033AndAugust12053Memberpsa:USDollarDenominatedUnsecuredDebtMember2023-07-260001393311psa:MaximumCovenantMemberpsa:USDollarDenominatedUnsecuredDebtMember2023-09-300001393311srt:MinimumMemberpsa:USDollarDenominatedUnsecuredDebtMember2022-10-012023-09-300001393311psa:USDollarDenominatedUnsecuredDebtMember2022-10-012023-09-30psa:tranche0001393311psa:NotesDueNovember32025Memberpsa:EuroDenominatedUnsecuredDebtMember2015-11-03iso4217:EUR0001393311psa:EuroDenominatedUnsecuredDebtMemberpsa:NotesDueApril122024Member2016-04-120001393311psa:EuroDenominatedUnsecuredDebtMemberpsa:NotesDueJanuary242032Member2020-01-240001393311psa:NotesDueSeptember92030Memberpsa:EuroDenominatedUnsecuredDebtMember2021-09-090001393311psa:EuroDenominatedUnsecuredDebtMember2023-07-012023-09-300001393311psa:EuroDenominatedUnsecuredDebtMember2023-01-012023-09-300001393311psa:EuroDenominatedUnsecuredDebtMember2022-07-012022-09-300001393311psa:EuroDenominatedUnsecuredDebtMember2022-01-012022-09-300001393311us-gaap:MortgagesMembersrt:MinimumMember2023-09-300001393311us-gaap:MortgagesMembersrt:MaximumMember2023-09-300001393311us-gaap:UnsecuredDebtMember2023-09-300001393311us-gaap:SeriesFPreferredStockMember2023-09-300001393311us-gaap:SeriesFPreferredStockMember2022-12-310001393311us-gaap:SeriesGPreferredStockMember2023-09-300001393311us-gaap:SeriesGPreferredStockMember2022-12-310001393311us-gaap:SeriesHPreferredStockMember2023-09-300001393311us-gaap:SeriesHPreferredStockMember2022-12-310001393311psa:SeriesIPreferredStockMember2023-09-300001393311psa:SeriesIPreferredStockMember2022-12-310001393311psa:SeriesJPreferredStockMember2023-09-300001393311psa:SeriesJPreferredStockMember2022-12-310001393311psa:SeriesKPreferredStockMember2023-09-300001393311psa:SeriesKPreferredStockMember2022-12-310001393311psa:SeriesLPreferredStockMember2023-09-300001393311psa:SeriesLPreferredStockMember2022-12-310001393311psa:SeriesMPreferredStockMember2023-09-300001393311psa:SeriesMPreferredStockMember2022-12-310001393311psa:SeriesNPreferredStockMember2023-09-300001393311psa:SeriesNPreferredStockMember2022-12-310001393311psa:SeriesOPreferredStockMember2023-09-300001393311psa:SeriesOPreferredStockMember2022-12-310001393311psa:SeriesPPreferredStockMember2023-09-300001393311psa:SeriesPPreferredStockMember2022-12-310001393311psa:SeriesQPreferredStockMember2023-09-300001393311psa:SeriesQPreferredStockMember2022-12-310001393311psa:SeriesRPreferredStockMember2023-09-300001393311psa:SeriesRPreferredStockMember2022-12-310001393311psa:SeriesSPreferredStockMember2023-09-300001393311psa:SeriesSPreferredStockMember2022-12-31psa:dividendpsa:board_member00013933112023-02-042023-02-0400013933112023-02-032023-02-0300013933112023-02-0300013933112023-02-040001393311psa:HughesOwnedCanadianFacilitiesMembercountry:CAus-gaap:RelatedPartyMemberpsa:TamaraHughesGustavsonMember2023-09-300001393311psa:HughesOwnedCanadianFacilitiesMembercountry:CAus-gaap:RelatedPartyMember2023-09-30psa:adult_children0001393311psa:PremiumPaymentsMember2023-01-012023-09-300001393311psa:DirectCostsOfLeasedAndRentedPropertyOrEquipmentMember2023-07-012023-09-300001393311psa:DirectCostsOfLeasedAndRentedPropertyOrEquipmentMember2022-07-012022-09-300001393311psa:DirectCostsOfLeasedAndRentedPropertyOrEquipmentMember2023-01-012023-09-300001393311psa:DirectCostsOfLeasedAndRentedPropertyOrEquipmentMember2022-01-012022-09-300001393311psa:OtherCostOfOperatingRevenueMember2023-07-012023-09-300001393311psa:OtherCostOfOperatingRevenueMember2022-07-012022-09-300001393311psa:OtherCostOfOperatingRevenueMember2023-01-012023-09-300001393311psa:OtherCostOfOperatingRevenueMember2022-01-012022-09-300001393311us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001393311us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001393311us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001393311us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001393311srt:MinimumMemberus-gaap:EmployeeStockOptionMember2023-01-012023-09-300001393311srt:MaximumMemberus-gaap:EmployeeStockOptionMember2023-01-012023-09-300001393311us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001393311psa:NonManagementTrusteeMember2023-01-012023-09-300001393311psa:PerformanceTargetStockOptionsMember2023-01-012023-09-300001393311psa:PerformanceTargetStockOptionsMember2023-09-300001393311us-gaap:EmployeeStockOptionMember2023-07-012023-09-300001393311us-gaap:EmployeeStockOptionMember2022-07-012022-09-300001393311us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001393311srt:MinimumMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001393311srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001393311us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001393311us-gaap:RestrictedStockUnitsRSUMember2023-09-300001393311us-gaap:RestrictedStockUnitsRSUMember2022-12-310001393311psa:PerformanceTargetRestrictedShareUnitsMember2023-01-012023-09-300001393311psa:PerformanceTargetRestrictedShareUnitsMember2023-09-300001393311psa:ServiceBasedRestrictedStockUnitsRSUsMember2023-01-012023-09-300001393311us-gaap:RestrictedStockUnitsRSUMember2023-07-012023-09-300001393311us-gaap:RestrictedStockUnitsRSUMember2022-07-012022-09-300001393311us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001393311psa:DeferredStockUnitsDSUsMember2023-01-012023-09-300001393311psa:UnrestrictedCommonStockMember2023-01-012023-09-300001393311psa:DeferredStockUnitsDSUsMember2023-09-300001393311psa:DeferredStockUnitsDSUsMember2022-12-310001393311us-gaap:OperatingSegmentsMemberpsa:SelfStorageOperationsMember2023-07-012023-09-300001393311us-gaap:OperatingSegmentsMemberpsa:SelfStorageOperationsMember2022-07-012022-09-300001393311us-gaap:OperatingSegmentsMemberpsa:SelfStorageOperationsMember2023-01-012023-09-300001393311us-gaap:OperatingSegmentsMemberpsa:SelfStorageOperationsMember2022-01-012022-09-300001393311psa:AncillaryOperationsMemberus-gaap:OperatingSegmentsMember2023-07-012023-09-300001393311psa:AncillaryOperationsMemberus-gaap:OperatingSegmentsMember2022-07-012022-09-300001393311psa:AncillaryOperationsMemberus-gaap:OperatingSegmentsMember2023-01-012023-09-300001393311psa:AncillaryOperationsMemberus-gaap:OperatingSegmentsMember2022-01-012022-09-300001393311us-gaap:OperatingSegmentsMember2023-07-012023-09-300001393311us-gaap:OperatingSegmentsMember2022-07-012022-09-300001393311us-gaap:OperatingSegmentsMember2023-01-012023-09-300001393311us-gaap:OperatingSegmentsMember2022-01-012022-09-300001393311us-gaap:MaterialReconcilingItemsMember2023-07-012023-09-300001393311us-gaap:MaterialReconcilingItemsMember2022-07-012022-09-300001393311us-gaap:MaterialReconcilingItemsMember2023-01-012023-09-300001393311us-gaap:MaterialReconcilingItemsMember2022-01-012022-09-30psa:certificate0001393311psa:AcquisitionOfSelfStorageFacilitiesMemberus-gaap:SubsequentEventMember2023-10-300001393311psa:AcquisitionOfSelfStorageFacilitiesMemberus-gaap:SubsequentEventMember2023-10-012023-10-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2023
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 | | 93-2834996 |
(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 5.150% 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 |
| Depositary Shares Each Representing 1/1,000 of a 4.125% Cum Pref Share, Series M, $0.01 par value | | PSAPrM | | New York Stock Exchange |
| Depositary Shares Each Representing 1/1,000 of a 3.875% Cum Pref Share, Series N, $0.01 par value | | PSAPrN | | New York Stock Exchange |
| Depositary Shares Each Representing 1/1,000 of a 3.900% Cum Pref Share, Series O, $0.01 par value | | PSAPrO | | New York Stock Exchange |
| Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series P, $0.01 par value | | PSAPrP | | New York Stock Exchange |
| Depositary Shares Each Representing 1/1,000 of a 3.950% Cum Pref Share, Series Q, $0.01 par value | | PSAPrQ | | New York Stock Exchange |
| Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series R, $0.01 par value | | PSAPrR | | New York Stock Exchange |
| Depositary Shares Each Representing 1/1,000 of a 4.100% Cum Pref Share, Series S, $0.01 par value | | PSAPrS | | New York Stock Exchange |
Guarantee of 0.875% Senior Notes due 2032 issued by Public Storage Operating Company | | PSA/32 | | New York Stock Exchange |
Guarantee of 0.500% Senior Notes due 2030 issued by Public Storage Operating Company | | PSA/30 | | 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.
☒ 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).
☒ 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 |
| ☒ | ☐ | ☐ | ☐ | ☐ |
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 ☒ No
Indicate the number of the registrant’s outstanding common shares of beneficial interest, as of October 23, 2023:
Common Shares of beneficial interest, $0.10 par value per share – 175,836,162 shares
EXPLANATORY NOTE
On August 14, 2023, the registrant completed a corporate reorganization into a holding company structure commonly referred to as an umbrella partnership real estate investment trust, or UPREIT (the “Reorganization”). The Reorganization is described more fully below. For purposes of this Explanatory Note, we refer to the following entities:
•“Old PSA” is a Maryland real estate investment trust currently known as Public Storage Operating Company (“PSOC”). Prior to August 14, 2023, Old PSA was known as Public Storage.
•“New PSA” is a newly-formed Maryland real estate investment trust currently known as Public Storage. It was organized as the parent holding company in connection with the Reorganization.
•“PSOP GP” is PSOP GP, LLC, a newly-formed Delaware limited liability company organized as the general partner of PSA OP in connection with the Reorganization. This entity is wholly-owned by New PSA.
•“PSA OP” is Public Storage OP, L.P., a newly-formed Delaware limited partnership organized as the operating partnership in connection with the Reorganization. This entity is currently wholly-owned by PSOP GP, its general partner, and New PSA, its limited partner, and it wholly owns Old PSA.
Prior to August 14, 2023, the business of the registrant was conducted through Old PSA. As a result of the Reorganization, Old PSA became an indirectly wholly owned subsidiary of New PSA. Old PSA is wholly-owned by PSA OP. New PSA currently owns all the limited partnership interest of PSA OP and all the membership interest of PSA OP’s general partner, PSOP GP. In connection with the Reorganization, (i) each outstanding common share and depository receipt underlying preferred share of Old PSA was converted into one equivalent common share or depository receipt underlying preferred share of New PSA with identical rights and terms, and such securities continued to trade on the NYSE under the same ticker symbol, (ii) Old PSA’s name was changed to “Public Storage Operating Company” and New PSA inherited the name “Public Storage”, and (iii) New PSA became the successor filer to Old PSA for Securities and Exchange Commission (“SEC”) reporting purposes. The consolidated assets and liabilities of New PSA immediately following the Reorganization are identical to the consolidated assets and liabilities of Old PSA immediately prior to the Reorganization, and the officers and trustees of New PSA immediately following the Reorganization are identical to the officers and trustees of Old PSA immediately prior to the Reorganization. All material indebtedness of Old PSA immediately prior to the Reorganization remained indebtedness of Old PSA after the Merger. New PSA has provided a full and unconditional guarantee of Old PSA’s obligations under its unsecured notes, its credit facility, and certain other indebtedness. For additional information on the Reorganization, please see our Current Reports on Form 8-K filed on August 2, 2023 and August 14, 2023.
Throughout this Quarterly Report, unless the context requires otherwise:
•the “Company,” “we,” “us” and “our” refer to:
◦for the period prior to August 14, 2023 (the period preceding the Reorganization), Old PSA and its business and operations conducted through its directly or indirectly owned subsidiaries;
◦for the period on or after August 14, 2023 (the period from and following the Reorganization), New PSA and its business and operations conducted through its directly or indirectly owned subsidiaries, including Old PSA; and
◦in statements regarding qualification as a real estate investment trust (“REIT”), such terms refer solely to Old PSA or New PSA, as applicable.
•References to “shares” and “shareholders” refer to the shares and shareholders of Old PSA prior to August 14, 2023 and of New PSA on or after August 14, 2023.
PUBLIC STORAGE
INDEX
| | | | | | | | |
| PART I | FINANCIAL INFORMATION | Pages |
| | |
| Item 1. | Consolidated Financial Statements (Unaudited) | |
| | |
| | Consolidated Balance Sheets | |
| | |
| | Consolidated Statements of Income | |
| | |
| | Consolidated Statements of Comprehensive Income | |
| | |
| | Consolidated Statements of Equity and Redeemable Noncontrolling Interests | |
| | |
| | Consolidated Statements of Cash Flows | |
| | |
| | Condensed Notes to Consolidated Financial Statements | |
| | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
| | |
| Item 4. | Controls and Procedures | |
| | |
| PART II | OTHER INFORMATION (Items 3, 4 and 5 are not applicable) | |
| | |
| Item 1. | Legal Proceedings | |
| | |
| Item 1A. | Risk Factors | |
| | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
| | |
Item 5. | Other Information | |
| | |
| Item 6. | Exhibits | |
PUBLIC STORAGE
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
| | | | | | | | | | | |
| | September 30,
2023 | | December 31,
2022 |
| (Unaudited) | | |
| | | |
| ASSETS | | | |
| | | |
| Cash and equivalents | $ | 629,773 | | | $ | 775,253 | |
| Real estate facilities, at cost: | | | |
| Land | 5,575,643 | | | 5,273,073 | |
| Buildings | 21,421,031 | | | 18,946,053 | |
| 26,996,674 | | | 24,219,126 | |
| Accumulated depreciation | (9,188,151) | | | (8,554,155) | |
| 17,808,523 | | | 15,664,971 | |
| Construction in process | 457,064 | | | 372,992 | |
| 18,265,587 | | | 16,037,963 | |
| | | |
| Investments in unconsolidated real estate entities | 278,131 | | | 275,752 | |
| Goodwill and other intangible assets, net | 414,291 | | | 232,517 | |
| Other assets | 287,967 | | | 230,822 | |
| Total assets | $ | 19,875,749 | | | $ | 17,552,307 | |
| | | | |
| LIABILITIES AND EQUITY | | | |
| | | |
| Notes payable | $ | 9,029,622 | | | $ | 6,870,826 | |
| | | |
| Accrued and other liabilities | 644,236 | | | 514,680 | |
| Total liabilities | 9,673,858 | | | 7,385,506 | |
| | | |
| Commitments and contingencies (Note 15) | | | |
| | | |
| | | |
| | | |
| Equity: | | | |
| Public Storage shareholders’ equity: | | | |
Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (174,000 shares at December 31, 2022) at liquidation preference | 4,350,000 | | | 4,350,000 | |
Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,501,315 shares issued and outstanding (175,265,668 shares at December 31, 2022) | 17,550 | | | 17,527 | |
| Paid-in capital | 5,951,794 | | | 5,896,423 | |
| Accumulated deficit | (130,581) | | | (110,231) | |
| Accumulated other comprehensive loss | (81,104) | | | (80,317) | |
| Total Public Storage shareholders’ equity | 10,107,659 | | | 10,073,402 | |
| Noncontrolling interests | 94,232 | | | 93,399 | |
| Total equity | 10,201,891 | | | 10,166,801 | |
| Total liabilities and equity | $ | 19,875,749 | | | $ | 17,552,307 | |
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 | | |
| | | | | | | | | |
| Revenues: | | | | | | | | | |
| Self-storage facilities | $ | 1,078,721 | | | $ | 1,027,374 | | | $ | 3,167,025 | | | $ | 2,917,675 | | | |
| Ancillary operations | 65,099 | | | 60,757 | | | 190,797 | | | 175,946 | | | |
| 1,143,820 | | | 1,088,131 | | | 3,357,822 | | | 3,093,621 | | | |
| | | | | | | | | |
| Expenses: | | | | | | | | | |
| Self-storage cost of operations | 267,785 | | | 255,470 | | | 794,078 | | | 738,953 | | | |
| Ancillary cost of operations | 21,159 | | | 21,572 | | | 63,037 | | | 54,297 | | | |
| Depreciation and amortization | 238,748 | | | 220,772 | | | 682,531 | | | 661,608 | | | |
| General and administrative | 28,625 | | | 29,501 | | | 79,603 | | | 81,401 | | | |
| Interest expense | 58,350 | | | 34,113 | | | 132,530 | | | 100,178 | | | |
| | 614,667 | | | 561,428 | | | 1,751,779 | | | 1,636,437 | | | |
| | | | | | | | | |
| Other increases to net income: | | | | | | | | | |
| Interest and other income | 32,295 | | | 12,736 | | | 69,381 | | | 26,394 | | | |
| Equity in earnings of unconsolidated real estate entities | 7,227 | | | 8,180 | | | 22,787 | | | 100,129 | | | |
| Foreign currency exchange gain | 47,880 | | | 100,170 | | | 19,924 | | | 237,270 | | | |
| | | | | | | | | |
| Gain on sale of real estate | 88 | | | 1,503 | | | 88 | | | 1,503 | | | |
| Gain on sale of equity investment in PS Business Parks, Inc. | — | | | 2,128,860 | | | — | | | 2,128,860 | | | |
| Net income | 616,643 | | | 2,778,152 | | | 1,718,223 | | | 3,951,340 | | | |
| Allocation to noncontrolling interests | (3,345) | | | (9,158) | | | (9,188) | | | (14,553) | | | |
| Net income allocable to Public Storage shareholders | 613,298 | | | 2,768,994 | | | 1,709,035 | | | 3,936,787 | | | |
| Allocation of net income to: | | | | | | | | | |
| Preferred shareholders | (48,678) | | | (48,678) | | | (146,029) | | | (145,716) | | | |
| | | | | | | | | |
| Restricted share units | (1,383) | | | (8,155) | | | (3,922) | | | (11,405) | | | |
| Net income allocable to common shareholders | $ | 563,237 | | | $ | 2,712,161 | | | $ | 1,559,084 | | | $ | 3,779,666 | | | |
| Net income per common share: | | | | | | | | | |
| Basic | $ | 3.21 | | | $ | 15.47 | | | $ | 8.89 | | | $ | 21.57 | | | |
| Diluted | $ | 3.20 | | | $ | 15.38 | | | $ | 8.85 | | | $ | 21.44 | | | |
| | | | | | | | | |
| Basic weighted average common shares outstanding | 175,499 | | 175,283 | | 175,451 | | 175,227 | | |
| Diluted weighted average common shares outstanding | 176,150 | | 176,328 | | 176,170 | | 176,325 | | |
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 | | |
| | | | | | | | | |
| Net income | $ | 616,643 | | | $ | 2,778,152 | | | $ | 1,718,223 | | | $ | 3,951,340 | | | |
| Foreign currency translation loss on investment in Shurgard | (5,958) | | | (17,253) | | | (787) | | | (42,883) | | | |
| Total comprehensive income | 610,685 | | | 2,760,899 | | | 1,717,436 | | | 3,908,457 | | | |
| Allocation to noncontrolling interests | (3,345) | | | (9,158) | | | (9,188) | | | (14,553) | | | |
| Comprehensive income allocable to Public Storage shareholders | $ | 607,340 | | | $ | 2,751,741 | | | $ | 1,708,248 | | | $ | 3,893,904 | | | |
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Three Months Ended September 30, 2023
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cumulative Preferred Shares | | Common Shares | | Paid-in Capital | | Accumulated Deficit | | Accumulated
Other Comprehensive Loss | | Total
Public Storage Shareholders' Equity | | Noncontrolling Interests | | Total Equity | | |
Balances at June 30, 2023 | $ | 4,350,000 | | | $ | 17,549 | | | $ | 5,940,945 | | | $ | (167,404) | | | $ | (75,146) | | | $ | 10,065,944 | | | $ | 92,627 | | | $ | 10,158,571 | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Issuance of common shares in connection with share-based compensation (8,429 shares) | — | | | 1 | | | 1,105 | | | — | | | — | | | 1,106 | | | — | | | 1,106 | | | |
| Taxes withheld upon net share settlement of restricted share units | — | | | — | | | (644) | | | — | | | — | | | (644) | | | — | | | (644) | | | |
| Share-based compensation expense | — | | | — | | | 10,388 | | | — | | | — | | | 10,388 | | | — | | | 10,388 | | | |
| | | | | | | | | | | | | | | | | |
| Contributions by noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | 1,908 | | | 1,908 | | | |
| | | | | | | | | | | | | | | | | |
| Net income | — | | | — | | | — | | | 616,643 | | | — | | | 616,643 | | | — | | | 616,643 | | | |
| Net income allocated to noncontrolling interests | — | | | — | | | — | | | (3,345) | | | — | | | (3,345) | | | 3,345 | | | — | | | |
| Distributions to: | | | | | | | | | | | | | | | | | |
Preferred shareholders (Note 10) | — | | | — | | | — | | | (48,678) | | | — | | | (48,678) | | | — | | | (48,678) | | | |
| Noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (3,648) | | | (3,648) | | | |
Common shareholders and restricted share unitholders ($3.00 per share) (Note 10) | — | | | — | | | — | | | (527,797) | | | — | | | (527,797) | | | — | | | (527,797) | | | |
Other comprehensive loss | — | | | — | | | — | | | — | | | (5,958) | | | (5,958) | | | — | | | (5,958) | | | |
Balances at September 30, 2023 | $ | 4,350,000 | | | $ | 17,550 | | | $ | 5,951,794 | | | $ | (130,581) | | | $ | (81,104) | | | $ | 10,107,659 | | | $ | 94,232 | | | $ | 10,201,891 | | | |
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Three Months Ended September 30, 2022
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cumulative Preferred Shares | | Common Shares | | Paid-in Capital | | Accumulated Deficit | | Accumulated
Other Comprehensive Loss | | Total
Public Storage Shareholders' Equity | | Noncontrolling Interests | | Total Equity | | Redeemable Noncontrolling Interests |
Balances at June 30, 2022 | $ | 4,350,000 | | | $ | 17,524 | | | $ | 5,848,632 | | | $ | (182,213) | | | $ | (79,217) | | | $ | 9,954,726 | | | $ | 93,622 | | | $ | 10,048,348 | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Issuance of common shares in connection with share-based compensation (97,189 shares) | — | | | 10 | | | 16,445 | | | — | | | — | | | 16,455 | | | — | | | 16,455 | | | — | |
| Taxes withheld upon net share settlement of restricted share units | — | | | — | | | (779) | | | — | | | — | | | (779) | | | — | | | (779) | | | — | |
| Share-based compensation expense | — | | | — | | | 14,441 | | | — | | | — | | | 14,441 | | | — | | | 14,441 | | | — | |
| | | | | | | | | | | | | | | | | |
| Contributions by noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | 561 | | | 561 | | | — | |
| | | | | | | | | | | | | | | | | |
| Net income | — | | | — | | | — | | | 2,778,152 | | | — | | | 2,778,152 | | | — | | | 2,778,152 | | | — | |
| Net income allocated to noncontrolling interests | — | | | — | | | — | | | (9,158) | | | — | | | (9,158) | | | 9,158 | | | — | | | — | |
| Distributions to: | | | | | | | | | | | | | | | | | |
| Preferred shareholders | — | | | — | | | — | | | (48,678) | | | — | | | (48,678) | | | — | | | (48,678) | | | — | |
| Noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (9,756) | | | (9,756) | | | — | |
Common shareholders and restricted share unitholders ($15.15 per share) | — | | | — | | | — | | | (2,660,734) | | | — | | | (2,660,734) | | | — | | | (2,660,734) | | | — | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | (17,253) | | | (17,253) | | | — | | | (17,253) | | | — | |
Balances at September 30, 2022 | $ | 4,350,000 | | | $ | 17,534 | | | $ | 5,878,739 | | | $ | (122,631) | | | $ | (96,470) | | | $ | 10,027,172 | | | $ | 93,585 | | | $ | 10,120,757 | | | $ | — | |
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Nine Months Ended September 30, 2023
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cumulative Preferred Shares | | Common Shares | | Paid-in Capital | | Accumulated Deficit | | Accumulated
Other Comprehensive Loss | | Total
Public Storage Shareholders' Equity | | Noncontrolling Interests | | Total Equity | | |
Balances at December 31, 2022 | $ | 4,350,000 | | | $ | 17,527 | | | $ | 5,896,423 | | | $ | (110,231) | | | $ | (80,317) | | | $ | 10,073,402 | | | $ | 93,399 | | | $ | 10,166,801 | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Issuance of common shares in connection with share-based compensation (235,647 shares) (Note 12) | — | | | 23 | | | 31,267 | | | — | | | — | | | 31,290 | | | — | | | 31,290 | | | |
Taxes withheld upon net share settlement of restricted share units (Note 12) | — | | | — | | | (10,040) | | | — | | | — | | | (10,040) | | | — | | | (10,040) | | | |
| Share-based compensation cost (Note 12) | — | | | — | | | 34,144 | | | — | | | — | | | 34,144 | | | — | | | 34,144 | | | |
| | | | | | | | | | | | | | | | | |
| Contributions by noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | 2,641 | | | 2,641 | | | |
| | | | | | | | | | | | | | | | | |
| Net income | — | | | — | | | — | | | 1,718,223 | | | — | | | 1,718,223 | | | — | | | 1,718,223 | | | |
| Net income allocated to noncontrolling interests | — | | | — | | | — | | | (9,188) | | | — | | | (9,188) | | | 9,188 | | | — | | | |
| Distributions to: | | | | | | | | | | | | | | | | | |
| Preferred shareholders (Note 10) | — | | | — | | | — | | | (146,029) | | | — | | | (146,029) | | | — | | | (146,029) | | | |
| Noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (10,996) | | | (10,996) | | | |
Common shareholders and restricted share unitholders ($9.00 per share) (Note 10) | — | | | — | | | — | | | (1,583,356) | | | — | | | (1,583,356) | | | — | | | (1,583,356) | | | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | (787) | | | (787) | | | — | | | (787) | | | |
Balances at September 30, 2023 | $ | 4,350,000 | | | $ | 17,550 | | | $ | 5,951,794 | | | $ | (130,581) | | | $ | (81,104) | | | $ | 10,107,659 | | | $ | 94,232 | | | $ | 10,201,891 | | | |
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Nine Months Ended September 30, 2022
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cumulative Preferred Shares | | Common Shares | | Paid-in Capital | | Accumulated Deficit | | Accumulated
Other Comprehensive Loss | | Total
Public Storage Shareholders' Equity | | Noncontrolling Interests | | Total Equity | | Redeemable Noncontrolling Interests |
Balances at December 31, 2021 | $ | 4,100,000 | | | $ | 17,513 | | | $ | 5,821,667 | | | $ | (550,416) | | | $ | (53,587) | | | $ | 9,335,177 | | | $ | 20,112 | | | $ | 9,355,289 | | | $ | 68,249 | |
Issuance of 10,000 preferred shares | 250,000 | | | — | | | (7,168) | | | — | | | — | | | 242,832 | | | — | | | 242,832 | | | — | |
| | | | | | | | | | | | | | | | | |
Issuance of common shares in connection with share-based compensation (201,997 shares) | — | | | 21 | | | 27,994 | | | — | | | — | | | 28,015 | | | — | | | 28,015 | | | — | |
| Taxes withheld upon net settlement of restricted share units | — | | | — | | | (12,989) | | | — | | | — | | | (12,989) | | | — | | | (12,989) | | | — | |
Share-based compensation cost | — | | | — | | | 49,235 | | | — | | | — | | | 49,235 | | | — | | | 49,235 | | | — | |
| | | | | | | | | | | | | | | | | |
| Contributions by noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | 6,698 | | | 6,698 | | | 15,426 | |
| Reclassification from redeemable noncontrolling interests to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | 83,826 | | | 83,826 | | | (83,826) | |
| Net income | — | | | — | | | — | | | 3,951,340 | | | — | | | 3,951,340 | | | — | | | 3,951,340 | | | — | |
| Net income allocated to noncontrolling interests | — | | | — | | | — | | | (14,553) | | | — | | | (14,553) | | | 13,893 | | | (660) | | | 660 | |
| Distributions to: | | | | | | | | | | | | | | | | | |
| Preferred shareholders | — | | | — | | | — | | | (145,716) | | | — | | | (145,716) | | | — | | | (145,716) | | | — | |
| Noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (30,944) | | | (30,944) | | | (509) | |
Common shareholders and restricted share unitholders ($19.15 per share) | — | | | — | | | — | | | (3,363,286) | | | — | | | (3,363,286) | | | — | | | (3,363,286) | | | — | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | (42,883) | | | (42,883) | | | — | | | (42,883) | | | — | |
Balances at September 30, 2022 | $ | 4,350,000 | | | $ | 17,534 | | | $ | 5,878,739 | | | $ | (122,631) | | | $ | (96,470) | | | $ | 10,027,172 | | | $ | 93,585 | | | $ | 10,120,757 | | | $ | — | |
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| | | | | | | | | | | | | |
| |
| | For the Nine Months Ended September 30, |
| | 2023 | | 2022 | | |
| Cash flows from operating activities: | | | | | |
| Net income | $ | 1,718,223 | | | $ | 3,951,340 | | | |
| Adjustments to reconcile net income to net cash flows from operating activities: | | | | | |
| Gain on sale of equity investment in PS Business Parks, Inc. | — | | | (2,128,860) | | | |
| Gain on sale of real estate | (88) | | | (1,503) | | | |
| Depreciation and amortization | 682,531 | | | 661,608 | | | |
| Equity in earnings of unconsolidated real estate entities | (22,787) | | | (100,129) | | | |
| Distributions from cumulative equity in earnings of unconsolidated real estate entities | 17,663 | | | 134,460 | | | |
| Unrealized foreign currency exchange gain | (19,937) | | | (236,698) | | | |
| Share-based compensation expense | 31,309 | | | 44,597 | | | |
| Other non-cash adjustments | 10,205 | | | 6,213 | | | |
| Changes in operating assets and liabilities, excluding the impact of acquisitions: | | | | | |
| Other assets | (40,719) | | | (41,123) | | | |
| Accrued and other liabilities | 78,564 | | | 90,885 | | | |
| Net cash flows from operating activities | 2,454,964 | | | 2,380,790 | | | |
| Cash flows from investing activities: | | | | | |
| Capital expenditures to maintain real estate facilities | (157,967) | | | (163,702) | | | |
| Capital expenditures for property enhancements | (119,360) | | | (137,550) | | | |
| Capital expenditures for energy efficiencies (LED lighting, solar) | (45,772) | | | (36,644) | | | |
| Development and expansion of real estate facilities | (248,977) | | | (231,483) | | | |
| Acquisition of real estate facilities and intangible assets | (301,324) | | | (529,357) | | | |
| Acquisition of BREIT Simply Storage LLC, net of cash acquired | (2,178,151) | | | — | | | |
| Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities | 3,165 | | | 13,670 | | | |
| | | | | |
| Proceeds from sale of real estate investments | 101 | | | 1,543 | | | |
| Proceeds from sale of equity investment in PS Business Parks, Inc. | — | | | 2,636,011 | | | |
| Net cash flows (used in) from investing activities | (3,048,285) | | | 1,552,488 | | | |
| Cash flows from financing activities: | | | | | |
| Issuance costs on amendment of credit facility | (8,377) | | | — | | | |
| Repayments of notes payable | (8,229) | | | (502,270) | | | |
| Issuance of notes payable, net of issuance costs | 2,181,273 | | | — | | | |
| Issuance of preferred shares | — | | | 242,832 | | | |
| Issuance of common shares in connection with share-based compensation | 31,099 | | | 27,913 | | | |
| | | | | |
| Taxes paid upon net share settlement of restricted share units | (10,040) | | | (12,989) | | | |
| | | | | |
| Contributions by noncontrolling interests | 2,641 | | | 1,659 | | | |
| Distributions paid to preferred shareholders, common shareholders and restricted share unitholders | (1,728,852) | | | (3,508,581) | | | |
| Distributions paid to noncontrolling interests | (10,996) | | | (31,453) | | | |
| Net cash flows from (used) in financing activities | 448,519 | | | (3,782,889) | | | |
| | | | | |
| | | | | |
| Net (decrease) increase in cash and equivalents, including restricted cash | $ | (144,802) | | | $ | 150,389 | | | |
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| | | | | | | | | | | | | |
| |
| | For the Nine Months Ended September 30, |
| | 2023 | | 2022 | | |
| | | | | |
| Cash and equivalents, including restricted cash at beginning of the period: | | | | | |
| Cash and equivalents | $ | 775,253 | | | $ | 734,599 | | | |
| Restricted cash included in other assets | 29,904 | | | 26,691 | | | |
| $ | 805,157 | | | $ | 761,290 | | | |
| | | | | |
| Cash and equivalents, including restricted cash at end of the period: | | | | | |
| Cash and equivalents | $ | 629,773 | | | $ | 883,787 | | | |
| Restricted cash included in other assets | 30,582 | | | 27,892 | | | |
| | $ | 660,355 | | | $ | 911,679 | | | |
| | | | | |
| Supplemental schedule of non-cash investing and financing activities: | | | | | |
| | | | | |
| Costs incurred during the period remaining unpaid at period end for: | | | | | |
| Capital expenditures to maintain real estate facilities | $ | (10,405) | | | $ | (6,429) | | | |
| Capital expenditures for property enhancements | (4,637) | | | (6,829) | | | |
| Capital expenditures for energy efficiencies (LED lighting, solar) | (574) | | | (996) | | | |
| Construction or expansion of real estate facilities | (66,788) | | | (71,006) | | | |
| | | | | |
| Real estate acquired in exchange for noncontrolling interests | — | | | (19,865) | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
1.Description of the Business
Public Storage (referred to herein as “the Company,” “we,” “us,” or “our”) is a Maryland real estate investment trust (“REIT”) engaged in the ownership and operation of self-storage facilities that offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities such as tenant reinsurance, merchandise sales, and third party management, as well as the acquisition and development of additional self-storage space.
As described in greater detail in the Explanatory Note to this Quarterly Report on Form 10-Q, on August 14, 2023, the Company completed a reorganization in which its interest in its facilities is now held through an operating partnership, Public Storage OP, L.P. (“PSA OP”) and its subsidiaries including Public Storage Operating Company (“PSOC”), formerly known as Public Storage. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT. The reorganization was accounted for as a transaction between entities under common control and there was no change in the Company’s total assets, liabilities or results of operations. Subsequent to the reorganization, the primary assets of the parent entity, Public Storage, are general partner and limited partner interests in PSA OP, which holds all of the Company’s assets through its ownership of all of the membership interests in PSOC. As a limited partnership, PSA OP is a variable interest entity and is consolidated by the Company as its primary beneficiary. As of September 30, 2023, the Company owned all of the limited partnership interests of PSA OP.
At September 30, 2023, we owned equity interests in 3,028 self-storage facilities (with approximately 216.5 million net rentable square feet) located in 40 states in the United States (“U.S.”) operating under the Public Storage® name, and 1.2 million net rentable square feet of commercial and retail space.
At September 30, 2023, we owned a 35% common equity interest in Shurgard Self Storage Limited (“Shurgard”), a public company traded on the Euronext Brussels under the “SHUR” symbol, which owned 267 self-storage facilities (with approximately 15 million net rentable square feet) located in seven Western European countries, all operating under the Shurgard® name.
2.Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
We have prepared the accompanying interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Accounting Standards Codification of the Financial Accounting Standards Board, and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, the interim consolidated financial statements presented herein reflect all adjustments, primarily of a normal recurring nature, that are necessary to present fairly the interim consolidated financial statements. Because they do not include all of the disclosures required by GAAP for complete annual financial statements, these interim consolidated financial statements should be read together with the audited Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Certain amounts previously reported in our September 30, 2022 Statements of Cash Flows have been reclassified to conform to the September 30, 2023 presentation, with respect to the separate presentation of changes in operating assets and liabilities in the cash flows from operating activities section and major types of capital expenditures in the cash flows from investing activities section. The reclassifications did not affect the subtotals for cash flows from operating, investing or financing activities.
Disclosures of the number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 15) are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (U.S.).
Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
Summary of Significant Accounting Policies
There have been no significant changes to the Company's significant accounting policies described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
3.Simply Acquisition
On September 13, 2023, we acquired all the membership interests of BREIT Simply Storage LLC, a self-storage company that owns and operates 127 self-storage facilities (9.4 million net rentable square feet) and manages 25 self-storage facilities for third parties, for a purchase price of $2.2 billion in cash, including cash acquired of $6.0 million and direct transaction costs of $9.6 million (the “Simply Acquisition”).
We accounted for the Simply Acquisition as an asset acquisition because substantially all the fair value of the gross assets acquired is concentrated in the real estate assets and intangible assets associated with the self-storage facilities, which are determined to be similar in nature. As a result, the direct transaction costs of $9.6 million were capitalized to the basis of the acquired properties.
The total purchase price was allocated to the individual assets acquired and liabilities assumed based on their relative fair values. The total purchase price, including direct transaction costs, was allocated as follows (in thousands):
| | | | | |
Cash | $ | 6,032 | |
| Real estate facilities: | |
| Land | 229,396 | |
| Buildings | 1,762,752 | |
Construction in process | 2,922 | |
| Intangible assets: | |
| Acquired customers in place | 209,516 | |
Non real estate-related contracts | 4,750 | |
Other assets | 12,046 | |
Accrued and other liabilities | (43,231) | |
| |
Total purchase price, including direct transaction costs | $ | 2,184,183 | |
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
4.Real Estate Facilities
Activity in real estate facilities during the nine months ended September 30, 2023 is as follows:
| | | | | | | | | |
| Nine Months Ended September 30, 2023 |
| |
| | | | | |
| | (Amounts in thousands) |
| Operating facilities, at cost: | | | | | |
| Beginning balance | $ | 24,219,126 | | | | | |
| Capital expenditures to maintain real estate facilities | 153,120 | | | | | |
| Capital expenditures for property enhancements | 124,298 | | | | | |
| Capital expenditures for energy efficiencies (LED lighting, solar) | 46,357 | | | | | |
| Acquisitions | 2,284,590 | | | | | |
| Dispositions and other | (3,461) | | | | | |
| Developed or expanded facilities opened for operation | 172,644 | | | | | |
| Ending balance | 26,996,674 | | | | | |
| Accumulated depreciation: | | | | | |
| Beginning balance | (8,554,155) | | | | | |
| Depreciation expense | (636,631) | | | | | |
| Dispositions and other | 2,635 | | | | | |
| Ending balance | (9,188,151) | | | | | |
| Construction in process: | | | | | |
| Beginning balance | 372,992 | | | | | |
| Costs incurred to develop and expand real estate facilities | 257,527 | | | | | |
| Acquisitions | 2,922 | | | | | |
| Write-off of cancelled projects | (3,733) | | | | | |
| Developed or expanded facilities opened for operation | (172,644) | | | | | |
| Ending balance | 457,064 | | | | | |
Total real estate facilities at September 30, 2023 | $ | 18,265,587 | | | | | |
During the nine months ended September 30, 2023, in addition to the Simply Acquisition, we acquired 26 self-storage facilities (1.9 million net rentable square feet of storage space), for a total cost of $301.3 million in cash. Approximately $8.9 million of the total cost was allocated to intangible assets.
We completed development and redevelopment activities costing $172.6 million during the nine months ended September 30, 2023, adding 0.9 million net rentable square feet of self-storage space. Construction in process at September 30, 2023 consisted of projects to develop new self-storage facilities and expand existing self-storage facilities.
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
5.Investments in Unconsolidated Real Estate Entities
The following table sets forth our equity in earnings of the Unconsolidated Real Estate Entities (amounts in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Equity in Earnings of Unconsolidated Real Estate Entities for the |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | | |
| Shurgard | $ | 7,227 | | $ | 4,594 | | $ | 22,787 | | $ | 19,533 |
| PSB | — | | 3,586 | | — | | 80,596 |
| Total | $ | 7,227 | | $ | 8,180 | | $ | 22,787 | | $ | 100,129 |
Investment in Shurgard
Our investment in Shurgard was $278.1 million and $275.8 million as of September 30, 2023 and December 31, 2022, respectively.
Throughout all periods presented, we effectively owned 31,268,459 Shurgard common shares, representing a 35% equity interest in Shurgard.
Based upon the closing price at September 30, 2023 (€37.50 per share of Shurgard common stock, at 1.057 exchange rate of U.S. Dollars to the Euro), the shares we owned had a market value of approximately $1.2 billion.
Our equity in earnings of Shurgard comprised our equity share of Shurgard’s net income, less amortization of the Shurgard Basis Differential (defined below). During the nine months ended September 30, 2023 and 2022, we received $2.8 million and $2.6 million of trademark license fees that Shurgard pays to us for the use of the Shurgard® trademark, respectively. We eliminated $1.0 million and $0.9 million of intra-entity profits and losses for the nine months ended September 30, 2023 and 2022, respectively, representing our equity share of the trademark license fees. We classify the remaining license fees we receive from Shurgard as interest and other income on our income statement.
During the nine months ended September 30, 2023 and 2022, we received cash dividend distributions from Shurgard totaling $19.8 million and $37.8 million, respectively. Approximately $3.2 million and $13.7 million of total cash distributions from Shurgard during the nine months ended September 30, 2023 and 2022, respectively, represented distributions in excess of cumulative equity in earnings from Shurgard, which was classified within cash flows from investing activities in the Consolidated Statements of Cash Flows.
At September 30, 2023, our investment in Shurgard’s real estate assets exceeded our pro-rata share of the underlying amounts on Shurgard’s balance sheet by approximately $63.2 million ($67.8 million at December 31, 2022). This differential (the “Shurgard Basis Differential”) includes our basis adjustments in Shurgard’s real estate assets net of related deferred income taxes. The Shurgard Basis Differential is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately $4.6 million and $9.0 million during the nine months ended September 30, 2023 and 2022, respectively.
As of September 30, 2023 and 2022, we translated the book value of our investment in Shurgard from Euro to U.S. Dollars and recorded $0.8 million and $42.9 million other comprehensive loss during the nine months ended September 30, 2023 and 2022, respectively.
Investment in PSB
On July 20, 2022, in connection with the closing of the merger of PS Business Parks, Inc. (“PSB”) with affiliates of Blackstone Real Estate (“Blackstone”), we completed the sale of our 41% common equity interest in PSB in its entirety. At the close of the merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a gain of $2.1 billion during the third quarter of 2022.
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
During the nine months ended September 30, 2022, we received cash distributions from PSB totaling $109.5 million, which were classified within cash flows from operating activities in the Consolidated Statements of Cash flows. Since the sale of PSB in July 2022, we no longer recognize equity in earnings or receive cash distributions from PSB.
6.Goodwill and Other Intangible Assets
Goodwill and other intangible assets consisted of the following (amounts in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| At September 30, 2023 | | At December 31, 2022 |
| Gross Book Value | | Accumulated Amortization | | Net Book Value | | Gross Book Value | | Accumulated Amortization | | Net Book Value |
| Goodwill | $ | 165,843 | | | $ | — | | | $ | 165,843 | | | $ | 165,843 | | | $ | — | | | $ | 165,843 | |
| Shurgard® Trade Name | 18,824 | | | — | | | 18,824 | | | 18,824 | | | — | | | 18,824 | |
| Finite-lived intangible assets, subject to amortization | 981,254 | | | (751,630) | | | 229,624 | | | 758,106 | | | (710,256) | | | 47,850 | |
| Total goodwill and other intangible assets | $ | 1,165,921 | | | $ | (751,630) | | | $ | 414,291 | | | $ | 942,773 | | | $ | (710,256) | | | $ | 232,517 | |
Finite-lived intangible assets consist primarily of acquired customers in place. Amortization expense related to intangible assets subject to amortization was $16.0 million and $41.4 million for the three and nine months ended September 30, 2023, respectively, and $20.0 million and $78.2 million for the same periods in 2022. During the nine months ended September 30, 2023, intangibles increased $223.1 million, in connection with the Simply Acquisition (Note 3) and the acquisition of real estate facilities (Note 4).
The estimated future amortization expense for our finite-lived intangible assets at September 30, 2023 is as follows (amounts in thousands):
| | | | | | | | |
| Year | | Amount |
| Remainder of 2023 | | $ | 39,491 | |
| 2024 | | 108,871 | |
| 2025 | | 56,693 | |
| 2026 | | 18,013 | |
| 2027 | | 2,687 | |
| Thereafter | | 3,869 | |
| Total | | $ | 229,624 | |
7.Credit Facility
On June 12, 2023, PSOC entered into an amended revolving credit agreement (the “Credit Facility”), which increases our borrowing limit from $500 million to $1.5 billion and extends the maturity date from April 19, 2024 to June 12, 2027. We have the option to further extend the maturity date by up to one additional year with additional extension fees up to 0.125% of the extended commitment amount. Amounts drawn on the Credit Facility bear annual interest at rates ranging from SOFR plus 0.65% to SOFR plus 1.40% depending upon our credit rating (SOFR plus 0.70% at September 30, 2023). We are also required to pay a quarterly facility fee ranging from 0.10% per annum to 0.30% per annum depending upon our credit rating (0.10% per annum at September 30, 2023). At September 30, 2023 and October 30, 2023, we had no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling $14.6 million at September 30, 2023 ($18.6 million at December 31, 2022 under the previous credit facility). The Credit Facility has various customary restrictive covenants with which we were in compliance at September 30, 2023. We incurred a total of $8.4 million of issuance costs associated with the amended Credit Facility, which is classified as Other Assets on the Consolidated Balance Sheets and will be amortized as Interest Expense on the Consolidated Statement of Income through June 12, 2027.
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
Public Storage has provided a full and unconditional guarantee of PSOC’s obligations under the Credit Facility.
8.Notes Payable
Our notes payable (all of which were issued by PSOC), are reflected net of issuance costs (including original issue discounts), which are amortized as interest expense on the effective interest method over the term of each respective note. Our notes payable at September 30, 2023 and December 31, 2022 are set forth in the tables below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Amounts at September 30, 2023 | | Amounts at December 31, 2022 |
| | Coupon Rate | | Effective Rate | | Principal | | Unamortized Costs | Book
Value | | Fair
Value | | Book
Value | | Fair
Value |
| | | | | | | | | | | | | | | |
| | | | | | ($ amounts in thousands) |
| U.S. Dollar Denominated Unsecured Debt | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Notes due April 23, 2024 | SOFR+0.47% | | 5.791% | | $ | 700,000 | | | $ | (397) | | | $ | 699,603 | | | $ | 699,950 | | | $ | 699,075 | | | $ | 691,309 | |
| Notes due July 25, 2025 | SOFR+0.60% | | 5.932% | | 400,000 | | | (1,481) | | | 398,519 | | | 400,277 | | | — | | | — | |
Notes due February 15, 2026 | 0.875% | | 1.030% | | 500,000 | | | (1,766) | | | 498,234 | | | 448,646 | | | 497,678 | | | 441,849 | |
| Notes due November 9, 2026 | 1.500% | | 1.640% | | 650,000 | | | (2,704) | | | 647,296 | | | 580,053 | | | 646,643 | | | 578,899 | |
Notes due September 15, 2027 | 3.094% | | 3.218% | | 500,000 | | | (2,096) | | | 497,904 | | | 460,565 | | | 497,508 | | | 466,029 | |
Notes due May 1, 2028 | 1.850% | | 1.962% | | 650,000 | | | (3,091) | | | 646,909 | | | 556,154 | | | 646,401 | | | 558,197 | |
| Notes due November 9, 2028 | 1.950% | | 2.044% | | 550,000 | | | (2,457) | | | 547,543 | | | 465,373 | | | 547,182 | | | 468,509 | |
| Notes due January 15, 2029 | 5.125% | | 5.260% | | 500,000 | | | (3,093) | | | 496,907 | | | 491,674 | | | — | | | — | |
Notes due May 1, 2029 | 3.385% | | 3.459% | | 500,000 | | | (1,714) | | | 498,286 | | | 450,606 | | | 498,053 | | | 456,855 | |
Notes due May 1, 2031 | 2.300% | | 2.419% | | 650,000 | | | (5,183) | | | 644,817 | | | 517,832 | | | 644,303 | | | 530,390 | |
| Notes due November 9, 2031 | 2.250% | | 2.322% | | 550,000 | | | (2,872) | | | 547,128 | | | 429,370 | | | 546,866 | | | 443,514 | |
| Notes due August 1, 2033 | 5.100% | | 5.207% | | 700,000 | | | (5,697) | | | 694,303 | | | 669,161 | | | — | | | — | |
| Notes due August 1, 2053 | 5.350% | | 5.442% | | 600,000 | | | (8,050) | | | 591,950 | | | 546,860 | | | — | | | — | |
| | | | | | 7,450,000 | | | (40,601) | | | 7,409,399 | | | 6,716,521 | | | 5,223,709 | | | 4,635,551 | |
| | | | | | | | | | | | | | | |
| Euro Denominated Unsecured Debt | | | | | | | | | | | | | | |
Notes due April 12, 2024 | 1.540% | | 1.540% | | 105,744 | | | — | | | 105,744 | | | 103,939 | | | 107,035 | | | 104,344 | |
Notes due November 3, 2025 | 2.175% | | 2.175% | | 255,915 | | | — | | | 255,915 | | | 244,650 | | | 259,039 | | | 246,119 | |
| Notes due September 9, 2030 | 0.500% | | 0.640% | | 740,208 | | | (7,771) | | | 732,437 | | | 566,585 | | | 740,634 | | | 566,204 | |
Notes due January 24, 2032 | 0.875% | | 0.978% | | 528,720 | | | (4,456) | | | 524,264 | | | 396,406 | | | 530,317 | | | 396,297 | |
| | | | | | 1,630,587 | | | (12,227) | | | 1,618,360 | | | 1,311,580 | | | 1,637,025 | | | 1,312,964 | |
| | | | | | | | | | | | | | | |
Mortgage Debt, secured by 2 real estate facilities with a net book value of $11.7 million | 4.414% | | 4.414% | | 1,863 | | | — | | | 1,863 | | | 1,653 | | | 10,092 | | | 9,568 | |
| | | | | | | | | | | | | | | |
| | | | | | $ | 9,082,450 | | | $ | (52,828) | | | $ | 9,029,622 | | | $ | 8,029,754 | | | $ | 6,870,826 | | | $ | 5,958,083 | |
Public Storage has provided a full and unconditional guarantee of PSOC’s obligations under each series of unsecured notes.
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
U.S. Dollar Denominated Unsecured Notes
On July 26, 2023, we completed a public offering of $400 million, $500 million, $700 million, and $600 million aggregate principal amount of unsecured senior notes bearing interest at an annual rate of Compounded SOFR + 0.60% (reset quarterly), 5.125%, 5.100%, and 5.350%, respectively, and maturing on July 25, 2025, January 15, 2029, August 1, 2033, and August 1, 2053, respectively. Interest on the 2025 notes is payable quarterly, commencing on October 25, 2023. Interest on the 2029 notes is payable semi-annually, commencing on January 15, 2024. Interest on the 2033 notes and 2053 notes is payable semi-annually, commencing on February 1, 2024. In connection with the offering, we incurred a total of $18.7 million in costs.
The U.S. Dollar denominated unsecured notes (the “U.S. Dollar Denominated Unsecured Notes”) have various financial covenants with which we were in compliance at September 30, 2023. Included in these covenants are (a) a maximum Debt to Total Assets of 65% (approximately 16% at September 30, 2023) and (b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (approximately 21x for the twelve months ended September 30, 2023) as well as covenants limiting the amount we can encumber our properties with mortgage debt.
Euro Denominated Unsecured Notes
Our Euro denominated unsecured notes (the “Euro Notes”) consist of four tranches: (i) €242.0 million issued to institutional investors on November 3, 2015, (ii) €100.0 million issued to institutional investors on April 12, 2016, (iii) €500.0 million issued in a public offering on January 24, 2020, and (iv) €700.0 million issued in a public offering on September 9, 2021. The Euro Notes have financial covenants similar to those of the U.S. Dollar Denominated Unsecured Notes.
We reflect changes in the U.S. Dollar equivalent of the amount payable including the associated interest, as a result of changes in foreign exchange rates as “Foreign currency exchange gain” on our income statement (gains of $48.2 million and $20.1 million for the three and nine months ended September 30, 2023, respectively, as compared to gains of $100.9 million and $239.2 million for the three and nine months ended September 30, 2022, respectively).
Mortgage Notes
We assumed our non-recourse mortgage debt in connection with property acquisitions, and we recorded such debt at fair value with any premium or discount to the stated note balance amortized using the effective interest method.
At September 30, 2023, the related contractual interest rates of our mortgage notes are fixed, ranging between 3.9% and 7.1%, and mature between September 1, 2028 and July 1, 2030.
At September 30, 2023, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):
| | | | | | | | | | | | | | | | | |
| | Unsecured Debt | | Mortgage Debt | | Total |
| | | | | |
| Remainder of 2023 | $ | — | | $ | 30 | | $ | 30 |
| 2024 | 805,744 | | 124 | | 805,868 |
| 2025 | 655,915 | | 131 | | 656,046 |
| 2026 | 1,150,000 | | 138 | | 1,150,138 |
| 2027 | 500,000 | | 146 | | 500,146 |
| Thereafter | 5,968,928 | | 1,294 | | 5,970,222 |
| $ | 9,080,587 | | $ | 1,863 | | $ | 9,082,450 |
| Weighted average effective rate | 3.1% | | 4.4% | | 3.1% |
Cash paid for interest totaled $97.5 million and $87.6 million for the nine months ended September 30, 2023 and 2022, respectively. Interest capitalized as real estate totaled $6.8 million and $4.2 million for the nine months ended September 30, 2023 and 2022, respectively.
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
9.Noncontrolling Interests
There are noncontrolling interests related to several subsidiaries we consolidate of which we do not own 100% of the equity. At September 30, 2023, certain of these subsidiaries have issued 499,966 partnership units to third-parties that are convertible on a one-for-one basis (subject to certain limitations) into common shares of the Company at the request of the unitholder.
10.Shareholders’ Equity
Preferred Shares
At September 30, 2023 and December 31, 2022, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | At September 30, 2023 | | At December 31, 2022 |
| Series | | Earliest Redemption Date | | Dividend Rate | | Shares Outstanding | | Liquidation Preference | | Shares Outstanding | | Liquidation Preference |
| | | | | | | | | | | | |
| | | | | | | (Dollar amounts in thousands) |
| Series F | | 6/2/2022 | | 5.150 | % | | 11,200 | | | $ | 280,000 | | | 11,200 | | | $ | 280,000 | |
| Series G | | 8/9/2022 | | 5.050 | % | | 12,000 | | | 300,000 | | | 12,000 | | | 300,000 | |
| Series H | | 3/11/2024 | | 5.600 | % | | 11,400 | | | 285,000 | | | 11,400 | | | 285,000 | |
| Series I | | 9/12/2024 | | 4.875 | % | | 12,650 | | | 316,250 | | | 12,650 | | | 316,250 | |
| Series J | | 11/15/2024 | | 4.700 | % | | 10,350 | | | 258,750 | | | 10,350 | | | 258,750 | |
| Series K | | 12/20/2024 | | 4.750 | % | | 9,200 | | | 230,000 | | | 9,200 | | | 230,000 | |
| Series L | | 6/17/2025 | | 4.625 | % | | 22,600 | | | 565,000 | | | 22,600 | | | 565,000 | |
| Series M | | 8/14/2025 | | 4.125 | % | | 9,200 | | | 230,000 | | | 9,200 | | | 230,000 | |
| Series N | | 10/6/2025 | | 3.875 | % | | 11,300 | | | 282,500 | | | 11,300 | | | 282,500 | |
| Series O | | 11/17/2025 | | 3.900 | % | | 6,800 | | | 170,000 | | | 6,800 | | | 170,000 | |
| Series P | | 6/16/2026 | | 4.000 | % | | 24,150 | | | 603,750 | | | 24,150 | | | 603,750 | |
| Series Q | | 8/17/2026 | | 3.950 | % | | 5,750 | | | 143,750 | | | 5,750 | | | 143,750 | |
| Series R | | 11/19/2026 | | 4.000 | % | | 17,400 | | | 435,000 | | | 17,400 | | | 435,000 | |
| Series S | | 1/13/2027 | | 4.100 | % | | 10,000 | | | 250,000 | | | 10,000 | | | 250,000 | |
| Total Preferred Shares | | | | 174,000 | | | $ | 4,350,000 | | | 174,000 | | | $ | 4,350,000 | |
The holders of our Preferred Shares have general preference rights with respect to liquidation, quarterly distributions, and any accumulated unpaid distributions. Except as noted below, holders of the Preferred Shares do not have voting rights. In the event of a cumulative arrearage equal to six quarterly dividends, holders of all outstanding series of preferred shares (voting as a single class without regard to series) will have the right to elect two additional members to serve on our Board of Trustees (our “Board”) until the arrearage has been cured. At September 30, 2023, there were no dividends in arrears. The affirmative vote of at least 66.67% of the outstanding shares of a series of Preferred Shares is required for any material and adverse amendment to the terms of such series. The affirmative vote of at least 66.67% of the outstanding shares of all of our Preferred Shares, voting as a single class, is required to issue shares ranking senior to our Preferred Shares.
Except under certain conditions relating to the Company’s qualification as a REIT, the Preferred Shares are not redeemable prior to the dates indicated on the table above. On or after the respective dates, each of the series of Preferred Shares is redeemable at our option, in whole or in part, at $25.00 per depositary share, plus accrued and unpaid dividends. Holders of the Preferred Shares cannot require us to redeem such shares.
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
Upon issuance of our Preferred Shares, we classify the liquidation value as preferred equity on our consolidated balance sheet with any issuance costs recorded as a reduction to Paid-in capital.
Dividends
On February 4, 2023, our Board declared a 50% increase in its regular common quarterly dividend from $2.00 to $3.00 per share. The distribution equates to an annualized increase to the Company’s regular common dividend from $8.00 to $12.00 per share.
Common share dividends paid, including amounts paid to our restricted share unitholders and deferred share unitholders, totaled $527.6 million ($3.00 per share) and $2.7 billion ($15.15 per share) for the three months ended September 30, 2023 and 2022, respectively, and $1.6 billion ($9.00 per share) and $3.4 billion ($19.15 per share) for the nine months ended September 30, 2023 and 2022, respectively. Preferred share dividends paid totaled $48.7 million for each of the three months ended September 30, 2023 and 2022, and $146.0 million and $145.7 million for the nine months ended September 30, 2023 and 2022, respectively.
11.Related Party Transactions
At September 30, 2023, Tamara Hughes Gustavson, a current member of our Board, held less than a 0.1% equity interest in, and is a manager of, a limited liability company that owns 65 self-storage facilities in Canada. Two of Ms. Gustavson’s adult children owned the remaining equity interest in the limited liability company. These facilities operate under the Public Storage® tradename, which we license to the owners of these facilities for use in Canada on a royalty-free, non-exclusive basis. We have no ownership interest in these facilities and we do not own or operate any facilities in Canada. If we chose to acquire or develop our own facilities in Canada, we would have to share the use of the Public Storage® name in Canada. We have a right of first refusal, subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them. Our subsidiaries reinsure risks relating to loss of goods stored by customers in these facilities, and have received premium payments of approximately $1.6 million and $1.7 million for the nine months ended September 30, 2023 and 2022, respectively.
12.Share-Based Compensation
Under various share-based compensation plans and under terms established or modified by our Board or a committee thereof, we grant equity awards to trustees, officers, and key employees, including non-qualified options to purchase the Company’s common shares, restricted share units (“RSUs”), deferred share units (“DSUs”), and unrestricted common shares issued in lieu of trustee compensation.
We recorded share-based compensation expense associated with our equity awards in the various expense categories in the Consolidated Statements of Income as set forth in the following table. In addition, $0.5 million and $1.8 million share-based compensation cost was capitalized as real estate facilities for the three and nine months ended September 30, 2023, respectively, as compared to $0.4 million and $2.4 million for the same periods of 2022, respectively.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | | | | |
| | 2023 | | 2022 | | 2023 | | 2022 | | |
| | | | | | | | | |
| | (Amounts in thousands) |
| | | | | | | | | |
| Self-storage cost of operations | $ | 2,964 | | | $ | 4,203 | | | $ | 10,316 | | | $ | 13,740 | | | |
| Ancillary cost of operations | 320 | | | 203 | | | 960 | | | 690 | | | |
| General and administrative | 6,231 | | | 9,335 | | | 20,033 | | | 30,167 | | | |
| Total | $ | 9,515 | | | $ | 13,741 | | | $ | 31,309 | | | $ | 44,597 | | | |
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2023
(Unaudited)
Included in share-based compensation is $0.5 million and $2.6 million during the three and nine months ended September 30, 2023, respectively, as compared to $2.9 million and $12.4 million for the same periods in 2022, respectively, in connection with retirement acceleration as discussed in Note 2 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.
As of September 30, 2023, there was $76.8 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of three years.