Business Wire | Aug 3, 2021 04:06PM EDT

Public Storage Reports Results for the Three and Six Months Ended June 30, 2021

Aug. 03, 2021

GLENDALE, Calif.--(BUSINESS WIRE)--Aug. 03, 2021--Public Storage (NYSE:PSA) announced today operating results for the three and six months ended June 30, 2021.

Highlights for the Three Months Ended June 30, 2021

* Reported net income allocable to common shareholders of $1.97 per diluted share.

* Reported core FFO allocable to common shareholders ("Core FFO") of $3.15 per diluted share, an increase of 28.0% relative to the same period in 2020.

* Increased Same Store (as defined below) direct net operating income by 20.8%, resulting from a 10.8% increase in Same Store revenues and a 15.9% decrease in Same Store direct cost of operations.

* Achieved 79.4% Same Store direct net operating income margin, an increase of 4.9% relative to the year ended December 31, 2020.

* Acquired 84 self-storage facilities with 7.0 million net rentable square feet for $2.3 billion. This acquisition activity was funded by the largest bond issuance in company history totaling $2.0 billion at a weighted average annual rate of 1.6%. Subsequent to June 30, 2021, we acquired or were under contract to acquire 36 self-storage facilities across 15 states with 3.0 million net rentable square feet, for $466.6 million.

* Opened two newly developed facilities and various expansion projects with 0.3 million net rentable square feet costing $40.2 million. At June 30, 2021, we had various facilities in development and expansion with 4.3 million net rentable square feet estimated to cost $661.0 million.

* Refinanced $525.0 million of 5.02% weighted average preferred equity with $604 million of 4.00% preferred equity, continuing to lower our in place cost of capital.

Operating Results for the Three Months Ended June 30, 2021

For the three months ended June 30, 2021, net income allocable to our common shareholders was $346.2 million or $1.97 per diluted common share, compared to $246.1 million or $1.41 per diluted common share in 2020 representing an increase of $100.1 million or $0.56 per diluted common share. The increase is due primarily to (i) a $126.8 million increase in self-storage net operating income (described below), (ii) a $11.4 million increase due to equity in earnings of unconsolidated real estate entities, partially offset by (iii) a $35.1 million increase in depreciation and amortization expense and (iv) a $10.6 million increase in general and administrative expense due primarily to increased share-based compensation expense.

The $126.8 million increase in self-storage net operating income is a result of a $91.6 million increase in our Same Store Facilities, and a $35.2 million increase in our Non-Same Store Facilities (as defined below). Revenues for the Same Store Facilities increased 10.8% or $66.4 million in the three months ended June 30, 2021 as compared to 2020, due primarily to higher realized annual rent per available square foot and weighted average square foot occupancy. Cost of operations for the Same Store Facilities decreased by 13.1% or $25.2 million in the three months ended June 30, 2021 as compared to 2020, due primarily to a 33.7% ($13.1 million) decrease in on-site property manager payroll resulting from a temporary $3.00 hourly incentive increase and enhancement of paid time off benefits to all of our property managers between April 1, 2020 and June 30, 2020 during the COVID-19 Pandemic (the "COVID Pandemic"), a 61.2% ($10.8 million) decrease in marketing expenses, and a change in property tax timing contributing to our 7.3% ($5.3 million) decrease in property tax expense. The increase in net operating income of $35.2 million for the Non-Same Store Facilities is due primarily to the impact of facilities acquired in 2020 and 2021 and the fill-up of recently developed and expanded facilities.

Operating Results for the Six Months Ended June 30, 2021

For the six months ended June 30, 2021, net income allocable to our common shareholders was $732.1 million or $4.18 per diluted common share, compared to $559.3 million or $3.20 per diluted common share in 2020 representing an increase of $172.8 million or $0.98 per diluted common share. The increase is due primarily to (i) a $167.9 million increase in self-storage net operating income (described below), (ii) a $43.0 million increase due to the impact of foreign currency exchange gains and losses associated with our Euro denominated debt, partially offset by (iii) a $46.1 million increase in depreciation and amortization expense and (iv) a $12.3 million increase in general and administrative expense due primarily to increased share-based compensation expense.

The $167.9 million increase in self-storage net operating income is a result of a $120.9 million increase in our Same Store Facilities (as defined below), and a $47.0 million increase in our Non-Same Store Facilities (as defined below). Revenues for the Same Store Facilities increased 7.1% or $87.5 million in the six months ended June 30, 2021 as compared to 2020, due primarily to higher realized annual rent per available square foot and weighted average square foot occupancy. Cost of operations for the Same Store Facilities decreased by 8.7% or $33.3 million in the six months ended June 30, 2021 as compared to 2020, due primarily to a 24.3% ($17.4 million) decrease in on-site property manager payroll resulting from a temporary $3.00 hourly incentive increase and enhancement of paid time off benefits to all of our property managers between April 1, 2020 and June 30, 2020 during the COVID Pandemic, a change in property tax timing contributing to a 7.9% ($11.5 million) decrease in property tax expense, and a 34.0% ($11.0 million) decrease in marketing expenses. The increase in net operating income of $47.0 million for the Non-Same Store Facilities is due primarily to the impact of facilities acquired in 2020 and 2021 and the fill-up of recently developed and expanded facilities.

Funds from Operations

For the three months ended June 30, 2021, funds from operations ("FFO") was $2.99 per diluted common share, as compared to $2.28 in the same period in 2020, representing an increase of 31.1%. FFO is a non-GAAP measure defined by the National Association of Real Estate Investment Trusts and generally represents net income before depreciation and amortization expense, gains and losses and impairment charges with respect to real estate assets. A reconciliation of GAAP diluted net income per share to FFO per share, and additional descriptive information regarding this non-GAAP measure, is attached.

For the six months ended June 30, 2021, FFO was $6.07 per diluted common share, as compared to $4.90 in the same period in 2020, representing an increase of 23.9%.

We also present "Core FFO per share," a non-GAAP measure that represents FFO per share excluding the impact of (i) foreign currency exchange gains and losses, (ii) charges related to the redemption of preferred securities, and (iii) certain other non-cash and/or nonrecurring income or expense items primarily representing, with respect to the periods presented below, the impact of casualties, and due diligence costs incurred in strategic transactions. We review Core FFO per share to evaluate our ongoing operating performance, and we believe it is used by investors and REIT analysts in a similar manner. However, Core FFO per share is not a substitute for net income per share. Because other REITs may not compute Core FFO per share in the same manner as we do, may not use the same terminology, or may not present such a measure, Core FFO per share may not be comparable among REITs.

The following table reconciles from FFO per share to Core FFO per share (unaudited):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 Percentage 2021 2020 Percentage Change Change



FFO per $ 2.99 $ 2.28 31.1 % $ 6.07 $ 4.90 23.9 %share

Eliminatethe pershare impactof itemsexcludedfrom Core FFO,includingour equityshare frominvestments:

Foreigncurrency 0.07 0.11 (0.19) 0.06 exchangeloss (gain)

Preferredshare 0.10 0.09 0.10 0.09 redemptioncharge

Other items (0.01) (0.02) (0.01) (0.01)

Core FFO per $ 3.15 $ 2.46 28.0 % $ 5.97 $ 5.04 18.5 %share

Property Operations - Same Store Facilities

The Same Store Facilities consist of facilities that have been owned and operated on a stabilized level of occupancy, revenues, and cost of operations since January 1, 2019. The composition of our Same Store Facilities allows us to more effectively evaluate the ongoing performance of our self-storage portfolio in 2019, 2020, and 2021 and exclude the impact of fill-up of unstabilized facilities, which can significantly affect operating trends. We believe the Same Store information is used by investors and analysts in a similar manner. However, because other REITs may not compute Same Store Facilities in the same manner as we do, may not use the same terminology, or may not present such a measure, Same Store Facilities may not be comparable among REITs. The following table summarizes the historical operating results of these 2,278 facilities (148.9 million net rentable square feet) that represent approximately 81% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at June 30, 2021 (unaudited):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 Percentage 2021 2020 Percentage Change Change

(Dollar amounts in thousands, except for per square foot data)

Revenues (a):

Rental income $ 661,684 $ 596,110 11.0 % $ 1,289,495 $ 1,196,169 7.8 %

Late chargesand 19,154 18,308 4.6 % 39,160 44,940 (12.9) %administrativefees

Total revenues 680,838 614,418 10.8 % 1,328,655 1,241,109 7.1 %



Direct cost ofoperations (a):

Property taxes 67,194 72,458 (7.3) % 133,749 145,236 (7.9) %(b)

On-siteproperty 25,641 38,698 (33.7) % 54,370 71,804 (24.3) %managerpayroll

Repairs and 12,124 11,517 5.3 % 23,145 22,252 4.0 %maintenance

Snow removal 953 153 522.9 % 2,963 2,131 39.0 %

Utilities 9,334 9,567 (2.4) % 20,079 20,416 (1.7) %

Marketing 6,844 17,630 (61.2) % 21,415 32,438 (34.0) %

Other direct 18,289 16,953 7.9 % 36,630 33,842 8.2 %property costs

Total directcost of 140,379 166,976 (15.9) % 292,351 328,119 (10.9) %operations

Direct netoperating 540,459 447,442 20.8 % 1,036,304 912,990 13.5 %income (c)

Indirect costof operations (a):

Supervisory (9,184) (10,927) (16.0) % (19,018) (21,838) (12.9) %payroll

Centralizedmanagement (13,066) (11,180) 16.9 % (26,083) (24,992) 4.4 %costs

Share-basedcompensation (4,545) (3,262) 39.3 % (10,734) (6,585) 63.0 %(d)

Net operating $ 513,664 $ 422,073 21.7 % $ 980,469 $ 859,575 14.1 %income (e)



Gross margin(beforeindirectcosts, 79.4 % 72.8 % 9.1 % 78.0 % 73.6 % 6.0 %depreciation,andamortizationexpense)



Gross margin(beforedepreciation 75.4 % 68.7 % 9.8 % 73.8 % 69.3 % 6.5 %andamortizationexpense)



Weightedaverage for the period:

Square foot 97.0 % 94.2 % 3.0 % 96.3 % 93.6 % 2.9 %occupancy

Realizedannual rental income per(f):

Occupied $ 18.32 $ 17.00 7.8 % $ 17.98 $ 17.16 4.8 %square foot

Availablesquare foot $ 17.77 $ 16.01 11.0 % $ 17.32 $ 16.07 7.8 %("REVPAF")

At June 30:

Square foot 96.5 % 94.6 % 2.0 %occupancy

Annualcontract rentper occupied $ 18.75 $ 17.24 8.8 %square foot(g)

(a)

Revenues and cost of operations do not include tenant reinsurance and merchandise sales and expenses generated at the facilities.

(b)

Property tax expense for 2021 will be expensed ratably through the year, as described in more detail in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our June 30, 2021 Form 10-Q. We expect decreases through the third quarter to be offset by an increase in the fourth quarter of 2021, resulting in an approximate increase of 5.0% for the year ended December 31, 2021, compared to the same period in 2020.

(c)

Direct net operating income ("Direct NOI"), a subtotal within NOI, is a non-GAAP financial measure that excludes the impact of supervisory payroll, centralized management costs, and share-based compensation in addition to depreciation and amortization expense. We utilize direct net operating income in evaluating property performance and in evaluating property operating trends as compared to our competitors.

(d)

For the three and six months ended June 30, 2021, share-based compensation expense increased 39.3% and 63.0%, respectively, as compared to the same periods in 2020, primarily due to the absence of comparable performance-based share-based compensation expense for the three and six months ended June 30, 2020 and the accelerated compensation costs recognized in the three and six months ended June 30, 2021 associated with modifying our share-based compensation plans in July 2020, to allow immediate vesting upon retirement.

(e)

See attached reconciliation of self-storage NOI to net income.

(f)

Realized annual rent per occupied square foot is computed by dividing annualized rental income, before late charges and administrative fees, by the weighted average occupied square feet for the period. Realized annual rent per available square foot ("REVPAF") is computed by dividing annualized rental income, before late charges and administrative fees, by the total available rentable square feet for the period. These measures exclude late charges and administrative fees in order to provide a better measure of our ongoing level of revenue. Late charges are dependent upon the level of delinquency, and administrative fees are dependent upon the level of move-ins. In addition, the rates charged for late charges and administrative fees can vary independently from rental rates. These measures take into consideration promotional discounts, which reduce rental income.

(g)

Annual contract rent represents the agreed upon monthly rate that is paid by our tenants in place at the time of measurement. Contract rates are initially set in the lease agreement upon move-in, and we adjust them from time to time with notice. Contract rent excludes other fees that are charged on a per-item basis, such as late charges and administrative fees, does not reflect the impact of promotional discounts, and does not reflect the impact of rents that are written off as uncollectible.

The following table summarizes selected quarterly financial data with respect to the Same Store Facilities (unaudited):

(a) Revenues and cost of operations do not include tenant reinsurance and merchandise sales and expenses generated at the facilities.

Property tax expense for 2021 will be expensed ratably through the year, as described in more detail in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our June 30, 2021 Form(b) 10-Q. We expect decreases through the third quarter to be offset by an increase in the fourth quarter of 2021, resulting in an approximate increase of 5.0% for the year ended December 31, 2021, compared to the same period in 2020.

Direct net operating income ("Direct NOI"), a subtotal within NOI, is a non-GAAP financial measure that excludes the impact of supervisory(c) payroll, centralized management costs, and share-based compensation in addition to depreciation and amortization expense. We utilize direct net operating income in evaluating property performance and in evaluating property operating trends as compared to our competitors.

For the three and six months ended June 30, 2021, share-based compensation expense increased 39.3% and 63.0%, respectively, as compared to the same periods in 2020, primarily due to the absence of comparable(d) performance-based share-based compensation expense for the three and six months ended June 30, 2020 and the accelerated compensation costs recognized in the three and six months ended June 30, 2021 associated with modifying our share-based compensation plans in July 2020, to allow immediate vesting upon retirement.

(e) See attached reconciliation of self-storage NOI to net income.

Realized annual rent per occupied square foot is computed by dividing annualized rental income, before late charges and administrative fees, by the weighted average occupied square feet for the period. Realized annual rent per available square foot ("REVPAF") is computed by dividing annualized rental income, before late charges and administrative fees, by the total available rentable square feet for the period. These measures(f) exclude late charges and administrative fees in order to provide a better measure of our ongoing level of revenue. Late charges are dependent upon the level of delinquency, and administrative fees are dependent upon the level of move-ins. In addition, the rates charged for late charges and administrative fees can vary independently from rental rates. These measures take into consideration promotional discounts, which reduce rental income.

Annual contract rent represents the agreed upon monthly rate that is paid by our tenants in place at the time of measurement. Contract rates are initially set in the lease agreement upon move-in, and we adjust them(g) from time to time with notice. Contract rent excludes other fees that are charged on a per-item basis, such as late charges and administrative fees, does not reflect the impact of promotional discounts, and does not reflect the impact of rents that are written off as uncollectible.

The following table summarizes selected quarterly financial data with respect to the Same Store Facilities (unaudited):

For the Quarter Ended

March 31 June 30 September December Entire Year 30 31

(Amounts in thousands, except for per square foot data)

Total revenues:

2021 $ 647,817 $ 680,838

2020 $ 626,691 $ 614,418 $ 629,169 $ 638,149 $ 2,508,427



Total cost of operations:

2021 $ 181,012 $ 167,174

2020 $ 189,189 $ 192,345 $ 184,329 $ 146,584 $ 712,447



Property taxes:

2021 $ 66,555 $ 67,194

2020 $ 72,778 $ 72,458 $ 71,616 $ 41,197 $ 258,049



Repairs andmaintenance, including

snow removal expenses:

2021 $ 13,031 $ 13,077

2020 $ 12,713 $ 11,670 $ 12,973 $ 13,485 $ 50,841



Marketing:

2021 $ 14,571 $ 6,844

2020 $ 14,808 $ 17,630 $ 16,158 $ 13,526 $ 62,122



REVPAF:

2021 $ 16.86 $ 17.77

2020 $ 16.12 $ 16.01 $ 16.39 $ 16.62 $ 16.29



Weighted average realized annual

rent per occupied square foot:

2021 $ 17.63 $ 18.32

2020 $ 17.33 $ 17.00 $ 17.16 $ 17.46 $ 17.24



Weighted average occupancy levels

for the period:

2021 95.6% 97.0%

2020 93.0% 94.2% 95.5% 95.2% 94.5%

Property Operations - Non-Same Store Facilities

In addition to the 2,278 Same Store Facilities, we have 371 facilities that were not stabilized with respect to occupancies, revenues, or cost of operations since January 1, 2019 or that we did not own as of January 1, 2019, including 205 facilities that were acquired, 67 newly developed facilities, 71 facilities that have been expanded or are targeted for expansion, and 28 facilities that are unstabilized due to the impact of casualties and other factors (collectively, the "Non-Same Store Facilities"). Operating data, metrics, and further commentary with respect to these facilities, including detail by vintage, are included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Self-Storage Operations" in our June 30, 2021 Form 10-Q.

Investing and Capital Activities

During the three months ended June 30, 2021, we acquired 84 self-storage facilities (39 in Maryland, 11 in Virginia, six in Idaho, four in Indiana, three each in Florida, Nebraska, and Texas, two each in Arizona, California, Georgia and Washington, and one each in Colorado, Illinois, Kansas, North Carolina, Ohio, Pennsylvania and South Carolina,) with 7.0 million net rentable square feet for $2.3 billion. During the six months ended June 30, 2021, we acquired 99 self-storage facilities (39 in Maryland, 12 in Virginia, six in Idaho, five in Arizona, four each in California, Indiana and Nebraska, three each in Florida, North Carolina, South Carolina and Texas, two each in Washington, Louisiana, Ohio and Georgia, and one each in Colorado, Illinois, Kansas, Nevada and Pennsylvania) with 8.1 million net rentable square feet for $2.5 billion.

The preceding discussion of properties acquired, includes our acquisition of the ezStorage portfolio on April 28, 2021, consisting of 48 properties (4.1 million net rentable square feet) for an acquisition cost of $1.8 billion, which includes 47 self-storage facilities and a property that is under construction. For the quarter ended June 30, 2021, these facilities generated revenues of $14.8 million, NOI of $11.6 million (including Direct NOI of $12.0 million) and square footage occupancy at quarter end was 94.2%.

Subsequent to June 30, 2021, we acquired or were under contract to acquire 36 self-storage facilities across 15 states with 3.0 million net rentable square feet, for $466.6 million.

During the three months ended June 30, 2021, we opened two newly developed facilities and various expansion projects (0.3 million net rentable square feet with 0.2 million in Florida and 0.1 million in Colorado) costing $40.2 million. During the six months ended June 30, 2021, we opened three newly developed facilities and various expansion projects (0.5 million net rentable square feet - 0.2 million each in Virginia and Florida and 0.1 million in Colorado) costing $85.6 million. At June 30, 2021, we had various facilities in development (1.9 million net rentable square feet) estimated to cost $308 million and various expansion projects (2.4 million net rentable square feet) estimated to cost $353 million. Our aggregate 4.3 million net rentable square foot pipeline of development and expansion facilities includes 1.0 million each in California and Florida, 0.4 million Maryland, 0.3 million each in New Jersey and Washington, 0.2 million each in Michigan, Minnesota, New York, and Texas and 0.5 million in other states. The remaining $411 million of development costs for these projects is expected to be incurred primarily in the next 18 to 24 months.

On June 16, 2021, we issued our 4.000% Series P Preferred Shares for gross proceeds of $604 million.

On June 18, 2021, we called for redemption, and on July 20, 2021 we redeemed, our 4.950% Series D Preferred Shares for $325 million, plus accrued dividends.

On June 30, 2021, we redeemed our 5.125% Series C Preferred Shares for $200 million.

Distributions Declared

On July 28, 2021, our Board of Trustees declared a regular common quarterly dividend of $2.00 per common share. The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on September 30, 2021 to shareholders of record as of September 15, 2021.

Outlook for the Twelve Months Ending December 31, 2021

The following table outlines the Company's Core FFO per share estimate and certain underlying assumptions for the year ending December 31, 2021:

Guidance Ranges for 2021

Low High

(Amounts in thousands, except per share data)

Same Store:

Revenue growth 7.00% 8.50%

Expense growth 0.00% 1.00%

Net operating income growth 9.40% 11.90%



Acquisitions $3,100,000

Development openings $215,000

Non-Same Store net operating $225,000 $240,000income

Ancillary net operating income $137,000 $141,000

General and administrative expense $96,000 $99,000

Interest expense $94,000 $96,000

Preferred dividends $182,000

Capital expenditures $250,000 $300,000



Core FFO per share $11.90 $12.30

Forward-looking Core FFO per share measures exclude estimates for the impact of (i) foreign currency exchange gains and losses, (ii) charges related to the redemption of preferred securities, and (iii) certain other significant non-cash and/or nonrecurring income or expense items such as loss contingency accruals, casualties, transactional due diligence, and advisory costs. Public Storage is unable to provide a reconciliation of Core FFO per share guidance measures to corresponding U.S. GAAP measures on forward-looking basis without unreasonable effort due to the overall high variability of most of the foregoing items that have been excluded. The items that are being excluded are difficult to predict and a reconciliation could result in disclosure that would be imprecise or potentially misleading. Material changes to any one of these items could have a significant effect on our guidance and future U.S. GAAP results.

Second Quarter Conference Call

A conference call is scheduled for August 4, 2021 at 9:00 a.m. (PDT) to discuss the second quarter earnings results. The domestic dial-in number is (866) 406-5408, and the international dial-in number is (973) 582-2770 (conference ID number for either domestic or international is 2088572). A simultaneous audio webcast may be accessed by using the link at www.publicstorage.com under "About Us, Investor Relations, News and Events, Event Calendar." A replay of the conference call may be accessed through August 18, 2021 by calling (800) 585-8367 (domestic), (404) 537-3406 (international) or by using the link at www.publicstorage.com under "About Us, Investor Relations, News and Events, Event Calendar." All forms of replay utilize conference ID number 2088572.

About Public Storage

Public Storage, a member of the S&P 500 and FT Global 500, is a REIT that primarily acquires, develops, owns and operates self-storage facilities. At June 30, 2021, we had: (i) interests in 2,649 self-storage facilities located in 39 states with approximately 184 million net rentable square feet in the United States, (ii) an approximate 35% common equity interest in Shurgard Self-Storage SA (Euronext Brussels:SHUR) which owned 243 self-storage facilities located in seven Western European nations with approximately 13 million net rentable square feet operated under the "Shurgard" brand and (iii) an approximate 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 28 million rentable square feet of commercial space at June 30, 2021. Our headquarters are located in Glendale, California.

This press release, our Form 10-Q for the second quarter of 2021, and additional information about Public Storage are available on our website, www.publicstorage.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements relating to our 2021 outlook and all underlying assumptions, our expected acquisition, disposition, development and redevelopment activity, supply and demand for our self-storage facilities, information relating to operating trends in our markets, expectations regarding operating expenses, including property tax changes, our strategic priorities, expectations with respect to financing activities, rental rates, cap rates and yields, leasing expectations, our credit ratings, and all other statements other than statements of historical fact. Such statements are based on management's beliefs and assumptions made based on information currently available to management. All statements in this press release, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words "outlook," "guidance," "expects," "believes," "anticipates," "should," "estimates," and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to, those described in Part 1, Item 1A, "Risk Factors" in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 24, 2021 and in our other filings with the SEC including: general risks associated with the ownership and operation of real estate, including changes in demand, risk related to development, expansion and acquisition of self-storage facilities, potential liability for environmental contamination, natural disasters and adverse changes in laws and regulations governing property tax, real estate and zoning; risks associated with downturns in the national and local economies in the markets in which we operate, including risks related to current economic conditions and the economic health of our customers; risks associated with the COVID-19 Pandemic (the "COVID Pandemic") or similar events, including but not limited to illness or death of our employees or customers, negative impacts to the economic environment and to self-storage customers which could reduce the demand for self-storage or reduce our ability to collect rent, and/or potential regulatory actions to (i) close our facilities if we were determined not to be an "essential business" or for other reasons, (ii) limit our ability to increase rent or otherwise limit the rent we can charge or (iii) limit our ability to collect rent or evict delinquent tenants; the risk that there could be an out-migration of population from certain high-cost major markets, if it is determined that the ability to "work from home," which has become more prominent during the COVID Pandemic, could allow certain workers to live in less expensive localities, which could negatively impact the occupancies and revenues of our properties in such major high-cost markets; the risk that more jurisdictions will reinstitute COVID Pandemic restrictions, which were previously eased, in response to increases in infections, including as a result of variants such as the Delta variant, or if additional pandemics occur; the risk that we could experience a change in the move-out patterns of our long-term customers due to economic uncertainty and the increases in unemployment resulting from changes in the macro environment, which could lead to lower occupancies and rent "roll down" as long-term customers are replaced with new customers at lower rates; risk of negative impacts on the cost and availability of debt and equity capital as a result of the COVID Pandemic, which could have a material impact upon our capital and growth plans; the impact of competition from new and existing self-storage and commercial facilities and other storage alternatives; the risk that our existing self-storage facilities may be at a disadvantage in competing with newly developed facilities with more visual and customer appeal; risks related to increased reliance on Google and Sparefoot as customer acquisition channels; difficulties in our ability to successfully evaluate, finance, integrate into our existing operations and manage properties that we acquire directly or through the acquisition of entities that own and operate self-storage facilities or to consummate announced acquisitions in the expected timeframe or at all; risks associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations, changes in tax laws and local and global economic uncertainty that could adversely affect our earnings and cash flows; risks related to our participation in joint ventures; the impact of the legal and regulatory environment, as well as national, state and local laws and regulations including, without limitation, those governing environmental issues, taxes, our tenant reinsurance business, and labor, including risks related to the impact of new laws and regulations; risks of increased tax expense associated either with a possible failure by us to qualify as a REIT, or with challenges to the determination of taxable income for our taxable REIT subsidiaries; risks due to ballot initiatives or other actions that could remove the protections of Proposition 13 with respect to our real estate and result in substantial increases in our assessed values and property tax bills in California; changes in United States federal or state tax laws related to the taxation of REITs and other corporations; security breaches, including ransomware, or a failure of our networks, systems or technology could adversely impact our operations or our business, customer and employee relationships or result in fraudulent payments; risks associated with the self-insurance of certain business risks, including property and casualty insurance, employee health insurance and workers compensation liabilities; difficulties in raising capital at a reasonable cost; delays and cost overruns on our projects to develop new facilities or expand our existing facilities; difficulties in our ability to hire and retain skilled management and staff; ineffective succession planning for our CEO, executive management and our other key employees; ongoing litigation and other legal and regulatory actions which may divert management's time and attention, require us to pay damages and expenses or restrict the operation of our business; and economic uncertainty due to the impact of war or terrorism. These forward-looking statements speak only as of the date of this press release. All of our forward-looking statements, including those in this press release, are qualified in their entirety by this statement. We expressly disclaim any obligation to update publicly or otherwise revise any forward-looking statements, whether because of new information, new estimates, or other factors, events or circumstances after the date of these forward-looking statements, except when expressly required by law. Given these risks and uncertainties, you should not rely on any forward-looking statements in this press release, or which management may make orally or in writing from time to time, neither as predictions of future events nor guarantees of future performance.

PUBLIC STORAGE

SELECTED INCOME STATEMENT DATA

(Amounts in thousands, except per share data)

(Unaudited)

Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020



Revenues:

Self-storage $ 776,993 $ 664,542 $ 1,493,340 $ 1,338,743 facilities

Ancillary operations 52,322 48,401 103,237 93,244

829,315 712,943 1,596,577 1,431,987



Expenses:

Self-storage cost of 202,595 216,954 414,700 428,050 operations

Ancillary cost of 15,991 15,335 32,309 28,907 operations

Depreciation and 172,728 137,618 319,587 273,518 amortization

General and 27,740 17,104 47,314 34,972 administrative

Interest expense 21,994 14,145 37,244 27,766

441,048 401,156 851,154 793,213

Other increases(decreases) to net income:

Interest and other 3,113 5,665 5,965 11,784 income

Equity in earnings ofunconsolidated real 29,066 17,655 48,522 41,623 estate entities

Gain on sale of real 3,991 - 13,404 1,117 estate

Foreign currency (12,707) (19,295) 32,678 (10,350) exchange (loss) gain

Net income 411,730 315,812 845,992 682,948

Allocation tononcontrolling (1,304) (889) (2,530) (1,869) interests

Net income allocableto Public Storage 410,426 314,923 843,462 681,079 shareholders

Allocation of net income to:

Preferredshareholders - (46,183) (52,952) (92,263) (104,957) distributions

Preferredshareholders - (16,989) (15,069) (16,989) (15,069) redemptions

Restricted share (1,005) (783) (2,151) (1,800) units

Net income allocableto common $ 346,249 $ 246,119 $ 732,059 $ 559,253 shareholders



Per common share:

Net income per common $ 1.98 $ 1.41 $ 4.19 $ 3.21 share - Basic

Net income per common $ 1.97 $ 1.41 $ 4.18 $ 3.20 share - Diluted

Weighted average 174,824 174,493 174,718 174,470 common shares - Basic

Weighted averagecommon shares - 175,547 174,575 175,194 174,596 Diluted

PUBLIC STORAGE

SELECTED BALANCE SHEET DATA

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

June 30, 2021

December 31, 2020

ASSETS

(Unaudited)

Cash and equivalents

$

480,810

$

257,560

Operating real estate facilities:

Land and buildings, at cost

19,977,932

17,372,627

Accumulated depreciation

(7,435,657)

(7,152,135)

12,542,275

10,220,492

Construction in process

249,713

188,079

Investments in unconsolidated real estate entities

767,914

773,046

Goodwill and other intangible assets, net

265,486

204,654

Other assets

184,167

172,715

Total assets

$

14,490,365

$

11,816,546

LIABILITIES AND EQUITY

Senior unsecured notes

$

4,971,454

$

2,519,762

Mortgage notes

24,166

25,230

Preferred shares called for redemption

325,000

300,000

Accrued and other liabilities

406,642

394,655

Total liabilities

5,727,262

3,239,647

Equity:

Public Storage shareholders' equity:

Cumulative Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 154,850 shares issued (in series) and outstanding, (151,700 at December 31, 2020) at liquidation preference

3,871,250

3,792,500

Common Shares, $0.10 par value, 650,000,000 shares authorized, 174,864,437 shares issued and outstanding (174,581,742 shares at December 31, 2020)

17,486

17,458

Paid-in capital

5,764,672

5,707,101

Accumulated deficit

(863,742)

(914,791)

Accumulated other comprehensive loss

(46,082)

(43,401)

Total Public Storage shareholders' equity

8,743,584

8,558,867

Noncontrolling interests

19,519

18,032

Total equity

8,763,103

8,576,899

Total liabilities and equity

$

14,490,365

$

11,816,546

PUBLIC STORAGE

SELECTED BALANCE SHEET DATA

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

June 30, 2021 December 31, 2020

ASSETS (Unaudited)



Cash and equivalents $ 480,810 $ 257,560



Operating real estate facilities:

Land and buildings, at cost 19,977,932 17,372,627

Accumulated depreciation (7,435,657) (7,152,135)

12,542,275 10,220,492

Construction in process 249,713 188,079

Investments in unconsolidated real estate 767,914 773,046 entities

Goodwill and other intangible assets, net 265,486 204,654

Other assets 184,167 172,715

Total assets $ 14,490,365 $ 11,816,546





LIABILITIES AND EQUITY



Senior unsecured notes $ 4,971,454 $ 2,519,762

Mortgage notes 24,166 25,230

Preferred shares called for redemption 325,000 300,000

Accrued and other liabilities 406,642 394,655

Total liabilities 5,727,262 3,239,647



Equity:

Public Storage shareholders' equity:

Cumulative Preferred Shares, $0.01 par value,100,000,000 shares authorized, 154,850 shares 3,871,250 3,792,500 issued (in series) and outstanding, (151,700 atDecember 31, 2020) at liquidation preference

Common Shares, $0.10 par value, 650,000,000shares authorized, 174,864,437 shares issued 17,486 17,458 and outstanding (174,581,742 shares at December31, 2020)

Paid-in capital 5,764,672 5,707,101

Accumulated deficit (863,742) (914,791)

Accumulated other comprehensive loss (46,082) (43,401)

Total Public Storage shareholders' equity 8,743,584 8,558,867

Noncontrolling interests 19,519 18,032

Total equity 8,763,103 8,576,899

Total liabilities and equity $ 14,490,365 $ 11,816,546

PUBLIC STORAGE

SELECTED FINANCIAL DATA

Computation of Funds from Operations and Funds Available for Distribution

(Unaudited - amounts in thousands except per share data)

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Computation of FFO per Share:

Net income allocable to common shareholders

$

346,249

$

246,119

$

732,059

$

559,253

Eliminate items excluded from FFO:

Depreciation and amortization

171,738

136,821

317,607

271,958

Depreciation from unconsolidated real estate investments

17,343

16,872

35,276

35,115

Depreciation allocated to noncontrolling interests and restricted share unitholders

(1,124)

(938)

(2,095)

(1,899)

Gains on sale of real estate, including equity investment share

(9,197)

-

(18,584)

(9,241)

FFO allocable to common shares (a)

$

525,009

$

398,874

$

1,064,263

$

855,186

Diluted weighted average common shares

175,547

174,575

175,194

174,596

FFO per share (a)

$

2.99

$

2.28

$

6.07

$

4.90

Reconciliation of Diluted Earnings per Share to FFO per Share:

Diluted earnings per share

$

1.97

$

1.41

$

4.18

$

3.20

Eliminate per share amounts excluded from FFO:

Depreciation and amortization

1.07

0.87

2.00

1.75

Gains on sale of real estate

(0.05)

-

(0.11)

(0.05)

FFO per share (a)

$

2.99

$

2.28

$

6.07

$

4.90

Computation of Funds Available for Distribution ("FAD"):

FFO allocable to common shares

$

525,009

$

398,874

$

1,064,263

$

855,186

Eliminate effect of items included in FFO but not FAD:

Share-based compensation expense in excess of cash paid

18,075

6,546

25,198

3,716

Foreign currency exchange loss (gain)

12,707

19,295

(32,678)

10,350

Impact of preferred share redemption charges, including equity investment share

16,989

15,069

16,989

15,069

Less: Capital expenditures to maintain real estate facilities

(58,823)

(38,772)

(94,616)

(95,629)

FAD (a)

$

513,957

$

401,012

$

979,156

$

788,692

Distributions paid to common shareholders and restricted share units

$

350,054

$

349,834

$

700,150

$

699,636

Distribution payout ratio

68.1

%

87.2

%

71.5

%

88.7

%

Distributions per common share

$

2.00

$

2.00

$

4.00

$

4.00

PUBLIC STORAGE

SELECTED FINANCIAL DATA



Computation of Funds from Operations and Funds Available for Distribution

(Unaudited - amounts in thousands except per share data)

Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020



Computation of FFO per Share:

Net income allocable to $ 346,249 $ 246,119 $ 732,059 $ 559,253 common shareholders

Eliminate items excluded from FFO:

Depreciation and 171,738 136,821 317,607 271,958 amortization

Depreciation fromunconsolidated real 17,343 16,872 35,276 35,115 estate investments

Depreciation allocatedto noncontrollinginterests and (1,124) (938) (2,095) (1,899) restricted shareunitholders

Gains on sale of realestate, including (9,197) - (18,584) (9,241) equity investment share

FFO allocable to common $ 525,009 $ 398,874 $ 1,064,263 $ 855,186 shares (a)

Diluted weighted 175,547 174,575 175,194 174,596 average common shares

FFO per share (a) $ 2.99 $ 2.28 $ 6.07 $ 4.90

Reconciliation ofDiluted Earnings per Share to FFO per Share:

Diluted earnings per $ 1.97 $ 1.41 $ 4.18 $ 3.20 share

Eliminate per shareamounts excluded from FFO:

Depreciation and 1.07 0.87 2.00 1.75 amortization

Gains on sale of real (0.05) - (0.11) (0.05) estate

FFO per share (a) $ 2.99 $ 2.28 $ 6.07 $ 4.90

Computation of FundsAvailable for Distribution ("FAD"):

FFO allocable to common $ 525,009 $ 398,874 $ 1,064,263 $ 855,186 shares

Eliminate effect ofitems included in FFO but not FAD:

Share-basedcompensation expense in 18,075 6,546 25,198 3,716 excess of cash paid

Foreign currency 12,707 19,295 (32,678) 10,350 exchange loss (gain)

Impact of preferredshare redemption 16,989 15,069 16,989 15,069 charges, includingequity investment share

Less: Capitalexpenditures to (58,823) (38,772) (94,616) (95,629) maintain real estatefacilities

FAD (a) $ 513,957 $ 401,012 $ 979,156 $ 788,692

Distributions paid tocommon shareholders and $ 350,054 $ 349,834 $ 700,150 $ 699,636 restricted share units

Distribution payout 68.1 % 87.2 % 71.5 % 88.7 %ratio

Distributions per $ 2.00 $ 2.00 $ 4.00 $ 4.00 common share

(a)FFO and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts and, along with the non-GAAP measure FAD, are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents GAAP net income before depreciation and amortization, real estate gains or losses and impairment charges, which are excluded because they are based upon historical costs and assume that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. FAD represents FFO adjusted to exclude certain non-cash charges and to deduct capital expenditures. We utilize FAD in evaluating our ongoing cash flow available for investment, debt repayment and common distributions. We believe investors and analysts utilize FAD in a similar manner. FFO and FFO per share are not a substitute for net income or earnings per share. FFO and FAD are not substitutes for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful.

FFO and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts and, along with the non-GAAP measure FAD, are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents GAAP net income before depreciation and amortization, real estate gains or losses and impairment charges, which are excluded because they are based upon historical costs and assume that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. FAD represents FFO adjusted to exclude certain non-cash charges and to deduct capital(a) expenditures. We utilize FAD in evaluating our ongoing cash flow available for investment, debt repayment and common distributions. We believe investors and analysts utilize FAD in a similar manner. FFO and FFO per share are not a substitute for net income or earnings per share. FFO and FAD are not substitutes for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful.

PUBLIC STORAGE

SELECTED FINANCIAL DATA

Reconciliation of Self-Storage Net Operating Income to

Net Income

(Unaudited - amounts in thousands)

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Self-storage revenues for:

Same Store Facilities

$

680,838

$

614,418

$

1,328,655

$

1,241,109

Acquired facilities

42,395

9,359

62,564

17,102

Developed and expanded facilities

48,019

35,617

90,958

70,318

Other Non-Same Store facilities

5,741

5,148

11,163

10,214

Self-storage revenues

776,993

664,542

1,493,340

1,338,743

Self-storage cost of operations for:

Same Store Facilities

167,174

192,345

348,186

381,534

Acquired facilities

15,147

5,044

25,854

8,750

Developed and expanded facilities

18,263

17,109

36,401

33,201

Other Non-Same Store facilities

2,011

2,456

4,259

4,565

Self-storage cost of operations

202,595

216,954

414,700

428,050

Self-storage NOI for:

Same Store Facilities

513,664

422,073

980,469

859,575

Acquired facilities

27,248

4,315

36,710

8,352

Developed and expanded facilities

29,756

18,508

54,557

37,117

Other Non-Same Store facilities

3,730

2,692

6,904

5,649

Self-storage NOI (a)

574,398

447,588

1,078,640

910,693

Ancillary revenues

52,322

48,401

103,237

93,244

Ancillary cost of operations

(15,991)

(15,335)

(32,309)

(28,907)

Depreciation and amortization

(172,728)

(137,618)

(319,587)

(273,518)

General and administrative expense

(27,740)

(17,104)

(47,314)

(34,972)

Interest and other income

3,113

5,665

5,965

11,784

Interest expense

(21,994)

(14,145)

(37,244)

(27,766)

Equity in earnings of unconsolidated real estate entities

29,066

17,655

48,522

41,623

Gain on sale of real estate

3,991

-

13,404

1,117

Foreign currency exchange (loss) gain

(12,707)

(19,295)

32,678

(10,350)

Net income on our income statement

$

411,730

$

315,812

$

845,992

$

682,948

PUBLIC STORAGE

SELECTED FINANCIAL DATA



Reconciliation of Self-Storage Net Operating Income to

Net Income

(Unaudited - amounts in thousands)

Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020



Self-storage revenues for:

Same Store Facilities $ 680,838 $ 614,418 $ 1,328,655 $ 1,241,109

Acquired facilities 42,395 9,359 62,564 17,102

Developed and 48,019 35,617 90,958 70,318 expanded facilities

Other Non-Same Store 5,741 5,148 11,163 10,214 facilities

Self-storage revenues 776,993 664,542 1,493,340 1,338,743



Self-storage cost of operations for:

Same Store Facilities 167,174 192,345 348,186 381,534

Acquired facilities 15,147 5,044 25,854 8,750

Developed and 18,263 17,109 36,401 33,201 expanded facilities

Other Non-Same Store 2,011 2,456 4,259 4,565 facilities

Self-storage cost of 202,595 216,954 414,700 428,050 operations



Self-storage NOI for:

Same Store Facilities 513,664 422,073 980,469 859,575

Acquired facilities 27,248 4,315 36,710 8,352

Developed and 29,756 18,508 54,557 37,117 expanded facilities

Other Non-Same Store 3,730 2,692 6,904 5,649 facilities

Self-storage NOI (a) 574,398 447,588 1,078,640 910,693

Ancillary revenues 52,322 48,401 103,237 93,244

Ancillary cost of (15,991) (15,335) (32,309) (28,907) operations

Depreciation and (172,728) (137,618) (319,587) (273,518) amortization

General andadministrative (27,740) (17,104) (47,314) (34,972) expense

Interest and other 3,113 5,665 5,965 11,784 income

Interest expense (21,994) (14,145) (37,244) (27,766)

Equity in earnings ofunconsolidated real 29,066 17,655 48,522 41,623 estate entities

Gain on sale of real 3,991 - 13,404 1,117 estate

Foreign currency (12,707) (19,295) 32,678 (10,350) exchange (loss) gain

Net income on our $ 411,730 $ 315,812 $ 845,992 $ 682,948 income statement

(a)

Net operating income or "NOI" is a non-GAAP financial measure that excludes the impact of depreciation and amortization expense, which is based upon historical costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. We utilize NOI in determining current property values, evaluating property performance, and in evaluating operating trends. We believe that investors and analysts utilize NOI in a similar manner. NOI is not a substitute for net income, operating cash flow, or other related GAAP financial measures, in evaluating our operating results. This table reconciles from NOI for our self-storage facilities to the net income presented on our income statement.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210803006065/en/

CONTACT: Ryan Burke (818) 244-8080, Ext. 1141