Public Storage — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022; this is an annual report, not a standalone fourth-quarter filing. Public Storage is a REIT focused on self-storage ownership and operations, with ancillary tenant reinsurance, merchandise sales, and third-party management. At year-end it consolidated 2,869 facilities across 40 U.S. states, totaling 204.2 million net rentable square feet.
Financial performance and position
| Metric | FY2022 | Comparison |
|---|---|---|
| Total revenue | $4.182 billion | $3.416 billion in 2021 |
| Net income | $4.366 billion | $1.960 billion in 2021 |
| Net income allocable to common shareholders | $4.142 billion; $23.50 diluted EPS | $1.732 billion; $9.87 diluted EPS in 2021 |
| Funds from Operations (FFO) | $16.46 per diluted share | Up 23.2% from $13.36 |
| Core FFO | $15.92 per diluted share | Up 23.1% from $12.93 |
| Operating cash flow | $3.117 billion | $2.544 billion in 2021 |
| Cash and equivalents | $775 million | $735 million at year-end 2021 |
| Notes payable | $6.871 billion book value; 2.0% weighted-average effective rate | $7.475 billion at year-end 2021 |
Self-storage revenue increased 23.2% to $3.946 billion. Total self-storage net operating income (NOI) rose 26.1% to $2.966 billion. Same-store revenue grew 14.8% and same-store NOI rose 17.9%; same-store operating margin before depreciation and amortization was 76.7%, versus 74.7% in 2021. Cash-flow investing activities included $460 million of maintenance capital expenditures, $314 million for development and expansion, and $758 million for acquisitions. The filing does not provide a single consolidated operating margin measure.
Liquidity included a $500 million revolving credit facility with no borrowings outstanding at year-end; letters of credit reduced available capacity by $18.6 million. Principal debt maturities were concentrated in 2024 ($807 million) and 2026 ($1.150 billion). The company reported compliance with debt covenants and an approximately 25x adjusted EBITDA-to-interest ratio.
Material changes versus 2021
- Common-shareholder net income increased substantially, driven principally by a $2.129 billion gain on the sale of the company’s PS Business Parks investment and higher self-storage NOI. The sale generated $2.7 billion in proceeds; Public Storage no longer expects PSB equity earnings.
- Same-store revenue gains reflected a 16.4% increase in realized rent per occupied square foot, partly offset by lower average occupancy: 94.9% versus 96.3%. Year-end same-store occupancy was 92.4%, compared with 94.8%.
- Same-store operating costs increased 5.7%, including higher property taxes, payroll, marketing, and repairs. Interest expense increased to $136 million from $91 million, primarily reflecting debt issued to fund 2021 acquisitions.
- The company paid a $13.15-per-share special dividend funded in connection with the PSB sale. Total common distributions were $21.15 per share in 2022, versus $8.00 in 2021.
- Acquisitions and development expanded the portfolio: 74 facilities were acquired in 2022 for $730 million; acquisitions since the start of 2020 totaled 368 facilities for $6.6 billion.
Outlook, management commentary, and risks
- Management expects significantly slower revenue growth in 2023 than in 2021–2022, citing weaker expected demand, fewer moves, and occupancy and move-outs returning toward pre-2020 patterns. It noted the possibility of year-over-year revenue declines in the second half of 2023 and expects to use more marketing, lower new-tenant rates, and greater promotional discounts.
- Management projected approximately $500 million of retained operating cash flow in 2023, $450 million of capital expenditures, and about $160 million of Property of Tomorrow spending. Property tax expense growth of approximately 5.3% was expected, with payroll expense also likely to rise.
- The development and expansion pipeline was estimated at $979.6 million, with $606.6 million remaining to spend, primarily over 18–24 months. Management cited construction costs, permitting, labor, demand, and required investment returns as constraints.
- On February 4, 2023, the Board declared a 50% increase in the regular quarterly common dividend, from $2 to $3 per share, or $12 annualized. On February 5, the company disclosed a proposed all-share acquisition of Life Storage; Life Storage rejected the offer on February 16. No transaction was assured.
- Key risks include softer demand and new supply, inflation and higher operating costs, interest rates and capital access, property-tax exposure (particularly California), natural disasters and climate impacts, cybersecurity, regulation, and execution risks in acquisitions and development. The filing said the likelihood of material loss from existing legal proceedings was remote; it also noted that catastrophe losses could exceed insurance limits.
- Public Storage reported no material information-security breach in the prior three years. The financial statements received an unqualified audit opinion, and management and the auditor concluded internal control over financial reporting was effective as of year-end.
Important facts for investors to verify
- Track same-store occupancy, move-in and move-out trends, achieved rents, and promotional discounting against management’s 2023 demand outlook.
- Separate recurring operating performance from the one-time PSB gain and special dividend; review FFO and Core FFO reconciliations alongside GAAP net income.
- Assess debt refinancing and interest-rate exposure, including the 2024 and 2026 maturities and the floating-rate $700 million note due 2024.
- Monitor delivery costs, lease-up, and expected returns on the development pipeline, plus the effect of inflation, property taxes, and the Property of Tomorrow program.
- Confirm any developments in the Life Storage proposal, including terms, financing, closing conditions, and potential share issuance; the filing provides no assurance of completion.