Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 23, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Registrant Name | PS BUSINESS PARKS INC/CA | |
Entity Central Index Key | 866,368 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Trading Symbol | psb | |
Entity Common Stock, Shares Outstanding | 27,251,037 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
ASSETS | ||
Cash and cash equivalents | $ 132,658 | $ 128,629 |
Real estate facilities, at cost: | ||
Land | 789,227 | 789,227 |
Buildings and improvements | 2,254,663 | 2,224,522 |
Gross real estate investment property | 3,043,890 | 3,013,749 |
Accumulated depreciation | (1,219,314) | (1,158,054) |
Net real estate investment property | 1,824,576 | 1,855,695 |
Property held for disposition, net | 909 | |
Land and building held for development | 29,252 | 27,028 |
Total real estate investments | 1,853,828 | 1,883,632 |
Investment in and advances to unconsolidated joint venture | 96,593 | 67,190 |
Rent receivable, net | 2,203 | 1,945 |
Deferred rent receivable, net | 31,670 | 29,770 |
Other assets | 8,779 | 8,205 |
Total assets | 2,125,731 | 2,119,371 |
LIABILITIES AND EQUITY | ||
Accrued and other liabilities | 82,618 | 78,657 |
Preferred stock called for redemption | 220,000 | 230,000 |
Total liabilities | 302,618 | 308,657 |
Commitments and contingencies | ||
PS Business Parks, Inc.'s shareholders' equity: | ||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, 35,590 and 35,190 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 889,750 | 879,750 |
Common stock, $0.01 par value, 100,000,000 shares authorized, 27,251,037 and 27,138,138 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 272 | 271 |
Paid-in capital | 735,714 | 733,671 |
Accumulated earnings (deficit) | 60 | (433) |
Total PS Business Parks, Inc.'s shareholders' equity | 1,625,796 | 1,613,259 |
Noncontrolling interests | 197,317 | 197,455 |
Total equity | 1,823,113 | 1,810,714 |
Total liabilities and equity | $ 2,125,731 | $ 2,119,371 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Consolidated Balance Sheets [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 35,590 | 35,190 |
Preferred stock, shares outstanding | 35,590 | 35,190 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 27,251,037 | 27,138,138 |
Common stock, shares outstanding | 27,251,037 | 27,138,138 |
Consolidated Statements Of Inco
Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Consolidated Statements Of Income [Abstract] | ||||
Rental income | $ 100,481 | $ 97,340 | $ 300,342 | $ 289,272 |
Expenses: | ||||
Cost of operations | 31,679 | 30,796 | 92,962 | 92,440 |
Depreciation and amortization | 23,759 | 24,631 | 70,465 | 74,886 |
General and administrative | 1,745 | 2,970 | 7,019 | 11,982 |
Total operating expense | 57,183 | 58,397 | 170,446 | 179,308 |
Operating Income | 43,298 | 38,943 | 129,896 | 109,964 |
Interest and other income | 212 | 206 | 599 | 940 |
Interest and other expense | (503) | (155) | (972) | (5,507) |
Equity in loss of unconsolidated joint venture | (376) | (758) | ||
Gain on sale of real estate facility | 1,209 | |||
Gain on sale of development rights | 3,865 | |||
Net income | 42,631 | 38,994 | 133,839 | 105,397 |
Allocation to noncontrollinig interests | (4,866) | (5,315) | (18,610) | (13,495) |
Net income allocated to PS Business Parks, Inc | 37,765 | 33,679 | 115,229 | 91,902 |
Distributions | (12,590) | (13,833) | (38,472) | (41,498) |
Redemptions (Note 9) | (6,900) | (6,900) | ||
Allocation to restricted stock unit holders | (137) | (128) | (582) | (387) |
Net income allocable to common shareholders | $ 18,138 | $ 19,718 | $ 69,275 | $ 50,017 |
Net income per common share: | ||||
Basic | $ 0.67 | $ 0.73 | $ 2.55 | $ 1.85 |
Diluted | $ 0.66 | $ 0.72 | $ 2.53 | $ 1.84 |
Weighted average common shares outstanding: | ||||
Basic | 27,226 | 27,103 | 27,192 | 27,076 |
Diluted | 27,427 | 27,201 | 27,399 | 27,166 |
Dividends declared per common share | $ 0.85 | $ 0.75 | $ 2.55 | $ 2.25 |
Consolidated Statement Of Equit
Consolidated Statement Of Equity - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Paid-In Capital [Member] | Accumulated Earnings (Deficit) [Member] | Total PS Business Parks, Inc.'s Shareholders' Equity [Member] | Noncontrolling Interests [Member] | Total |
Balances at Dec. 31, 2016 | $ 879,750 | $ 271 | $ 733,671 | $ (433) | $ 1,613,259 | $ 197,455 | $ 1,810,714 |
Balances, shares at Dec. 31, 2016 | 35,190 | 27,138,138 | |||||
Issuance of preferred stock, net of issuance costs | $ 230,000 | (7,775) | 222,225 | 222,225 | |||
Issuance of preferred stock, net of issuance costs, shares | 9,200 | ||||||
Redemption of preferred stock, net of issuance costs | $ (220,000) | 6,900 | (6,900) | (220,000) | (220,000) | ||
Redemption of preferred stock, net of issuance costs, shares | (8,800) | ||||||
Issuance of common stock in connection with stock-based compensation | $ 1 | 3,991 | 3,992 | 3,992 | |||
Issuance of common stock in connection with stock-based compensation, shares | 112,899 | ||||||
Stock compensation, net | 2,673 | 2,673 | 2,673 | ||||
Cash paid for taxes in lieu of shares upon vesting of restricted stock units | (3,865) | (3,865) | (3,865) | ||||
Net income | 133,839 | ||||||
Total net income allocable to PS Business Parks, Inc | 115,229 | 115,229 | 115,229 | ||||
Net income Allocation to noncontrolling interests | 18,610 | 18,610 | |||||
Distributions: | |||||||
Preferred stock | (38,472) | (38,472) | (38,472) | ||||
Common stock | (69,364) | (69,364) | (69,364) | ||||
Noncontrolling interests | (18,629) | (18,629) | |||||
Adjustment to noncontrolling interests in the OP | 119 | 119 | (119) | ||||
Balances at Sep. 30, 2017 | $ 889,750 | $ 272 | $ 735,714 | $ 60 | $ 1,625,796 | $ 197,317 | $ 1,823,113 |
Balances, shares at Sep. 30, 2017 | 35,590 | 27,251,037 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 133,839 | $ 105,397 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 70,465 | 74,886 |
Tenant improvement reimbursements, net of lease incentives | (1,654) | (1,253) |
Equity in loss of unconsolidated joint venture | 758 | |
Gain on sale of real estate facility | (1,209) | |
Gain on sale of development rights | (3,865) | |
Stock compensation | 3,255 | 8,933 |
Amortization of financing costs | 338 | 391 |
Other, net | 4,125 | 1,259 |
Total adjustments | 72,213 | 84,216 |
Net cash provided by operating activities | 206,052 | 189,613 |
Cash flows from investing activities: | ||
Capital expenditures to real estate facilities | (38,709) | (24,230) |
Capital expenditures to land and building held for development | (2,224) | |
Investment in and advances to unconsolidated joint venture | (30,161) | (28,800) |
Acquisition of real estate facilities | (12,628) | |
Proceeds from sale of real estate facilities | 2,144 | |
Proceeds from sale of development rights | 2,400 | |
Net cash used in investing activities | (66,550) | (65,658) |
Cash flows from financing activities: | ||
Borrowings on credit facility | 170,000 | 116,000 |
Repayment of borrowings on credit facility | (170,000) | (56,000) |
Repayment of mortgage note payable | (250,000) | |
Payment of financing costs | (778) | |
Proceeds from the exercise of stock options | 3,992 | 2,956 |
Net proceeds from the issuance of preferred stock | 222,225 | |
Redemption of preferred stock | (230,000) | |
Cash paid for taxes in lieu of shares upon vesting of restricted stock units | (3,865) | (1,940) |
Cash paid to restricted stock unit holders | (582) | |
Distributions paid to preferred shareholders | (38,472) | (41,498) |
Distributions paid to common shareholders | (69,364) | (60,932) |
Distributions paid to noncontrolling interests | (18,629) | (16,437) |
Net cash used in financing activities | (135,473) | (307,851) |
Net increase (decrease) in cash and cash equivalents | 4,029 | (183,896) |
Cash and cash equivalents at the beginning of the period | 128,629 | 188,912 |
Cash and cash equivalents at the end of the period | 132,658 | 5,016 |
Adjustment to noncontrolling interests in OP | ||
Noncontrolling interests | (119) | 1,613 |
Paid-in capital | 119 | $ (1,613) |
Preferred Redemption Allocation | ||
Paid-in capital | 6,900 | |
Accumulated earnings (deficit) | (6,900) | |
Preferred stock called for redemption: | ||
Preferred stock called for redemption and reclassified to liabilities | 220,000 | |
Preferred stock called for redemption and reclassified from equity | $ (220,000) |
Organization And Description Of
Organization And Description Of Business | 9 Months Ended |
Sep. 30, 2017 | |
Organization And Description Of Business [Abstract] | |
Organization And Description Of Business | 1. Organization and description of business PS Business Parks, Inc. (“PSB”) was incorporated in the state of California in 1990. As of September 30, 2017 , PSB owned 78.0 % of the common partnership units of PS Business Parks, L.P. (the “OP”). The remaining common partnership units are owned by Public Storage (“PS”). PS’s interest in the OP is referred to as the “PS OP Interest.” PSB, as the sole general partner of the OP, has full, exclusive and complete responsibility and discretion in managing and controlling the OP. PSB and its subsidiaries, including the OP, are collectively referred to as the “Company, ” “we,” “us,” or “our.” PS would own 41.9 % ( or 14.5 million shares) of the outstanding shares of the Company’s common stock if it redeemed its common partnership units for common shares . The Company is a fully-integrated, self-advised and self-managed real estate investment trust (“REIT”) that owns, operates, acquires and develops commercial properties, primarily multi-tenant flex, office and industrial space. As o f September 30, 2017 , the Company owned and operated 28.0 million rentable square feet of commercial space in six states and a 95.0% interest in 395 apartments . The Company also manages 684,000 rentable square feet on behalf of PS. References to the number of properties or square footage are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) . |
Summary Of Significant Accounti
Summary Of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary Of Significant Accounting Policies [Abstract] | |
Summary Of Significant Accounting Policies | 2. Summary of significant accounting policies Basis of presentation The accompanying unaudited consolidated financial statements include the accounts of PSB and its subsidiaries, including the OP. All significant inter-company balances and transactions have been eliminated in the consolidated financial statements. The financial statements are presented on an accrual basis in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Consolidation and equity method of a ccounting We consider entities to be Variable Interest Entities (“VIEs”) when they have insufficient equity to finance their activities without additional subordinated financial support provided by other parties, or the equity holders as a group do not have a controlling financial interest. A limited partnership is also generally considered a VIE if the limited partners do not participate in operating decisions. We consolidate VIEs when we are the primary beneficiary, generally defined as having (i) the power to direct the activities most significantly impacting economic performance and (ii) either the obligation to absorb losses or the right to receive benefits from the VIE. We account for investment s in entities that are not VIEs that we have significant influence over, but do not control, using the equity method of accounting. At September 30, 2017 , we have an interest in a joint venture engaged in the development and operation of residential real estate, which we account for using the equity method of accounting. See Note 4 for more information on this entity. PS, the sole limited partner in the OP, has no power to direct the activities of the OP. We are the primary beneficiary of the OP. Accordingly, we consider the OP a VIE and consolidate it. Substantially all of our assets and liabilities are held by the OP. Noncontrolling interests The PS OP Interest represents PS’s noncontrolling interest in the OP through its ownership of 7,305,355 common partnership units. See note 7 for further information. Use of estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Allowance for doubtful accounts The Company monitors the collectability of its receivable balances including the deferred rent receivable on an ongoing basis. Tenant receivables are net of an allowance for estimated uncollectible accounts totaling $ 400,000 at September 30, 2017 and December 31, 2016 . Deferred rent receivable is net of an allowance for uncollectible accounts totaling $ 910,000 and $ 916,000 at September 30, 2017 and December 31, 2016 , respectively. Financial instruments The methods and assumptions used to estimate the fair value of financial instruments are described below. The Company has estimated the fair value of financial instruments using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop estimates of market value. Accordingly, estimated fair values are not necessarily indicative of the amounts that could be realized in current market exchanges. The Company determines the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. This hierarchy requires the use of observable market data when available. The following is the fair value hierarchy: · Level 1 —quoted prices for identical instruments in active markets; · Level 2 —quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and · Level 3 —fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Financial assets that are exposed to credit risk consist primarily of cash and cash equivalents and receivables. The Company considers all highly liquid investments with a remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents, which consist primarily of money market investments, are only invested in entities with an investment grade rating. Receivables are comprised of balances due from a large number of customers. Balances that the Company expects to become uncollectible are reserved for or written off. Due to the short period to maturity of the Company’s cash and cash equivalents, accounts receivable, other assets and accrued and other liabilities, the carrying values as presented on the consolidated balance sheets are reasonable estimates of fair value. Carrying values of the Company’s unsecured Credit Facility (as defined on page 15) approximate fair value. The characteristics of these financial instruments, market data and other comparative metrics utilized in determining these fair values are “Level 2” inputs. Real estate facilities Real estate facilities are recorded at cost. Property taxes, insurance, interest and costs essential to the development of property for its intended use are capitalized during the period of development. Costs related to the renovation or improvement of the properties are capitalized. Expenditures for repairs and maintenance are expensed as incurred. Expenditures that are expected to benefit a period greater than two years and exceed $2,000 are capitalized and depreciated over their estimated useful life. Buildings and improvements are depreciated using the straight-line method over their estimated useful lives, which generally range from five to 30 years. Transaction costs, which include tenant improvements and lease commissions, of $1,000 or more for leases with terms greater than one year are capitalized and depreciated over their estimated useful lives. Transaction costs less than $1,000 or for leases of one year or less are expensed as incurred. Property held for disposition or development Real estate is classified as held for disposition when the asset is being marketed for sale and we expect that a sale is likely to occur in the next 12 months. Real estate is classified as held for development when it is likely that it will be developed to an alternate use and no longer used in its present form. Property held fo r development or disposition is not depreciated. Intangible assets/liabilities When we acquire facilities, an intangible asset is r ecorded for leases where the in- place rent is higher than market rents, and an intangible liability is recorded where the market rents are highe r than the in- place rents. The amounts recorded are based upon the present value (using a discount rate which reflects the risks associated with the leases acquired) of such differences over the lease term and such amounts are amortized to rent al income over the respective remaining lease term. We have no material intangible assets or liabilities for any periods presented. Evaluation of asset impairment We evaluate our real estate and finite-lived intangible assets for impairment each quarter. If there are indicators of impairment and we determine that the asset is not recoverable from future undiscounted cash flows to be received through the asset’s remaining life (or, if earlier, the expected disposal date), we record an impairment charge to the extent the carrying amount exceeds the asset’s estimated fair value or net proceeds from expected disposal. We evaluate our investment in our unconsolidated joint venture on a quarterly basis. We record an impairment charge to the extent the carrying amount exceeds estimated fair value, when we believe any such shortfall is other than temporary. No impairments were recorded in any of our evaluations for any period presented herein. Stock compensation All share-based payments to employees, including grants of employee stock options, are recognized as stock compensation in the Company’s consolidated statements of income based on their fair values at the beginning of the service period . See Note 11. Ac crued and other liabilities and other a ssets Accrued and other liabilities consist primarily of rents prepaid by our tenants, trade payables, propert y tax accruals, accrued payroll and contingent loss accruals when probable and estimable. We disclose the nature of significant unaccrued losses that are reasonably possible of occurring and, if estimable, a range of exposure. Other assets are comprised primarily of prepaid expenses. We believe the fair value of our accrued and other liabilities and other assets approximate book value, due to the short period until settlement . Revenue recognition Revenue is recognized with respect to contractual arrangements when persuasive evidence of an arrangement exists; the delivery has occurred or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured. All leases are classified as operating leases. Rental income is recognized on a straight-line basis over the lease term, with the excess of cumulative rent al income recognized over the cumulative rent billed for the lease term reflected as “deferred rent receivable” on our consolidated balance sheet s . Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as rental income in the period the applicable costs are incurred. Property management fees are recognized in the period earned. Costs incurred in acquiring tenants (primarily tenant improvements and lease commissions) are capitalized and amortized over the lease period. Gains from sales of real estate facilities The Company recognizes gains from sales of real estate facilities at the time of sale using the full accrual method, provided that various criteria related to the terms of the transactions and any subsequent involvement by the Company with the properties sold are met. If the criteria are not met, the Company defers the gains and recognizes them when the criteria are met or uses the installment or cost recovery methods as appropriate under the circumstances. General and administrative expense s General and administrative expense s include executive and other compensation, corporate office expenses, professional fees, acquisition transaction costs, state income taxes and other such costs that are not directly related to the operation of our real estate facilities. Income taxes We have elected to be treated as a REIT, as defined in the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, we do not incur federal income tax if we distribute 100% of our REIT taxable income each year, and if we meet certain organiz ational and operational rules. We believe we have met these REIT requirements for all periods presented herein. Accordingly, we have recorded no federal income tax expense related to our REIT taxable income. We recognize tax benefits of uncertain income tax positions that are subject to audit only if we believe it is more likely than not that the position would ultimately be sustained assuming the relevant taxing authorities had full knowledge of the relevant facts and c ircumstances of our positions. As of September 30, 2017 , we did not recognize any tax benefits for uncertain positions. Accounting for preferred equity issuance costs We record issuance costs as a reduction to paid-in capital on our consolidated balance sheets at the time the preferred securities are issued and reflect the carrying value of the preferred equity at its redemption value. An additional allocation of income is made from the common shareholders to the preferred shareholders in the amount of the original issuance costs, and we reclassify the redemption value from equity to liabilities when we call preferred shares for redemption. Net income per common share Notwithstanding the presentation of income allocations on our consolidated statements of income , net income is allocated to ( a) preferred shareholders, for distributions paid, ( b) preferred shareholder s, to the extent redemption value exceeds the related carrying value (a “Preferred Redemption Allocation”) and ( c) restricted share unit holders, for non-forfeitable dividends paid adjusted for participation rights in undistributed earnings. The remaining net income is allocated to the common partnership units and our common shareholders, respectively, based upon the pro-rata aggregate number of units and shares outstanding. Basic and diluted net income per common share are each calculated based upon net income allocable to common shareholders, divided by (i) in the case of basic net income per common share, weighted average common shares and (ii) in the case of diluted income per share, weighted average common shares adjusted for the impact, if dilutive, of stock compensation awards outstanding (Note 11 ). The following tables set forth the calculation of the components of our basic and diluted income per share that are not reflected on the face of our consolidated statements of income , including the allocation of income to common shareholders and common partnership units, the percentage of weighted average shares and common partnership units, as well as basic and diluted weighted average shares ( in thousands ): For The Three Months For The Nine Months Ended September 30, Ended September 30, 2017 2016 2017 2016 Calculation of net income allocable to common shareholders Net income $ 42,631 $ 38,994 $ 133,839 $ 105,397 Less net income allocated to Preferred shareholders based upon distributions (12,590) (13,833) (38,472) (41,498) Preferred shareholders based upon redemptions (6,900) — (6,900) — Restricted stock unit holders (137) (128) (582) (387) Net income allocable to common shareholders and noncontrolling interests 23,004 25,033 87,885 63,512 Net income allocation to noncontrolling interests (4,866) (5,315) (18,610) (13,495) Net income allocable to common shareholders $ 18,138 $ 19,718 $ 69,275 $ 50,017 Calculation of common partnership units as a percentage of common share equivalents Weighted average common shares outstanding 27,226 27,103 27,192 27,076 Weighted average common partnership units outstanding 7,305 7,305 7,305 7,305 Total common share equivalents 34,531 34,408 34,497 34,381 Common partnership units as a percent of common share equivalents 21.2% 21.2% 21.2% 21.2% Weighted average common shares outstanding Basic weighted average common shares outstanding 27,226 27,103 27,192 27,076 Net effect of dilutive stock compensation—based on treasury stock method using average market price 201 98 207 90 Diluted weighted average common shares outstanding 27,427 27,201 27,399 27,166 Segment reporting The Company views its operations as one segment. Reclassifications Certain reclassifications have been made to the consolidated financial statements for 2016 and in order to conform to the 2017 presentation, including reclassifying management fee income totaling $130,000 and $389,000 for the three and nine months ended September 30, 2016 into “interest and other income” on our consolidated statements of income. Recently issued accounting standards In May 2014 and February 2016, the Financial Accounting Standards Board issued two Acco unting Standards Updates (“ASU” s), ASU 2014-09, Revenue from Contracts with Customers (the “Revenue Standard”), and ASU 2016-02, Leases (the “Lease Standard”). These standards apply to substantially all of our revenue generating activities, as well as provide a model to account for the disposition of real estate facilities to non-customers, which is governed under ASU 2017-05 . The Lease Standard will direct how we account for payments from the elements of our leases that are generally fixed and determinable at the inception of the lease (“Fixed Lease Payments”) while the Revenue Standard will direct how we account for the non-lease components of our lease contracts, primarily expense reimbursements (“ Non- Lease Payments”) and the accounting for the disposition of real estate facilities. The Revenue Standard is effective on January 1, 2018, and generally requires that revenue from Non- Lease Payments be based upon the consideration expected from our tenants, and be recognized under various methods depending upon the nature of the underlying expense and the contractual reimbursement arrangement. The standard permits either the retrospective (restatement) method or cumul ative effects transition method and allowed for early adoption on January 1, 2017, which we did not elect. We expect to use the cumulative effects transition method, which will result in an adjustment to our retained earnings effective January 1, 2018 for the cumulative impact of the standard as of December 31, 2017. We do not expect this standard to have a material impact on our accounting for our facility management fees for property management services provided to PS or the disposi tion of real estate facilities as our accounting policy is consistent with the provisions of the standard. Rental income from leasing arrangements is a substantial portion of our revenues and is specifically excluded from the Revenue Standard and will be governed by the Lease Standard. In conjunction with the adoption of the Lease Standard, w e are currently evaluating the impact of the standard as it relates to Non- Lease Payments. The Lease Standard is effective on January 1, 2019. The standard provides definitional guidance of what constitutes a lease , requiring lessees to recognize most leases on the balance sheet and making certain changes to lessor accounting. For leases in which we are the lessor, we are requir ed to account for Fixed Lease Payments on a straight-line basis, with the expected fixed payments recognized ratably over the term of the lease. The standard also requires capitalization of only the incremental costs incurred in executing each particular lease, such as legal fees to draft a lease or commissions based upon a particular lease. Costs that would have been incurred regardless of lease execution, such as allocated costs of internal personnel, are not capitalized. F or most leases with a term of greater than 12 months, in which we are the lessee, the present value of future lease payments will be recognized on our balance sheet as a right-of-use asset and related labiality. As of September 30, 2017, the remaining contractual payments under our ground lease agreements aggregated $ 282,000 . The standard requires a modified retrospective transition approach for all leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements on the d ate of initial application and allowed early adoption, which we did not elect. We do not expect that the Lease Standard will impact our accounting for Fixed Lease Payments, because our accounting policy is currently consistent with the provisions of the standard. We are currently evaluating the impact of the standard as it relates to the capitalization of costs associated with executed leases. In August, 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments , which provides guidance on the classification of certain specific cash receipts and cash payments in the statement of cash flows, including, but not limited to, cash distributions received from equity method investees, including unconsolidated joint ventures. The new standard is effective for periods beginning after December 15, 2017, with early adoption permitted and shall be applied retrospectively where practicable. The Company is currently in the process of evaluating the impact of adoption of the new accounting guidance on its consolidated financial statements. In November, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) – Restricted Cash , which requires the statements of cash flows to explain the change during the period in the total cash, cash equivalents, restricted cash and restricted cash equivalents. T he new guidance also requires entities to reconcile such total to amounts on the balance sheet s and disclose the nature of the restrictions. The guidance is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein, with early adoption permitted. The guidance must be adopted using a modified retrospective approach. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In January, 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business . Under the new guidance, a set of transferred assets and activities is not a business when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, which we believe will apply to substantially all of our future acquisitions of real estate facilities. Previously, such acquisitions were considered the acquisition of a business, and transaction costs of such acquisitions were expensed as incurred. Under the new guidance, transaction costs will instead be capitalized as part of the purchase price. This standard is effective for fiscal years beginning after December 15, 2017. We early adopted the standard on January 1, 2017; however, the adoption had no effect because we have not acquired any facilities since January 1, 2017 . |
Real Estate Facilities
Real Estate Facilities | 9 Months Ended |
Sep. 30, 2017 | |
Real Estate Facilities [Abstract] | |
Real Estate Facilities | 3. Real estate facilities The activity in real estate facilities for the nine months ended September 30, 2017 is as f ollows (in thousands) : Buildings and Accumulated Land Improvements Depreciation Total Balances at December 31, 2016 $ 789,227 $ 2,224,522 $ (1,158,054) $ 1,855,695 Capital expenditures — 39,321 — 39,321 Disposals — (9,180) 9,180 — Depreciation and amortization — — (70,465) (70,465) Transfer to properties held for disposition — — 25 25 Balances at September 30, 2017 $ 789,227 $ 2,254,663 $ (1,219,314) $ 1,824,576 The purchase price of acquired properties is allocated to land, buildings and improvements (including tenant improvements, unamortized lease commissions, acquired in-place lease values and tenant relationships, if any), intangible assets and intangible liabilities (see Note 2), based upon the relative fair value of each component, which are evaluated independently. We must make significant assumptions in determining the fair value of assets acquired and liabilities assumed, which can affect the recognition and timing of revenue and depreciation and amortization expense. The fair value of land is estimated based upon, among other considerations, comparable sales of land within the same region. The fair value of buildings and improvements, tenant improvements and unamortized lease commissions are based on current market replacement costs and other market information. The amount recorded to acquired in-place leases is determined based on management’s assessment of current market conditions and the estimated lease-up periods for the respective spaces. On May 1, 2017 , the Company disposed of Empire Commerce , a two -building single-story office park comprising 44,000 square feet , located in Dallas, Texas , for net proceeds of $2.1 million, which resulted in a net gain of $1.2 million. On March 31, 2017, the Company sold development rights it held to build medical office buildings on land adjacent to its Westech Business Park in Silver Spring, Maryland for $6.5 million. The Company had acquired the development rights as part of its 2006 acquisition of the park. The Company has received net proceeds of $ 3.9 million, of which $1.5 million was received in prior years and $2. 4 million was received in March, 2017. The Company recorded a gain of $3.9 million related to the net proceeds received through September 30, 2017 , which are non-refundable. The Company will report an additional gain of $2.5 million when the final proceeds are received in the fourth quarter of 2017 and the remaining contingencies have lapsed. As of September 30, 2017, we have commitments, pursuant to executed leases, to spend $12.7 million in transaction costs, which include tenant improvements and lease commissions. |
Investment In And Advances To U
Investment In And Advances To Unconsolidated Joint Venture | 9 Months Ended |
Sep. 30, 2017 | |
Investment In And Advances To Unconsolidated Joint Venture [Abstract] | |
Investment In And Advances To Unconsolidated Joint Venture | 4. Investment in and advances to unconsolidated joint venture In 2013, the Company entered into a joint venture known as Amher st JV LLC (the “Joint Venture”) with an unrelated real estate development company (the “JV Partner”) for the purpose of developing a 395 -unit multi-family building on a five -acre site (the “Project”) with in the Company’s 628,000 square foot office park located in Tysons, Virginia (known as “The Mile”) . We hold a 95.0% interest in the Joint Venture with the remaining 5.0% held by the JV Partner. The JV Partner is responsible for the development and constr uction of the Project, as well as the leasing and operational management of the Project. We do not control the Joint Venture, when considering, among other factors, that the consent of our JV Partner is required for all significant decisions. Accordingly, we account for our investment using the equity method . O n October 5, 2015 (th e “C ontribution Date”), the Company contributed the site and improvements to the Joint Venture. We provide the Joint Venture with a construction loan in the amount of $75.0 million bearing interest at the London Interbank Offered Rate (“LIBOR”) plus 2.25% . The loan will mature on April 5, 2019 with two one -year extension options. The aggregate amount of development costs are estimated to be $105.6 million (excluding unrealized land appreciation). The Company is committed to funding $75.0 million through the construction loan in addition to its equity contribution of $28.5 million , which includes a land basis of $15.3 million. The Project delivered its first completed units in May, 2017, with final completion date of the overall Project expected during the fourth quarter of 2017. We have reflected the aggregate cost of the contributed site and improvements , our equity contributions and loan advances , as well as capitalized third party interest we incurred as investment in and advances to unconsolidated joint venture. The Company’s investment in and advances to unconsolidated joint venture was $96.6 million and $67.2 million as of September 30, 2017 and December 31, 2016 , respectively. For the nine months ended September 30, 2017 , we made loan advances of $29.7 million and capitalized $506,000 of interest. For the nine months ended September 30, 2016 , the Company made loan advances to the Joint Venture of $22.3 million , capital contributions of $5.7 million and capitalized $854,000 of interest. As of September 30, 2017, all 395 units have been completed . During the three and nine months ended September 30, 2017, the Company recorded an equity loss in the unconsolidated joint venture of $376,000 and $758 ,000, respectively. |
Leasing Activity
Leasing Activity | 9 Months Ended |
Sep. 30, 2017 | |
Leasing Activity [Abstract] | |
Leasing Activity | 5 . Leasing activity The Company leases space in its real estate facilities to tenants primarily under non-cancelable leases generally ranging from one to 10 years. Future minimum rental revenues, excluding recovery of operating expenses under these leases, are as follows as of September 30, 2017 (in thousands ) : Remainder of 2017 $ 75,498 2018 267,885 2019 196,801 2020 133,240 2021 92,451 Thereafter 168,364 Total $ 934,239 In addition to minimum rental payments, certain tenants reimburse the Company for their pro rata share of specified operating expenses. Such reimbursements amounted to $ 22.6 million and $20. 3 million for the three months ended September 30, 2017 and 2016 , respectively , and $68.4 milli on and $61.6 million for the nine months ended September 30, 2017 and 2016, respectively . These amounts are included as rental income in the accompanying consolidated statements of income. Leases accounting for 3.0% of total leased square footage are subject to termination options, of which 1.2% of total leased square footage have termination options exerc isable through December 31, 2017 . In general, these leases provide for termination payments should the termination options be exercised. The future minimum rental revenues in the above table assume such options are not exercised. |
Bank Loans
Bank Loans | 9 Months Ended |
Sep. 30, 2017 | |
Bank Loans [Abstract] | |
Bank Loans | 6 . Bank loans We have a line of credit (the “Credit Facility”) with Wells Fargo Bank, Nation al Association (“Wells Fargo”). The Credit Facility has a borrowing limit of $250.0 million and expires January 10, 20 22 . The rate of interest charged on borrowings is based on the LIBOR plus 0.80% to LIBOR plus 1.55% depending on the Company’s credit ratings. Currently, the Company’s rate under the Credit Facility is LIBOR plus 0.825% . In addition, the Company is required to pay an annual facility fee ranging from 0.10% to 0.30% of the borrowing limit depending on the Company’s credit ratings (currently 0.125 %). We paid $613,000 of loan origination costs in January, 2017. The Company h ad no balance outstanding on the Credit Facility at September 30, 2017 and December 31, 2016 . Subsequent to September 30, 2017 , the Company borrowed net $80 .0 million on the Credit Facility. The Company had $979,000 a nd $ 539,000 of unamortized loan origination cost s as of September 30, 2017 and December 31, 2016 , respectively , which is included in other assets in the accompanying consolidated balance sheets . The Credit Facility requires us to meet certain covenants, all of which we were in compliance with as of September 30, 2017 . Interest on outstanding borrowings is payable monthly . |
Noncontrolling Interests
Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2017 | |
Noncontrolling Interests [Abstract] | |
Noncontrolling Interests | 7 . Noncontrolling interests Noncontrolling interests represent 7,305,355 common partnership units of the OP owned by PS. Each common partnership unit receives a cash distribution equal to the dividend paid on our common shares and is redeemable at PS’s option. If PS exercises its right of redemption, at PSB’s option (a) PS will receive one common share from us for each common partnership unit redeemed, or (b) PS will receive cash from us for each common partnership unit generally equal to the market value of a common share (as defined in the Operating Partnership Agreement). We can prevent redemptions that we believe would violate either our articles of incorporation or securities laws, cause PSB to no longer qualify as a REIT, or could result in the OP no longer being treated as a partnership for federal tax purposes. In allocating net income and presenting equity, we treat the common partnership units as if converted to common shares. Accordingly, they receive the same net income allocation per unit as a common share and are adjusted each period to have the same equity per unit as a common share. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 8 . Related party transactions We manage industrial, office and retail facilities in the U.S. for PS under both the “Public Storage” or “PS Business Parks” names (the “PS Management Agreement”). The PS Management Agreement can be cancelled by either party with seven years notice. Under PS’s supervision, we coordinate and assist in rental and marketing activities, property maintenance and other operational activities, including the selection of vendors, suppliers, employees and independent contractors. We receive a management fee based upon a percentage of revenues. Management fee revenues were $ 126,000 and $130,000 for the three months ended September 30, 2017 and 2016, respectively, and $378,000 and $389,000 for the nine months ended September 30, 2017 and 2016, respectively. We allocate certain operating expenses to PS related to the management of these properties, including payroll and other business expenses , totaling $134,000 and $142,000 for the three months ended September 30, 2017 and 201 6, respectively, and $401,000 and $416,000 for the nine months ended September 30 , 2017 and 2016, respectively. These amounts are included in “interest and other income” on our consolidated statements of income. The PS Business Parks name and logo are owned by PS and licensed to us under a non-exclusive, royalty-free license agreement. The license can be terminated by either party for any reason with six months written notice. PS also provides property management services for the self-storage component of two assets we own, that are located in Florida and operate under the “Public Storage” name. Either the Company or PS can cancel the property management contract upon 60 days’ notice. Under our supervision, PS coordinates and assists in rental and marketing activities, property maintenance and other operational activities, including the selection of vendors, suppliers, employees and independent contractors. Management fee expenses were $ 24,000 and $22,000 for the three months ended September 30, 2017 and 2016, respectively, and $69,000 and $64,000 for the nine months ended September 30, 2017 and 2016, respectively. Additionally, PS allocated certain o perating expenses to us related to the management of these properties, including payroll and other business expenses, totaling $54,000 and $156,000 for the three and nine months ended September 30, 2017 , respectively, and $49,000 and $153,000 for the three and nine months ended September 30, 2016, respectively . These amounts are included under “cost of operations” on our consolidated statements of income. Pursuant to a cost sharing and administrative services agreement, we and PS share certain administrative services and corporate off ice space, which are allocated between the Company and PS in accordance with a methodology intended to fairly allocate those costs. Costs allocated to the Company totaled $ 132,000 and $ 123,000 for the three months ended September 30, 2017 and 2016 , respectively, and $397,000 and $370,000 for the nine months ended September 30, 2017 and 2016, respectively . Costs allocated to PS totaled $8,000 and $23,000 for the three and nine months ended September 30, 2017, respectively. The Company had net amounts due to PS of $30,000 and due from PS of $295,000 at September 30, 2017 and December 31, 2016 , respectively, for these contracts, as well as for certain operating expenses paid by the Company on behalf of PS . |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Shareholders' Equity [Abstract] | |
Shareholders' Equity | 9 . Shareholders’ equity Preferred stock As of September 30, 2017 and December 31, 2016 , the Company had the following series of preferred stock outstanding: September 30, 2017 December 31, 2016 Earliest Potential Dividend Shares Amount Shares Amount Series Issuance Date Redemption Date Rate Outstanding (in thousands) Outstanding (in thousands) Series T May, 2012 May, 2017 6.00% 5,200 $ 130,000 14,000 $ 350,000 Series U September, 2012 September, 2017 5.75% 9,200 230,000 9,200 230,000 Series V March, 2013 March, 2018 5.70% 4,400 110,000 4,400 110,000 Series W October, 2016 October, 2021 5.20% 7,590 189,750 7,590 189,750 Series X September, 2017 September, 2022 5.25% 9,200 230,000 — — Total 35,590 $ 889,750 35,190 $ 879,750 During September, 2017, we called for a partial redemption of 8,800,000 of our outstanding 14,000,000 depositary shares representing interests in our 6. 0 % Cumulative Preferred Stock, Series T, at par. The aggregate redemption amount of $220.0 million is scheduled to be paid on October 30, 2017 to the holders of the depositary shares. We recorded a Preferred Redemption Allocation of $6.9 million for the three and nine months ended September 30, 2017 and reclassified the shares from equity to “preferred stock called for redemption” on our consolidated balance sheets at September 30, 2017. On September 21, 2017, we issued $230.0 million or 9,200,000 depositary shares representing interests in our 5.25% Cumulative Preferred Stock, Series X, at $25.00 per depositary share. The 5.25% Series X Cumulative Redeemable Preferred Units are non-callable for five years and have no mandatory redemption. We received $222 .2 million in net proceeds. On December 7, 2016, we called our 6.45% Cumulative Preferred Stock, Series S, for redemption at par and completed the redemption on January 18, 2017 . We recorded a Preferred Redemption Allocation of $7.3 million in the three months ended December 31, 2016 and reclassified the shares from equity to “preferred stock called for redemption” on our consolidated balance sheets at December 31, 2016. We paid $12.6 million and $1 3.8 million in distributions to our preferred shareholders for the three months ended September 30, 2017 and 2016 , respectively, and $38.5 million and $41.5 million in distributions to our preferred shareholders for the nine months ended September 30, 2017 and 2016 , respectively . The holders of our preferred stock have general preference rights with respect to liquidation, quarterly distributions and any accumulated unpaid distributions. Holders of our preferred stock will not be entitled to vote on most matters, except under certain conditions. In the event of a cumulative arrearage equal to six quarterly dividends, the holders of the preferred stock will have the right to elect two additional members to serve on the Company’s Board of Directors (the “Board”) until all events of default have been cured. At September 30, 2017 , there were no dividends in arrears. Except under certain conditions relating to the Company’s qualification as a REIT, the preferred stock is not redeemable prior to the previously noted redemption dates. On or after the respective redemption dates, the respective series of preferred stock will be redeemable, at the option of the Company, in whole or in part, at $ 25.00 per depositary share, plus any accrued and unpaid dividends. Common stock During the three months ended March 31, 2017, the Board increased our quarterly dividends from $0.75 per common share to $0.85 per common share. We paid $ 23.2 million ($ 0.8 5 per common share) and $20.3 million ( $0. 75 per commo n share) in distributions to our common shareholders for the three months ended September 30, 2017 and 2016 , respectively, and $69.4 million ( $2. 55 per common share) and $60.9 million ( $2. 25 per common share) in distributions to our common shareholders for the nine months ended September 30, 2017 and 2016 , respectively . Equity stock In addition to common and preferred stock, the Company is authorized to issue 100.0 million shares of Equity Stock. The Articles of Incorporation provide that Equity Stock may be issued from time to time in one or more series and give the Board broad authority to fix the dividend and distribution rights, conversion and voting rights, redemption provisions and liquidation rights of each series of Equity Stock. |
Commitments And Contingencies
Commitments And Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies [Abstract] | |
Commitments And Contingencies | 10 . Commitments and contingencies The Company currently is neither subject to any other material litigation nor, to management’s knowledge, is any material litigation currently threatened against the Company other than routine litigation and administrative proceedings arising in the ordinary course of business. |
Stock Compensation
Stock Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Stock Compensation [Abstract] | |
Stock Compensation | 11 . Stock compensation Under various share-based compensation plans, PSB grants non-qualified options to purchase the Company’s common shares at a price not less than fair value on the date of grant, as well as restricted stock units (“RSUs”), to certain directors, officers and key employees. The service period for stock options and RSUs begins when (i) the Company and the recipient reach a mutual understanding of the key terms of the award, (ii) the award has been authorized, (iii) the recipient is affected by changes in the market price of our stock and (iv) it is probable that any performance conditions will be met, and ends when the stock option or RSU vests. We amortize the fair value of awards at the beginning of the service period as compensation expense. For awards that are earned solely upon the passage of time and continued service, the entire cost of the award is amortized on a straight-line basis over the service period. For awards with performance conditions, the individual cost of each vesting is amortized separately over each individual service period (the “accelerated attribution” method). In amortizing share-based compensation expense, we do not estimate future forfeitures in advance. Instead, we reverse previously amortized share-based compensation expense with respect to grants that are forfeited in the period the employee terminates employment. Stock Options Stock options vest over a five -year period, expire after the grant date and the exercise price is equal to the closing trading price of our common shares on the grant date. Employees cannot require the Company to settle their award in cash. We use the Black-Scholes option valuation model to estimate the fair value of our stock options. For the three and nine months ended September 30, 2017, respectively we recorded $ 53,000 and $156,000 in compensation expense related to stock options, as compared to $ 51,000 and $229,000 for the same periods in 2016. During the nine months ended September 30, 2017, 16,000 stock options were granted and 69,676 options were exercised. A total of 175,979 options were outstanding at September 30, 2017 ( 229,655 at December 31, 2016). Restricted Stock Units RSUs gen erally vest ratably over a five -year period from the grant date. The grantee receives dividends for each outstanding RSU equal to the per-share dividends received by our common shareholders. We expense any dividends previously paid upon forfeiture of the related RSU. Upon vesting, the grantee receives common shares equal to the number of vested RSUs, less common shares withheld in exchange for tax deposits made by the Company to satisfy the grantee’s statutory tax liabilities arising from the vesting. The fair value of our RSUs is determined based upon the applicable closing trading price of our common shares on the date of grant . For the three and nine months ended September 30, 2017, respectively, we recorded a net reversal of $521,000 and expense of $2.9 million in comp ensation expense related to RSU s, as compared to expense of $1.7 million and $8.5 million for the same periods in 2016. In conjunction with the departure of our Chief Financial Officer (“CFO”) , the Company recorded a reversal of stock compensation of $1.9 million in RSU expense related to RSUs under our LTEIP (see below) during the third quarter of 2017 . T he 2016 amount includes $ 2.0 million in additional RSU expense related to RSU s under our LTEIP expected to be issued to our former Chief Executive Officer (“CEO”) . During the nine months ended September 30, 2017, 110,750 RSU s were granted, 15,806 RSUs were forfeited and 76,994 RSUs vested. This vesting resulted in the issuance of 43,223 common shares. In addition, tax deposits totaling $3. 9 million ( $1. 9 million for the same period in 2016) were made on behalf of employees in exchange for 33,771 common shares wit hheld upon vesting. A total of 162,643 RSU s were outstanding at September 30, 2017 ( 144,693 at December 31, 2016). Effective March, 2014, the Company entered into a performance-based restricted stock unit program, the Senior Management Long-Term Equity Incentive Program for 2014-2017 (“LTEIP”), with certain employees of the Company. Under the LTEIP, the Company established three levels of targeted restricted stock unit awards for certain employees, which would be earned only if the Company achieved one of three defined targets during 2014 to 2017. Under the LTEIP there is an annual award following the end of each of the four years in the program, with the award subject to and based on the achievement of total return t argets during the previous year , as well as an award based on achieving total return targets during the cumulative four -year period 2014-2017. In the event the minimum defined target is not achieved for an annual award, the restricted stock units allocated to be awarded for such year are added to the restricted stock unit s that may be received if the four-year target is achieved. All restricted stock unit awards under the LTEIP vest in four equal annual installments beginning from the date of award. Up to 94,150 restr icted stock units would be award ed for each of the four years assuming achievement was met and up to 81,800 restr icted stock units would be award ed for the cumulative four -year period assuming achievement was met. Compensation expense is recognized based on the restricted stock unit s expected to be awarded based on the target level that is expected to be achieved. The compensation expense and RSU counts with respect to the LTEIP are included in the aggregate RSU amounts disclosed above. |
Summary Of Significant Accoun18
Summary Of Significant Accounting Policies (Policy) | 9 Months Ended |
Sep. 30, 2017 | |
Summary Of Significant Accounting Policies [Abstract] | |
Basis Of Presentation | Basis of presentation The accompanying unaudited consolidated financial statements include the accounts of PSB and its subsidiaries, including the OP. All significant inter-company balances and transactions have been eliminated in the consolidated financial statements. The financial statements are presented on an accrual basis in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . |
Consolidation And Equity Method Of Accounting | Consolidation and equity method of a ccounting We consider entities to be Variable Interest Entities (“VIEs”) when they have insufficient equity to finance their activities without additional subordinated financial support provided by other parties, or the equity holders as a group do not have a controlling financial interest. A limited partnership is also generally considered a VIE if the limited partners do not participate in operating decisions. We consolidate VIEs when we are the primary beneficiary, generally defined as having (i) the power to direct the activities most significantly impacting economic performance and (ii) either the obligation to absorb losses or the right to receive benefits from the VIE. We account for investment s in entities that are not VIEs that we have significant influence over, but do not control, using the equity method of accounting. At September 30, 2017 , we have an interest in a joint venture engaged in the development and operation of residential real estate, which we account for using the equity method of accounting. See Note 4 for more information on this entity. PS, the sole limited partner in the OP, has no power to direct the activities of the OP. We are the primary beneficiary of the OP. Accordingly, we consider the OP a VIE and consolidate it. Substantially all of our assets and liabilities are held by the OP. |
Noncontrolling Interests | Noncontrolling interests The PS OP Interest represents PS’s noncontrolling interest in the OP through its ownership of 7,305,355 common partnership units. See note 7 for further information. |
Use Of Estimates | Use of estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. |
Allowance For Doubtful Accounts | Allowance for doubtful accounts The Company monitors the collectability of its receivable balances including the deferred rent receivable on an ongoing basis. Tenant receivables are net of an allowance for estimated uncollectible accounts totaling $ 400,000 at September 30, 2017 and December 31, 2016 . Deferred rent receivable is net of an allowance for uncollectible accounts totaling $ 910,000 and $ 916,000 at September 30, 2017 and December 31, 2016 , respectively. |
Financial Instruments | Financial instruments The methods and assumptions used to estimate the fair value of financial instruments are described below. The Company has estimated the fair value of financial instruments using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop estimates of market value. Accordingly, estimated fair values are not necessarily indicative of the amounts that could be realized in current market exchanges. The Company determines the estimated fair value of financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. This hierarchy requires the use of observable market data when available. The following is the fair value hierarchy: · Level 1 —quoted prices for identical instruments in active markets; · Level 2 —quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and · Level 3 —fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Financial assets that are exposed to credit risk consist primarily of cash and cash equivalents and receivables. The Company considers all highly liquid investments with a remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents, which consist primarily of money market investments, are only invested in entities with an investment grade rating. Receivables are comprised of balances due from a large number of customers. Balances that the Company expects to become uncollectible are reserved for or written off. Due to the short period to maturity of the Company’s cash and cash equivalents, accounts receivable, other assets and accrued and other liabilities, the carrying values as presented on the consolidated balance sheets are reasonable estimates of fair value. Carrying values of the Company’s unsecured Credit Facility (as defined on page 15) approximate fair value. The characteristics of these financial instruments, market data and other comparative metrics utilized in determining these fair values are “Level 2” inputs. |
Real Estate Facilities | Real estate facilities Real estate facilities are recorded at cost. Property taxes, insurance, interest and costs essential to the development of property for its intended use are capitalized during the period of development. Costs related to the renovation or improvement of the properties are capitalized. Expenditures for repairs and maintenance are expensed as incurred. Expenditures that are expected to benefit a period greater than two years and exceed $2,000 are capitalized and depreciated over their estimated useful life. Buildings and improvements are depreciated using the straight-line method over their estimated useful lives, which generally range from five to 30 years. Transaction costs, which include tenant improvements and lease commissions, of $1,000 or more for leases with terms greater than one year are capitalized and depreciated over their estimated useful lives. Transaction costs less than $1,000 or for leases of one year or less are expensed as incurred. |
Property Held For Disposition Or Development | Property held for disposition or development Real estate is classified as held for disposition when the asset is being marketed for sale and we expect that a sale is likely to occur in the next 12 months. Real estate is classified as held for development when it is likely that it will be developed to an alternate use and no longer used in its present form. Property held fo r development or disposition is not depreciated. |
Intangible Assets/Liabilities | Intangible assets/liabilities When we acquire facilities, an intangible asset is r ecorded for leases where the in- place rent is higher than market rents, and an intangible liability is recorded where the market rents are highe r than the in- place rents. The amounts recorded are based upon the present value (using a discount rate which reflects the risks associated with the leases acquired) of such differences over the lease term and such amounts are amortized to rent al income over the respective remaining lease term. We have no material intangible assets or liabilities for any periods presented. |
Evaluation Of Asset Impairment | Evaluation of asset impairment We evaluate our real estate and finite-lived intangible assets for impairment each quarter. If there are indicators of impairment and we determine that the asset is not recoverable from future undiscounted cash flows to be received through the asset’s remaining life (or, if earlier, the expected disposal date), we record an impairment charge to the extent the carrying amount exceeds the asset’s estimated fair value or net proceeds from expected disposal. We evaluate our investment in our unconsolidated joint venture on a quarterly basis. We record an impairment charge to the extent the carrying amount exceeds estimated fair value, when we believe any such shortfall is other than temporary. No impairments were recorded in any of our evaluations for any period presented herein. |
Stock Compensation | Stock compensation All share-based payments to employees, including grants of employee stock options, are recognized as stock compensation in the Company’s consolidated statements of income based on their fair values at the beginning of the service period . See Note 11. |
Accrued And Other Liabilities And Other Assets | Ac crued and other liabilities and other a ssets Accrued and other liabilities consist primarily of rents prepaid by our tenants, trade payables, propert y tax accruals, accrued payroll and contingent loss accruals when probable and estimable. We disclose the nature of significant unaccrued losses that are reasonably possible of occurring and, if estimable, a range of exposure. Other assets are comprised primarily of prepaid expenses. We believe the fair value of our accrued and other liabilities and other assets approximate book value, due to the short period until settlement . |
Revenue Recognition | Revenue recognition Revenue is recognized with respect to contractual arrangements when persuasive evidence of an arrangement exists; the delivery has occurred or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured. All leases are classified as operating leases. Rental income is recognized on a straight-line basis over the lease term, with the excess of cumulative rent al income recognized over the cumulative rent billed for the lease term reflected as “deferred rent receivable” on our consolidated balance sheet s . Reimbursements from tenants for real estate taxes and other recoverable operating expenses are recognized as rental income in the period the applicable costs are incurred. Property management fees are recognized in the period earned. Costs incurred in acquiring tenants (primarily tenant improvements and lease commissions) are capitalized and amortized over the lease period. |
Gains From Sales Of Real Estate Facilities | Gains from sales of real estate facilities The Company recognizes gains from sales of real estate facilities at the time of sale using the full accrual method, provided that various criteria related to the terms of the transactions and any subsequent involvement by the Company with the properties sold are met. If the criteria are not met, the Company defers the gains and recognizes them when the criteria are met or uses the installment or cost recovery methods as appropriate under the circumstances. |
General And Administrative Expenses | General and administrative expense s General and administrative expense s include executive and other compensation, corporate office expenses, professional fees, acquisition transaction costs, state income taxes and other such costs that are not directly related to the operation of our real estate facilities. |
Income Taxes | Income taxes We have elected to be treated as a REIT, as defined in the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, we do not incur federal income tax if we distribute 100% of our REIT taxable income each year, and if we meet certain organiz ational and operational rules. We believe we have met these REIT requirements for all periods presented herein. Accordingly, we have recorded no federal income tax expense related to our REIT taxable income. We recognize tax benefits of uncertain income tax positions that are subject to audit only if we believe it is more likely than not that the position would ultimately be sustained assuming the relevant taxing authorities had full knowledge of the relevant facts and c ircumstances of our positions. As of September 30, 2017 , we did not recognize any tax benefits for uncertain positions. |
Accounting For Preferred Equity Issuance Costs | Accounting for preferred equity issuance costs We record issuance costs as a reduction to paid-in capital on our consolidated balance sheets at the time the preferred securities are issued and reflect the carrying value of the preferred equity at its redemption value. An additional allocation of income is made from the common shareholders to the preferred shareholders in the amount of the original issuance costs, and we reclassify the redemption value from equity to liabilities when we call preferred shares for redemption. |
Net Income Per Common Share | Net income per common share Notwithstanding the presentation of income allocations on our consolidated statements of income , net income is allocated to ( a) preferred shareholders, for distributions paid, ( b) preferred shareholder s, to the extent redemption value exceeds the related carrying value (a “Preferred Redemption Allocation”) and ( c) restricted share unit holders, for non-forfeitable dividends paid adjusted for participation rights in undistributed earnings. The remaining net income is allocated to the common partnership units and our common shareholders, respectively, based upon the pro-rata aggregate number of units and shares outstanding. Basic and diluted net income per common share are each calculated based upon net income allocable to common shareholders, divided by (i) in the case of basic net income per common share, weighted average common shares and (ii) in the case of diluted income per share, weighted average common shares adjusted for the impact, if dilutive, of stock compensation awards outstanding (Note 11 ). The following tables set forth the calculation of the components of our basic and diluted income per share that are not reflected on the face of our consolidated statements of income , including the allocation of income to common shareholders and common partnership units, the percentage of weighted average shares and common partnership units, as well as basic and diluted weighted average shares ( in thousands ): For The Three Months For The Nine Months Ended September 30, Ended September 30, 2017 2016 2017 2016 Calculation of net income allocable to common shareholders Net income $ 42,631 $ 38,994 $ 133,839 $ 105,397 Less net income allocated to Preferred shareholders based upon distributions (12,590) (13,833) (38,472) (41,498) Preferred shareholders based upon redemptions (6,900) — (6,900) — Restricted stock unit holders (137) (128) (582) (387) Net income allocable to common shareholders and noncontrolling interests 23,004 25,033 87,885 63,512 Net income allocation to noncontrolling interests (4,866) (5,315) (18,610) (13,495) Net income allocable to common shareholders $ 18,138 $ 19,718 $ 69,275 $ 50,017 Calculation of common partnership units as a percentage of common share equivalents Weighted average common shares outstanding 27,226 27,103 27,192 27,076 Weighted average common partnership units outstanding 7,305 7,305 7,305 7,305 Total common share equivalents 34,531 34,408 34,497 34,381 Common partnership units as a percent of common share equivalents 21.2% 21.2% 21.2% 21.2% Weighted average common shares outstanding Basic weighted average common shares outstanding 27,226 27,103 27,192 27,076 Net effect of dilutive stock compensation—based on treasury stock method using average market price 201 98 207 90 Diluted weighted average common shares outstanding 27,427 27,201 27,399 27,166 |
Segment Reporting | Segment reporting The Company views its operations as one segment. |
Reclassifications | Reclassifications Certain reclassifications have been made to the consolidated financial statements for 2016 and in order to conform to the 2017 presentation, including reclassifying management fee income totaling $130,000 and $389,000 for the three and nine months ended September 30, 2016 into “interest and other income” on our consolidated statements of income. |
Recently Issued Accounting Standards | Recently issued accounting standards In May 2014 and February 2016, the Financial Accounting Standards Board issued two Acco unting Standards Updates (“ASU” s), ASU 2014-09, Revenue from Contracts with Customers (the “Revenue Standard”), and ASU 2016-02, Leases (the “Lease Standard”). These standards apply to substantially all of our revenue generating activities, as well as provide a model to account for the disposition of real estate facilities to non-customers, which is governed under ASU 2017-05 . The Lease Standard will direct how we account for payments from the elements of our leases that are generally fixed and determinable at the inception of the lease (“Fixed Lease Payments”) while the Revenue Standard will direct how we account for the non-lease components of our lease contracts, primarily expense reimbursements (“ Non- Lease Payments”) and the accounting for the disposition of real estate facilities. The Revenue Standard is effective on January 1, 2018, and generally requires that revenue from Non- Lease Payments be based upon the consideration expected from our tenants, and be recognized under various methods depending upon the nature of the underlying expense and the contractual reimbursement arrangement. The standard permits either the retrospective (restatement) method or cumul ative effects transition method and allowed for early adoption on January 1, 2017, which we did not elect. We expect to use the cumulative effects transition method, which will result in an adjustment to our retained earnings effective January 1, 2018 for the cumulative impact of the standard as of December 31, 2017. We do not expect this standard to have a material impact on our accounting for our facility management fees for property management services provided to PS or the disposi tion of real estate facilities as our accounting policy is consistent with the provisions of the standard. Rental income from leasing arrangements is a substantial portion of our revenues and is specifically excluded from the Revenue Standard and will be governed by the Lease Standard. In conjunction with the adoption of the Lease Standard, w e are currently evaluating the impact of the standard as it relates to Non- Lease Payments. The Lease Standard is effective on January 1, 2019. The standard provides definitional guidance of what constitutes a lease , requiring lessees to recognize most leases on the balance sheet and making certain changes to lessor accounting. For leases in which we are the lessor, we are requir ed to account for Fixed Lease Payments on a straight-line basis, with the expected fixed payments recognized ratably over the term of the lease. The standard also requires capitalization of only the incremental costs incurred in executing each particular lease, such as legal fees to draft a lease or commissions based upon a particular lease. Costs that would have been incurred regardless of lease execution, such as allocated costs of internal personnel, are not capitalized. F or most leases with a term of greater than 12 months, in which we are the lessee, the present value of future lease payments will be recognized on our balance sheet as a right-of-use asset and related labiality. As of September 30, 2017, the remaining contractual payments under our ground lease agreements aggregated $ 282,000 . The standard requires a modified retrospective transition approach for all leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements on the d ate of initial application and allowed early adoption, which we did not elect. We do not expect that the Lease Standard will impact our accounting for Fixed Lease Payments, because our accounting policy is currently consistent with the provisions of the standard. We are currently evaluating the impact of the standard as it relates to the capitalization of costs associated with executed leases. In August, 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments , which provides guidance on the classification of certain specific cash receipts and cash payments in the statement of cash flows, including, but not limited to, cash distributions received from equity method investees, including unconsolidated joint ventures. The new standard is effective for periods beginning after December 15, 2017, with early adoption permitted and shall be applied retrospectively where practicable. The Company is currently in the process of evaluating the impact of adoption of the new accounting guidance on its consolidated financial statements. In November, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) – Restricted Cash , which requires the statements of cash flows to explain the change during the period in the total cash, cash equivalents, restricted cash and restricted cash equivalents. T he new guidance also requires entities to reconcile such total to amounts on the balance sheet s and disclose the nature of the restrictions. The guidance is effective for public entities for fiscal years beginning after December 15, 2017 and for interim periods therein, with early adoption permitted. The guidance must be adopted using a modified retrospective approach. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. In January, 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business . Under the new guidance, a set of transferred assets and activities is not a business when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, which we believe will apply to substantially all of our future acquisitions of real estate facilities. Previously, such acquisitions were considered the acquisition of a business, and transaction costs of such acquisitions were expensed as incurred. Under the new guidance, transaction costs will instead be capitalized as part of the purchase price. This standard is effective for fiscal years beginning after December 15, 2017. We early adopted the standard on January 1, 2017; however, the adoption had no effect because we have not acquired any facilities since January 1, 2017 |
Summary Of Significant Accoun19
Summary Of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Summary Of Significant Accounting Policies [Abstract] | |
Calculation Of Earnings Per Share | For The Three Months For The Nine Months Ended September 30, Ended September 30, 2017 2016 2017 2016 Calculation of net income allocable to common shareholders Net income $ 42,631 $ 38,994 $ 133,839 $ 105,397 Less net income allocated to Preferred shareholders based upon distributions (12,590) (13,833) (38,472) (41,498) Preferred shareholders based upon redemptions (6,900) — (6,900) — Restricted stock unit holders (137) (128) (582) (387) Net income allocable to common shareholders and noncontrolling interests 23,004 25,033 87,885 63,512 Net income allocation to noncontrolling interests (4,866) (5,315) (18,610) (13,495) Net income allocable to common shareholders $ 18,138 $ 19,718 $ 69,275 $ 50,017 Calculation of common partnership units as a percentage of common share equivalents Weighted average common shares outstanding 27,226 27,103 27,192 27,076 Weighted average common partnership units outstanding 7,305 7,305 7,305 7,305 Total common share equivalents 34,531 34,408 34,497 34,381 Common partnership units as a percent of common share equivalents 21.2% 21.2% 21.2% 21.2% Weighted average common shares outstanding Basic weighted average common shares outstanding 27,226 27,103 27,192 27,076 Net effect of dilutive stock compensation—based on treasury stock method using average market price 201 98 207 90 Diluted weighted average common shares outstanding 27,427 27,201 27,399 27,166 |
Real Estate Facilities (Tables)
Real Estate Facilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Real Estate Facilities [Abstract] | |
Activity In Real Estate Facilities | Buildings and Accumulated Land Improvements Depreciation Total Balances at December 31, 2016 $ 789,227 $ 2,224,522 $ (1,158,054) $ 1,855,695 Capital expenditures — 39,321 — 39,321 Disposals — (9,180) 9,180 — Depreciation and amortization — — (70,465) (70,465) Transfer to properties held for disposition — — 25 25 Balances at September 30, 2017 $ 789,227 $ 2,254,663 $ (1,219,314) $ 1,824,576 |
Leasing Activity (Tables)
Leasing Activity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Leasing Activity [Abstract] | |
Summary Of Future Minimum Rental Revenues Excluding Recovery Of Operating Expenses | Remainder of 2017 $ 75,498 2018 267,885 2019 196,801 2020 133,240 2021 92,451 Thereafter 168,364 Total $ 934,239 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Shareholders' Equity [Abstract] | |
Schedule Of Preferred Stock Outstanding | September 30, 2017 December 31, 2016 Earliest Potential Dividend Shares Amount Shares Amount Series Issuance Date Redemption Date Rate Outstanding (in thousands) Outstanding (in thousands) Series T May, 2012 May, 2017 6.00% 5,200 $ 130,000 14,000 $ 350,000 Series U September, 2012 September, 2017 5.75% 9,200 230,000 9,200 230,000 Series V March, 2013 March, 2018 5.70% 4,400 110,000 4,400 110,000 Series W October, 2016 October, 2021 5.20% 7,590 189,750 7,590 189,750 Series X September, 2017 September, 2022 5.25% 9,200 230,000 — — Total 35,590 $ 889,750 35,190 $ 879,750 |
Organization And Description 23
Organization And Description Of Business (Narrative) (Details) shares in Millions | 9 Months Ended |
Sep. 30, 2017ft²propertystateshares | |
Organization And Description Of Business [Line Items] | |
The Company's ownership percentage of the limited partnership | 78.00% |
Owned and operated properties (in rentable square feet) | 28,000,000 |
Number of states with rentable commercial space | state | 6 |
Economic interest in joint venture, percentage | 95.00% |
Number of units developed | property | 395 |
Managed properties (in rentable square feet) | 684,000 |
PS [Member] | |
Organization And Description Of Business [Line Items] | |
Affiliate's percent ownership of the Company's common equity | 41.90% |
Shares owned by Public Storage | shares | 14.5 |
Summary Of Significant Accoun24
Summary Of Significant Accounting Policies (Narrative) (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($)shares | Sep. 30, 2016USD ($)shares | Sep. 30, 2017USD ($)segmentshares | Sep. 30, 2016USD ($)shares | Dec. 31, 2016USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Allowance for uncollectible accounts | $ 400,000 | $ 400,000 | $ 400,000 | ||
Allowance for uncollectable deferred rent receivables | 910,000 | $ 910,000 | 916,000 | ||
Cash and cash equivalents maximum benchmark (in months) | 3 months | ||||
Minimum expenditure costs subject to capitalization and depreciation | $ 2,000 | ||||
Minimum expected future benefit period on expenditures cost to be capitalized and depreciated (in years) | 2 years | ||||
Minimum transaction cost subject to capitalization and depreciation | $ 1,000 | ||||
Minimum expected future benefit period on transaction cost to be capitalized and depreciated (in years) | 1 year | ||||
Maximum transaction costs subject to being expensed as incurred | $ 1,000 | ||||
Maximum length of lease period for transaction costs to be expensed as incurred | 1 year | ||||
Intangible assets | 0 | $ 0 | 0 | ||
Intangible Liabilities | 0 | $ 0 | 0 | ||
Length of time criteria for expected sale of assets to be classified as properties held for disposition | 12 months | ||||
Impairment on assets | $ 0 | $ 0 | |||
Management fee revenues | $ 126,000 | $ 130,000 | $ 378,000 | $ 389,000 | |
Common Units In Operating Partnerships | shares | 7,305,000 | 7,305,000 | 7,305,000 | 7,305,000 | |
Percentage of real estate investment trust taxable income distributed for exemption of federal income tax | 100.00% | ||||
Income tax expense | $ 0 | ||||
Tax benefit for uncertain tax positions | $ 0 | ||||
Number of operating segments | segment | 1 | ||||
PS [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Common Units In Operating Partnerships | shares | 7,305,355 | ||||
Ground Lease Agreements [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Aggregate amount of contractual payments remaining under ground lease agreements | $ 282,000 | ||||
Minimum lease term requirement | 12 months | ||||
Maximum [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful life (in years) | 30 years | ||||
Minimum [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful life (in years) | 5 years |
Summary Of Significant Accoun25
Summary Of Significant Accounting Policies (Calculation Of Earnings Per Share) (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Summary Of Significant Accounting Policies [Abstract] | ||||
Net income | $ 42,631 | $ 38,994 | $ 133,839 | $ 105,397 |
Preferred shareholders based upon distributions | (12,590) | (13,833) | (38,472) | (41,498) |
Preferred shareholders based upon redemptions | (6,900) | (6,900) | ||
Net income allocation to restricted stock unit holders | (137) | (128) | (582) | (387) |
Net income allocated to common shareholders and noncontrolling interests | 23,004 | 25,033 | 87,885 | 63,512 |
Net income allocation to noncontrolling interests | (4,866) | (5,315) | (18,610) | (13,495) |
Net income allocable to common shareholders | $ 18,138 | $ 19,718 | $ 69,275 | $ 50,017 |
Weighted average common shares outstanding | 27,226 | 27,103 | 27,192 | 27,076 |
Weighted average common partnership units outstanding | 7,305 | 7,305 | 7,305 | 7,305 |
Total common share equivalents | 34,531 | 34,408 | 34,497 | 34,381 |
Common partnership units as a percent of common share equivalents | 21.20% | 21.20% | 21.20% | 21.20% |
Net effect of dilutive stock compensation - based on treasury stock method using average market price | 201 | 98 | 207 | 90 |
Diluted weighted average common shares outstanding | 27,427 | 27,201 | 27,399 | 27,166 |
Real Estate Facilities (Narrati
Real Estate Facilities (Narrative) (Details) $ in Thousands | May 01, 2017ft²item | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) |
Real Estate Facilities [Line Items] | |||||
Total sale price of development rights | $ 6,500 | ||||
Payments received for sale of development rights, net | $ 2,400 | $ 3,900 | $ 1,500 | ||
Gain on sale of development rights | 3,865 | ||||
Proceeds from sale of real estate facilities | 2,144 | ||||
Gain on sale of real estate facility | 1,209 | ||||
Committed transaction costs for executed leases | $ 12,700 | ||||
Scenario, Forecast [Member] | |||||
Real Estate Facilities [Line Items] | |||||
Last installment of payments for sale of development rights | $ 2,500 | ||||
Empire Commerce, Dallas Texas [Member] | |||||
Real Estate Facilities [Line Items] | |||||
Number of buildings disposed | item | 2 | ||||
Disposal date of real estate | May 1, 2017 | ||||
Square Footage of Real Estate Property | ft² | 44,000 |
Real Estate Facilities (Activit
Real Estate Facilities (Activity In Real Estate Facilities) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property, Plant and Equipment [Line Items] | ||||
Balances | $ 1,855,695 | |||
Accumulated Depreciation, Balances | (1,158,054) | |||
Capital expenditures | 39,321 | |||
Disposals | ||||
Accumulated Depreciation, Disposals | 9,180 | |||
Depreciation and amortization | $ (23,759) | $ (24,631) | (70,465) | $ (74,886) |
Transfer to property held for disposition | 25 | |||
Accumulated Depreciation, Balances | (1,219,314) | (1,219,314) | ||
Balances | 1,824,576 | 1,824,576 | ||
Land [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Balances | 789,227 | |||
Capital expenditures | ||||
Disposals | ||||
Depreciation and amortization | ||||
Transfer to property held for disposition | ||||
Balances | 789,227 | 789,227 | ||
Buildings And Improvements [Member] | ||||
Property, Plant and Equipment [Line Items] | ||||
Balances | 2,224,522 | |||
Capital expenditures | 39,321 | |||
Disposals | (9,180) | |||
Depreciation and amortization | ||||
Transfer to property held for disposition | ||||
Balances | $ 2,254,663 | $ 2,254,663 |
Investment In And Advances To28
Investment In And Advances To Unconsolidated Joint Venture (Narrative) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)a | Sep. 30, 2017USD ($)aft²propertyitem | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||||
Economic interest in joint venture, percentage | 95.00% | 95.00% | ||
Number of units developed | property | 395 | |||
Investment in and advances to unconsolidated joint venture | $ 96,593 | $ 96,593 | $ 67,190 | |
Land | 789,227 | 789,227 | $ 789,227 | |
Equity in loss of unconsolidated joint venture | $ (376) | $ (758) | ||
Investment in Unconsolidated Joint Venture [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Economic interest in joint venture, percentage | 95.00% | 95.00% | ||
Number of units developed | property | 395 | |||
Area of land | a | 5 | 5 | ||
Square footage | ft² | 628,000 | |||
Contribution date | Oct. 5, 2015 | |||
Number of extension options | item | 2 | |||
Extension option period | 1 year | |||
Construction Loan Capacity | $ 75,000 | $ 75,000 | ||
Construction loan maturity date | Apr. 5, 2019 | |||
Equity and capital contributions | $ 28,500 | $ 5,700 | ||
Loan advances | 29,700 | 29,700 | 22,300 | |
Capitalized interest | 506 | $ 854 | ||
Estimated total development costs | 105,600 | |||
Land | $ 15,300 | $ 15,300 | ||
Investment in Unconsolidated Joint Venture [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Spread over LIBOR | 2.25% | |||
JV Partner [Member] | Investment in Unconsolidated Joint Venture [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Economic interest in joint venture, percentage | 5.00% | 5.00% |
Leasing Activity (Narrative) (D
Leasing Activity (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operating Leased Assets [Line Items] | ||||
Tenant reimbursements | $ 22.6 | $ 20.3 | $ 68.4 | $ 61.6 |
Percentage of leased asset subjected to termination options | 3.00% | 3.00% | ||
Percentage of leased asset exercisable in period | 1.20% | 1.20% | ||
Maximum [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Non-cancelable leases term (in years) | 10 years | |||
Minimum [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Non-cancelable leases term (in years) | 1 year |
Leasing Activity (Summary Of Fu
Leasing Activity (Summary Of Future Minimum Rental Revenues Excluding Recovery Of Operating Expenses) (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Leasing Activity [Abstract] | |
Remainder of 2017 | $ 75,498 |
2,018 | 267,885 |
2,019 | 196,801 |
2,020 | 133,240 |
2,021 | 92,451 |
Thereafter | 168,364 |
Total | $ 934,239 |
Bank Loans (Details)
Bank Loans (Details) - Wells Fargo Credit Facility [Member] - USD ($) | 1 Months Ended | 9 Months Ended | ||
Jan. 31, 2017 | Sep. 30, 2017 | Oct. 27, 2017 | Dec. 31, 2016 | |
Line of Credit Facility [Line Items] | ||||
loan origination fees | $ 613,000 | |||
Line of credit, expiration date | Jan. 10, 2022 | |||
Credit Facility, borrowing limit | $ 250,000,000 | |||
Credit Facility, frequency of interest payment | monthly | |||
Spread over LIBOR | 0.825% | |||
Credit Facility, percentage of commitment fees | 0.125% | |||
Credit Facility, amount outstanding | $ 0 | $ 0 | ||
Unamortized commitment fees | $ 979,000 | $ 539,000 | ||
Subsequent Event [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Credit Facility, amount outstanding | $ 80,000,000 | |||
Maximum [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Spread over LIBOR | 1.55% | |||
Credit Facility, percentage of commitment fees | 0.30% | |||
Minimum [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Spread over LIBOR | 0.80% | |||
Credit Facility, percentage of commitment fees | 0.10% |
Noncontrolling Interests (Narra
Noncontrolling Interests (Narrative) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Noncontrolling Interests [Line Items] | ||||
Common Units In Operating Partnerships | 7,305,000 | 7,305,000 | 7,305,000 | 7,305,000 |
PS [Member] | ||||
Noncontrolling Interests [Line Items] | ||||
Common Units In Operating Partnerships | 7,305,355 |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Related Party Transaction [Line Items] | |||||
Management agreement notice of cancellation minimum period (in years) | 7 years | ||||
Property management contract written notice of termination period minimum (in days) | 60 days | ||||
Royalty-free license agreement written notice of termination period minimum (in months) | 6 months | ||||
Management fee revenues | $ 126,000 | $ 130,000 | $ 378,000 | $ 389,000 | |
Operating expenses allocated to PS | $ 134,000 | 142,000 | $ 401,000 | 416,000 | |
Number of assets owned that are maintained by Public Storage | item | 2 | 2 | |||
Management fee expenses | $ 24,000 | 22,000 | $ 69,000 | 64,000 | |
Administrative services costs | 132,000 | 123,000 | 397,000 | 370,000 | |
Due to related parties | 30,000 | 30,000 | |||
Due from related parties | $ 295,000 | ||||
Operating expenses allocated from PS | 54,000 | $ 49,000 | 156,000 | $ 153,000 | |
PS [Member] | |||||
Related Party Transaction [Line Items] | |||||
Costs allocated to PS | $ 8,000 | $ 23,000 |
Shareholders' Equity (Narrative
Shareholders' Equity (Narrative) (Details) | Dec. 07, 2016 | Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)item$ / sharesshares | Sep. 30, 2016USD ($) | Sep. 21, 2017USD ($)$ / sharesshares |
Class of Stock [Line Items] | ||||||||
Shares issued value | $ 889,750,000 | $ 889,750,000 | $ 879,750,000 | $ 889,750,000 | ||||
Preferred stock issued in sale | shares | 35,590 | 35,590 | 35,190 | 35,590 | ||||
Preferred stock, par value | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Net proceeds from the issuance of preferred stock | $ 222,225,000 | |||||||
Charge related to the redemption of preferred securities | $ 6,900,000 | 6,900,000 | ||||||
Redemption amount | $ 220,000,000 | $ 220,000,000 | $ 230,000,000 | $ 220,000,000 | ||||
Shares Outstanding | shares | 35,590 | 35,590 | 35,190 | 35,590 | ||||
Distributions paid to preferred shareholders | $ 12,600,000 | $ 13,800,000 | $ 38,472,000 | $ 41,498,000 | ||||
Number of quarterly dividends in arrearage before preferred shareholders can elect additional board members | item | 6 | |||||||
Number of additional board members the preferred shareholders can elect in the case of an excess arrearage of quarterly dividends | item | 2 | |||||||
Dividends in arrears | $ 0 | |||||||
Redeemable preferred stock, redemption price per share | $ / shares | $ 25 | $ 25 | $ 25 | |||||
Series T [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Redemption of preferred stock, shares | shares | 8,800,000 | |||||||
Cumulative preferred stock, dividend rate | 6.00% | |||||||
Issuance Date | May 1, 2012 | |||||||
Shares Outstanding | shares | 5,200 | 5,200 | 14,000 | 5,200 | ||||
Earliest Potential Redemption Date | May 1, 2017 | |||||||
Subsequent redemption date | Oct. 30, 2017 | |||||||
Series X [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares issued value | $ 230,000,000 | |||||||
Preferred stock issued in sale | shares | 9,200,000 | |||||||
Preferred stock, par value | $ / shares | $ 25 | |||||||
Cumulative preferred stock, dividend rate | 5.25% | |||||||
Series S [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Charge related to the redemption of preferred securities | $ 7,300,000 | |||||||
Cumulative preferred stock, dividend rate | 6.45% | |||||||
Earliest Potential Redemption Date | Jan. 18, 2017 |
Shareholders' Equity (Common An
Shareholders' Equity (Common And Equity Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Shareholders' Equity [Abstract] | |||||
Distributions paid to common shareholders | $ 23,200 | $ 20,300 | $ 69,364 | $ 60,932 | |
Dividends paid per common share | $ 0.85 | $ 0.75 | $ 2.55 | $ 2.25 | $ 0.75 |
Equity stock, shares authorized | 100 | 100 |
Shareholders' Equity (Schedule
Shareholders' Equity (Schedule Of Preferred Stock Outstanding) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Class of Stock [Line Items] | ||
Shares Outstanding | 35,590 | 35,190 |
Amount | $ 889,750 | $ 879,750 |
Series T [Member] | ||
Class of Stock [Line Items] | ||
Issuance Date | May 1, 2012 | |
Earliest Potential Redemption Date | May 1, 2017 | |
Dividend Rate | 6.00% | |
Shares Outstanding | 5,200 | 14,000 |
Amount | $ 130,000 | $ 350,000 |
Series U [Member] | ||
Class of Stock [Line Items] | ||
Issuance Date | Sep. 1, 2012 | |
Earliest Potential Redemption Date | Sep. 1, 2017 | |
Dividend Rate | 5.75% | |
Shares Outstanding | 9,200 | 9,200 |
Amount | $ 230,000 | $ 230,000 |
Series V [Member] | ||
Class of Stock [Line Items] | ||
Issuance Date | Mar. 1, 2013 | |
Earliest Potential Redemption Date | Mar. 1, 2018 | |
Dividend Rate | 5.70% | |
Shares Outstanding | 4,400 | 4,400 |
Amount | $ 110,000 | $ 110,000 |
Series W [Member] | ||
Class of Stock [Line Items] | ||
Issuance Date | Oct. 1, 2016 | |
Earliest Potential Redemption Date | Oct. 1, 2021 | |
Dividend Rate | 5.20% | |
Shares Outstanding | 7,590 | 7,590 |
Amount | $ 189,750 | $ 189,750 |
Series X [Member] | ||
Class of Stock [Line Items] | ||
Dividend Rate | 5.25% |
Stock Compensation (Narrative)
Stock Compensation (Narrative) (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($)shares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)itemshares | Sep. 30, 2016USD ($) | Dec. 31, 2016shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Proceeds from the exercise of stock options | $ | $ 3,992,000 | $ 2,956,000 | |||
Tax deposits on behalf of employees in exchange for common shares withheld upon vesting | $ | $ 3,865,000 | 1,940,000 | |||
Common stock, shares issued | 27,251,037 | 27,251,037 | 27,138,138 | ||
Stock Options [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period (in years) | 5 years | ||||
Options granted | 16,000 | ||||
Options exercised | 69,676 | ||||
Options outstanding | 175,979 | 175,979 | 229,655 | ||
Stock options expense | $ | $ 53,000 | $ 51,000 | $ 156,000 | 229,000 | |
Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period (in years) | 5 years | ||||
Stock units granted | 110,750 | ||||
Stock units vested | 76,994 | ||||
Stock units outstanding | 162,643 | 162,643 | 144,693 | ||
Stock units forfeited | 15,806 | ||||
Compensation expense | $ | $ (521,000) | $ 1,700,000 | $ 2,900,000 | 8,500,000 | |
Number of units issued | 43,223 | ||||
Common shares withheld upon vesting | 33,771 | ||||
Restricted Stock Units (RSUs) [Member] | Chief Executive Officer [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Compensation expense | $ | $ 2,000,000 | ||||
Restricted Stock Units (RSUs) [Member] | Chief Financial Officer [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Compensation expense | $ | $ (1,900,000) | $ (1,900,000) | |||
2014 Performance-Based Restricted Stock Unit Program [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of defined targets to achieve for restricted stock unit awards, maximum | item | 3 | ||||
Number of defined targets to achieve for restricted stock unit awards, minimum | item | 1 | ||||
Length of Restricted Stock Unit program (in years) | 4 years | ||||
Number of annual vesting installments | item | 4 | ||||
Approximate number of restricted stock units granted per year, maximum | 94,150 | ||||
Maximum shares for cumulative four-year period | 81,800 |