Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 21, 2019 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Registrant Name | PS BUSINESS PARKS INC/CA | |
Entity Central Index Key | 0000866368 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 1-10709 | |
Entity Incorporation, State or Country Code | CA | |
Entity Tax Identification Number | 95-4300881 | |
Entity Address, Address Line One | 701 Western Avenue | |
Entity Address, City or Town | Glendale | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 91201-2349 | |
City Area Code | 818 | |
Local Phone Number | 244-8080 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,436,547 | |
Common Stock [Member] | ||
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | PSB | |
Security Exchange Name | NYSE | |
Series U Preferred Stock [Member] | ||
Title of 12(b) Security | Depositary Shares Each Representing 1/1,000 of a 5.750% Cum Pref Stock, Series U, $0.01 par value | |
Trading Symbol | PSBPrU | |
Security Exchange Name | NYSE | |
Series V Preferred Stock [Member] | ||
Title of 12(b) Security | Depositary Shares Each Representing 1/1,000 of a 5.700% Cum Pref Stock, Series V, $0.01 par value | |
Trading Symbol | PSBPrV | |
Security Exchange Name | NYSE | |
Series W Preferred Stock [Member] | ||
Title of 12(b) Security | Depositary Shares Each Representing 1/1,000 of a 5.200% Cum Pref Stock, Series W, $0.01 par value | |
Trading Symbol | PSBPrW | |
Security Exchange Name | NYSE | |
Series X Preferred Stock [Member] | ||
Title of 12(b) Security | Depositary Shares Each Representing 1/1,000 of a 5.250% Cum Pref Stock, Series X, $0.01 par value | |
Trading Symbol | PSBPrX | |
Security Exchange Name | NYSE | |
Series Y Preferred Stock [Member] | ||
Title of 12(b) Security | Depositary Shares Each Representing 1/1,000 of a 5.200% Cum Pref Stock, Series Y, $0.01 par value | |
Trading Symbol | PSBPrY | |
Security Exchange Name | NYSE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 6,749,000 | $ 37,379,000 |
Real estate facilities, at cost | ||
Land | 837,891,000 | 762,731,000 |
Buildings and improvements | 2,212,166,000 | 2,157,407,000 |
Gross real estate investment property | 3,050,057,000 | 2,920,138,000 |
Accumulated depreciation | (1,152,946,000) | (1,097,748,000) |
Net real estate investment property | 1,897,111,000 | 1,822,390,000 |
Properties held for sale, net | 124,937,000 | 128,093,000 |
Land and building held for development | 30,515,000 | 30,848,000 |
Total real estate investments | 2,052,563,000 | 1,981,331,000 |
Rent receivable | 1,752,000 | 1,403,000 |
Deferred rent receivable | 35,548,000 | 33,308,000 |
Other assets | 21,122,000 | 15,173,000 |
Total assets | 2,117,734,000 | 2,068,594,000 |
LIABILITIES AND EQUITY | ||
Accrued and other liabilities | 92,252,000 | 85,141,000 |
Credit facility | 50,000,000 | 0 |
Total liabilities | 142,252,000 | 85,141,000 |
Commitments and contingencies | ||
PS Business Parks, Inc.'s shareholders' equity | ||
Preferred stock, $0.01 par value, 50,000,000 shares authorized, 38,390 shares issued and outstanding at September 30, 2019 and December 31, 2018, at liquidation preference | 959,750,000 | 959,750,000 |
Common stock, $0.01 par value, 100,000,000 shares authorized, 27,435,139 and 27,362,101 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 274,000 | 274,000 |
Paid-in capital | 734,760,000 | 736,131,000 |
Accumulated earnings | 64,775,000 | 69,207,000 |
Total PS Business Parks, Inc.'s shareholders' equity | 1,759,559,000 | 1,765,362,000 |
Noncontrolling interests | 215,923,000 | 218,091,000 |
Total equity | 1,975,482,000 | 1,983,453,000 |
Total liabilities and equity | $ 2,117,734,000 | $ 2,068,594,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
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 | 38,390 | 38,390 |
Preferred stock, shares outstanding | 38,390 | 38,390 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 27,435,139 | 27,362,101 |
Common Stock, Shares, Outstanding | 27,435,139 | 27,362,101 |
Consolidated Statements Of Inco
Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Consolidated Statements Of Income [Abstract] | ||||
Rental income | $ 108,064 | $ 103,808 | $ 323,671 | $ 309,391 |
Expenses | ||||
Cost of operations | 32,468 | 31,197 | 97,521 | 94,449 |
Depreciation and amortization | 26,220 | 25,207 | 75,863 | 73,505 |
General and administrative | 4,051 | 2,882 | 10,111 | 8,560 |
Total operating expenses | 62,739 | 59,286 | 183,495 | 176,514 |
Interest and other income | 1,384 | 488 | 2,766 | 1,066 |
Interest and other expense | (199) | (167) | (484) | (499) |
Gain on sale of real estate facilities | 85,283 | |||
Net income | 46,510 | 44,843 | 142,458 | 218,727 |
Allocation to noncontrolling interests | (7,020) | (6,514) | (21,670) | (36,814) |
Net income allocable to PS Business Parks, Inc. | 39,490 | 38,329 | 120,788 | 181,913 |
Allocation to preferred shareholders | (12,959) | (12,959) | (38,877) | (38,921) |
Allocation to restricted stock unit holders | (219) | (239) | (699) | (1,592) |
Net income allocable to common shareholders | $ 26,312 | $ 25,131 | $ 81,212 | $ 141,400 |
Net income per common share | ||||
Basic | $ 0.96 | $ 0.92 | $ 2.96 | $ 5.18 |
Diluted | $ 0.96 | $ 0.92 | $ 2.95 | $ 5.16 |
Weighted average common shares outstanding | ||||
Basic | 27,432 | 27,339 | 27,411 | 27,310 |
Diluted | 27,543 | 27,442 | 27,512 | 27,412 |
Consolidated Statements Of Equi
Consolidated Statements Of Equity - 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, 2017 | $ 959,750 | $ 272 | $ 735,067 | $ (1,778) | $ 1,693,311 | $ 196,625 | $ 1,889,936 |
Balances, shares at Dec. 31, 2017 | 38,390 | 27,254,607 | |||||
Issuance of common stock in connection with stock-based compensation | $ 1 | 1,678 | 1,679 | 1,679 | |||
Issuance of common stock in connection with stock-based compensation, shares | 91,955 | ||||||
Stock compensation, net | 2,098 | 2,098 | 2,098 | ||||
Cash paid for taxes in lieu of shares upon vesting of restricted stock units | (4,955) | (4,955) | (4,955) | ||||
Consolidation of joint venture (see Note 3) | 4,032 | 4,032 | |||||
Net income | 181,913 | 218,727 | |||||
Net income allocable to PS Business Parks, Inc. | 181,913 | 181,913 | |||||
Net income allocable to Noncontrolling Interests | 36,814 | 36,814 | |||||
Distributions | |||||||
Preferred stock (Note 8) | (38,921) | (38,921) | (38,921) | ||||
Common stock | (75,107) | (75,107) | (75,107) | ||||
Common Units | (20,090) | (20,090) | |||||
Adjustment to noncontrolling interests - common units in the OP | 453 | 453 | (453) | ||||
Balances at Sep. 30, 2018 | $ 959,750 | $ 273 | 734,341 | 66,107 | 1,760,471 | 216,928 | 1,977,399 |
Balances, shares at Sep. 30, 2018 | 38,390 | 27,346,562 | |||||
Balances at Jun. 30, 2018 | $ 959,750 | $ 272 | 733,617 | 69,448 | 1,763,087 | 217,932 | 1,981,019 |
Balances, shares at Jun. 30, 2018 | 38,390 | 27,331,834 | |||||
Issuance of common stock in connection with stock-based compensation | $ 1 | 450 | 451 | 451 | |||
Issuance of common stock in connection with stock-based compensation, shares | 14,728 | ||||||
Stock compensation, net | 853 | 853 | 853 | ||||
Cash paid for taxes in lieu of shares upon vesting of restricted stock units | (426) | (426) | (426) | ||||
Net income | 38,329 | 38,329 | 44,843 | ||||
Net income allocable to PS Business Parks, Inc. | 38,329 | ||||||
Net income allocable to Noncontrolling Interests | 6,514 | 6,514 | |||||
Distributions | |||||||
Preferred stock (Note 8) | (12,959) | (12,959) | (12,959) | ||||
Common stock | (28,711) | (28,711) | (28,711) | ||||
Common Units | (7,671) | (7,671) | |||||
Adjustment to noncontrolling interests - common units in the OP | (153) | (153) | 153 | ||||
Balances at Sep. 30, 2018 | $ 959,750 | $ 273 | 734,341 | 66,107 | 1,760,471 | 216,928 | 1,977,399 |
Balances, shares at Sep. 30, 2018 | 38,390 | 27,346,562 | |||||
Balances at Dec. 31, 2018 | $ 959,750 | $ 274 | 736,131 | 69,207 | 1,765,362 | 218,091 | 1,983,453 |
Balances, shares at Dec. 31, 2018 | 38,390 | 27,362,101 | |||||
Balances at Jun. 30, 2019 | $ 959,750 | $ 274 | 733,777 | 67,049 | 1,760,850 | 216,327 | 1,977,177 |
Balances, shares at Jun. 30, 2019 | 38,390 | 27,429,756 | |||||
Balances at Dec. 31, 2018 | $ 959,750 | $ 274 | 736,131 | 69,207 | 1,765,362 | 218,091 | 1,983,453 |
Balances, shares at Dec. 31, 2018 | 38,390 | 27,362,101 | |||||
Issuance of common stock in connection with stock-based compensation | 709 | 709 | 709 | ||||
Issuance of common stock in connection with stock-based compensation, shares | 73,038 | ||||||
Stock compensation, net | 3,292 | 3,292 | 3,292 | ||||
Cash paid for taxes in lieu of shares upon vesting of restricted stock units | (6,120) | (6,120) | (6,120) | ||||
Net income | 120,788 | 142,458 | |||||
Net income allocable to PS Business Parks, Inc. | 120,788 | 120,788 | |||||
Net income allocable to Noncontrolling Interests | 21,670 | 21,670 | |||||
Distributions | |||||||
Preferred stock (Note 8) | (38,877) | (38,877) | (38,877) | ||||
Common stock | (86,343) | (86,343) | (86,343) | ||||
Common Units | (23,012) | (23,012) | |||||
Joint Venture | (78) | (78) | |||||
Adjustment to noncontrolling interests - common units in the OP | 748 | 748 | (748) | ||||
Balances at Sep. 30, 2019 | $ 959,750 | $ 274 | 734,760 | 64,775 | 1,759,559 | 215,923 | 1,975,482 |
Balances, shares at Sep. 30, 2019 | 38,390 | 27,435,139 | |||||
Balances at Jun. 30, 2019 | $ 959,750 | $ 274 | 733,777 | 67,049 | 1,760,850 | 216,327 | 1,977,177 |
Balances, shares at Jun. 30, 2019 | 38,390 | 27,429,756 | |||||
Issuance of common stock in connection with stock-based compensation, shares | 5,383 | ||||||
Stock compensation, net | 1,883 | 1,883 | 1,883 | ||||
Cash paid for taxes in lieu of shares upon vesting of restricted stock units | (620) | (620) | (620) | ||||
Net income | 39,490 | 46,510 | |||||
Net income allocable to PS Business Parks, Inc. | 39,490 | 39,490 | |||||
Net income allocable to Noncontrolling Interests | 7,020 | 7,020 | |||||
Distributions | |||||||
Preferred stock (Note 8) | (12,959) | (12,959) | (12,959) | ||||
Common stock | (28,805) | (28,805) | (28,805) | ||||
Common Units | (7,671) | (7,671) | |||||
Joint Venture | (33) | (33) | |||||
Adjustment to noncontrolling interests - common units in the OP | (280) | (280) | 280 | ||||
Balances at Sep. 30, 2019 | $ 959,750 | $ 274 | $ 734,760 | $ 64,775 | $ 1,759,559 | $ 215,923 | $ 1,975,482 |
Balances, shares at Sep. 30, 2019 | 38,390 | 27,435,139 |
Consolidated Statements Of Eq_2
Consolidated Statements Of Equity (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Consolidated Statements Of Equity [Abstract] | ||||
Common stock, distributions per share | $ 1.05 | $ 1.05 | $ 3.15 | $ 2.75 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net income | $ 142,458,000 | $ 218,727,000 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization expense | 75,863,000 | 73,505,000 |
Tenant improvement reimbursement amortization, net of lease incentive amortization | (788,000) | (1,690,000) |
Gain on sale of real estate facilities | (85,283,000) | |
Stock compensation expense | 3,991,000 | 2,933,000 |
Amortization of financing costs | 410,000 | 400,000 |
Other, net | (1,071,000) | (4,823,000) |
Total adjustments | 78,405,000 | (14,958,000) |
Net cash provided by operating activities | 220,863,000 | 203,769,000 |
Cash flows from investing activities | ||
Capital expenditures to real estate facilities | (26,272,000) | (25,817,000) |
Capital expenditures to land and building held for development | (2,873,000) | (517,000) |
Acquisition of real estate facilities | (117,691,000) | (142,399,000) |
Consolidation of joint venture | 1,082,000 | |
Proceeds from sale of real estate facilities | 126,836,000 | |
Net cash used in investing activities | (146,836,000) | (40,815,000) |
Cash flows from financing activities | ||
Borrowings on credit facility | 70,000,000 | 50,000,000 |
Repayment of borrowings on credit facility | (20,000,000) | (50,000,000) |
Payment of financing costs | (237,000) | (227,000) |
Proceeds from the exercise of stock options | 709,000 | 1,679,000 |
Redemption of preferred stock | (130,000,000) | |
Cash paid for taxes in lieu of shares upon vesting of restricted stock units | (6,120,000) | (4,955,000) |
Cash paid to restricted stock unit holders | (699,000) | (835,000) |
Distributions paid to preferred shareholders | (38,877,000) | (39,614,000) |
Distributions paid to common shareholders | (86,343,000) | (75,107,000) |
Distributions paid to noncontrolling interests - common units | (23,012,000) | (20,090,000) |
Distributions paid to noncontrolling interests - joint venture | (78,000) | 0 |
Net cash used in financing activities | (104,657,000) | (269,149,000) |
Net decrease in cash and cash equivalents | (30,630,000) | (106,195,000) |
Cash, cash equivalents and restricted cash at the beginning of the period | 38,467,000 | 115,970,000 |
Cash, cash equivalents and restricted cash at the end of the period | 7,837,000 | 9,775,000 |
Adjustment to noncontrolling interests- common units in the OP | ||
Noncontrolling interests- common units | (748,000) | (453,000) |
Paid-in capital | $ 748,000 | 453,000 |
Consolidation of joint venture | ||
Land | 21,814,000 | |
Buildings and improvements | 85,436,000 | |
Other, net | (2,320,000) | |
Investment in and advances to unconsolidated joint venture | (100,898,000) | |
Noncontrolling interest - joint venture | $ (4,032,000) |
Organization And Description Of
Organization And Description Of Business | 9 Months Ended |
Sep. 30, 2019 | |
Organization And Description Of Business [Abstract] | |
Organization And Description Of Business | 1. Organization and description of business Organization PS Business Parks, Inc. (“PSB”) was incorporated in the state of California in 1990. As of September 30, 2019, PSB owned 79.0 % 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 Interests.” 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 and our consolidated joint venture that owns a 395 -unit multifamily apartment complex in Tysons, Virginia, are collectively referred to as the “Company,” “we,” “us,” or “our.” PS would own 41.6 % (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. Description of Business 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 industrial, flex and office space. As of September 30, 2019, the Company owned and operated 28.8 million rentable square feet of commercial space in six states and held a 95.0 % interest in a 395 -un it multifamily apartment complex in Tysons, Virginia . The Company also manages for a fee approximately 438,000 rentable square feet on behalf of PS. |
Summary Of Significant Accounti
Summary Of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
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 and our consolidated joint venture. 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, 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 audited 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, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. 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, 2018. Consolidation and equity method of accounting 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 investments in entities that are not VIEs that we have significant influence over, but do not control, using the equity method of accounting and for investment in entities that we control, we consolidate. On January 1, 2018, we began to consolidate our joint venture due to changes to the joint venture agreement that gave the Company control of the joint venture. See Note 3 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 represent (i) PS’s noncontrolling interest in the OP through its ownership of 7,305,355 common partnership units and (ii) a third-party 5.0 % interest in our consolidated joint venture owning a 395 -unit multifamily apartment complex. See Note 6 for further information on noncontrolling interests. 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. 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 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 various customers. Balances that the Company expects to become uncollectible are 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. The following table provides a reconciliation of cash, cash equivalents and restricted cash per the consolidated statements of cash flow to the corresponding financial statement line items in the consolidated balance sheets (in thousands) : December 31, 2018 2017 Consolidated balance sheets Cash and cash equivalents $ 37,379 $ 114,882 Restricted cash included in Land and building held for development 1,088 1,088 Consolidated statements of cash flows $ 38,467 $ 115,970 September 30, 2019 2018 Consolidated balance sheets Cash and cash equivalents $ 6,749 $ 8,687 Restricted cash included in Land and building held for development 1,088 1,088 Consolidated statements of cash flows $ 7,837 $ 9,775 Carrying values of the Company’s Credit Facility (as defined in Note 5) 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. Direct 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 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, for leases with terms greater than one year are capitalized and depreciated over their estimated useful lives. Property held for sale or development Real estate is classified as held for sale 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 no longer used in its original form and likely that it will be developed to an alternate use. Property held for development or sale is not depreciated. Intangible assets/liabilities When we acquire real estate facilities, an intangible asset is recorded as other assets for leases where the in-place rent is higher than market rents, and an intangible liability is recorded as other liabilities where the market rents are higher 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 rental income over the respective remaining lease term. As of September 30, 2019, the value of above-market in-place rents resulted in net intangible assets of $ 1.4 million, net of $ 10.4 million of accumulated amortization and the value of below-market in-place rents resulted in net intangible liabilities of $ 2.5 million, net of $ 11.2 million of accumulated amortization. As of December 31, 2018, the value of above-market in-place rents resulted in net intangible assets of $ 1.8 million, net of $ 10.0 million of accumulated amortization and the value of below-market in-place rents resulted in net intangible liabilities of $ 1.8 million, net of $ 10.8 million of accumulated amortization. Additionally, when we acquire real estate facilities, the value of in-place leases (i.e., customer lease-up costs) is recorded as other assets and is amortized to depreciation and amortization expense over the respective remaining lease term. As of September 30, 2019, the value of acquired in-place leases resulted in net intangible assets of $ 6.3 million, net of $ 3.1 million of accumulated amortization. As of December 31, 2018, the value of acquired in-place leases resulted in net intangible assets of $ 4.7 million, net of $ 1.3 million of accumulated amortization. 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 carrying value of the asset is not recoverable from estimated 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. No impairment charges were recorded in any period presented herein. Stock compensation Share-based payments to employees, including grants of employee stock options, are recognized as stock compensation expense in the Company’s consolidated statements of income based on their grant date fair values, except for performance-based grants, which are accounted for based on their fair values at the beginning of the service period. See Note 10. Accrued and other liabilities Accrued and other liabilities consist primarily of rents prepaid by our customers, trade payables, property tax accruals, accrued payroll and contingent loss accruals when probable and estimable, as well as the intangible liabilities discussed above. We disclose the nature of significant unaccrued losses that are reasonably possible of occurring and, if estimable, a range of exposure. Other assets Other assets are comprised primarily of prepaid expenses, as well as the intangible assets discussed above. Revenue recognition We recognize the aggregate rent to be collected (including the impact of escalators and concessions) under leases ratably throughout the non-cancellable lease term on a “straight-line” basis, commencing when the customer takes control of the leased space. Cumulative straight-line rent recognized in excess of amounts billed per the lease term is presented as “deferred rent receivable” on our consolidated balance sheets. We present r eimbursements from customers for real estate taxes and other recoverable operating expenses under a single lease component presentation as the timing and pattern of transfer of such reimbursements are the same as the lease term, and the combined single component of such leases are classified as operating leases. Accordingly, w e recognize such variable lease payments resulting from the reimbursements from customers for real estate taxes and other recoverable operating expenses as rental income in the period the applicable costs are incurred. The Company monitors the collectability of its receivable balances, including deferred rent receivable balances, on an ongoing basis. The Company writes off uncollectible customer receivable balances, including deferred rent receivable balances, in the period such receivable balances are deemed uncollectible. Therefore, recognition of rental income is limited to the lesser of the amount of cash collected or rental income reflected on a “straight-line” basis, plus any accruable variable lease payments for those customer receivable balances deemed uncollectible. Property management fees are recognized in the period earned as other income. Costs incurred in acquiring customers (primarily tenant improvements and lease commissions) are capitalized and amortized over the lease period for leases with terms greater than one year . Sales of real estate facilities Sales of real estate facilities are not part of our ordinary activities, and as a result, we consider such sales as contracts with non-customers. We recognize sales of real estate when we have collected payment and the attributes of ownership, such as possession and control of the asset, have been transferred to the buyer. If a contract for sale includes obligations to provide goods or services to the buyer, an allocated portion of the contract price is recognized as revenue as the related goods or services are transferred to the buyer. General and administrative expense General and administrative expense includes executive and other compensation, corporate office expenses, professional fees, 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 substantially all of our “REIT taxable income” each year, and if we meet certain organizational 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 circumstances of our positions. As of September 30, 2019 and December 31, 2018, we did no t recognize any tax benefit for uncertain tax 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 or payable, (b) preferred shareholders, to the extent redemption value exceeds the related carrying value, (c) our joint venture partner, to the extent the consolidated joint venture produce net income or loss during the period and (d) restricted stock unit (“RSU”) 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 of stock compensation awards outstanding (Note 10) using the treasury stock method. 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, 2019 2018 2019 2018 Calculation of net income allocable to common shareholders Net income $ 46,510 $ 44,843 $ 142,458 $ 218,727 Net (income) loss allocated to Preferred shareholders based upon distributions ( 12,959 ) ( 12,959 ) ( 38,877 ) ( 38,921 ) Noncontrolling interests—joint venture ( 14 ) 189 ( 27 ) 1,008 Restricted stock unit holders ( 219 ) ( 239 ) ( 699 ) ( 1,592 ) Net income allocable to common shareholders and noncontrolling interests—common units 33,318 31,834 102,855 179,222 Net income allocation to noncontrolling interests— common units ( 7,006 ) ( 6,703 ) ( 21,643 ) ( 37,822 ) Net income allocable to common shareholders $ 26,312 $ 25,131 $ 81,212 $ 141,400 Calculation of common partnership units as a percentage of common share equivalents Weighted average common shares outstanding 27,432 27,339 27,411 27,310 Weighted average common partnership units outstanding 7,305 7,305 7,305 7,305 Total common share equivalents 34,737 34,644 34,716 34,615 Common partnership units as a percentage of common share equivalents 21.0 % 21.1 % 21.0 % 21.1 % Weighted average common shares outstanding Basic weighted average common shares outstanding 27,432 27,339 27,411 27,310 Net effect of dilutive stock compensation—based on treasury stock method using average market price 111 103 101 102 Diluted weighted average common shares outstanding 27,543 27,442 27,512 27,412 Segment reporting We have two operating segments: (i) the acquisition, development, ownership and management of commercial real estate and (ii) the acquisition, development, ownership and management of multifamily real estate, but have one reportable segment as the multifamily segment does not meet the quantitative thresholds necessary to require reporting as a separate segment. Reclassifications We have reclassified our divisional vice presidents’ compensation costs totaling $ 457,000 and $ 1.5 million for the three and nine months ended September 30, 2018, respectively, from cost of operations into general and administrative expense on our consolidated statements of income in the three and nine months ended September 30, 2018 in order to conform to the current periods’ presentation. Certain reclassifications have been made to the consolidated financial statements for 2018 in order to conform to the 2019 presentation, including reclassifying assets held for sale as of September 30, 2019 from “real estate facilities, at costs” totaling $ 128.1 million as of December 31, 2018 into “properties held for sale, net” on our consolidated balance sheets. Recently issued accounting standards In May 2014 and February 2016, the Financial Accounting Standards Board (“FASB”) issued two Accounting 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. Lessor accounting The Lease Standard directs 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 directs how we account for the non-lease components of our lease contracts, primarily expense reimbursements (“Non-Lease Payments”). The Lease Standard requires us to identify Fixed Lease Payments and Non-Lease Payments of a lease agreement and governs the recognition of revenue for the Fixed Lease Payments. Revenue related to Non-Lease Payments under our lease arrangements is subject to the Revenue Standard effective upon adoption of the Lease Standard. See further discussion below on Fixed Lease Payments and Non-Lease Payments. Under the Lease Standard, a set of practical expedients for implementation, which must be elected as a package and for all leases, was elected as part of our adoption of the Lease Standard. These practical expedients include (i) relief from re-assessing whether an expired or existing contract meets the definition of a lease, (ii) relief from re-assessing the classification of expired or existing leases at the adoption date and (iii) allowing previously capitalized initial direct leasing costs to continue to be amortized. We adopted the Lease Standard on its effective date of January 1, 2019. In addition to the package of practical expedients noted above, we also elected the practical expedient not to allocate the total consideration to Fixed Lease Payments and Non-Lease Payments based on their relative standalone selling prices. This practical expedient allows lessors to elect a combined single component presentation if (i) the timing and pattern of the revenue recognition for the Fixed Lease Payments and Non-Lease Payments are the same, and (ii) the combined single component of the lease would continue to be classified as an operating lease. We have assessed and believe the two conditions have been met for Non-Lease Payments as (i) the timing and pattern of transfer of the Fixed Lease Payments and Non-Lease Payments are the same, and (ii) the combined single component of the lease would be classified as an operating lease. The adoption of the Leasing Standard did not result in a material impact to our consolidated financial statements. We recognized revenue from our lease arrangements aggregating $ 108.1 million and $ 103.8 million for the three months ended September 30, 2019 and 2018, respectively, and $ 323.7 million and $ 309.4 million for the nine months ended September 30, 2019 and 2018, respectively. This revenue consisted primarily of rental income from operating leases and the related variable lease payments resulting from reimbursements of property operating expenses. Rental income was $ 84.1 million and $ 80.9 million for the three months ended September 30, 2019 and 2018, respectively, and $ 250.7 million and $ 240.3 million for the nine months ended September 30, 2019 and 2018, respectively. Variable lease payments were $ 24.0 million and $ 22.9 million for the three months ended September 30, 2019 and 2018, respectively, and $ 73.0 million and $ 69.1 million for the nine months ended September 30, 2019 and 2018, respectively. The Lease Standard provides two approaches to account for uncollectible customer receivable balances, and the respective deferred rent receivables balances: (i) an impairment model approach or (ii) a reserve approach in accordance to ASU 450-20, Contingencies - Loss Contingencies (“Contingencies - Loss Contingencies Standard”). Under the impairment model, recognition of rental income is limited to the lesser of the amount of cash collected or rental income reflected on a “straight-line” basis, plus any accruable variable lease payments for those customer receivable balances deemed uncollectible. After completing the impairment model approach, a lessor may also choose to apply the reserve approach. Under the reserve approach, a lessor records a reserve for a portion of the receivable balances, based on historical data, for uncollectible amounts. A lessor that chooses the reserve approach will have to apply the guidance from both the Lease Standard and Contingencies - Loss Contingencies Standard. The Company has elected the impairment model approach to account for its uncollectible customer receivable balances, and the respective deferred rent receivable balances. The Company’s uncollectible receivable balances policy is consistent with the impairment model approach as the Company writes off uncollectible receivable balances in the period the amounts are deemed uncollectible. Therefore, our rental income is limited to the lesser of the amount of cash collected or rental income reflected on a “straight-line” basis, plus any accruable variable lease payments for those customer receivable balances deemed uncollectible. Costs to execute leases The Lease Standard also provides updated guidance on the requirements for the capitalization of the incremental costs incurred in executing leases, such as legal fees and commissions. Under the Lease Standard, any costs that would have been incurred regardless of successful lease execution, such as allocated costs of internal personnel, are to be expensed and may not be capitalized. As we have historically not capitalized any such costs, the adoption of the Lease Standard did not result in a material impact to our consolidated financial statements. Lessee accounting Under the Lease Standard, lessees are required to apply a dual approach by classifying leases as either finance or operating leases based on the principle whether the lease is effectively a finance purchase of the leased asset by the lessee. This classification determines whether the lease expense is recognized based on an effective interest method or a straight-line basis over the term of the lease. 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 is recognized on our balance sheet as a right-of-use (“ROU”) asset and related liability. On January 1, 2019, the Company recorded a ROU asset of $ 1.7 million, included in “other assets” on our consolidated balance sheets and a corresponding liability of $ 1.7 million under “accrued and other liabilities”, relating to our existing ground lease arrangements. These operating leases were recognized based on the present value of the future minimum lease payments over the lease term. As these leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available in determining the present value of future payments. The discount rate used to determine the present value of these operating leases’ future payments was 4.20 %. These ground leases expire in 2029 and 2030 and do not have an option to extend. As of September 30, 2019, the remaining lease terms ranged from 10.0 years to 10. 3 years. Lease expense for minimum lease payments is recognized in the period the applicable costs are incurred as monthly rent for these operating leases are constant without increases through the remaining terms of these leases. The adoption of the Lease Standard did not result in a material impact to our consolidated financial statements from the initial recognition of each lease liability or from the pattern of recognition subsequent to adoption. |
Real Estate Facilities
Real Estate Facilities | 9 Months Ended |
Sep. 30, 2019 | |
Real Estate Facilities [Abstract] | |
Real Estate Facilities | 3. Real estate facilities The activity in real estate facilities for the nine months ended September 30, 2019 was as follows (in thousands) : Buildings and Accumulated Land Improvements Depreciation Total Balances at December 31, 2018 (1) $ 762,731 $ 2,157,407 $ ( 1,097,748 ) $ 1,822,390 Acquisition of real estate facility 75,160 40,765 — 115,925 Capital expenditures — 26,536 — 26,536 Disposals (2) — ( 11,643 ) 11,643 — Depreciation and amortization expense — — ( 70,896 ) ( 70,896 ) Transfer to properties held for sale — ( 899 ) 4,055 3,156 Balances at September 30, 2019 $ 837,891 $ 2,212,166 $ ( 1,152,946 ) $ 1,897,111 ____________________________ (1) Land, building and improvements, and accumulated depreciation, respectively, totaling $ 53.9 million, $ 217.5 million and $ 143.3 million were reclassified as of December 31, 2018 to “properties held for sale, net” representing 1.3 million rentable square feet of flex and office business parks located in Rockville and Silver Spring, Maryland. (2) Disposals primarily represent the book value of tenant improvements that have been removed upon the customer vacating their space. As of September 30, 2019, we have commitments, pursuant to executed leases throughout our portfolio, to spend $ 10.3 million on transaction costs, which include tenant improvements and lease commissions. 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 customer 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 is determined using a combination of the income and replacement cost approaches which both utilize available market information relevant to the acquired property. The fair value of other acquired assets including tenant improvements and unamortized lease commissions are determined using the replacement cost approach. The amount recorded to acquired in-place leases is also determined utilizing the income approach using market assumptions which are based on management’s assessment of current market conditions and the estimated lease-up periods for the respective spaces. Transaction costs related to asset acquisitions are capitalized. On September 5, 2019, we acquired a multi-tenant industrial park comprised of approximately 543,000 rentable square feet in Santa Fe Springs, California, for a total purchase price of $ 104.3 million, inclusive of capitalized transaction costs. On April 18, 2019, we acquired a multi-tenant industrial park comprised of approximately 74,000 rentable square feet in Signal Hill, California, for a total purchase price of $ 13.8 million, inclusive of capitalized transaction costs. On June 8, 2018, we acquired two multi-tenant industrial parks aggregating 1.1 million rentable square feet in Springfield, Virginia, for a purchase price of $ 143.8 million , inclusive of capitalized transaction costs . The following table summarizes the assets acquired and liabilities assumed for the nine months ended September 30, (in thousands) : 2019 2018 Land $ 75,160 $ 25,806 Buildings and improvements 40,765 112,230 Other assets (above-market in-place rents) — 1,487 Accrued and other liabilities (below-market in-place rents) ( 1,142 ) ( 1,790 ) Other assets (in-place lease value) 3,371 6,033 Total purchase price 118,154 143,766 Net operating assets acquired and liabilities assumed ( 463 ) ( 1,367 ) Total cash paid $ 117,691 $ 142,399 We have a 95.0 % interest in a 395 -un it multifamily apartment complex on a five -acre site within the Company’s 628,000 square foot office park located in Tysons, Virginia . An unrelated real estate development company (the “JV Partner”) holds the remaining 5.0 %. On January 1, 2018, we began to consolidate our joint venture due to changes to the joint venture agreement that gave the Company control of the joint venture. The following table summarizes the assets acquired and liabilities assumed related to the consolidation of the joint venture, which was accounted for as an asset acquisition, as of January 1, 2018 (in thousands) : 2018 Land $ 21,814 Buildings and improvements 84,903 Other assets (in-place lease value) 1,199 Total consolidated joint venture 107,916 Noncontrolling interest in consolidated joint venture ( 4,032 ) Net book value of joint venture at consolidation $ 103,884 Properties Sold and Held for Sale Subsequent to September 30, 2019, we sold 1.3 million rentable square feet of flex and office business parks located in Rockville and Silver Spring, Maryland, for a gross sales price of $ 148.8 million. We determined that the sale did not meet the criteria for discontinued operations presentation, as the sale of such assets did not represent a strategic shift that will have a major effect on our operations and financial results. As a result of this classification, the assets of the properties are separately presented as held for sale in the consolidated balance sheet as of December 31, 2018. On March 5, 2018, we sold Corporate Pointe Business Park, a park consisting of five multi-tenant office buildings totaling 161,000 square feet located in Orange County, California, for net sale proceeds of $ 41.7 million, which resulted in a gain of $ 26.8 million. On April 18, 2018, we sold Orange County Business Center, a park consisting of five multi-tenant office buildings totaling 437,000 square feet located in Orange County, California, for net sale proceeds of $ 73.3 million, which resulted in a gain of $ 50.6 million. On April 30, 2018, we sold Northgate Business Park, a park consisting of seven multi-tenant flex buildings totaling 194,000 square feet located in Dallas, Texas, for net sale proceeds of $ 11.8 million, which resulted in a gain of $ 7.9 million. We determined that these sales also did not meet the criteria for discontinued operations presentation. |
Leasing Activity
Leasing Activity | 9 Months Ended |
Sep. 30, 2019 | |
Leasing Activity [Abstract] | |
Leasing Activity | 4. Leasing activity The Company leases space in its commercial real estate facilities to customers primarily under non-cancelable leases generally ranging from one to 10 years. Future minimum rental income, excluding recovery of operating expenses under these leases, is as follows as of September 30, 2019 (in thousands) : Remainder of 2019 $ 74,648 2020 266,240 2021 205,616 2022 143,955 2023 98,747 Thereafter 146,129 Total (1) $ 935,335 ____________________________ (1) Excludes future minimum rental income from assets held for sale. In addition to minimum rental payments, certain customers reimburse the Company for their pro rata share of specified property operating expenses. Such reimbursements amounted to $ 24.0 million and $ 22.9 million for the three months ended September 30, 2019 and 2018, respectively, and $ 73.0 million and $ 69.1 million for the nine months ended September 30, 2019 and 2018, respectively. These variable lease payment amounts are included as rental income in the accompanying consolidated statements of income. Leases accounting for 3.3 % of total leased square footage are subject to termination options, of which 1.4 % of total leased square footage have termination options exercisable through December 31, 2019 . In general, these leases provide for termination payments to us should the termination options be exercised. Certain leases also have an option to extend the terms of the lease. The future minimum rental income in the above table assumes termination options and lease extension options are not exercised. |
Bank Loans
Bank Loans | 9 Months Ended |
Sep. 30, 2019 | |
Bank Loans [Abstract] | |
Bank Loans | 5. Bank loans We have an unsecured revolving line of credit (the “Credit Facility”) with Wells Fargo Bank, National 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 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 %). As of September 30, 2019, the Company had $ 50.0 million outstanding on the Credit Facility at an interest rate of 2.88 %. Subsequent to September 30, 2019, the Company repaid the Credit Facility in full. We had no balance outstanding on our Credit Facility at December 31, 2018. The Company had $ 518,000 and $ 691,000 of total unamortized loan origination costs as of September 30, 2019 and December 31, 2018, 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, 2019. Interest on outstanding borrowings is payable monthly . |
Noncontrolling Interests
Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2019 | |
Noncontrolling Interests [Abstract] | |
Noncontrolling Interests | 6. Noncontrolling interests Noncontrolling interests represent (i) PS’s noncontrolling interest in the OP through its ownership of 7,305,355 common partnership units, totaling $ 213.0 million and $ 215.1 million at September 30, 2019 and December 31, 2018, respectively, and (ii) the JV Partner’s 5.0 % interest in a joint venture owning a 395 -unit multifamily apartment complex, totaling $ 3.0 million at September 30, 2019 and December 31, 2018, respectively. PS OP Interests 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 redeemed 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, totaling $ 7.0 million and $ 6.7 million for the three months ended September 30, 2019 and 2018, respectively, and $ 21.6 million and $ 37.8 million for the nine months ended September 30, 2019 and 2018, respectively. JV Partner In conjunction with consolidating the joint venture on January 1, 2018, we recorded noncontrolling interest of $ 4.0 million related to the JV Partner’s 5.0 % interest in a joint venture owning a 395 -unit multifamily apartment complex. A total of $ 14,000 in income and $ 189,000 in loss was allocated to the JV Partner during the three months ended September 30, 2019 and 2018, respectively, and $ 27,000 in income and $ 1.0 million in loss for the nine months ended September 30, 2019 and 2018, respectively. Distributions of $ 33,000 and $ 78,000 were paid to the JV Partner during the three and nine months ended September 30, 2019 and none were paid during 2018. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 7. Related party transactions We manage certain industrial, office and retail facilities in the United States for PS under either the “Public Storage” or “PS Business Parks” names (the “PS Management Agreement”). 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, which is included in “interest and other income” on our consolidated statements of income. Management fee revenues were $ 71,000 and $ 93,000 for the three months ended September 30, 2019 and 2018, respectively, and $ 221,000 and $ 331,000 for the nine months ended September 30, 2019 and 2018, respectively. We allocate certain operating expenses to PS related to the management of these properties, including payroll and other business expenses, totaling $ 89,000 and $ 101,000 for the three months ended September 30, 2019 and 2018, respectively, and $ 282,000 and $ 376,000 for the nine months ended September 30, 2019 and 2018, respectively. 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 provides us property management services for the self-storage component of two assets we own and operates them 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, and property maintenance and other operational activities, including the selection of vendors, suppliers, employees and independent contractors. Management fee expenses were $ 25,000 and $ 24,000 for the three months ended September 30, 2019 and 2018, respectively, and $ 74,000 and $ 72,000 for the nine months ended September 30, 2019 and 2018, respectively. Additionally, PS allocated certain operating expenses to us related to the management of these properties totaling $ 19,000 and $ 16,000 for the three months ended September 30, 2019 and 2018, respectively, and $ 56,000 and $ 51,000 for the nine months ended September 30, 2019 and 2018, respectively. These amounts are included under “cost of operations” on our consolidated statements of income. Pursuant to a cost sharing agreement, we share certain administrative services, corporate office space, and certain other third party costs with PS which are allocated based upon fair and reasonable estimates of the cost of the services expected to be provided. We reimbursed PS $ 448,000 and $ 170,000 for costs PS incurred on our behalf for the three months ended September 30, 2019 and 2018, respectively, and $ 868,000 and $ 586,000 for the nine months ended September 30, 2019 and 2018, respectively. PS reimbursed us $ 9,000 and $ 10,000 for costs we incurred on their behalf for the three months ended September 30, 2019 and 2018, respectively, and $ 26,000 and $ 29,000 for the nine months ended September 30, 2019 and 2018, respectively. The Company had net amounts due to PS of $ 152,000 at September 30, 2019 and due from PS of $ 43,000 at December 31, 2018 for these contracts, as well as certain operating expenses paid by the Company on behalf of PS. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2019 | |
Shareholders' Equity [Abstract] | |
Shareholders' Equity | 8. Shareholders’ equity Preferred stock As of September 30, 2019 and December 31, 2018, the Company had the following series of preferred stock outstanding: Earliest Potential Dividend Shares Amount Series Issuance Date Redemption Date Rate Outstanding (in thousands) Series U September, 2012 September, 2017 5.75 % 9,200 $ 230,000 Series V March, 2013 March, 2018 5.70 % 4,400 110,000 Series W October, 2016 October, 2021 5.20 % 7,590 189,750 Series X September, 2017 September, 2022 5.25 % 9,200 230,000 Series Y December, 2017 December, 2022 5.20 % 8,000 200,000 Total 38,390 $ 959,750 On January 3, 2018, we completed the redemption of our remaining 6.00 % Cumulative Preferred Stock, Series T, at par of $ 130.0 million. We paid $ 13.0 million in distributions to our preferred shareholders for each of the three months ended September 30, 2019 and 2018, and $ 38.9 million and $ 39.6 million in distributions to our preferred shareholders for the nine months ended September 30, 2019 and 2018, 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, 2019, 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 redemption dates noted above. 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 and units We paid $ 28.8 million ($ 1.05 per common share) and $ 28.7 million ( $ 1.05 per common share) in distributions to our common shareholders for the three months ended September 30, 2019 and 2018, respectively, and $ 86.3 million ($ 3.15 per common share) and $ 75.1 million ($ 2.75 per common share) in distributions to our common shareholders for the nine months ended September 30, 2019 and 2018, respectively. We paid $ 7.7 million ($ 1.05 per common unit) in distributions to our common unit holders for each of the three months ended September 30, 2019 and 2018, respectively, and $ 23.0 million ($ 3.15 per common unit) and $ 20.1 million ($ 2.75 per common unit) in distributions to our common unit holders for the nine months ended September 30, 2019 and 2018, respectively. Equity 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. As of September 30, 2019 and December 31, 2018, no equity stock had been issued. |
Commitments And Contingencies
Commitments And Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments And Contingencies [Abstract] | |
Commitments And Contingencies | 9. Commitments and contingencies We are a party to various legal proceedings and subject to various claims and complaints; however, we believe that the likelihood of these contingencies resulting in a material loss to the Company, either individually or in the aggregate, is remote. |
Stock Compensation
Stock Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Stock Compensation [Abstract] | |
Stock Compensation | 10. 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 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 RSUs vests. We account for forfeitures of share-based payments as they occur by reversing previously amortized share-based compensation expense with respect to grants that are forfeited in the period the employee terminates employment. We amortize the fair value of awards starting 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). Stock Options Stock options expire 10 years 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 on the date of grant. For the three and nine months ended September 30, 2019, respectively, we recorded $ 90,000 and $ 209,000 in compensation expense related to stock options as compared to $ 62,000 and $ 179,000 for the same periods in 2018. During the nine months ended September 30, 2019, 34,000 stock options were granted, 11,179 options were exercised and 4,000 options were forfeited. A total of 162,236 and 143,415 options were outstanding at September 30, 2019 and December 31, 2018, respectively. Restricted Stock Units RSUs granted prior to 2016 are subject to a six-year vesting, with 20 % vesting after year two, and 20 % vesting after each of the next four years. RSUs granted during and subsequent to 2016 are subject to a five-year vesting at the rate of 20 % per year. The grantee receives dividends for each outstanding RSU equal to the per share dividend received by 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 withholdings 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. Effective March, 2014, the Company entered into a performance-based RSU 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 RSU awards, which would be earned only if the Company achieved one of three defined targets during 2014 to 2017. Under the LTEIP there was 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 targets 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 was not achieved for an annual award, the RSUs allocated to be awarded for such year were added to the RSUs that may be received if the four-year target was achieved. All RSU awards under the LTEIP vest in four equal annual installments beginning from the date of award. Compensation expense is recognized based on the RSUs 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. Senior management earned 145,350 shares of RSUs granted in March, 2018 as the maximum targets were achieved for both the year ended December 31, 2017 and for the cumulative four-year period. For the three and nine months ended September 30, 2019, respectively, we recorded $ 813,000 and $ 2.5 million in compensation expense related to RSUs as compared to $ 1.0 million and $ 2.6 million for the same periods in 2018. During the nine months ended September 30, 2019, 6,400 RSUs were granted, 92,820 RSUs vested and 1,460 RSUs were forfeited. Tax withholdings totaling $ 6.1 million were made on behalf of employees in exchange for 38,961 common shares withheld upon vesting for the nine months ended September 30, 2019 resulting in the issuance of 53,859 common shares. Tax withholdings totaling $ 5.0 million were made on behalf of employees in exchange for 43,393 common shares withheld upon vesting for the nine months ended September 30, 2018 resulting in the issuance of 62,030 common shares. A total of 155,410 and 243,290 RSUs were outstanding at September 30, 2019 and December 31, 2018, respectively. In July, 2019, the Company amended the Retirement Plan for Non-Employee Directors (the “Director Plan”), to increase the maximum shares issued upon retirement for each year served as a director from 8,000 shares to 10,000 shares of common stock. The Company recognizes compensation expense with regard to grants to be issued in the future under the Director Plan over the requisite service period. For the three and nine months ended September 30, 2019, respectively, we recorded $ 1.2 million and $ 1.3 million in compensation expense related to these shares as compared to $ 51,000 and $ 160,000 for the same periods in 2018. In April, 2019, we issued 8,000 shares to a director upon retirement with an aggregate fair value of $ 1.2 million. No shares were issued during the nine months ended September 30, 2018. |
Summary Of Significant Accoun_2
Summary Of Significant Accounting Policies (Policy) | 9 Months Ended |
Sep. 30, 2019 | |
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 and our consolidated joint venture. 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, 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 audited 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, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. 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, 2018. |
Consolidation And Equity Method Of Accounting | Consolidation and equity method of accounting 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 investments in entities that are not VIEs that we have significant influence over, but do not control, using the equity method of accounting and for investment in entities that we control, we consolidate. On January 1, 2018, we began to consolidate our joint venture due to changes to the joint venture agreement that gave the Company control of the joint venture. See Note 3 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 Noncontrolling interests represent (i) PS’s noncontrolling interest in the OP through its ownership of 7,305,355 common partnership units and (ii) a third-party 5.0 % interest in our consolidated joint venture owning a 395 -unit multifamily apartment complex. See Note 6 for further information on noncontrolling interests. |
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. |
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 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 various customers. Balances that the Company expects to become uncollectible are 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. The following table provides a reconciliation of cash, cash equivalents and restricted cash per the consolidated statements of cash flow to the corresponding financial statement line items in the consolidated balance sheets (in thousands) : December 31, 2018 2017 Consolidated balance sheets Cash and cash equivalents $ 37,379 $ 114,882 Restricted cash included in Land and building held for development 1,088 1,088 Consolidated statements of cash flows $ 38,467 $ 115,970 September 30, 2019 2018 Consolidated balance sheets Cash and cash equivalents $ 6,749 $ 8,687 Restricted cash included in Land and building held for development 1,088 1,088 Consolidated statements of cash flows $ 7,837 $ 9,775 Carrying values of the Company’s Credit Facility (as defined in Note 5) 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. Direct 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 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, for leases with terms greater than one year are capitalized and depreciated over their estimated useful lives. |
Property Held For Sale Or Development | Property held for sale or development Real estate is classified as held for sale 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 no longer used in its original form and likely that it will be developed to an alternate use. Property held for development or sale is not depreciated. |
Intangible Assets/Liabilities | Intangible assets/liabilities When we acquire real estate facilities, an intangible asset is recorded as other assets for leases where the in-place rent is higher than market rents, and an intangible liability is recorded as other liabilities where the market rents are higher 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 rental income over the respective remaining lease term. As of September 30, 2019, the value of above-market in-place rents resulted in net intangible assets of $ 1.4 million, net of $ 10.4 million of accumulated amortization and the value of below-market in-place rents resulted in net intangible liabilities of $ 2.5 million, net of $ 11.2 million of accumulated amortization. As of December 31, 2018, the value of above-market in-place rents resulted in net intangible assets of $ 1.8 million, net of $ 10.0 million of accumulated amortization and the value of below-market in-place rents resulted in net intangible liabilities of $ 1.8 million, net of $ 10.8 million of accumulated amortization. Additionally, when we acquire real estate facilities, the value of in-place leases (i.e., customer lease-up costs) is recorded as other assets and is amortized to depreciation and amortization expense over the respective remaining lease term. As of September 30, 2019, the value of acquired in-place leases resulted in net intangible assets of $ 6.3 million, net of $ 3.1 million of accumulated amortization. As of December 31, 2018, the value of acquired in-place leases resulted in net intangible assets of $ 4.7 million, net of $ 1.3 million of accumulated amortization. |
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 carrying value of the asset is not recoverable from estimated 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. No impairment charges were recorded in any period presented herein. |
Stock Compensation | Stock compensation Share-based payments to employees, including grants of employee stock options, are recognized as stock compensation expense in the Company’s consolidated statements of income based on their grant date fair values, except for performance-based grants, which are accounted for based on their fair values at the beginning of the service period. See Note 10. |
Accrued And Other Liabilities | Accrued and other liabilities Accrued and other liabilities consist primarily of rents prepaid by our customers, trade payables, property tax accruals, accrued payroll and contingent loss accruals when probable and estimable, as well as the intangible liabilities discussed above. We disclose the nature of significant unaccrued losses that are reasonably possible of occurring and, if estimable, a range of exposure. |
Other Assets | Other assets Other assets are comprised primarily of prepaid expenses, as well as the intangible assets discussed above. |
Revenue Recognition | Revenue recognition We recognize the aggregate rent to be collected (including the impact of escalators and concessions) under leases ratably throughout the non-cancellable lease term on a “straight-line” basis, commencing when the customer takes control of the leased space. Cumulative straight-line rent recognized in excess of amounts billed per the lease term is presented as “deferred rent receivable” on our consolidated balance sheets. We present r eimbursements from customers for real estate taxes and other recoverable operating expenses under a single lease component presentation as the timing and pattern of transfer of such reimbursements are the same as the lease term, and the combined single component of such leases are classified as operating leases. Accordingly, w e recognize such variable lease payments resulting from the reimbursements from customers for real estate taxes and other recoverable operating expenses as rental income in the period the applicable costs are incurred. The Company monitors the collectability of its receivable balances, including deferred rent receivable balances, on an ongoing basis. The Company writes off uncollectible customer receivable balances, including deferred rent receivable balances, in the period such receivable balances are deemed uncollectible. Therefore, recognition of rental income is limited to the lesser of the amount of cash collected or rental income reflected on a “straight-line” basis, plus any accruable variable lease payments for those customer receivable balances deemed uncollectible. Property management fees are recognized in the period earned as other income. Costs incurred in acquiring customers (primarily tenant improvements and lease commissions) are capitalized and amortized over the lease period for leases with terms greater than one year . |
Sales Of Real Estate Facilities | Sales of real estate facilities Sales of real estate facilities are not part of our ordinary activities, and as a result, we consider such sales as contracts with non-customers. We recognize sales of real estate when we have collected payment and the attributes of ownership, such as possession and control of the asset, have been transferred to the buyer. If a contract for sale includes obligations to provide goods or services to the buyer, an allocated portion of the contract price is recognized as revenue as the related goods or services are transferred to the buyer. |
General And Administrative Expense | General and administrative expense General and administrative expense includes executive and other compensation, corporate office expenses, professional fees, 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 substantially all of our “REIT taxable income” each year, and if we meet certain organizational 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 circumstances of our positions. As of September 30, 2019 and December 31, 2018, we did no t recognize any tax benefit for uncertain tax 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 or payable, (b) preferred shareholders, to the extent redemption value exceeds the related carrying value, (c) our joint venture partner, to the extent the consolidated joint venture produce net income or loss during the period and (d) restricted stock unit (“RSU”) 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 of stock compensation awards outstanding (Note 10) using the treasury stock method. 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, 2019 2018 2019 2018 Calculation of net income allocable to common shareholders Net income $ 46,510 $ 44,843 $ 142,458 $ 218,727 Net (income) loss allocated to Preferred shareholders based upon distributions ( 12,959 ) ( 12,959 ) ( 38,877 ) ( 38,921 ) Noncontrolling interests—joint venture ( 14 ) 189 ( 27 ) 1,008 Restricted stock unit holders ( 219 ) ( 239 ) ( 699 ) ( 1,592 ) Net income allocable to common shareholders and noncontrolling interests—common units 33,318 31,834 102,855 179,222 Net income allocation to noncontrolling interests— common units ( 7,006 ) ( 6,703 ) ( 21,643 ) ( 37,822 ) Net income allocable to common shareholders $ 26,312 $ 25,131 $ 81,212 $ 141,400 Calculation of common partnership units as a percentage of common share equivalents Weighted average common shares outstanding 27,432 27,339 27,411 27,310 Weighted average common partnership units outstanding 7,305 7,305 7,305 7,305 Total common share equivalents 34,737 34,644 34,716 34,615 Common partnership units as a percentage of common share equivalents 21.0 % 21.1 % 21.0 % 21.1 % Weighted average common shares outstanding Basic weighted average common shares outstanding 27,432 27,339 27,411 27,310 Net effect of dilutive stock compensation—based on treasury stock method using average market price 111 103 101 102 Diluted weighted average common shares outstanding 27,543 27,442 27,512 27,412 |
Segment Reporting | Segment reporting We have two operating segments: (i) the acquisition, development, ownership and management of commercial real estate and (ii) the acquisition, development, ownership and management of multifamily real estate, but have one reportable segment as the multifamily segment does not meet the quantitative thresholds necessary to require reporting as a separate segment. |
Reclassifications | Reclassifications We have reclassified our divisional vice presidents’ compensation costs totaling $ 457,000 and $ 1.5 million for the three and nine months ended September 30, 2018, respectively, from cost of operations into general and administrative expense on our consolidated statements of income in the three and nine months ended September 30, 2018 in order to conform to the current periods’ presentation. Certain reclassifications have been made to the consolidated financial statements for 2018 in order to conform to the 2019 presentation, including reclassifying assets held for sale as of September 30, 2019 from “real estate facilities, at costs” totaling $ 128.1 million as of December 31, 2018 into “properties held for sale, net” on our consolidated balance sheets. |
Recently Issued Accounting Standards | Recently issued accounting standards In May 2014 and February 2016, the Financial Accounting Standards Board (“FASB”) issued two Accounting 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. Lessor accounting The Lease Standard directs 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 directs how we account for the non-lease components of our lease contracts, primarily expense reimbursements (“Non-Lease Payments”). The Lease Standard requires us to identify Fixed Lease Payments and Non-Lease Payments of a lease agreement and governs the recognition of revenue for the Fixed Lease Payments. Revenue related to Non-Lease Payments under our lease arrangements is subject to the Revenue Standard effective upon adoption of the Lease Standard. See further discussion below on Fixed Lease Payments and Non-Lease Payments. Under the Lease Standard, a set of practical expedients for implementation, which must be elected as a package and for all leases, was elected as part of our adoption of the Lease Standard. These practical expedients include (i) relief from re-assessing whether an expired or existing contract meets the definition of a lease, (ii) relief from re-assessing the classification of expired or existing leases at the adoption date and (iii) allowing previously capitalized initial direct leasing costs to continue to be amortized. We adopted the Lease Standard on its effective date of January 1, 2019. In addition to the package of practical expedients noted above, we also elected the practical expedient not to allocate the total consideration to Fixed Lease Payments and Non-Lease Payments based on their relative standalone selling prices. This practical expedient allows lessors to elect a combined single component presentation if (i) the timing and pattern of the revenue recognition for the Fixed Lease Payments and Non-Lease Payments are the same, and (ii) the combined single component of the lease would continue to be classified as an operating lease. We have assessed and believe the two conditions have been met for Non-Lease Payments as (i) the timing and pattern of transfer of the Fixed Lease Payments and Non-Lease Payments are the same, and (ii) the combined single component of the lease would be classified as an operating lease. The adoption of the Leasing Standard did not result in a material impact to our consolidated financial statements. We recognized revenue from our lease arrangements aggregating $ 108.1 million and $ 103.8 million for the three months ended September 30, 2019 and 2018, respectively, and $ 323.7 million and $ 309.4 million for the nine months ended September 30, 2019 and 2018, respectively. This revenue consisted primarily of rental income from operating leases and the related variable lease payments resulting from reimbursements of property operating expenses. Rental income was $ 84.1 million and $ 80.9 million for the three months ended September 30, 2019 and 2018, respectively, and $ 250.7 million and $ 240.3 million for the nine months ended September 30, 2019 and 2018, respectively. Variable lease payments were $ 24.0 million and $ 22.9 million for the three months ended September 30, 2019 and 2018, respectively, and $ 73.0 million and $ 69.1 million for the nine months ended September 30, 2019 and 2018, respectively. The Lease Standard provides two approaches to account for uncollectible customer receivable balances, and the respective deferred rent receivables balances: (i) an impairment model approach or (ii) a reserve approach in accordance to ASU 450-20, Contingencies - Loss Contingencies (“Contingencies - Loss Contingencies Standard”). Under the impairment model, recognition of rental income is limited to the lesser of the amount of cash collected or rental income reflected on a “straight-line” basis, plus any accruable variable lease payments for those customer receivable balances deemed uncollectible. After completing the impairment model approach, a lessor may also choose to apply the reserve approach. Under the reserve approach, a lessor records a reserve for a portion of the receivable balances, based on historical data, for uncollectible amounts. A lessor that chooses the reserve approach will have to apply the guidance from both the Lease Standard and Contingencies - Loss Contingencies Standard. The Company has elected the impairment model approach to account for its uncollectible customer receivable balances, and the respective deferred rent receivable balances. The Company’s uncollectible receivable balances policy is consistent with the impairment model approach as the Company writes off uncollectible receivable balances in the period the amounts are deemed uncollectible. Therefore, our rental income is limited to the lesser of the amount of cash collected or rental income reflected on a “straight-line” basis, plus any accruable variable lease payments for those customer receivable balances deemed uncollectible. Costs to execute leases The Lease Standard also provides updated guidance on the requirements for the capitalization of the incremental costs incurred in executing leases, such as legal fees and commissions. Under the Lease Standard, any costs that would have been incurred regardless of successful lease execution, such as allocated costs of internal personnel, are to be expensed and may not be capitalized. As we have historically not capitalized any such costs, the adoption of the Lease Standard did not result in a material impact to our consolidated financial statements. Lessee accounting Under the Lease Standard, lessees are required to apply a dual approach by classifying leases as either finance or operating leases based on the principle whether the lease is effectively a finance purchase of the leased asset by the lessee. This classification determines whether the lease expense is recognized based on an effective interest method or a straight-line basis over the term of the lease. 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 is recognized on our balance sheet as a right-of-use (“ROU”) asset and related liability. On January 1, 2019, the Company recorded a ROU asset of $ 1.7 million, included in “other assets” on our consolidated balance sheets and a corresponding liability of $ 1.7 million under “accrued and other liabilities”, relating to our existing ground lease arrangements. These operating leases were recognized based on the present value of the future minimum lease payments over the lease term. As these leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available in determining the present value of future payments. The discount rate used to determine the present value of these operating leases’ future payments was 4.20 %. These ground leases expire in 2029 and 2030 and do not have an option to extend. As of September 30, 2019, the remaining lease terms ranged from 10.0 years to 10. 3 years. Lease expense for minimum lease payments is recognized in the period the applicable costs are incurred as monthly rent for these operating leases are constant without increases through the remaining terms of these leases. The adoption of the Lease Standard did not result in a material impact to our consolidated financial statements from the initial recognition of each lease liability or from the pattern of recognition subsequent to adoption. |
Summary Of Significant Accoun_3
Summary Of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Summary Of Significant Accounting Policies [Abstract] | |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | December 31, 2018 2017 Consolidated balance sheets Cash and cash equivalents $ 37,379 $ 114,882 Restricted cash included in Land and building held for development 1,088 1,088 Consolidated statements of cash flows $ 38,467 $ 115,970 September 30, 2019 2018 Consolidated balance sheets Cash and cash equivalents $ 6,749 $ 8,687 Restricted cash included in Land and building held for development 1,088 1,088 Consolidated statements of cash flows $ 7,837 $ 9,775 |
Calculation Of Earnings Per Share | For The Three Months For The Nine Months Ended September 30, Ended September 30, 2019 2018 2019 2018 Calculation of net income allocable to common shareholders Net income $ 46,510 $ 44,843 $ 142,458 $ 218,727 Net (income) loss allocated to Preferred shareholders based upon distributions ( 12,959 ) ( 12,959 ) ( 38,877 ) ( 38,921 ) Noncontrolling interests—joint venture ( 14 ) 189 ( 27 ) 1,008 Restricted stock unit holders ( 219 ) ( 239 ) ( 699 ) ( 1,592 ) Net income allocable to common shareholders and noncontrolling interests—common units 33,318 31,834 102,855 179,222 Net income allocation to noncontrolling interests— common units ( 7,006 ) ( 6,703 ) ( 21,643 ) ( 37,822 ) Net income allocable to common shareholders $ 26,312 $ 25,131 $ 81,212 $ 141,400 Calculation of common partnership units as a percentage of common share equivalents Weighted average common shares outstanding 27,432 27,339 27,411 27,310 Weighted average common partnership units outstanding 7,305 7,305 7,305 7,305 Total common share equivalents 34,737 34,644 34,716 34,615 Common partnership units as a percentage of common share equivalents 21.0 % 21.1 % 21.0 % 21.1 % Weighted average common shares outstanding Basic weighted average common shares outstanding 27,432 27,339 27,411 27,310 Net effect of dilutive stock compensation—based on treasury stock method using average market price 111 103 101 102 Diluted weighted average common shares outstanding 27,543 27,442 27,512 27,412 |
Real Estate Facilities (Tables)
Real Estate Facilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Real Estate Properties [Line Items] | |
Activity In Real Estate Facilities | Buildings and Accumulated Land Improvements Depreciation Total Balances at December 31, 2018 (1) $ 762,731 $ 2,157,407 $ ( 1,097,748 ) $ 1,822,390 Acquisition of real estate facility 75,160 40,765 — 115,925 Capital expenditures — 26,536 — 26,536 Disposals (2) — ( 11,643 ) 11,643 — Depreciation and amortization expense — — ( 70,896 ) ( 70,896 ) Transfer to properties held for sale — ( 899 ) 4,055 3,156 Balances at September 30, 2019 $ 837,891 $ 2,212,166 $ ( 1,152,946 ) $ 1,897,111 ____________________________ (1) Land, building and improvements, and accumulated depreciation, respectively, totaling $ 53.9 million, $ 217.5 million and $ 143.3 million were reclassified as of December 31, 2018 to “properties held for sale, net” representing 1.3 million rentable square feet of flex and office business parks located in Rockville and Silver Spring, Maryland. (2) Disposals primarily represent the book value of tenant improvements that have been removed upon the customer vacating their space. |
Summary Of Real Estate Assets Acquired And Liabilities Assumed | 2019 2018 Land $ 75,160 $ 25,806 Buildings and improvements 40,765 112,230 Other assets (above-market in-place rents) — 1,487 Accrued and other liabilities (below-market in-place rents) ( 1,142 ) ( 1,790 ) Other assets (in-place lease value) 3,371 6,033 Total purchase price 118,154 143,766 Net operating assets acquired and liabilities assumed ( 463 ) ( 1,367 ) Total cash paid $ 117,691 $ 142,399 |
JV Partner [Member] | |
Real Estate Properties [Line Items] | |
Summary Of Real Estate Assets Acquired And Liabilities Assumed | 2018 Land $ 21,814 Buildings and improvements 84,903 Other assets (in-place lease value) 1,199 Total consolidated joint venture 107,916 Noncontrolling interest in consolidated joint venture ( 4,032 ) Net book value of joint venture at consolidation $ 103,884 |
Leasing Activity (Tables)
Leasing Activity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leasing Activity [Abstract] | |
Summary Of Future Minimum Rental Revenues Excluding Recovery Of Operating Expenses | Remainder of 2019 $ 74,648 2020 266,240 2021 205,616 2022 143,955 2023 98,747 Thereafter 146,129 Total (1) $ 935,335 ____________________________ (1) Excludes future minimum rental income from assets held for sale. |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Shareholders' Equity [Abstract] | |
Schedule Of Preferred Stock Outstanding | Earliest Potential Dividend Shares Amount Series Issuance Date Redemption Date Rate Outstanding (in thousands) Series U September, 2012 September, 2017 5.75 % 9,200 $ 230,000 Series V March, 2013 March, 2018 5.70 % 4,400 110,000 Series W October, 2016 October, 2021 5.20 % 7,590 189,750 Series X September, 2017 September, 2022 5.25 % 9,200 230,000 Series Y December, 2017 December, 2022 5.20 % 8,000 200,000 Total 38,390 $ 959,750 |
Organization And Description _2
Organization And Description Of Business (Narrative) (Details) shares in Millions | 9 Months Ended |
Sep. 30, 2019ft²propertystateshares | |
Organization And Description Of Business [Line Items] | |
The Company's ownership percentage of the limited partnership | 79.00% |
Owned and operated properties (in rentable square feet) | 28,800,000 |
Number of states with rentable commercial space | state | 6 |
Number of units in multi-family asset | property | 395 |
Managed properties (in rentable square feet) | 438,000 |
PS [Member] | |
Organization And Description Of Business [Line Items] | |
Affiliate's percent ownership of the Company's common equity | 41.60% |
Shares owned by Public Storage | shares | 14.5 |
Investment in Consolidated Joint Venture [Member] | |
Organization And Description Of Business [Line Items] | |
Economic interest in joint venture, percentage | 95.00% |
Summary Of Significant Accoun_4
Summary Of Significant Accounting Policies (Narrative) (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segmentpropertyshares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||||
Common units in operating partnership | shares | 7,305,355 | ||||
Number of units in multi-family asset | property | 395 | ||||
Cash and cash equivalents maximum benchmark (in months) | 3 months | ||||
Minimum expected future benefit period on expenditures cost to be capitalized and depreciated (in years) | 2 years | ||||
Minimum expected future benefit period on transaction cost to be capitalized and depreciated (in years) | 1 year | ||||
Length of time criteria for expected sale of assets to be classified as properties held for disposition | 12 months | ||||
Below market lease, net | $ 2,500,000 | $ 2,500,000 | $ 1,800,000 | ||
Below market leases, accumulated amortization | 11,200,000 | 11,200,000 | 10,800,000 | ||
Impairment on assets | 0 | $ 0 | |||
Income tax expense | 0 | ||||
Tax benefit for uncertain tax positions | $ 0 | 0 | |||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 1 | ||||
Cost of operations | 32,468,000 | $ 31,197,000 | $ 97,521,000 | 94,449,000 | |
General and administrative expenses | 4,051,000 | 2,882,000 | 10,111,000 | 8,560,000 | |
Net real estate investment property | 1,897,111,000 | 1,897,111,000 | 1,822,390,000 | ||
Properties held for sale, net | 124,937,000 | 124,937,000 | 128,093,000 | ||
Rental income | 108,064,000 | 103,808,000 | 323,671,000 | 309,391,000 | |
Rental income, operating leases | 84,100,000 | 80,900,000 | 250,700,000 | 240,300,000 | |
Rental income, variable lease payments | 24,000,000 | 22,900,000 | 73,000,000 | 69,100,000 | |
Operating lease, right-of-use asset | 1,700,000 | 1,700,000 | |||
Operating lease, liability | $ 1,700,000 | $ 1,700,000 | |||
Operating lease, discount rate | 4.20% | 4.20% | |||
Reclassification [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Net real estate investment property | (128,100,000) | ||||
Properties held for sale, net | 128,100,000 | ||||
Divisional Vice President [Member] | Reclassification [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Cost of operations | (457,000) | (1,500,000) | |||
General and administrative expenses | $ 457,000 | $ 1,500,000 | |||
Above Market Leases [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Finite-lived intangible assets, net | $ 1,400,000 | $ 1,400,000 | 1,800,000 | ||
Finite-lived intangible assets, accumulated amortization | (10,400,000) | (10,400,000) | (10,000,000) | ||
Acquired In Place Leases [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Finite-lived intangible assets, net | 6,300,000 | 6,300,000 | 4,700,000 | ||
Finite-lived intangible assets, accumulated amortization | $ 3,100,000 | $ 3,100,000 | $ 1,300,000 | ||
JV Partner [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Consolidated entity ownership percentage | 5.00% | 5.00% | |||
Minimum [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful life (in years) | 5 years | ||||
Operating lease, expiration date | Sep. 30, 2029 | ||||
Operating lease, remaining lease term | 10 years | 10 years | |||
Maximum [Member] | |||||
Summary Of Significant Accounting Policies [Line Items] | |||||
Estimated useful life (in years) | 30 years | ||||
Operating lease, expiration date | Jan. 31, 2030 | ||||
Operating lease, remaining lease term | 10 years 3 months 18 days | 10 years 3 months 18 days |
Summary Of Significant Accoun_5
Summary Of Significant Accounting Policies (Reconciliation of Cash, Cash Equivalents and Restricted Cash) (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Summary Of Significant Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 6,749 | $ 37,379 | $ 8,687 | $ 114,882 |
Restricted cash included in - Land and building held for development | 1,088 | 1,088 | 1,088 | 1,088 |
Consolidated statements of cash flows | $ 7,837 | $ 38,467 | $ 9,775 | $ 115,970 |
Summary Of Significant Accoun_6
Summary Of Significant Accounting Policies (Calculation Of Earnings Per Share) (Details) - USD ($) shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Summary Of Significant Accounting Policies [Abstract] | ||||
Net income | $ 46,510,000 | $ 44,843,000 | $ 142,458,000 | $ 218,727,000 |
Net (income) loss allocated to Preferred shareholders based upon distributions | (12,959,000) | (12,959,000) | (38,877,000) | (38,921,000) |
Net (income) loss allocated to Noncontrolling interests - joint venture | (14,000) | 189,000 | (27,000) | 1,008,000 |
Net (income) loss allocated to Restricted stock unit holders | (219,000) | (239,000) | (699,000) | (1,592,000) |
Net income allocable to common shareholders and noncontrolling interests - common units | 33,318,000 | 31,834,000 | 102,855,000 | 179,222,000 |
Net income allocation to noncontrolling interests - common units | (7,006,000) | (6,703,000) | (21,643,000) | (37,822,000) |
Net income allocable to common shareholders | $ 26,312,000 | $ 25,131,000 | $ 81,212,000 | $ 141,400,000 |
Weighted average common shares outstanding | 27,432 | 27,339 | 27,411 | 27,310 |
Weighted average common partnership units outstanding | 7,305 | 7,305 | 7,305 | 7,305 |
Total common share equivalents | 34,737 | 34,644 | 34,716 | 34,615 |
Common partnership units as a percentage of common share equivalents | 21.00% | 21.10% | 21.00% | 21.10% |
Net effect of dilutive stock compensation - based on treasury stock method using average market price | 111 | 103 | 101 | 102 |
Diluted weighted average common shares outstanding | 27,543 | 27,442 | 27,512 | 27,412 |
Real Estate Facilities (Narrati
Real Estate Facilities (Narrative) (Details) $ in Thousands | Oct. 01, 2019USD ($)ft² | Sep. 05, 2019USD ($)ft² | Apr. 18, 2019USD ($)ft² | Jun. 08, 2018USD ($)ft²item | Apr. 30, 2018USD ($)ft²item | Apr. 18, 2018USD ($)ft²item | Mar. 05, 2018USD ($)ft²item | Sep. 30, 2019USD ($)aft²property | Sep. 30, 2018USD ($) |
Real Estate Facilities [Line Items] | |||||||||
Purchase price | $ 118,154 | $ 143,766 | |||||||
Number of units in multi-family asset | property | 395 | ||||||||
Number of acres | a | 5 | ||||||||
Area of real estate property (in square feet) | ft² | 628,000 | ||||||||
Proceeds from sale of real estate facilities | 126,836 | ||||||||
Gain on sale of real estate facilities | $ 85,283 | ||||||||
Committed transaction costs for executed leases | $ 10,300 | ||||||||
Santa Fe Springs Acquisition [Member] | |||||||||
Real Estate Facilities [Line Items] | |||||||||
Number of square foot acquired | ft² | 543,000 | ||||||||
Purchase price | $ 104,300 | ||||||||
Signal Hill Acquisition [Member] | |||||||||
Real Estate Facilities [Line Items] | |||||||||
Number of square foot acquired | ft² | 74,000 | ||||||||
Purchase price | $ 13,800 | ||||||||
Multi-Tenant Industrial Park Acquisition [Member] | |||||||||
Real Estate Facilities [Line Items] | |||||||||
Number of square foot acquired | ft² | 1,100,000 | ||||||||
Purchase price | $ 143,800 | ||||||||
Number of buildings acquired | item | 2 | ||||||||
JV Partner [Member] | |||||||||
Real Estate Facilities [Line Items] | |||||||||
Consolidated entity ownership percentage | 5.00% | ||||||||
Rockville and Silver Spring, Maryland [Member] | Subsequent Event [Member] | |||||||||
Real Estate Facilities [Line Items] | |||||||||
Area of real estate property (in square feet) | ft² | 1,300,000 | ||||||||
Gross proceeds from the sale of real estate facilities | $ 148,800 | ||||||||
Corporate Pointe [Member] | |||||||||
Real Estate Facilities [Line Items] | |||||||||
Area of real estate property (in square feet) | ft² | 161,000 | ||||||||
Number of buildings disposed | item | 5 | ||||||||
Proceeds from sale of real estate facilities | $ 41,700 | ||||||||
Gain on sale of real estate facilities | $ 26,800 | ||||||||
Orange County Business Center [Member] | |||||||||
Real Estate Facilities [Line Items] | |||||||||
Area of real estate property (in square feet) | ft² | 437,000 | ||||||||
Number of buildings disposed | item | 5 | ||||||||
Proceeds from sale of real estate facilities | $ 73,300 | ||||||||
Gain on sale of real estate facilities | $ 50,600 | ||||||||
Northgate Business Park [Member] | |||||||||
Real Estate Facilities [Line Items] | |||||||||
Area of real estate property (in square feet) | ft² | 194,000 | ||||||||
Number of buildings disposed | item | 7 | ||||||||
Proceeds from sale of real estate facilities | $ 11,800 | ||||||||
Gain on sale of real estate facilities | $ 7,900 | ||||||||
Investment in Consolidated Joint Venture [Member] | |||||||||
Real Estate Facilities [Line Items] | |||||||||
Consolidated entity ownership percentage | 95.00% |
Real Estate Facilities (Activit
Real Estate Facilities (Activity In Real Estate Facilities) (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019USD ($)ft² | Dec. 31, 2018USD ($)ft² | |
Property, Plant and Equipment [Line Items] | ||
Beginning Balances | $ 1,822,390 | |
Accumulated Depreciation, Beginning Balances | (1,097,748) | |
Acquisition of real estate facility | 115,925 | |
Capital expenditures | 26,536 | |
Depreciation and amortization expense | (70,896) | |
Transfer to properties held for sale | 3,156 | |
Accumulated Depreciation, Ending Balances | (1,152,946) | |
Ending Balances | 1,897,111 | |
Properties held for sale, net | $ 124,937 | $ 128,093 |
Area of real estate property (in square feet) | ft² | 628,000 | |
Properties Held for Sale or Sold [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Area of real estate property (in square feet) | ft² | 1,300,000 | |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Beginning Balances | $ 762,731 | |
Acquisition of real estate facility | 75,160 | |
Ending Balances | 837,891 | |
Buildings And Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Beginning Balances | 2,157,407 | |
Acquisition of real estate facility | 40,765 | |
Capital expenditures | 26,536 | |
Disposals | (11,643) | |
Transfer to properties held for sale | (899) | |
Ending Balances | 2,212,166 | |
Accumulated Depreciation [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Accumulated Depreciation, Beginning Balances | (1,097,748) | |
Accumulated Depreciation, Disposals | 11,643 | |
Depreciation and amortization expense | (70,896) | |
Transfer to properties held for sale | 4,055 | |
Accumulated Depreciation, Ending Balances | (1,152,946) | |
Reclassification [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Beginning Balances | (128,100) | |
Properties held for sale, net | $ 128,100 | |
Reclassification [Member] | Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Beginning Balances | (53,900) | |
Properties held for sale, net | 53,900 | |
Reclassification [Member] | Buildings And Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Beginning Balances | (217,500) | |
Properties held for sale, net | 217,500 | |
Reclassification [Member] | Accumulated Depreciation [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Beginning Balances | $ (143,300) | |
Properties held for sale, net | $ 143,300 |
Real Estate Facilities (Summary
Real Estate Facilities (Summary Of Real Estate Assets Acquired And Liabilities Assumed) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Real Estate Facilities [Abstract] | ||
Land | $ 75,160 | $ 25,806 |
Buildings and improvements | 40,765 | 112,230 |
Other assets (above-market in-place rents) | 1,487 | |
Accrued and other liabilities (below-market in-place rents) | (1,142) | (1,790) |
Other assets (in-place lease value) | 3,371 | 6,033 |
Total purchase price | 118,154 | 143,766 |
Net operating assets acquired and liabilities assumed | (463) | (1,367) |
Total cash paid | $ 117,691 | $ 142,399 |
Real Estate Facilities (Summa_2
Real Estate Facilities (Summary Of Real Estate Assets Acquired And Liabilities Assumed - Joint Venture) (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Sep. 30, 2018 | Sep. 30, 2019 |
Land | $ 25,806 | $ 75,160 | |
Buildings and improvements | 112,230 | 40,765 | |
Other assets (in-place lease value) | 6,033 | $ 3,371 | |
Noncontrolling interest in consolidated joint venture | $ (4,032) | ||
JV Partner [Member] | |||
Land | $ 21,814 | ||
Buildings and improvements | 84,903 | ||
Other assets (in-place lease value) | 1,199 | ||
Total consolidated joint venture | 107,916 | ||
Noncontrolling interest in consolidated joint venture | (4,032) | ||
Net book value of joint venture at consolidation | $ 103,884 |
Leasing Activity (Narrative) (D
Leasing Activity (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Operating Leased Assets [Line Items] | ||||
Rental income, variable lease payments | $ 24 | $ 22.9 | $ 73 | $ 69.1 |
Percentage of leased asset subjected to termination options | 3.30% | 3.30% | ||
Percentage of leased asset exercisable in period | 1.40% | 1.40% | ||
Termination option, exercisable through date | Dec. 31, 2019 | |||
Maximum [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Non-cancelable lease term | 10 years | 10 years | ||
Minimum [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Non-cancelable lease term | 1 year | 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, 2019USD ($) |
Leasing Activity [Abstract] | |
Remainder of 2019 | $ 74,648 |
2020 | 266,240 |
2021 | 205,616 |
2022 | 143,955 |
2023 | 98,747 |
Thereafter | 146,129 |
Total | $ 935,335 |
Bank Loans (Narrative) (Details
Bank Loans (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Line of Credit Facility [Line Items] | ||
Credit facility, outstanding | $ 50,000,000 | $ 0 |
Wells Fargo Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit, expiration date | Jan. 10, 2022 | |
Line of credit, borrowing limit | $ 250,000,000 | |
Line of credit, frequency of interest payment | monthly | |
Spread over LIBOR | 0.825% | |
Line of credit, facility fee percent | 0.125% | |
Credit Facility, interest rate | 2.88% | |
Unamortized loan origination costs | $ 518,000 | $ 691,000 |
Wells Fargo Credit Facility [Member] | Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over LIBOR | 1.55% | |
Line of credit, facility fee percent | 0.30% | |
Wells Fargo Credit Facility [Member] | Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Spread over LIBOR | 0.80% | |
Line of credit, facility fee percent | 0.10% |
Noncontrolling Interests (Narra
Noncontrolling Interests (Narrative) (Details) | Jan. 01, 2018USD ($) | Sep. 30, 2019USD ($)shares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)propertyshares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
Noncontrolling Interests [Line Items] | ||||||
Common units in operating partnership | shares | 7,305,355 | |||||
Noncontrolling interests | $ 215,923,000 | $ 215,923,000 | $ 218,091,000 | |||
Number of units in multi-family asset | property | 395 | |||||
Number of shares of common stock for each unit of limited partnership interest redeemed | shares | 1 | 1 | ||||
Net (income) loss allocated to Noncontrolling interest - joint venture | $ 14,000 | $ (189,000) | $ 27,000 | $ (1,008,000) | ||
Noncontrolling interest in consolidated joint venture | 4,032,000 | |||||
Net income allocation to noncontrolling interests - common units | 7,006,000 | 6,703,000 | 21,643,000 | 37,822,000 | ||
Distribution paid | 33,000 | $ 0 | 78,000 | $ 0 | ||
PS [Member] | ||||||
Noncontrolling Interests [Line Items] | ||||||
Noncontrolling interests | 213,000,000 | 213,000,000 | 215,100,000 | |||
JV Partner [Member] | ||||||
Noncontrolling Interests [Line Items] | ||||||
Noncontrolling interests | $ 3,000,000 | $ 3,000,000 | $ 3,000,000 | |||
Economic interest in joint venture, percentage | 5.00% | 5.00% | ||||
Noncontrolling interest in consolidated joint venture | $ 4,032,000 |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($)item | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)item | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Related Party Transaction [Line Items] | |||||
Interest and other income | $ 1,384,000 | $ 488,000 | $ 2,766,000 | $ 1,066,000 | |
Royalty-free license agreement written notice of termination period minimum (in months) | 6 months | ||||
Number of assets owned that are maintained by Public Storage | item | 2 | 2 | |||
Property management contract written notice of termination period minimum (in days) | 60 days | ||||
Management fee expenses | $ 25,000 | 24,000 | $ 74,000 | 72,000 | |
Costs allocated from related party | 19,000 | 16,000 | 56,000 | 51,000 | |
Reimbursement to related party | 448,000 | 170,000 | 868,000 | 586,000 | |
Reimbursement from related party | 9,000 | 10,000 | 26,000 | 29,000 | |
Due to related parties | 152,000 | 152,000 | |||
Due from related parties | $ 43,000 | ||||
Property Management [Member] | |||||
Related Party Transaction [Line Items] | |||||
Interest and other income | 71,000 | 93,000 | 221,000 | 331,000 | |
Operating expenses allocated to operating party | $ 89,000 | $ 101,000 | $ 282,000 | $ 376,000 |
Shareholders' Equity (Preferred
Shareholders' Equity (Preferred Stock) (Narrative) (Details) | Jan. 03, 2018USD ($) | Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)item$ / shares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
Class of Stock [Line Items] | ||||||
Shares Amount | $ 959,750,000 | $ 959,750,000 | $ 959,750,000 | |||
Distributions to preferred shareholders | $ 13,000,000 | $ 13,000,000 | $ 38,877,000 | $ 39,614,000 | ||
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 | ||||
Series T Preferred Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Cumulative preferred stock, dividend rate | 6.00% | |||||
Shares Amount | $ 130,000,000 |
Shareholders' Equity (Common St
Shareholders' Equity (Common Stock And Units And Equity Stock) (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Shareholders' Equity [Abstract] | |||||
Distributions paid to common shareholders | $ 28,800 | $ 28,700 | $ 86,343 | $ 75,107 | |
Dividends paid per common share | $ 1.05 | $ 1.05 | $ 3.15 | $ 2.75 | |
Distributions paid to noncontrolling interests — common units | $ 7,700 | $ 7,700 | $ 23,012 | $ 20,090 | |
Dividends paid per common unit | $ 1.05 | $ 1.05 | $ 3.15 | $ 2.75 | |
Equity stock, shares authorized | 100,000,000 | 100,000,000 | |||
Equity stock, shares issued | 0 | 0 | 0 |
Shareholders' Equity (Schedule
Shareholders' Equity (Schedule Of Preferred Stock Outstanding) (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Class of Stock [Line Items] | |||
Shares Outstanding | 38,390 | 38,390 | 38,390 |
Shares Amount | $ 959,750 | $ 959,750 | |
Series U Preferred Stock [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 | |
Shares Amount | $ 230,000 | $ 230,000 | |
Series V Preferred Stock [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 | |
Shares Amount | $ 110,000 | $ 110,000 | |
Series W Preferred Stock [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 | |
Shares Amount | $ 189,750 | $ 189,750 | |
Series X Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Issuance Date | Sep. 1, 2017 | ||
Earliest Potential Redemption Date | Sep. 1, 2022 | ||
Dividend Rate | 5.25% | ||
Shares Outstanding | 9,200 | 9,200 | |
Shares Amount | $ 230,000 | $ 230,000 | |
Series Y Preferred Stock [Member] | |||
Class of Stock [Line Items] | |||
Issuance Date | Dec. 1, 2017 | ||
Earliest Potential Redemption Date | Dec. 1, 2022 | ||
Dividend Rate | 5.20% | ||
Shares Outstanding | 8,000 | 8,000 | |
Shares Amount | $ 200,000 | $ 200,000 |
Stock Compensation (Narrative)
Stock Compensation (Narrative) (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||
Jul. 31, 2019shares | Apr. 30, 2019USD ($)shares | Mar. 31, 2018shares | Sep. 30, 2019USD ($)shares | Sep. 30, 2018USD ($) | Jun. 30, 2019shares | Sep. 30, 2019USD ($)itemshares | Sep. 30, 2018USD ($)shares | Dec. 31, 2018shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Cash paid for taxes in lieu of shares upon vesting of RSU's | $ | $ 620,000 | $ 426,000 | $ 6,120,000 | $ 4,955,000 | |||||
Stock Options [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Expiration period | 10 years | ||||||||
Compensation expense | $ | $ 90,000 | 62,000 | $ 209,000 | 179,000 | |||||
Options exercised | 11,179 | ||||||||
Options forfeited | 4,000 | ||||||||
Stock units granted | 34,000 | ||||||||
Options outstanding | 162,236 | 162,236 | 143,415 | ||||||
Restricted Stock Units (RSUs) Granted Prior To 2016 [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting period | 6 years | ||||||||
Restricted Stock Units (RSUs) Granted Prior To 2016 [Member] | Year Two [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
Restricted Stock Units (RSUs) Granted Prior To 2016 [Member] | Year Three [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
Restricted Stock Units (RSUs) Granted Prior To 2016 [Member] | Year Four [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
Restricted Stock Units (RSUs) Granted Prior To 2016 [Member] | Year Five [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
Restricted Stock Units (RSUs) Granted Prior To 2016 [Member] | Year Six [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Compensation expense | $ | $ 813,000 | 1,000,000 | $ 2,500,000 | $ 2,600,000 | |||||
Vesting period | 5 years | ||||||||
Stock units granted | 6,400 | ||||||||
Stock units forfeited | 1,460 | ||||||||
Awards outstanding | 155,410 | 155,410 | 243,290 | ||||||
Stock units vested | 92,820 | ||||||||
Issuance of common stock in connection with stock-based compensation, shares | 53,859 | 62,030 | |||||||
Common shares withheld upon vesting | 38,961 | 43,393 | |||||||
Restricted Stock Units (RSUs) [Member] | Year One [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
Restricted Stock Units (RSUs) [Member] | Year Two [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
Restricted Stock Units (RSUs) [Member] | Year Three [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
Restricted Stock Units (RSUs) [Member] | Year Four [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
Restricted Stock Units (RSUs) [Member] | Year Five [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Vesting percentage | 20.00% | ||||||||
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 | item | 3 | ||||||||
Number of defined targets to achieve for restricted stock unit awards | item | 1 | ||||||||
Length of Restricted Stock Unit program (in years) | 4 years | ||||||||
Number of annual vesting installments | item | 4 | ||||||||
2014 Performance-Based Restricted Stock Unit Program [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Stock units granted | 145,350 | ||||||||
Retirement Plan for Non-Employee Directors [Member] | Restricted Stock Units (RSUs) [Member] | Director [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Compensation expense | $ | $ 1,200,000 | $ 51,000 | $ 1,300,000 | $ 160,000 | |||||
Issuance of common stock in connection with stock-based compensation, shares | 8,000 | 0 | |||||||
Aggregate fair value of the shares issued | $ | $ 1,200,000 | ||||||||
Maximum [Member] | Retirement Plan for Non-Employee Directors [Member] | Restricted Stock Units (RSUs) [Member] | Director [Member] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Issuance of common stock in connection with stock-based compensation, shares | 10,000 | 8,000 |