Public Storage Reports Results for the Second Quarter Ended June 30, 2007 
GLENDALE, CA (REIT Media) August 2, 2007 - Public Storage (NYSE:PSA) announced today operating results for the second quarter ended June 30, 2007.
Operating Results for the Second Quarter Ended June 30, 2007:
Net income for the three months ended June 30, 2007 was $77,104,000 compared to net income of $128,862,000 for the same period in 2006, representing a decrease of $51,758,000. This decrease is primarily due to increased amortization expense totaling $70.9 million due to the amortization of certain intangible assets acquired in our merger with Shurgard Storage Centers, Inc. ("Shurgard"), which closed on August 22, 2006, combined with an increase of $35.7 million in depreciation expense related to facilities acquired in the merger. In addition, during the three months ended June 30, 2007, our general and administrative expense increased significantly as we incurred $9.6 million in expenses related to our proposed offering of shares in our European business and $2.0 million of expenses related to our reorganization as a Maryland real estate investment trust (a "Maryland REIT").
The negative impacts to our net income from the above mentioned items were partially offset by improved operations from our Same Store group of facilities, continued growth in operations from our newly developed and recently expanded facilities, as well as continued growth in our recently acquired self-storage facilities including the facilities acquired in the merger with Shurgard.
Our Same Store net operating income, before depreciation expense, increased by approximately $2,224,000 to $151,927,000, or 1.5%, as a result of a 1.7% improvement in revenues partially offset by a 2.1% increase in cost of operations. Aggregate net operating income for our newly developed and recently expanded and acquired facilities (other than the Shurgard facilities) increased by approximately $2,968,000 to $26,102,000 compared to the same period in 2006. This increase was largely due to the impact of facilities acquired in 2005, 2006 and 2007, combined with continued fill-up of our newly developed and expansion facilities. For those facilities that were acquired in the Shurgard merger, net operating income was approximately $83,821,000 for the quarter ended June 30, 2007. Our expanded media advertising, along with our aggressive pricing and promotional discount programs, increased our entire domestic portfolio's (including the Shurgard portfolio for all periods presented) average occupancy to 89.7% for the second quarter 2007 compared to 88.6% last year and 87.5% in the first quarter 2007. The overall occupancy at the end of June 2007 was 90.6% compared to 89.3% last year.
For the three months ended June 30, 2007, we had a net income allocable to our common shareholders (after allocating net income to our preferred and equity shareholders) of $14,433,000 or $0.08 per common share on a diluted basis compared to income of $71,130,000 or $0.55 per common share on a diluted basis for the same period in 2006, representing a decrease of $56,697,000 or $0.47 per diluted common share or 84.6%. The decreases in net income allocable to common shareholders on an aggregate and per-share basis are due primarily to the impact of the factors described above, combined with an increase in income allocated to preferred shareholders, as described below.
For the three months ended June 30, 2007 and 2006, we allocated $57,315,000 and $52,376,000 of our net income, respectively, to our preferred shareholders based on distributions paid. The year-over-year increase is due to the issuance of additional preferred securities, partially offset by the redemption of preferred securities that had higher dividend rates than the newly issued preferred securities.
Weighted average diluted shares increased to 170,213,000 for the three months ended June 30, 2007 from 129,062,000 for the three months ended June 30, 2006. The increase in weighted average diluted shares is due primarily to the issuance of approximately 38.9 million shares in the merger with Shurgard, as well as the exercise of employee stock options assumed in the merger with Shurgard.
Operating Results for the Six Months Ended June 30, 2007:
Net income for the six months ended June 30, 2007 was $136,882,000 compared to $243,078,000 for the same period in 2006, representing a decrease of $106,196,000. This decrease is primarily due to increased amortization expense totaling $156.7 million due to the amortization of certain intangible assets acquired in our merger with Shurgard combined with an increase of $71.4 million in depreciation expense related to facilities acquired in the merger. In addition, during the six months ended June 30, 2007, our general and administrative expense increased significantly as we incurred $9.6 million in expenses related to our proposed offering of shares in our European business, $2.0 million of expenses related to our reorganization as a Maryland REIT, and $5.3 million in integration expenses related to the merger.
These items were partially offset by improved operations from our Same Store group of facilities, continued growth in operations from our newly developed and recently expanded facilities along with continued growth in our recently acquired self-storage facilities (including the facilities acquired from Shurgard).
Same Store net operating income, before depreciation expense, increased by $6,578,000 to $299,776,000, or 2.2%, as a result of a 2.3% improvement in revenues partially offset by a 2.4% increase in cost of operations. Aggregate net operating income for our newly developed, acquired and expansion self-storage facilities (excluding the Shurgard facilities) increased by approximately $7,722,000 to $51,005,000. We earned an aggregate of $160,930,000 in net operating income with respect to the facilities acquired from Shurgard.
Net income allocable to our common shareholders (after allocating net income to our preferred and equity shareholders) was $10,079,000 or $0.06 per common share on a diluted basis for the six months ended June 30, 2007 compared to $133,375,000 or $1.03 per common share on a diluted basis for the same period in 2006, representing a decrease of $0.97 per common share, or 94.2%. The decrease in net income allocable to common shareholders and earnings per common diluted share are due primarily to the impact of the factors described above, combined with an increase in income allocated to preferred shareholders, as described below.
For the six months ended June 30, 2007 and 2006, we allocated $116,091,000 and $98,991,000 of our net income, respectively, to our preferred shareholders based on distributions paid. The year-over-year increase is due to the issuance of additional preferred securities, partially offset by the redemption of preferred securities that had higher dividend rates than the newly preferred securities issued.
Weighted average diluted shares increased to 170,275,000 for the six months ended June 30, 2007 from 129,037,000 for the six months ended June 30, 2006. The increase in weighted average diluted shares is due primarily to the issuance of approximately 38.9 million shares in the merger with Shurgard, as well as the exercise of employee stock options assumed in the merger with Shurgard.
Funds from Operations:
For the three months ended June 30, 2007, funds from operations ("FFO") increased to $1.10 per common share on a diluted basis as compared to $0.99 per common share for the same period in 2006, representing an increase of $0.11 per common share, or 11.1%. For the six months ended June 30, 2007, FFO increased to $2.15 per common share on a diluted basis as compared to $1.93 per common share for same period in 2006, representing an increase of $0.22 per common share, or 11.4%.
For the three and six months ended June 30, 2007 and 2006, FFO has been impacted as a result of (i) additional expenses incurred in connection with the merger with Shurgard included in general and administrative expense totaling approximately $1.3 million and $5.3 million for the three and six months ended June 30, 2007, respectively, as compared to $1.1 million and $2.2 million, respectively, for the same periods in 2006, (ii) net foreign currency exchange gains of approximately $5.6 million and $10.6 million for the three and six months ended June 30, 2007, respectively, (iii) expenses related to our proposed offering of shares in our European business totaling $9.6 million for the three months ended June 30, 2007, (iv) additional expenses related to our reorganization as a Maryland REIT totaling approximately $2.0 million for the three months ended June 30, 2007, (v) an increase in estimated insurance proceeds with respect to damage caused by Hurricane Katrina of $2.7 million, and (vi) our pro rata share of PS Business Parks, Inc.'s application of EITF Topic D-42 in connection with the redemption of preferred securities totaling $729,000 in the three and six months ended June 30, 2006 and included in equity in earnings of real estate entities.
The following table provides a summary of the impact of these items that have occurred during the three and six months ended June 30, 2007 and 2006:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
Percentage Percentage
2007 2006 Change 2007 2006 Change
------- ------- ---------- ------- ------- ----------
FFO per common
share prior to
adjustments for
the following
items $ 1.15 $ 1.01 13.9% $ 2.17 $ 1.96 10.7%
Costs and
expenses
incurred in
connection with
the merger with
Shurgard (0.01) (0.01) (0.03) (0.02)
Foreign currency
exchange gain 0.03 - 0.06 -
Costs and
expenses
incurred in
connection with
a proposed
offering of
shares in our
European
business (0.06) - (0.06) -
Costs to
reorganize as a
Maryland REIT (0.01) - (0.01) -
Increase in
insurance
proceeds -
casualty gain - - 0.02 -
Application of
EITF Topic D-42
in connection
with the
redemption of
preferred
securities - (0.01) - (0.01)
------- ------- ------- -------
FFO per common
share, as
reported $ 1.10 $ 0.99 11.1% $ 2.15 $ 1.93 11.4%
======= ======= ======= =======
FFO is a term defined by the National Association of Real Estate Investment Trusts ("NAREIT"). It is generally defined as net income before depreciation with respect to real estate assets and gains and losses on real estate assets. FFO is presented because management and many analysts consider FFO to be one measure of the performance of real estate companies. In addition, we believe that FFO is helpful to investors as an additional measure of the performance of a REIT, because net income includes the impact of depreciation, which assumes that the value of real estate diminishes predictably over time, while we believe that the value of real estate fluctuates due to market conditions and in response to inflation. FFO computations do not consider scheduled principal payments on debt, capital improvements, distribution and other obligations of the Company. FFO is not a substitute for our cash flow or net income as a measure of our liquidity or operating performance or our ability to pay dividends. Other REITs may not compute FFO in the same manner; accordingly, FFO may not be comparable among REITs. See the attached reconciliation of net income to funds from operations included in the selected financial data attached to this press release.
Property Operations-Same Store Facilities:
We derive substantially all of our revenues from the ownership and management of self-storage facilities. In order to evaluate the performance of our overall self-storage portfolio, we analyze the operating performance of our stabilized self-storage facilities.
As of June 30, 2007, our "Same Store" portfolio consists of 1,316 facilities, which represents the facilities that we have consolidated in our financial statements and have been operating at a stabilized basis throughout 2005, 2006 and first six months of 2007.
The Same Store facilities contain approximately 77.8 million net rentable square feet, representing approximately 63% of the aggregate net rentable square feet in the United States of our consolidated self-storage portfolio at June 30, 2007. The following table summarizes the historical operating results of the Same Store facilities:
Selected Operating Data for the Same
Store Facilities (1,316 Facilities): Three Months Ended June 30,
-------------------------------------- -------------------------------
Percentage
2007 2006 Change
--------- --------- -----------
(Dollar amounts in thousands,
except weighted average data)
Revenues:
Rental income $220,056 $216,347 1.7%
Late charges and administrative fees
collected 10,105 10,005 1.0%
--------- --------- -----------
Total revenues (a) 230,161 226,352 1.7%
Cost of operations (excluding
depreciation):
Property taxes 21,630 20,730 4.3%
Direct property payroll 16,098 16,624 (3.2)%
Advertising and promotion 9,161 7,058 29.8%
Utilities 5,112 4,734 8.0%
Repairs and maintenance 7,016 7,437 (5.7)%
Telephone reservation center 2,182 2,204 (1.0)%
Property insurance 2,377 3,343 (28.9)%
Other costs of management 14,658 14,519 1.0%
--------- --------- -----------
Total cost of operations (a) 78,234 76,649 2.1%
--------- --------- -----------
Net operating income (before
depreciation) (b) 151,927 149,703 1.5%
Depreciation expense (40,391) (39,298) 2.8%
--------- --------- -----------
Operating income $111,536 $110,405 1.0%
========= ========= ===========
Gross margin (before depreciation) 66.0% 66.1% (0.2)%
Weighted average for the period:
Square foot occupancy (c) 91.5% 92.1% (0.7)%
Realized annual rent per occupied
square foot (d) (f) $ 12.37 $ 12.08 2.4%
REVPAF (e) (f) $ 11.32 $ 11.13 1.7%
Weighted average at June 30:
Square foot occupancy
In place annual rent per occupied
square foot (g)
Total net rentable square feet (in
thousands)
Selected Operating Data for the Same
Store Facilities (1,316 Facilities): Six Months Ended June 30,
-------------------------------------- ------------------------------
Percentage
2007 2006 Change
--------- --------- ----------
(Dollar amounts in thousands,
except weighted average data)
Revenues:
Rental income $435,783 $426,152 2.3%
Late charges and administrative fees
collected 20,055 19,497 2.9%
--------- --------- ----------
Total revenues (a) 455,838 445,649 2.3%
Cost of operations (excluding
depreciation):
Property taxes 44,501 42,718 4.2%
Direct property payroll 32,239 32,143 0.3%
Advertising and promotion 15,889 14,021 13.3%
Utilities 10,540 9,929 6.2%
Repairs and maintenance 14,057 14,541 (3.3)%
Telephone reservation center 4,251 4,247 0.1%
Property insurance 4,831 5,305 (8.9)%
Other costs of management 29,754 29,547 0.7%
--------- --------- ----------
Total cost of operations (a) 156,062 152,451 2.4%
--------- --------- ----------
Net operating income (before
depreciation) (b) 299,776 293,198 2.2%
Depreciation expense (80,797) (80,349) 0.6%
--------- --------- ----------
Operating income $218,979 $212,849 2.9%
========= ========= ==========
Gross margin (before depreciation) 65.8% 65.8% -
Weighted average for the period:
Square foot occupancy (c) 90.6% 91.1% (0.5)%
Realized annual rent per occupied
square foot (d) (f) $ 12.37 $ 12.03 2.8%
REVPAF (e) (f) $ 11.21 $ 10.96 2.3%
Weighted average at June 30:
Square foot occupancy 92.2% 92.6% (0.4)%
In place annual rent per occupied
square foot (g) $ 13.69 $ 13.33 2.7%
Total net rentable square feet (in
thousands) 77,782 77,782 -
a) See attached reconciliation of these amounts to our consolidated
self-storage revenues and operating expenses. Revenues and cost of
operations do not include ancillary revenues and expenses generated
at the facilities with respect to tenant reinsurance, retail sales
and truck rentals. "Other costs of management" included in cost of
operations principally represents all the indirect costs incurred in
the operations of the facilities. Indirect costs principally include
supervisory costs and corporate overhead cost incurred to support the
operating activities of the facilities.
b) Net operating income (before depreciation) or "NOI" is a non-GAAP
(generally accepted accounting principles) financial measure that
excludes the impact of depreciation expense. Although depreciation is
an operating expense, we believe that NOI is a meaningful measure of
operating performance, because we utilize NOI in making decisions
with respect to capital allocations, in determining current property
values, segment performance and comparing period-to-period and
market-to-market property operating results. NOI is not a substitute
for net operating income after depreciation in evaluating our
operating results.
c) Square foot occupancies represent weighted average occupancy levels
over the entire period.
d) Realized annual rent per occupied square foot is computed by
annualizing the result of dividing rental income by the weighted
average occupied square footage for the period. Realized annual rent
per occupied square foot takes into consideration promotional
discounts, credit card fees and other costs that reduce rental income
from the contractual amounts due.
e) Annualized rental income per available square foot ("REVPAF")
represents annualized rental income divided by total available net
rentable square feet.
f) Late charges and administrative fees are excluded from the
computation of realized annual rent per occupied square foot and
REVPAF because exclusion of these amounts provides a better measure
of our ongoing level of revenue, by excluding the volatility of late
charges, which are dependent principally upon the level of tenant
delinquency, and administrative fees, which are dependent principally
upon the absolute level of move-ins for a period.
g) In place annual rent per occupied square foot represents annualized
contractual rents per occupied square foot without reductions for
promotional discounts, and excludes late charges and administrative
fees.
The following table summarizes additional selected
financial data with respect to our Same Store facilities:
Three Months Ended
--------------------------------------------
March 31 June 30 September 30 December 31 Full Year
--------- --------- ------------ ----------- ---------
Total revenues
(in 000's):
2006 $219,297 $226,352 $233,420 $227,007 $906,076
2007 $225,677 $230,161
Total cost of
operations
(excluding
depreciation
expense) (in
000's):
2006 $ 75,802 $ 76,649 $ 74,947 $ 72,149 $299,547
2007 $ 77,828 $ 78,234
Property taxes
(in 000's):
2006 $ 21,988 $ 20,730 $ 21,700 $ 18,844 $ 83,262
2007 $ 22,871 $ 21,630
Media
advertising
expense (in
000's):
2006 $ 4,130 $ 2,802 $ 1,049 $ 3,823 $ 11,804
2007 $ 3,365 $ 5,333
Other
advertising
and promotion
expense (in
000's):
2006 $ 2,833 $ 4,256 $ 3,723 $ 3,640 $ 14,452
2007 $ 3,363 $ 3,828
REVPAF:
2006 $ 10.79 $ 11.13 $ 11.46 $ 11.16 $ 11.13
2007 $ 11.09 $ 11.32
Weighted
average
realized
annual rent
per occupied
square foot
for the
period:
2006 $ 11.97 $ 12.08 $ 12.55 $ 12.42 $ 12.26
2007 $ 12.35 $ 12.37
Weighted
average square
foot occupancy
levels for the
period:
2006 90.1% 92.1% 91.3% 89.8% 90.8%
2007 89.8% 91.5%
Merger with Shurgard:
On August 22, 2006, we completed the merger with Shurgard Storage Centers, Inc. Included in general and administrative expense are costs related to completing the integration of the two companies of approximately $1.3 million and $5.3 million for the three and six months ended June 30, 2007, respectively. Similar costs relating to pursuing the merger totaling $1.1 million and $2.2 million were incurred in the three and six months ended June 30, 2006, respectively. We do not expect there will be further merger integration costs.
Shurgard Europe:
We own and operate 103 wholly-owned European facilitates with 5.6 million net rentable square feet along with a 20% interest in two joint ventures which collectively own 65 European properties with 3.2 million net rentable square feet. The two joint ventures collectively had approximately $327 million of outstanding debt at June 30, 2007, which is included in our condensed consolidated financial statements.
At June 30, 2007, one of the joint ventures had seven facilities under construction (358,000 net rentable square feet), with total estimated costs of approximately $75 million, of which approximately $45 million had been incurred as of June 30, 2007. We also have seven facilities, and one redevelopment project of an existing facility, in development with an aggregate of 407,000 net rentable square feet. Total estimated costs for these projects, aggregating approximately $64 million (approximately $4 million incurred as of June 30, 2007), will be funded by us. The development of these facilities is subject to various risks and contingencies.
During the second quarter of 2007, we completed the development of one facility in Denmark at a total cost of $8 million, adding 50,000 net rentable square feet to the portfolio.
During the second quarter of 2007, a share offering of Shurgard Europe was initiated to be listed on Eurolist of Euronext(TM) Brussels. Due to adverse market conditions, this offering was withdrawn on June 21, 2007. There is no estimate as to when or if a future offering may occur. We incurred $9.6 million in expenses related to our proposed offering of shares which is included in general and administrative expense for the three and six months ended June 30, 2007.
As previously disclosed in January 2007, we filed an arbitration action with our joint venture partner related to our intention to terminate the joint ventures early. As part of our efforts to resolve this dispute, we had entered into an agreement to exchange their interest in the joint ventures for shares in the proposed public company; however, because the offering has been withdrawn, Shurgard Europe will continue to pursue its arbitration action.
Development and Asset Acquisition Activities in the United States:
During the quarter, we acquired a self-storage facility in California containing 53,000 net rentable square feet, for approximately $6.3 million and have entered into agreements to acquire five additional facilities in California and Georgia with net rentable square feet of 395,000, for an aggregate purchase price of approximately $44 million. These transactions are expected to close in the third quarter.
At June 30, 2007, we had 41 projects (1,786,000 net additional rentable square feet) that were either under construction or were expected to begin construction generally within the next year, which expand existing self-storage facilities and enhance their visual appeal for a total estimated cost of $140 million. These projects will be fully funded by us. Opening dates for these facilities are estimated through the next 24 months. The development of these facilities is subject to various risks and contingencies.
Issuance and Redemption of Preferred Securities:
On July 2, 2007, we issued 6,900,000 depositary shares, with each depositary share representing 1/1,000 of a 7.0% Cumulative Preferred Share of Beneficial Interest, Series N, for aggregate gross proceeds of $172.5 million. A portion of the net proceeds from this offering were used to repay a portion of borrowings under our revolving credit facility and the remainder will be used to make additional investments in self-storage facilities and for other general corporate purposes.
During September 2007, we have the opportunity to redeem our 7.50% Series V preferred stock ($172.5 million). The potential redemption of this security would result in EITF Topic D-42 allocations of approximately $6 million in the third quarter of 2007. No decision has been made to redeem these securities.
Share Repurchases:
Our Board of Trustees has authorized the repurchase from time to time of up to 25,000,000 shares of our common stock on the open market or in privately negotiated transactions. From the inception of the repurchase program through August 2, 2007, we have repurchased a total of 22,201,720 shares (none from January 1, 2006 through August 2, 2007) of common stock at an aggregate cost of approximately $567.2 million.
Distributions Declared:
On August 2, 2007 the Board of Trustees declared a quarterly distribution of $0.50 per regular common share and $0.6125 per share on the depositary shares each representing 1/1,000 of a share of Equity Stock, Series A. Distributions were also declared with respect to the Company's various series of preferred stock. All the distributions are payable on September 27, 2007 to shareholders of record as of September 12, 2007.
Second Quarter Conference Call:
A conference call is scheduled for Friday, August 3, 2007 at 10:00 a.m. (PDT) to discuss the second quarter ended June 30, 2007 earnings results. The participant toll free number is (866) 406-5408 (conference ID number 8992421). A simultaneous audio web cast may be accessed by using the link at www.publicstorage.com under "Corporate Information, Investor Relations" (conference ID number 8992421). A replay of the conference call may be accessed through August 16, 2007 by calling (877) 519-4471 or by using the link at www.publicstorage.com under "Corporate Information, Investor Relations." Both forms of replay utilize conference ID number 8992421.
About Public Storage:
Public Storage, a member of the S&P 500 and The Forbes Global 2000, is a fully integrated, self-administered and self-managed real estate investment trust that primarily acquires, develops, owns and operates self-storage facilities. The Company's headquarters are located in Glendale, California. The Company's self-storage properties are located in 38 states and seven Western European nations. At June 30, 2007, the Company had interests in 2,006 storage facilities with approximately 126 million net rentable square feet in the United States and 168 storage facilities with approximately 9 million net rentable square feet in Europe.
Additional information about Public Storage is available on our website, www.publicstorage.com.
Forward-Looking Statements:
All statements in this press release, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words "expects," "believes," "anticipates," "should," "estimates" and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause Public Storage's actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance are described from time to time in Public Storage's filings with the Securities and Exchange Commission, including in Item 1A, "Risk Factors" in Public Storage's Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and our Quarterly Reports on Form 10-Q, and in reports on Form 8-K. These risks include, but are not limited to, the following: risks related to the merger with Shurgard including difficulties that may be encountered in completing the integration of Public Storage and Shurgard, the impact of the merger on occupancy and rental rates, the inability to realize or delays in realizing expected results from the merger, and risks associated with international operations; changes in general economic conditions and in the markets in which Public Storage operates; the impact of competition from new and existing storage and commercial facilities and other storage alternatives, which could impact rents and occupancy levels at our facilities; difficulties in Public Storage's ability to evaluate, finance and integrate acquired and developed properties into its existing operations and to fill up those properties; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing Real Estate Investment Trusts, which could increase our expenses and reduce cash available for distribution; consumers' failure to accept the containerized storage concept; difficulties in raising capital at reasonable rates; delays in the development process; and economic uncertainty due to the impact of war or terrorism. Public Storage disclaims any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, new estimates, or other factors, events or circumstances after the date of this press release, except where expressly required by law.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
(Amounts in thousands, except per share
data)
Revenues:
Self-storage rental income $411,216 $262,232 $809,997 $513,579
Ancillary operations 36,977 25,582 70,438 47,678
Interest and other income 955 10,047 3,080 15,122
--------- --------- --------- ---------
449,148 297,861 883,515 576,379
--------- --------- --------- ---------
Expenses:
Cost of operations:
Self-storage facilities 149,366 89,395 298,286 177,098
Ancillary operations 21,743 17,150 42,744 32,424
Depreciation and
amortization (a) 167,601 48,580 344,082 98,608
General and administrative
(b) 21,465 6,975 37,981 13,754
Interest expense 16,707 1,872 33,515 3,429
--------- --------- --------- ---------
376,882 163,972 756,608 325,313
--------- --------- --------- ---------
Income from continuing
operations before equity in
earnings of real estate
entities, gain on disposition
of real estate investments,
casualty gain, foreign
currency exchange gain,
income from derivatives and
minority interest in income 72,266 133,889 126,907 251,066
Equity in earnings of real
estate entities 2,782 3,124 6,759 6,590
Gain on disposition of real
estate investments 2,238 466 2,238 466
Casualty gain (c) - - 2,665 -
Foreign currency exchange gain 5,553 - 10,593 -
Income from derivatives, net 1,771 - 1,009 -
Minority interest in income
allocable to:
Preferred minority interests
based upon ongoing
distributions (5,403) (4,658) (10,806) (8,249)
Other partnership interests (2,121) (4,070) (2,501) (7,638)
--------- --------- --------- ---------
Income from continuing
operations 77,086 128,751 136,864 242,235
Cumulative effect of change
in accounting principle - - - 578
Discontinued operations 18 111 18 265
--------- --------- --------- ---------
Net income $ 77,104 $128,862 $136,882 $243,078
========= ========= ========= =========
Net income allocation:
------------------------------
Allocable to preferred
shareholders $ 57,315 $ 52,376 $116,091 $ 98,991
Allocable to equity
shareholders, Series A 5,356 5,356 10,712 10,712
Allocable to common
shareholders 14,433 71,130 10,079 133,375
--------- --------- --------- ---------
$ 77,104 $128,862 $136,882 $243,078
========= ========= ========= =========
Per common share:
------------------------------
Net income per share - Basic $ 0.09 $ 0.55 $ 0.06 $ 1.04
========= ========= ========= =========
Net income per share -
Diluted $ 0.08 $ 0.55 $ 0.06 $ 1.03
========= ========= ========= =========
Weighted average common
shares - Basic 169,346 128,180 169,288 128,151
========= ========= ========= =========
Weighted average common
shares - Diluted 170,213 129,062 170,275 129,037
========= ========= ========= =========
(a) Depreciation and amortization increased substantially, principally
due to $70,928,000 and $156,712,000 in amortization of intangibles
acquired in the merger with Shurgard for the three and six months
ended June 30, 2007, respectively, as well as $35,700,000 and
$71,400,000 in depreciation of the buildings acquired in the merger
with Shurgard for the same periods. Amortization of the intangible
assets acquired in the merger with Shurgard is expected to be
approximately $51,994,000 in the third quarter of 2007 and
$36,938,000 in the fourth quarter of 2007.
(b) Included in general and administrative expense are merger related
costs totaling $1.3 million and $1.1 million for the three months
ended June 30, 2007 and 2006, respectively, and $5.3 million and $2.2
million for the six months ended June 30, 2007 and 2006,
respectively. Also included in general and administrative expense for
the three months ended June 30, 2007 are expenses associated with our
proposed offering of shares in our European business aggregating $9.6
million and $2.0 million of expenses related to our reorganization as
a Maryland REIT.
(c) During 2005, several of our self-storage facilities were
significantly damaged by Hurricane Katrina. As a result, a loss was
recorded in 2005 based on the excess of the net book value of the
damaged facilities over the estimated insurance proceeds that we
would receive.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
(Unaudited)
June 30, December 31,
2007 2006
------------ ------------
(Amounts in thousands,
except share and per
share data)
ASSETS
Cash and cash equivalents $ 46,743 $ 535,684
Operating real estate facilities:
Land and building, at cost 11,339,578 11,261,865
Accumulated depreciation (1,940,189) (1,754,362)
------------ ------------
9,399,389 9,507,503
Construction in process 98,645 90,038
------------ ------------
9,498,034 9,597,541
Investment in real estate entities 321,208 301,905
Goodwill 174,634 174,634
Intangible assets, net 260,015 414,602
Restricted cash 20,206 19,900
Other assets 156,268 154,207
------------ ------------
Total assets $10,477,108 $11,198,473
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Borrowings on bank credit facilities $ 70,000 $ 345,000
Notes payable and debt due to joint venture
partner 1,018,368 1,503,542
Preferred stock called for redemption - 302,150
Accrued and other liabilities 326,985 333,706
------------ ------------
Total liabilities 1,415,353 2,484,398
Minority interest - preferred partnership
interests 325,000 325,000
Minority interest - other partnership
interests 178,124 181,030
Shareholders' equity:
Preferred Stock, $0.01 par value,
50,000,000 shares authorized, 1,732,600
shares issued (in series) and outstanding
(1,712,600 at December 31, 2006), at
liquidation preference:
Cumulative Preferred Stock, issued in
series 3,355,000 2,855,000
Common Stock, $0.10 par value, 200,000,000
shares authorized, 169,360,999 shares
issued and outstanding (169,144,467 at
December 31, 2006) 16,937 16,915
Equity Stock, Series A, $0.01 par value,
200,000,000 shares authorized, 8,744.193
shares issued and outstanding at June 30,
2007 and December 31, 2006 - -
Paid-in capital 5,655,666 5,661,507
Cumulative net income 3,640,174 3,503,292
Cumulative distributions paid (4,144,819) (3,847,998)
Accumulated other comprehensive income 35,673 19,329
------------ ------------
Total shareholders' equity 8,558,631 8,208,045
------------ ------------
Total liabilities and shareholders'
equity $10,477,108 $11,198,473
============ ============
Shurgard Domestic Same Store Selected Operating Data
The Shurgard Domestic Same Store pool of 344 facilities are all stabilized since January 1, 2005 and will therefore provide meaningful comparative data for 2005, 2006 and first six months of 2007. Previously, the Shurgard Domestic Same Store Pool included 355 facilities, which has now been reduced for 11 facilities which, effective May 24, 2007, were no longer consolidated in our operating results. After May 24, 2007, our pro rata share of the net operating results of these 11 facilities is presented as a component of Equity in Earnings of Real Estate Entities, and our net investment in these properties is reflected on our balance sheet as Investment in Real Estate Entities.
The operating data presented in the table below reflects the historical data from January 1, 2006 through June 30, 2006, the period for which the 344 facilities were operated under Shurgard combined with the historical data from January 1, 2007 through June 30, 2007, the period operated under Public Storage.
Selected Operating Data for the 344
facilities operated by Shurgard on a
stabilized basis since January 1,
2005 ("Shurgard Domestic Same Store
Facilities"): (a) Three Months Ended June 30,
-------------------------------------- -------------------------------
Percentage
2007 2006 Change
---------- -------- -----------
(Dollar amounts in thousands,
except weighted average data)
Revenues:
Rental income $65,402 $63,155 3.6%
Late charges and administrative fees
collected 2,159 2,183 (1.1%)
---------- -------- -----------
Total revenues (b) 67,561 65,338 3.4%
Cost of operations (excluding
depreciation):
Property taxes 6,703 6,178 8.5%
Direct property payroll 4,361 7,735 (43.6%)
Advertising and promotion 2,317 1,211 91.3%
Utilities 1,696 1,587 6.9%
Repairs and maintenance 2,011 1,402 43.4%
Telephone reservation center 574 - -
Property insurance 708 348 103.4%
Other costs of management 4,437 5,442 (18.5%)
---------- -------- -----------
Total cost of operations (b) 22,807 23,903 (4.6%)
---------- -------- -----------
Net operating income (excluding
depreciation) (c) $44,754 $41,435 8.0%
========== ======== ===========
Gross margin (before depreciation) 66.2% 63.4% 4.4%
Weighted average for the period:
Square foot occupancy (d) 89.4% 84.6% 5.7%
Realized annual rent per occupied
square foot (e) $ 13.26 $ 13.53 (2.0%)
REVPAF (f) (g) $ 11.85 $ 11.44 3.6%
Weighted average at June 30:
Square foot occupancy
Total net rentable square feet (in
thousands)
Selected Operating Data for the 344
facilities operated by Shurgard on a
stabilized basis since January 1,
2005 ("Shurgard Domestic Same Store
Facilities"): (a) Six Months Ended June 30,
-------------------------------------- ------------------------------
Percentage
2007 2006 Change
--------- --------- ----------
(Dollar amounts in thousands,
except weighted average data)
Revenues:
Rental income $128,484 $124,181 3.5%
Late charges and administrative fees
collected 4,222 4,248 (0.6%)
--------- --------- ----------
Total revenues (b) 132,706 128,429 3.3%
Cost of operations (excluding
depreciation):
Property taxes 13,443 12,367 8.7%
Direct property payroll 9,051 15,449 (41.4%)
Advertising and promotion 4,160 2,775 49.9%
Utilities 3,702 3,465 6.8%
Repairs and maintenance 4,032 2,979 35.3%
Telephone reservation center 1,118 - -
Property insurance 1,425 687 107.4%
Other costs of management 9,066 11,174 (18.9%)
--------- --------- ----------
Total cost of operations (b) 45,997 48,896 (5.9%)
--------- --------- ----------
Net operating income (excluding
depreciation) (c) $ 86,709 $ 79,533 9.0%
========= ========= ==========
Gross margin (before depreciation) 65.3% 61.9% 5.5%
Weighted average for the period:
Square foot occupancy (d) 88.1% 84.0% 4.9%
Realized annual rent per occupied
square foot (e) $ 13.21 $ 13.39 (1.3%)
REVPAF (f) (g) $ 11.64 $ 11.25 3.5%
Weighted average at June 30:
Square foot occupancy 90.4% 85.5% 5.7%
Total net rentable square feet (in
thousands) 22,076 22,076 -
(a) Operating data reflects the operations of these facilities without
regard to the time period in which Public Storage owned the
facilities; only the amounts for the period January 1, 2007 through
June 30, 2007 are included in our consolidated operating results.
(b) Revenues and cost of operations do not include ancillary revenues
and expenses generated at the facilities with respect to tenant
reinsurance, retail sales and truck rentals. "Other costs of
management" included in cost of operations principally represents all
the indirect costs incurred in the operations of the facilities.
Indirect costs principally include supervisory costs and corporate
overhead cost incurred to support the operating activities of the
facilities. These amounts presented herein will not necessarily
compare to amounts previously presented by Shurgard in its public
reporting due to differences in classification of revenues and
expenses, including tenant reinsurance, retail sales and truck rental
activities which are included on our income statement under
"ancillary operations" but were previously presented by Shurgard as
self-storage revenue and operating expenses.
(c) Net operating income (before depreciation) or "NOI" is a non-GAAP
(generally accepted accounting principles) financial measure that
excludes the impact of depreciation expense. Although depreciation is
an operating expense, we believe that NOI is a meaningful measure of
operating performance, because we utilize NOI in making decisions
with respect to capital allocations, in determining current property
values, segment performance, and comparing period-to-period and
market-to-market property operating results. NOI is not a substitute
for net operating income after depreciation in evaluating our
operating results. Depreciation is not presented herein because it is
not comparable during the period owned by us and during the period
owned by Shurgard, due to differing historical costs and depreciable
lives.
(d) Square foot occupancies represent weighted average occupancy
levels over the entire period.
(e) Realized annual rent per occupied square foot is computed by
annualizing the result of dividing rental income by the weighted
average occupied square footage for the period. Realized annual rent
per occupied square foot takes into consideration promotional
discounts, credit card fees and other costs that reduce rental income
from the contractual amounts due.
(f) Annualized rental income per available square foot ("REVPAF")
represents annualized rental income divided by total available net
rentable square feet.
(g) Late charges and administrative fees are excluded from the
computation of realized annual rent per occupied square foot and
REVPAF because exclusion of these amounts provides a better measure
of our ongoing level of revenue, by excluding the volatility of late
charges, which are dependent principally upon the level of tenant
delinquency, and administrative fees, which are dependent principally
upon the absolute level of move-ins for a period.
Shurgard European Same Store Selected Operating Data
In the merger with Shurgard, we acquired 103 wholly-owned facilities and an interest in 57 facilities owned by affiliated joint ventures located in seven European countries. The operating data presented in the table below reflects the historical data for the Same Store portfolio in Europe from January 1, 2006 through June 30, 2006, the period for which the facilities were operated under Shurgard combined with the historical data from January 1, 2007 through June 30, 2007, the period operated under Public Storage.
Selected Operating Data for the 96
facilities operated by Shurgard
Europe on a stabilized basis since
January 1, 2005 ("Europe Same Store
Facilities"): (a) Three Months Ended June 30,
-------------------------------------- -------------------------------
Percentage
2007 2006 Change
---------- -------- -----------
(Dollar amounts in thousands,
except weighted average data,
utilizing constant exchange
rates) (b)
Revenues:
Rental income $30,732 $27,961 9.9%
Late charges and administrative fees
collected 313 255 22.7%
---------- -------- -----------
Total revenues (c) 31,045 28,216 10.0%
Cost of operations (excluding
depreciation):
Property taxes 1,464 1,301 12.5%
Direct property payroll 3,629 4,074 (10.9%)
Advertising and promotion 1,309 1,595 (17.9%)
Utilities 722 815 (11.4%)
Repairs and maintenance 738 867 (14.9%)
Property insurance 343 372 (7.8%)
Other costs of management 4,916 4,941 (0.5%)
---------- -------- -----------
Total cost of operations (c) 13,121 13,965 (6.0%)
---------- -------- -----------
Net operating income (excluding
depreciation) (d) $17,924 $14,251 25.8%
========== ======== ===========
Gross margin (before depreciation) 57.7% 50.5% 14.3%
Weighted average for the period:
Square foot occupancy (e) 89.9% 83.5% 7.7%
Realized annual rent per occupied
square foot (f) $ 25.87 $ 25.34 2.1%
REVPAF (g) (h) $ 23.26 $ 21.16 9.9%
Weighted average at June 30:
Square foot occupancy
In place annual rent per occupied
square foot (i)
Total net rentable square feet (in
thousands)
Selected Operating Data for the 96
facilities operated by Shurgard Europe
on a stabilized basis since January 1,
2005 ("Europe Same Store Facilities"):
(a) Six Months Ended June 30,
---------------------------------------- ----------------------------
Percentage
2007 2006 Change
-------- -------- ----------
(Dollar amounts in thousands,
except weighted average data,
utilizing constant exchange
rates) (b)
Revenues:
Rental income $60,003 $54,569 10.0%
Late charges and administrative fees
collected 592 534 10.9%
-------- -------- ----------
Total revenues (c) 60,595 55,103 10.0%
Cost of operations (excluding
depreciation):
Property taxes 2,662 2,619 1.6%
Direct property payroll 7,209 8,129 (11.3%)
Advertising and promotion 2,532 3,455 (26.7%)
Utilities 1,572 1,708 (8.0%)
Repairs and maintenance 1,561 1,718 (9.1%)
Property insurance 701 741 (5.4%)
Other costs of management 9,486 9,341 1.6%
-------- -------- ----------
Total cost of operations (c) 25,723 27,711 (7.2%)
-------- -------- ----------
Net operating income (excluding
depreciation) (d) $34,872 $27,392 27.3%
======== ======== ==========
Gross margin (before depreciation) 57.5% 49.7% 15.7%
Weighted average for the period:
Square foot occupancy (e) 89.2% 82.8% 7.7%
Realized annual rent per occupied
square foot (f) $ 25.45 $ 24.94 2.0%
REVPAF (g) (h) $ 22.70 $ 20.65 9.9%
Weighted average at June 30:
Square foot occupancy 91.1% 85.9% 6.1%
In place annual rent per occupied
square foot (i) $ 27.29 $ 26.10 4.6%
Total net rentable square feet (in
thousands) 5,286 5,286 -
(a) Operating data reflects the operations of these facilities without
regard to the time period in which Public Storage owned the
facilities; only the amounts for the period January 1, 2007 through
June 30, 2007 are included in our consolidated operating results.
(b) Amounts for the quarter and six months, respectively, ended June
30, 2006 are translated based upon the average exchange rates for the
quarter and six months, respectively, ended June 30, 2007. Amounts
for the quarter and six months, respectively, ended June 30, 2007 are
translated based upon the average exchange rates in effect for each
period as denoted more fully in Note 2 to our financial statements,
"Summary of Significant Accounting Policies." The majority of our
operations are denominated in Euros and British Pounds. The Euro was
translated at an average exchange rate of approximately 1.348 and
1.329, respectively, in US Dollars per Euro for the three and six
months ended June 30, 2007, respectively. The British Pound was
translated at an average exchange rate of approximately 1.985 and
1.969, respectively, in US Dollars per British Pound for the three
and six months ended June 30, 2007, respectively.
(c) Revenues and cost of operations do not include ancillary revenues
and expenses generated at the facilities with respect to tenant
reinsurance and retail sales. "Other costs of management" included in
cost of operations principally represents all the indirect costs
incurred in the operations of the facilities. Indirect costs
principally include supervisory costs and corporate overhead cost
incurred to support the operating activities of the facilities. These
amounts presented herein will not necessarily compare to amounts
previously presented by Shurgard in its public reporting due to
differences in classification of revenues and expenses, including
tenant reinsurance and retail sales which are included on our income
statement under "ancillary operations" but were previously presented
by Shurgard as self-storage revenue and operating expenses.
(d) Net operating income (before depreciation) or "NOI" is a non-GAAP
(generally accepted accounting principles) financial measure that
excludes the impact of depreciation expense. Although depreciation is
an operating expense, we believe that NOI is a meaningful measure of
operating performance, because we utilize NOI in making decisions
with respect to capital allocations, in determining current property
values, segment performance, and comparing period-to-period and
market-to-market property operating results. NOI is not a substitute
for net operating income after depreciation in evaluating our
operating results. Depreciation is not presented herein because it is
not comparable during the period owned by us and during the period
owned by Shurgard, due to differing historical costs and depreciable
lives.
(e) Square foot occupancies represent weighted average occupancy
levels over the entire period.
(f) Realized annual rent per occupied square foot is computed by
annualizing the result of dividing rental income by the weighted
average occupied square footage for the period. Realized annual rent
per occupied square foot takes into consideration promotional
discounts, credit card fees and other costs that reduce rental income
from the contractual amounts due.
(g) Annualized rental income per available square foot ("REVPAF")
represents annualized rental income divided by total available net
rentable square feet.
(h) Late charges and administrative fees are excluded from the
computation of realized annual rent per occupied square foot and
REVPAF because exclusion of these amounts provides a better measure
of our ongoing level of revenue, by excluding the volatility of late
charges, which are dependent principally upon the level of tenant
delinquency, and administrative fees, which are dependent principally
upon the absolute level of move-ins for a period.
(i) In place annual rent per occupied square foot represents
annualized contractual rents per occupied square foot without
reductions for promotional discounts, and excludes late charges and
administrative fees.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Computation of Funds From Operations (a)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
2007 2006 2007 2006
--------- --------- ---------- ---------
(Amounts in thousands, except per share
data)
Computation of Funds from
Operations (FFO) allocable
to Common Stock
-----------------------------
Net income $ 77,104 $128,862 $ 136,882 $243,078
Add back - depreciation and
amortization 167,601 48,580 344,082 98,608
Add back - depreciation and
amortization included in
Discontinued Operations - 66 - 108
Eliminate - depreciation
with respect to non-real
estate assets (108) (45) (206) (105)
Eliminate - our pro rata
share of PSB's gain on
sale of real estate - (711) - (1,023)
Eliminate - gain on sale of
real estate assets (2,238) (466) (2,238) (466)
Depreciation from
unconsolidated real estate
investments 11,279 9,466 21,034 18,720
Add back - minority
interest share of income 7,524 8,728 13,307 15,887
--------- --------- ---------- ---------
Consolidated FFO 261,162 194,480 512,861 374,807
Allocable to preferred
minority interest based upon
ongoing distributions (5,403) (4,658) (10,806) (8,249)
Allocable to other minority
interests (5,473) (4,386) (9,276) (8,266)
--------- --------- ---------- ---------
Remaining FFO allocable to
our shareholders 250,286 185,436 492,779 358,292
Less: allocations to
preferred and equity stock
shareholders:
Preferred shareholder
distributions (57,315) (52,376) (116,091) (98,991)
Equity Stock, Series A
distributions (5,356) (5,356) (10,712) (10,712)
--------- --------- ---------- ---------
Remaining FFO allocable to
Common Stock (a) $187,615 $127,704 $ 365,976 $248,589
========= ========= ========== =========
Weighted average shares:
-----------------------------
Regular common shares 169,346 128,180 169,288 128,151
Weighted average stock
options and restricted
stock units outstanding
using treasury method 867 882 987 886
--------- --------- ---------- ---------
Weighted average common
shares for purposes of
computing fully-diluted FFO
per common share 170,213 129,062 170,275 129,037
========= ========= ========== =========
FFO per common share (a) $ 1.10 $ 0.99 $ 2.15 $ 1.93
========= ========= ========== =========
(a) Funds from operations ("FFO") is a term defined by the National
Association of Real Estate Investment Trusts ("NAREIT"). FFO is a
non-GAAP (generally accepted accounting principles) financial
measure. FFO is generally defined as net income before depreciation
with respect to real estate assets and gains and losses on real
estate assets. FFO is presented because management and many analysts
consider FFO to be one measure of the performance of real estate
companies. In addition, we believe that FFO is helpful to investors
as an additional measure of the performance of a REIT, because net
income includes the impact of depreciation, which assumes that the
value of real estate diminishes predictably over time, while we
believe that the value of real estate fluctuates due to market
conditions and in response to inflation. FFO computations do not
consider scheduled principal payments on debt, capital improvements,
distributions, and other obligations of the Company. FFO is not a
substitute for our cash flow or net income as a measure of our
liquidity or operating performance or our ability to pay dividends.
Other REITs may not compute FFO in the same manner; accordingly, FFO
may not be comparable among REITs.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Computation of Funds Available for Distribution (c)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
(Amounts in thousands)
Computation of Funds Available
for Distribution ("FAD"):
------------------------------
FFO allocable to Common Stock
(a) $187,615 $127,704 $365,976 $248,589
Add: Non-cash stock-based
compensation expense 2,360 1,491 4,868 3,027
Less: Non-cash foreign
exchange and derivative gains (7,324) - (11,602) -
Add: Non-cash EITF Topic D-42
charges included in equity in
earnings of real estate
entities - 729 - 729
Less: Capital expenditures to
maintain facilities (b) (20,500) (15,070) (25,207) (23,449)
--------- --------- --------- ---------
Funds available for
distribution ("FAD") (c) $162,151 $114,854 $334,035 $228,896
========= ========= ========= =========
Distribution to common
shareholders $ 85,025 $ 64,297 $170,018 $128,595
========= ========= ========= =========
Distribution payout ratio (c) 52.4% 56.0% 50.9% 56.2%
========= ========= ========= =========
(a) Funds from operations ("FFO") is a term defined by the National
Association of Real Estate Investment Trusts ("NAREIT"). FFO is a
non-GAAP (generally accepted accounting principles) financial
measure. FFO is generally defined as net income before depreciation
with respect to real estate assets and gains and losses on real
estate assets. FFO is presented because management and many analysts
consider FFO to be one measure of the performance of real estate
companies. In addition, we believe that FFO is helpful to investors
as an additional measure of the performance of a REIT, because net
income includes the impact of depreciation, which assumes that the
value of real estate diminishes predictably over time, while we
believe that the value of real estate fluctuates due to market
conditions and in response to inflation. FFO computations do not
consider scheduled principal payments on debt, capital improvements,
distributions, and other obligations of the Company. FFO is not a
substitute for our cash flow or net income as a measure of our
liquidity or operating performance or our ability to pay dividends.
Other REITs may not compute FFO in the same manner; accordingly, FFO
may not be comparable among REITs.
(b) Capital expenditures excludes approximately $3,600,000 for the six
months ended June 30, 2007, of costs incurred to re-brand the U.S.
Shurgard facilities to the "Public Storage" name, which principally
consists of permanent signage.
(c) Funds available for distribution ("FAD") represents FFO, plus 1)
impairment charges with respect to real estate assets, 2) the non-
cash portion of stock-based compensation expense, 3) income
allocation to preferred equity holders in accordance with EITF Topic
D-42, less capital expenditures and any gain or loss on foreign
exchange or from derivatives. The distribution payout ratio is
computed by dividing the distribution paid by FAD. FAD is presented
because many analysts consider it to be a measure of the performance
and liquidity of real estate companies and because we believe that
FAD is helpful to investors as an additional measure of the
performance of a REIT. FAD is not a substitute for our cash flow or
net income as a measure of our liquidity, operating performance, or
our ability to pay dividends. Other REITs may not compute FAD in the
same manner; accordingly, FAD may not be comparable among REITs.
PUBLIC STORAGE
SELECTED FINANCIAL DATA
Reconciliation of Same Store Revenues and Cost of Operations
To Consolidated Self-Storage Rental Income and Cost of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------
(Amounts in thousands)
Revenues for the 1,316 Same Store
facilities $230,161 $226,352 $455,838 $445,649
Revenues for non-Same Store
facilities (a):
Development facilities (year
opened):
2007 71 - 79 -
2006 1,080 56 1,937 56
2005 1,005 584 1,916 953
2003 and 2004 5,655 5,244 11,135 10,192
Expansion facilities 19,800 18,486 39,163 35,886
Acquisition facilities (year
acquired):
2007 299 - 311 -
2006 2,401 1,442 4,686 1,839
2005 6,937 6,178 13,569 11,816
Newly consolidated facilities 3,834 3,890 7,570 7,188
Consolidated U.S. Shurgard
facilities (b):
Shurgard Same Stores 67,561 - 132,706 -
Other facilities 25,224 - 48,670 -
Deconsolidated U.S. Shurgard
facilities (c) 831 - 2,198 -
Consolidated Europe Shurgard
facilities (b):
Shurgard Same Stores 31,045 - 60,595 -
Other facilities 15,312 - 29,624 -
--------- -------- -------- --------
Consolidated self-storage
revenues (d) $411,216 $262,232 $809,997 $513,579
========= ======== ======== ========
Cost of operations for the 1,316
Same Store facilities $ 78,234 $ 76,649 $156,062 $152,451
Cost of operations for non-Same
Store facilities (a):
Development facilities (year
opened):
2007 47 - 88 -
2006 680 114 1,216 114
2005 568 406 1,128 820
2003 and 2004 1,585 1,601 3,206 3,182
Expansion facilities 7,353 6,582 14,418 13,015
Acquisition facilities (year
acquired):
2007 126 - 129 -
2006 1,179 717 2,288 942
2005 2,577 2,385 5,146 4,854
Newly consolidated facilities 865 941 1,742 1,720
Consolidated U.S. Shurgard
facilities (b):
Shurgard Same Stores 22,807 - 45,997 -
Other facilities 9,895 - 19,790 -
Deconsolidated U.S. Shurgard
facilities (c) 344 - 916 -
Consolidated Europe Shurgard
facilities (b):
Shurgard Same Stores 13,121 - 25,723 -
Other facilities 9,985 - 20,437 -
--------- -------- -------- --------
Consolidated self-storage cost of
operations (d) $149,366 $ 89,395 $298,286 $177,098
========= ======== ======== ========
(a) We consolidate the operating results of additional self-storage
facilities that are not Same Store facilities. Such facilities are
not included in the Same Store pool either because they were not
stabilized for the entire period from January 1, 2005 through June
30, 2007, or because we acquired these facilities from third parties
after December 31, 2004.
(b) Represents the operations of the facilities acquired in the merger
with Shurgard, which remain consolidated at June 30, 2007, for the
period from January 1, 2007 through June 30, 2007.
(c) Represents the operations of the 11 facilities acquired from
Shurgard that we discontinued consolidation with the Company
effective May 24, 2007, for the period their operating results were
consolidated.
(d) Self-storage revenues and cost of operations do not include
revenues and expenses generated at the facilities with respect to
tenant reinsurance, retail sales and truck rentals.
Source: Public Storage
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