UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2006.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
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Commission File Number: 1-8389
PUBLIC STORAGE, INC.
(Exact name of Registrant as specified in its charter)
California 95-3551121
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
701 Western Avenue, Glendale, California 91201-2349
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(Address of principal executive offices) (Zip Code)
(818) 244-8080
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative
Preferred Stock, Series T, $.01 par value.................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.625% Cumulative
Preferred Stock, Series U, $.01 par value.................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.500% Cumulative
Preferred Stock, Series V $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.500% Cumulative
Preferred Stock, Series W $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.450% Cumulative
Preferred Stock, Series X $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.250% Cumulative
Preferred Stock, Series Z $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.125% Cumulative
Preferred Stock, Series A $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.125% Cumulative
Preferred Stock, Series B $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.600% Cumulative
Preferred Stock, Series C $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.180% Cumulative
Preferred Stock, Series D $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.750% Cumulative
Preferred Stock, Series E $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.450% Cumulative
Preferred Stock, Series F $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.000% Cumulative
Preferred Stock, Series G $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.950% Cumulative
Preferred Stock, Series H $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.250% Cumulative
Preferred Stock, Series I $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 7.250% Cumulative
Preferred Stock, Series K $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.750% Cumulative
Preferred Stock, Series L $.01 par value................................... New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a Share of 6.625% Cumulative New York Stock Exchange
Preferred Stock, Series M $.01 par value...................................
Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series A,
$.01 par value............................................................. New York Stock Exchange
Common Stock, $.10 par value.................................................... New York Stock Exchange
1
Securities registered pursuant to Section 12(g) of the Act: None (Title of
class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes [X] No [ ]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).
Large Accelerated Filer [X] Accelerated Filer [ ] Non-accelerated Filer [ ]
The aggregate market value of the voting and non-voting common stock held by
non-affiliates of the Registrant as of June 30, 2006:
Common Stock, $0.10 Par Value - $6,207,100,000 (computed on the basis of $75.90
per share which was the reported closing sale price of the Company's Common
Stock on the New York Stock Exchange on June 30, 2006.
Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series
A, $.01 Par Value - $198,175,000 (computed on the basis of $26.70 per share
which was the reported closing sale price of the Depositary Shares each
Representing 1/1,000 of a Share of Equity Stock, Series A on the New York Stock
Exchange on June 30, 2006.
As of February 26, 2007, the number of outstanding shares of Common
Stock, $.10 par value, was 170,388,218 shares and the number of outstanding
Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock, Series
A, $.01 par value, was 8,744,193 (representing 8,744.193 shares of Equity Stock,
Series A)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement to be filed in connection with the
Annual Meeting of Shareholders to be held in 2007 are incorporated by reference
into Part III of this Annual Report on Form 10-K.
2
PART I
ITEM 1. Business
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FORWARD LOOKING STATEMENTS
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All statements in this document, 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 in Item 1A, "Risk Factors". These risks include, but
are not limited to, the following: risks related to the merger with Shurgard
including difficulties that may be encountered in integrating Public Storage and
Shurgard, loss of personnel as a result of the merger, and the impact of the
merger on occupancy and rental rates, the inability to realize or delays in
realizing expected results from the merger, unanticipated operating costs
resulting 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, which could adversely
affect our profitability; 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, which would impede our ability to grow; delays in the development
process; economic uncertainty due to the impact of war or terrorism. We disclaim
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 document, except where
expressly required by law.
GENERAL
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Public Storage, Inc. (the "Company" or "we" or "our") is an equity real
estate investment trust ("REIT") organized as a corporation under the laws of
California on July 10, 1980. We are a fully integrated, self-administered and
self-managed REIT that acquires, develops, owns and operates self-storage
facilities. We are the largest owner and operator of self-storage space in the
United States. Our common stock is traded on the New York Stock Exchange under
the symbol "PSA". On August 22, 2006, the Company merged with Shurgard Storage
Centers, Inc., ("Shurgard"), a REIT which had an interest in 487 self-storage
facilities located in the United States ("U.S.") and had an interest in 160
self-storage facilities in Europe. See Note 3 to our consolidated financial
statements included elsewhere in this report for further discussion of our
merger with Shurgard.
At December 31, 2006, we had direct and indirect equity interests in
2,003 self-storage facilities located in 38 states within the U.S. operating
under the "Public Storage" name containing approximately 125 million net
rentable square feet of space, and 166 self-storage facilities located in seven
Western European countries which operate under the "Shurgard Storage Centers"
name containing approximately 8.7 million net rentable square feet of space. We
also have direct and indirect equity interests in approximately 20 million net
rentable square feet of commercial space located in 11 states in the U.S.
operated under the "PS Business Parks" and Public Storage, Inc. brands.
We currently operate within three reportable segments: self-storage -
Domestic operations, self-storage - European operations and domestic ancillary
operations. These segments are organized generally based upon their operating
characteristics. The self-storage - Domestic segment comprises the direct
ownership, development, and operation of traditional storage facilities in the
U.S., and the ownership of equity interests in entities that own storage
properties in the U.S. The self-storage - European segment comprises the direct
ownership, development, and operation of storage facilities in Europe that we
acquired in the merger with Shurgard. The ancillary operations segment includes
3
the following sources of operating income: (i) containerized storage, (ii)
commercial property operations, which reflects our interest in the ownership,
operation, and management of commercial properties (iii) the reinsurance of
policies against losses to goods stored by tenants in our self-storage
facilities, (iv) sale of merchandise at our self-storage facilities, (v) truck
rentals at our self-storage facilities and (vi) management of facilities owned
by third-party owners and facilities owned by entities in which we have an
interest, but are not consolidated. The vast majority of the commercial property
operations are conducted through PS Business Parks, Inc. ("PSB"), and to a much
lesser extent the Company and certain of its unconsolidated subsidiaries own
commercial space, managed by PSB, within facilities that combine storage and
commercial space for rent. See Note 15 to our consolidated financial statements
for further discussion of our reportable segments.
We also have a 44% ownership interest in PSB, which, as of December 31,
2006, owned and operated commercial properties containing approximately 18.7
million net rentable square feet of commercial space. PS Business Parks, Inc. is
a publicly traded REIT whose common stock trades on the American Stock Exchange
under the symbol "PSB."
We have elected to be taxed as a REIT under the Internal Revenue Code
of 1986, as amended. To the extent that we continue to qualify as a REIT, we
will not be subject to tax, with certain limited exceptions, on the taxable
income that is distributed to our shareholders.
We have reported annually to the Securities and Exchange Commission
("SEC") on Form 10-K, which includes financial statements certified by
independent public accountants. We have also reported quarterly to the SEC on
Form 10-Q, which included unaudited financial statements with such filings. We
expect to continue such reporting.
Our website is www.publicstorage.com, and we make available free of
charge on our website our reports on Forms 10-K, 10-Q, and 8-K, and all
amendments to those reports as soon as reasonably practicable after the reports
and amendments are electronically filed with or furnished to the SEC.
4
MANAGEMENT
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Ronald L. Havner, Jr. (49) has been Vice Chairman, Chief Executive
Officer and a director of the Company since November 7, 2002 and President since
July 1, 2005. Mr. Havner joined Public Storage, Inc. in 1986 and has held a
variety of positions, including Chairman of the Board of Directors for the
Company's affiliate, PS Business Parks, Inc., a position he has held since March
1998.
B. Wayne Hughes (73) is Chairman of the Board of Directors, a position
he has held since 1991. Mr. Hughes established the Public Storage organization
in 1972 and has managed the Company through several market cycles.
Our executive management team and their years of experience with the
Company are as follows: John Reyes (46), Senior Vice President - Chief Financial
Officer, 16 years; John S. Baumann (46), Senior Vice President - Chief Legal
Officer, who joined the Company in June 2003; John E. Graul (55), Senior Vice
President and President, Self-Storage Operations, who joined the Company in
February 2004; Candace N. Krol (45), Senior Vice President of Human Resources,
who joined the Company in September 2005 and David F. Doll (48), Senior Vice
President and President, Real Estate Group, who joined the Company in February
2005.
Our senior management has a significant ownership position in the
Company with executive officers, directors and their families owning
approximately 45.6 million shares or 27% of the common stock as of February 28,
2007.
INVESTMENT OBJECTIVE
--------------------
Our primary objective is to increase the intrinsic value of the Company
through internal growth (by increasing net income, funds from operations and
cash available for distribution) and acquisitions of additional real estate
investments and development of real estate facilities. We believe that our
access to capital, geographic diversification and operating efficiencies
resulting from our size will enhance our ability to achieve this objective.
COMPETITION
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Competition in the market areas in which we operate is significant and
affects the occupancy levels, rental rates and operating expenses of our
facilities. Development of new self-storage facilities has intensified the
competition among storage operators in many market areas in which we operate.
In seeking investments, we compete with a wide variety of institutions
and other investors. The increase in the amount of funds available for real
estate investments has increased competition for ownership interests in
facilities and may reduce yields on acquisitions.
We believe that the significant operating and financial experience of
our executive officers and directors, combined with the Company's conservative
capital structure, national investment scope, geographic diversity, economies of
scale and the "Public Storage" brand name, should enable us to compete
effectively with other entities.
In recent years consolidation has occurred in the fragmented
self-storage industry. In addition to the Company, there are other publicly
traded REITs and numerous private regional and local operators operating in the
self-storage industry. We believe that we are well positioned to capitalize on
this consolidation trend due to our demonstrated access to capital and national
presence.
5
BUSINESS ATTRIBUTES
-------------------
We believe that the Company possesses several primary business
attributes that permit us to compete effectively:
COMPREHENSIVE DISTRIBUTION SYSTEM AND NATIONAL TELEPHONE RESERVATION
SYSTEM: Our facilities are part of a comprehensive distribution system
encompassing standardized procedures, integrated reporting and information
networks and centralized marketing. During 2004, we implemented an upgraded
information system platform, which has enabled us to more quickly adapt our
pricing and marketing efforts to changing market conditions. This distribution
system, among other benefits, is designed to maximize revenue and occupancy
levels through automated pricing.
A significant component of our distribution system is our national
telephone reservation center, which provides added customer service and helps to
maximize utilization of available self-storage space. Customers calling either
the toll-free telephone referral system, (800) 44-STORE, or a storage facility,
are directed to the national reservation system. A representative discusses with
the customer space requirements, price and location preferences and also informs
the customer of other products and services provided by the Company and its
subsidiaries. We believe that the national telephone reservation system enhances
our ability to market storage space.
ECONOMIES OF SCALE: We are the largest provider of self-storage space
in the industry. As of December 31, 2006, we operated 2,169 storage facilities
in which we had an interest and managed 29 self-storage facilities for third
parties. These facilities are in markets within 38 states in the U.S. and seven
Western European countries. At December 31, 2006, we had over 1,102,000 spaces
rented. The size and scope of our operations have enabled us to achieve a high
level of profit margins and low level of administrative costs relative to
revenues.
Our size in many markets has enabled us to market efficiently using
television as a media source. We believe the high cost of television makes it
impractical for our competitors to use this form of media without the high
concentration of facilities in markets.
BRAND NAME RECOGNITION: Our operations are conducted under the "Public
Storage" brand name, which we believe is the most recognized and established
name in the self-storage industry in the U.S. Our storage operations within the
U.S. are conducted in 38 states, giving us national recognition and prominence.
We focus our operations within those states in the major metropolitan markets.
This concentration establishes us as one of the largest providers of
self-storage space in virtually all markets that we operate in and enables us to
use a variety of promotional activities, such as television advertising as well
as targeted discounting and referrals which are generally not economically
viable for most of our competitors.
The self-storage industry in Europe is still relatively new as compared
to the U.S. Customer awareness of the product in Europe is emerging. All of our
facilities in Europe are operating under the "Shurgard" brand name. While
competition in Europe has been increasing, we believe we are the single largest
self-storage operators in Europe as of December 31, 2006.
RETAIL OPERATIONS: Through a taxable REIT subsidiary, we sell retail
items associated with the storage business and rent trucks at our storage
facilities. In order to supplement and strengthen the existing self-storage
business by further meeting the needs of storage customers, we continue to
expand our retail activities.
In addition, full-service retail stores have been retrofitted to some
existing storage facility rental offices or "built-in" as part of the
development of new storage facilities, both in high traffic, high visibility
locations. The strategic objective of these retail stores is to provide a retail
environment to (i) rent spaces for the attached storage facility, (ii) rent
spaces for the other Public Storage facilities in adjacent neighborhoods, (iii)
sell locks, boxes and packing materials and (iv) rent trucks and other moving
equipment.
TENANT INSURANCE PROGRAM: Through a taxable REIT subsidiary, PS
Insurance Company Ltd. ("PSIC"), we reinsure policies issued to our tenants
6
against lost or damaged goods stored by tenants in our storage facilities. This
subsidiary receives the premiums and bears the risks associated with the
re-insurance. We believe that this insurance operation further supplements and
strengthens the existing self-storage business and provides an additional source
of earnings for the Company.
GROWTH AND INVESTMENT STRATEGIES
--------------------------------
Our growth strategies consist of: (i) improving the operating
performance of our existing self-storage properties, (ii) acquiring interests in
properties that are owned or operated by others, (iii) expanding and repackaging
existing real estate facilities, (iv) developing properties in selected markets
and (v) participating in the growth of commercial facilities owned primarily by
PSB. These strategies are described as follows:
IMPROVE THE OPERATING PERFORMANCE OF EXISTING PROPERTIES: We seek to
increase the net cash flow generated by our existing self-storage properties by
a) regularly evaluating our call volume, reservation activity, and
move-in/move-out rates for each of our properties relative to our marketing
activities, b) evaluating market supply and demand factors and, based upon these
analyses, adjusting our marketing activities and rental rates, c) attempting to
maximize revenues through evaluating the appropriate balance between occupancy,
rental rates, and promotional discounting and d) controlling expense levels. We
believe that our property management personnel and systems, combined with the
national telephone reservation system, will continue to enhance our ability to
meet these goals.
In connection with the merger with Shurgard, we acquired 487
self-storage facilities located in the United States. Substantially all of these
facilities are located in the same markets that we currently operate in. We
believe that the merger will provide us with additional economies of scale with
respect to certain operating costs that will ultimately improve operating
margins. In addition, on August 31, 2006, the average occupancy level of the 487
self-storage facilities was approximately 84.4% as compared to our existing
portfolio's 89.7%. We believe that we will be able to increase the average
occupancy level of the acquired portfolio to those experienced by our own. These
potential benefits will take time to develop and there can be no assurance that
we will be able to such benefits.
ACQUIRE PROPERTIES OWNED OR OPERATED BY OTHERS: We believe our presence
in and knowledge of substantially all of the major markets in the United States
enhances our ability to identify attractive acquisition opportunities and
capitalize on the overall fragmentation in the self-storage industry. We
maintain local market information on rates, occupancy and competition in each of
the markets in which we operate.
EXPAND AND REPACKAGE EXISTING REAL ESTATE FACILITIES: We have a
substantial number of facilities that were developed and constructed 20 or more
years ago based upon local competitive and demographic conditions in place at
that time. Since such conditions may have changed, there are opportunities to
expand and further invest into our existing self-storage locations, either by
improving their visual and structural appeal, or by expanding these facilities
at a per square foot cost that is typically less than the cost incurred in
developing a new location. In addition, there are opportunities to convert
existing vacant space previously used by our containerized storage facilities
into traditional self-storage space. At December 31, 2006, we have identified 48
such projects to expand or repackage our existing facilities in the United
States, for an aggregate cost of approximately $187.6 million, which will add an
aggregate of approximately 2,256,000 net rentable square feet. Completion of
these projects is subject to contingencies, including obtaining governmental
agency approvals. We continue to evaluate our existing real estate portfolio to
identify additional expansion and repackaging opportunities.
DEVELOP PROPERTIES IN SELECTED MARKET: Since 1995, the Company and its
joint venture partnerships (described below in "Financing of the Company's
Growth Strategies") have opened a total of 151 facilities in the United States.
During 2006, these facilities contributed significantly to the growth in our
earnings as they continued to gain occupancy and grow their revenues. We expect
that these facilities will continue to provide growth to our earnings into 2007.
As of December 31, 2006, we have no new self-storage facilities in the
development "pipeline" in the U.S. As of December 31, 2006, our development
"pipeline" in Europe is comprised of eight new self-storage facilities with an
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aggregate estimated cost of approximately $78.5 million, and an aggregate of
389,000 net rentable square feet. In 2005 and 2006, our rate of development of
new self-storage facilities has declined due to increases in construction cost,
increases in competition with retail, condominium, and apartment operators for
quality self-storage sites in urban locations, and more difficult zoning and
permitting requirements. However, we will continue to seek favorable sites and
markets for development.
PARTICIPATE IN THE GROWTH OF COMMERCIAL FACILITIES PRIMARILY THROUGH
OUR OWNERSHIP IN PS BUSINESS PARKS, INC.: We own a 44% common equity interest in
PSB and its operating partnership (PS Business Parks Inc. and the related
operating partnership are hereinafter referred to collectively as "PSB") which,
December 31, 2006, consisted of 5,418,273 shares of common stock and 7,305,355
limited partnership units in the Operating Partnership. The limited partnership
units are convertible at our option, subject to certain conditions, on a
one-for-one basis into PSB common stock. At December 31, 2006, PSB owned and
operated approximately 18.7 million net rentable square feet of commercial space
located in eight states.
ACQUIRE ADDITIONAL PARTNERSHIPS INTERESTS IN AFFILIATED ENTITIES: The
acquisition of interests in facilities that we have an ownership interest in and
operate has historically comprised a significant component of our growth.
However, the pool of such available acquisitions has continued to decrease as we
have acquired such remaining interests over the years. The potential remaining
acquisition opportunities principally include the remaining 78% that we do not
own in the 22 properties owned by the "Other Investments" described in Note 6 to
the consolidated financial statements for the year ended December 31, 2006 as
well as the "Other Consolidated Partnerships" and Shurgard Joint Ventures
described in Note 11 to the consolidated financial statements for the year ended
December 31, 2006. Accordingly, we do not expect such acquisitions to comprise a
significant component of our growth going forward.
POLICIES WITH RESPECT TO INVESTING ACTIVITIES: Following are our
policies with respect to certain other investing strategies, each of which may
be entered into without a vote of shareholders:
o Making loans to other entities: We have made loans in connection
with the sale of properties, have made short-term loans to PSB in
the last three years and may make loans to third parties as part of
our investment objectives. However, we do not expect such items to
be a significant part of our investing activities.
o Investing in the securities of other issuers for the purpose of
exercising control: There have been two instances in the past six
years where we invested in the securities of another publicly-held
REIT, one which resulted in control of that REIT (the merger with
Storage Trust, Inc. in 1999), and one that did not, resulting in
the sale of these securities on the open market. We may engage in
these activities in the future as a component of our real estate
acquisition strategy. We also own partnership interests in various
consolidated and unconsolidated partnerships. See "Investments in
Real Estate and Real Estate Entities."
o Underwriting securities of other issuers: We have not engaged in
this activity in the last three years, and do not intend to in the
future.
o Short-term investing: We have not engaged in investments in real
estate or real estate entities on a short-term basis in the last
three years with the exception of the aforementioned investments in
the securities of other REITs. Instead, historically, we have
acquired real estate assets and held them for an extended period of
time. We do not anticipate any such short-term investments.
o Repurchasing or reacquiring our common shares or other securities:
The Board of Directors 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. Cumulatively
through February 28, 2007, we repurchased a total of 22,201,720
shares of common stock under this authorization. Cumulatively
through February 28, 2007, we have called for redemption or
repurchased $2.5 billion of our senior preferred stock and $165
million of our preferred partnership units for cash, representing a
refinancing of these securities into lower-coupon preferred
securities. Any future repurchases of our common stock will depend
primarily upon the attractiveness of repurchases compared to our
other investment alternatives. Future redemptions or repurchases of
our preferred securities, which will become available for
redemption or repurchase on their respective call dates, will be
dependent upon the spread between market rates and the coupon rates
of these securities.
8
FINANCING OF THE COMPANY'S GROWTH STRATEGIES
OVERVIEW OF FINANCING STRATEGY: Over the past three years we have
funded substantially all of the cash portion (represented by our acquisition
cost less debt assumed, as described below) of our acquisitions, excluding the
merger with Shurgard, for which we issued 0.82 shares of our common stock for
each share of Shurgard common stock owned by Shurgard shareholders, with
permanent capital (predominantly retained cash flow and the net proceeds from
the issuance of preferred securities). We have elected to use preferred
securities as a form of leverage despite the fact that the dividend rates of our
preferred securities exceed the prevailing market interest rates on conventional
debt, because of certain benefits described in "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital
Resources." Our present intent is to continue to finance substantially all our
growth with permanent capital.
BORROWINGS: We have in the past used our $200 million revolving line of
credit described below under "Borrowings" as temporary "bridge" financing, and
repaid those amounts with permanent capital. In 2006, in connection with the
merger with Shurgard, we assumed i) Shurgard's domestic and European notes
payable and capital leases with a fair value on the date of acquisition of
approximately $1,396,777,000 of which $67,275,000 was repaid following the
merger and ii) Shurgard's line of credit totaling $603,772,000, which was repaid
following the merger. On December 27, 2006, we entered into a $300 million
unsecured short-term credit agreement with a commercial bank. Pursuant to the
credit agreement, we borrowed $300 million. On January 10, 2007, borrowings
under this facility were repaid in full and at such time the credit facility was
terminated. During 2004, we assumed long-term secured mortgage notes of $94.7
million in connection with property acquisitions. Prior to 2004, we incurred
long-term debt during the merger with Storage Trust in 1999 wherein we assumed
$100 million in senior unsecured notes. We were unable to prepay these debt
balances either because of the nature of the loan terms or because it was not
economically advantageous to do so. While it is not our present intention to
issue additional debt as a long-term financing strategy, we have broad powers to
borrow in furtherance of our objectives without a vote of our shareholders.
These powers are subject to a limitation on unsecured borrowings in our Bylaws
described in "Limitations on Borrowings" below.
ISSUANCE OF SENIOR SECURITIES: We have in the last three years, and
expect to continue, to issue additional series of preferred stock that are
senior to our Common Stock and Equity Stock. At December 31, 2006, we had
approximately $2.9 billion of preferred stock outstanding, excluding two series
that were called for redemption in December 2006 and subsequently redeemed on
January 18, 2007 and February 20, 2007, respectively, and prior to issuing an
additional $500 million of preferred stock in January 2007. The preferred stock,
which was issued in series, has general preference rights with respect to
liquidation and quarterly distributions. We intend to continue to issue
preferred securities without a vote of our common shareholders.
ISSUANCE OF SECURITIES IN EXCHANGE FOR PROPERTY: We have issued both
common and preferred equity in exchange for real estate and other investments in
the last three years. On October 12, 2004, we issued $25 million in preferred
units in conjunction with the acquisition of a self-storage business. Future
issuances will be dependent upon market conditions at the time, including the
market prices of our equity securities.
JOINT VENTURE FINANCING: We entered into two separate development joint
venture partnerships since 1997 in order to provide development financing. The
first development joint venture partnership was formed in 1997 and completed in
2001.
In November 1999, we formed PSAC Development Partners, L.P., (the
"Consolidated Development Joint Venture") with a joint venture partner ("PSAC
Storage Investors, LLC") whose partners include a third party institutional
investor, owning approximately 35%, and Mr. Hughes, owning approximately 65%, to
develop approximately $100 million of storage facilities. The Consolidated
Development Joint Venture completed construction on 22 storage facilities with a
9
total cost of approximately $108.6 million. On August 5, 2005 we acquired the
third party institutional investor's partnership interest in PSAC Storage
Investors, LLC for approximately $41.4 million in cash, and on November 17, 2005
we acquired Mr. Hughes' interest for an aggregate of $64.5 million in cash.
In January 2004, we entered into a joint venture partnership with an
institutional investor for the purpose of acquiring up to $125.0 million of
existing self-storage properties in the United States from third parties (the
"Acquisition Joint Venture"). The venture is funded entirely with equity
consisting of 30% from the Company and 70% from the institutional investor. For
a six-month period beginning 54 months after formation, we have the right to
acquire our joint venture partner's interest based upon the market value of the
properties. If we do not exercise our option, our joint venture partner can
elect to purchase our interest in the properties during a six-month period
commencing upon expiration of our six-month option period. If our joint venture
partner fails to exercise its option, the partnership will be liquidated and the
proceeds will be distributed to the partners according to the joint venture
agreement. As of December 31, 2006, the Acquisition Joint Venture owned
interests in a total of 12 self-storage facilities. See Note 9 to our
consolidated financial statements at December 31, 2006 for further discussion of
the accounting for the Acquisition Joint Venture. We do not expect the
Acquisition Joint Venture to acquire any additional facilities.
We may continue to form additional joint ventures to facilitate the
funding of future developments or acquisitions.
Disposition of properties: We historically have disposed of
self-storage facilities only because of condemnation proceedings, which compel
us to sell. We do not presently expect to sell any significant number of
self-storage facilities in the future, though there can be no assurance that we
will not.
INVESTMENTS IN REAL ESTATE AND REAL ESTATE ENTITIES
---------------------------------------------------
Investment Policies and Practices with respect to our investments:
Following are our investment practices and policies which, though we do not
anticipate any significant alteration, can be changed by the Board of Directors
without a shareholder vote:
o Our investments primarily consist of direct ownership of
self-storage properties (the nature of our self-storage properties
is described in Item 2, "Properties"), as well as partial interests
in entities that own self-storage properties, which are primarily
located in the United States.
o Our investments are acquired both for income and for capital gain.
o Our partial ownership interests primarily reflect general and
limited partnership interests in entities that own self-storage
facilities that are managed by us under the "Public Storage" brand
name.
o Additional acquired interests in real estate (other than the
acquisition properties from third parties) will include common
equity interests in entities in which we already have an interest.
o To a lesser extent, we have interests in existing commercial
properties (described in Item 2, "Properties"), containing
commercial and industrial rental space, primarily through our
investment in PSB.
o We have a "pipeline" of 56 development projects, including 48
expansions of real estate facilities, for a total estimated cost of
approximately $266 million. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."
The following table outlines our ownership interest in self-storage
facilities in the U.S. at December 31, 2006:
10
Net Rentable Square
Number of Footage of Storage
Storage Space
Facilities (in thousands)
----------- -------------------
Consolidated self-storage facilities:
Wholly-owned by the Company............... 1,490 95,005
Other consolidated facilities............. 491 28,998
----------- -------------------
1,981 124,003
Facilities owned by unconsolidated entities. 22 1,427
----------- -------------------
Total self-storage facilities in which the
Company has an ownership interest......... 2,003 125,430
=========== ===================
The following table outlines our ownership interest in self-storage
facilities in Europe at December 31, 2006:
Net Rentable Square
Number of Footage of Storage
Storage Space
Facilities (in thousands)
----------- -------------------
Consolidated self-storage facilities:
Wholly-owned by the Company............... 103 5,581
Other consolidated facilities............. 63 3,108
----------- -------------------
Total self-storage facilities in which the
Company has an ownership interest......... 166 8,689
=========== ===================
In addition to our interest in self-storage facilities noted above, we
own six commercial facilities with an aggregate of 520,000 net rentable square
feet, three industrial facilities with an aggregate of 244,000 net rentable
square feet used by the continuing containerized storage operations, and have
1,041,000 net rentable square feet of commercial space at certain of the
self-storage facilities. The Company and the entities it controls also have a
44% common interest in PSB, which at December 31, 2006 owned and operated
approximately 18.7 million net rentable square feet of commercial space.
FACILITIES OWNED BY CONTROLLED ENTITIES
---------------------------------------
In addition to our direct ownership of 1,490 self-storage facilities at
December 31, 2006, we had controlling ownership interests in 52 entities owning
an aggregate of 491 storage facilities in the U.S. and 63 in Europe. Because of
our controlling interest in each of these entities, we consolidate the assets,
liabilities, and results of operations of these entities on our financial
statements.
Through the merger with Shurgard, we acquired two joint venture
entities: First Shurgard SPRI (First Shurgard) formed in January 2003 and Second
Shurgard SPRL (Second Shurgard) formed in May 2004. These joint ventures were
expected to develop or acquire up to approximately 75 storage facilities in
Europe. Shurgard Europe has a 20% interest in each of these ventures. We have
determined that First Shurgard and Second Shurgard are each Variable Interest
Entities (See Note 2 to our December 31, 2006 consolidated financial
statements), and that we are the primary beneficiary. Accordingly, First
Shurgard and Second Shurgard have been consolidated in our consolidated
financial statements since the acquisition date. See Note 11 to our consolidated
financial statements included elsewhere in this report for further discussion of
the joint ventures acquired in the merger with Shurgard.
On September 5, 2006, we informed the joint venture partners of First
Shurgard and Second Shurgard of our intention to purchase their interests in
First Shurgard and Second Shurgard, pursuant to an "exit procedure" that we
believe is provided for in the respective agreements. Our joint venture partners
11
currently contest whether we have the right to purchase their interests under
this procedure and, accordingly, it is uncertain as to whether we will acquire
their interests pursuant to these provisions. On January 17, 2007, we filed an
arbitration request to compel arbitration of the matter.
Following the merger with Shurgard, we acquired the minority interests
in certain of Shurgard's joint ventures, for an aggregate of approximately
$62,300,000 in cash. As a result of these transactions, we obtained the
remaining interest in a total of 68 facilities located in the U.S.
FACILITIES OWNED BY UNCONSOLIDATED ENTITIES
-------------------------------------------
At December 31, 2006, we had ownership interests in PSB and five
limited partnerships (collectively the "Unconsolidated Entities"). Our ownership
interest in these entities is less than 50%.
Due to our limited ownership interest and limited control of these
entities, we do not consolidate the accounts of these entities for financial
reporting purposes and we account for such investments using the equity method.
PSB, which files financial statements with the Securities and Exchange
Commission, has debt and other obligations that are not included in our
consolidated financial statements. The five limited partnerships do not have any
significant amounts of debt or other obligations. See Note 6 to our consolidated
financial statements for the year ended December 31, 2006 for further disclosure
regarding the assets and liabilities of the Unconsolidated Entities.
The following chart sets forth, as of December 31, 2006, the entities
in which we have a controlling interest and the entities in which we have a
minority interest:
12
------------------------------------------------------------------------------------------------------------
Subsidiaries (Controlled Entities) Entities in which we have
of the Company a Minority Interest (Unconsolidated Entities)
------------------------------------------------------------------------------------------------------------
Capital Hill Partners, A Limited Partnership Public Storage Alameda, Ltd. (5)
Carson Storage Partners, Ltd. Public Storage Glendale Freeway, Ltd. (10)
Carson Storage Ventures Metropublic Storage Fund (11)
Connecticut Storage Fund PS Business Parks, Inc. (12)
Del Amo Storage Partners, Ltd. Public Storage Crescent Fund, Ltd. (13)
Downey Storage Partners, Ltd. (1) PSAF Acquisition Partners, Ltd.
Huntington Beach Storage Partners, Ltd.
Monterey Park Properties, Ltd. (2)
PS Orangeco Partnerships, Inc.
PS Partners, Ltd.
PS Partners VIII, Ltd.
PS Texas Holdings, II, Ltd.
Public Storage Properties IV, Ltd. (3)
Public Storage Properties V, Ltd. (4)
PSA Institutional Partners, L.P.
PS HKBF, LLC
Public Storage Euro Fund III, Ltd. (5)
Public Storage Euro Fund IV, Ltd. (5)
Public Storage Euro Fund V, Ltd. (5)
Public Storage Euro Fund VI, Ltd. (5)
Public Storage Euro Fund VII, Ltd. (5)
Public Storage Euro Fund VIII, Ltd. (5)
Public Storage Euro Fund IX, Ltd. (5)
Public Storage Euro Fund X, Ltd. (5)
Public Storage Euro Fund XI, Ltd. (5)
Public Storage Euro Fund XII, Ltd. (5)
Public Storage Euro Fund XIII, Ltd. (5)
Public Storage German Fund II, Ltd. (5)
Public Storage Institutional Fund
Public Storage Institutional Fund III
Public Storage Partners, Ltd. (6)
Public Storage Partners II, Ltd. (7)
Public Storage Properties, Ltd. (8)
Secure Mini-Storage
Shurgard/Canyon Park Self Storage, Ltd.
Shurgard-Freeman Franklin/Rivergate JV
Shurgard-Freeman Hermitage JV
Shurgard-Freeman Hickory Hollow JV
Shurgard-Freeman Medical Center JV
Shurgard-Freeman Memphis LLC
Shurgard-Freeman South Main JV
Shurgard-Freeman Stones River JV
Shurgard Resco LLC
Shurgard Resco II, LLC
Shurgard Resco III, LLC
Shurgard TRC Self Storage Development LLC
STOR-Re Mutual Insurance Company, Inc.
Storage Trust Properties, L.P.
Van Nuys Storage Partners, Ltd. (9)
Whittier Storage Partners, Ltd.
First Shurgard SPRI
Second Shurgard SPRL
(1) B. Wayne Hughes owns approximately 2.8% of the limited partnership interest
of this entity.
(2) B. Wayne Hughes owns approximately 4.4% of the limited partnership interest
of this entity.
(3) The Hughes Family owns 20% of the general partner interests and 15.5% of
the limited partnership interests of this entity.
13
(4) The Hughes Family owns 20% of the general partner interests and 11.4% of
the limited partnership interests of this entity.
(5) B. Wayne Hughes owns approximately 20% of the general partner interest of
these entities.
(6) The Hughes Family owns approximately 24.3% of the limited partnership
interest of this entity.
(7) The Hughes Family owns approximately 11.9% of the limited partnership
interest of this entity.
(8) The Hughes Family owns 20% of the general partner interests and 30.5% of
the limited partnership interests of this entity.
(9) B. Wayne Hughes owns approximately 17.4% of the limited partnership
interest of this entity.
(10) B. Wayne Hughes is a general partner in this entity and owns a 0.02% equity
interest.
(11) B. Wayne Hughes is a general partner of this entity, and has no economic
interest.
(12) B. Wayne Hughes owns approximately 0.5% of the common shares of PS Business
Parks, Inc.
(13) B. Wayne Hughes owns approximately 17.9% of the general partnership
interest of this entity.
14
PROHIBITED INVESTMENTS AND ACTIVITIES
-------------------------------------
Our Bylaws prohibit us from purchasing properties in which the
Company's officers or directors have an interest, or from selling properties to
such persons, unless the transactions are approved by a majority of the
independent directors and are fair to the Company based on an independent
appraisal. This Bylaw provision may be changed with shareholder approval. See
"Limitations on Debt" below for other restrictions in the Bylaws.
BORROWINGS
----------
We have a $200 million revolving line of credit (the "Credit
Agreement") that has a maturity date of April 1, 2007 and bears an annual
interest rate ranging from the London Interbank Offered Rate ("LIBOR") plus
0.50% to LIBOR plus 1.20% depending on our credit ratings (LIBOR plus 0.50% as
of December 31, 2006). In addition, we are required to pay a quarterly
commitment fee ranging from 0.15% per annum to 0.30% per annum depending on our
credit ratings (the fee was 0.15% per annum as of December 31, 2006). At
December 31, 2006, we had $45 million in outstanding borrowings under our $200
million bank line of credit. At February 28, 2007, we had $80 million in
outstanding borrowings on our line of credit.
The Credit Agreement includes various covenants, the more significant
of which require us to (i) maintain a balance sheet leverage ratio of less than
0.55 to 1.00, (ii) maintain certain quarterly interest and fixed-charge coverage
ratios (as defined) of not less than 2.25 to 1.0 and 1.5 to 1.0, respectively,
and (iii) maintain a minimum total shareholders' equity (as defined). In
addition, we are limited in our ability to incur additional borrowings (we are
required to maintain unencumbered assets with an aggregate book value equal to
or greater than 1.5 times our unsecured recourse debt). We were in compliance
with all the covenants of the Credit Agreement at December 31, 2006.
This credit facility expires on April 10, 2007. We are currently in the
process of obtaining a new credit facility which we anticipate will have $300
million of available borrowing capacity, as well as improved financing spreads
and covenants. We expect the new credit facility to be in place prior to the
expiration of the existing facility.
On December 27, 2006, we entered into a $300 million unsecured
short-term credit agreement with a commercial bank. Pursuant to the credit
agreement, we borrowed $300 million and had this amount outstanding at December
31, 2006.
At December 31, 2006, in addition to borrowings under our credit
facilities we had (i) $475.4 million of unsecured notes payable, (ii) $266.7
million of mortgage notes secured by facilities in the U.S., (iii) $717.7
million of notes payable secured by facilities located in Europe and (iv) other
miscellaneous debt totaling $43.9 million.
Our debt level is much higher than we are accustomed to and is a result
of assuming $1.3 billion of debt we have at December 31, 2006 that we assumed in
our merger with Shurgard.
Our goal is to continue to reduce the level of debt outstanding to a
level that is acceptable to us. In this regard, on January 2, 2007 we retired
approximately $429 million of notes payable that was secured by 102 of our
facilities located in Europe. In addition, on January 10, 2007, we retired
$300.0 million of borrowings on a bank credit facility and subsequently
terminated the facility. We financed the repayments with the net proceeds from
the issuance of preferred stock that was issued in early January 2007 combined
with additional cash on hand.
Subject to a limitation on unsecured borrowings in our Bylaws
(described below), we have broad powers to borrow in support of our objectives.
We have incurred in the past, and may incur in the future, both short-term and
long-term indebtedness to increase our funds available for investment in real
estate, capital expenditures and distributions.
LIMITATIONS ON DEBT
-------------------
The Bylaws provide that the Board of Directors shall not authorize or
permit the incurrence of any obligation by the Company, which would cause our
"Asset Coverage" of our unsecured indebtedness to become less than 300%. Asset
Coverage is defined in the Bylaws as the ratio (expressed as a percentage) by
15
which the value of the total assets (as defined in the Bylaws) of the Company
less the Company's liabilities (except liabilities for unsecured borrowings)
bears to the aggregate amount of all unsecured borrowings of the Company. This
Bylaw provision may be changed only upon a shareholder vote.
Our Bylaws prohibit us from issuing debt securities in a public
offering unless our "cash flow" (which for this purpose means net income,
exclusive of extraordinary items, plus depreciation) for the most recent 12
months for which financial statements are available, adjusted to give effect to
the anticipated use of the proceeds from the proposed sale of debt securities,
would be sufficient to pay the interest on such securities. This Bylaw provision
may be changed only upon a shareholder vote.
Without the consent of holders of the various series of Senior
Preferred Stock, we may not take any action that would result in a ratio of
"Debt" to "Assets" (the "Debt Ratio") in excess of 50%. As of December 31, 2006,
the Debt Ratio was approximately 16%. "Debt" means the liabilities (other than
"accrued and other liabilities" and "minority interest") that should, in
accordance with accounting principles generally accepted in the United States,
be reflected on our consolidated balance sheet at the time of determination.
"Assets" means our total assets before a reduction for accumulated depreciation
and amortization that should, in accordance with generally accepted accounting
principles, be reflected on the consolidated balance sheet at the time of
determination.
Our bank and senior unsecured debt agreements contain various financial
covenants, including limitations on the level of indebtedness of 30% of total
capitalization (as defined) and the prohibition of the payment of dividends upon
the occurrence of an event of default (as defined).
EMPLOYEES
---------
We have approximately 6,000 employees in the United States and Europe
at December 31, 2006 who render services on behalf of the Company, primarily
personnel engaged in property operations. None of our employees in the U.S. are
covered by a collective bargaining agreement. Two countries in Europe have
employees represented through an internal collective bargaining council. We
believe that our relations with our employees are generally good.
FEDERAL INCOME TAX
------------------
We believe that we have operated, and intend to continue to operate, in
such a manner as to qualify as a REIT under the Internal Revenue Code of 1986,
but no assurance can be given that we will at all times so qualify. To the
extent that we continue to qualify as a REIT, we will not be taxed, with certain
limited exceptions, on the taxable income (including gains from the sale of
securities and properties) that we distribute to our shareholders. Our taxable
REIT subsidiaries will be taxed on their taxable income.
For Federal tax purposes, our distributions to our shareholders are
treated by the shareholders as ordinary income, capital gains, return of capital
or a combination thereof. Ordinary income dividends to our shareholders will not
generally be eligible for the lower tax rates that apply to "qualified dividend
income."
INSURANCE
---------
We believe our properties are adequately insured. Our facilities have
historically carried comprehensive insurance, including property, earthquake,
general liability and workers compensation, through nationally recognized
insurance carriers and through our captive insurance programs (described below).
Our captive insurance programs also insure affiliates of the Company.
For losses incurred prior to April 1, 2004, our captive insurance
activities were conducted through STOR-Re Mutual Insurance Company, Inc.
("STOR-Re"), an association captive insurance company owned by the Company, the
Consolidated Entities, and the Unconsolidated Entities. For losses incurred
after March 31, 2004, these activities were conducted by an entity wholly owned
by the Company, PS Insurance Company Hawaii, Ltd. ("PSIC-H").
16
The Company, STOR-Re, PSIC-H and its affiliates' maximum aggregate
annual exposure for losses that are below the deductibles set forth in the
third-party insurance contracts, assuming multiple significant events occur, is
approximately $35 million. In addition, if losses exhaust the third-party
insurers' limit of coverage of $125 million for property coverage (a maximum of
$80 million with respect to earthquake coverage) and $102 million for general
liability, our exposure could be greater. These limits are higher than estimates
of maximum probable losses that could occur from individual catastrophic events
(i.e. earthquake and wind damage) determined in recent engineering and actuarial
studies.
Our tenant insurance program reinsures policies against claims for
losses to goods stored by tenants at our self-storage facilities. Throughout
2004 and 2005, we had third-party insurance coverage for claims paid exceeding
$500,000 resulting from any individual event, to a limit of $10,000,000.
Effective January 1, 2006, such coverage was revised to cover claims paid
exceeding $1,500,000 resulting from any individual event, to a limit of
$9,000,000. At December 31, 2006, we had approximately 403,000 reinsured
policies outstanding representing aggregate coverage of approximately $1.0
billion.
ITEM 1A. RISK FACTORS
------------
In addition to the other information in our Form 10-K, you should
consider the following factors in evaluating the Company:
WE ARE SUBJECT TO ADDITIONAL RISKS AS A RESULT OF THE SHURGARD MERGER.
In addition to the general risks related to real estate described below
which may also adversely impact Shurgard's operations, we are also subject to
the following risks in connection with the Shurgard merger and integrating
Shurgard into our operations, including without limitation the following:
o difficulties in completing the integration of operations, technologies
and personnel of Shurgard;
o inability to realize or delays in realizing expected synergies;
o unanticipated operating costs;
o diversion of our management's attention away from other business
concerns;
o exposure to any undisclosed or unknown potential liabilities of
Shurgard and;
o risks related to real estate markets in Europe which are new markets
for us.
We have never undertaken to integrate a company as large as Shurgard or
one with overseas operations. The success of the merger will depend, in part, on
our ability to realize the anticipated cost savings from combining the
businesses of Public Storage and Shurgard. However, to realize the anticipated
benefits from the merger, we must successfully compare the combination of the
businesses of Public Storage and Shurgard in a manner that permits those cost
savings to be realized. If we are not able to successfully achieve these
objectives, the anticipated benefits of the merger may not be realized fully or
at all or may take longer or cost more to realize than expected. It is possible
that the integration process could result in a decline in occupancy and/or
rental rates, the disruption of each company's ongoing businesses or
inconsistencies in standards, controls, procedures, practices, policies and
compensation arrangements that adversely affect our ability to maintain
relationships with tenants and employees or to achieve the anticipated benefits
of the merger. Further, the size of the transaction may make completing the
integration of Public Storage and Shurgard difficult, expensive and disruptive,
adversely affecting the combined company's revenues and earnings, and
implementation of merger integration efforts may divert management's attention
from other strategic priorities. In addition, the merger was structured so that
it should have been a taxable transaction for U.S. Federal income tax purposes.
As a result, the combined company should have the benefit of a step-up in tax
basis in Shurgard's assets. It is possible that the IRS may challenge the
step-up in basis. If such challenge were sustained, we would not achieve this
benefit, which would reduce our depreciation deductions and our ability to
retain cash flow.
17
We also acquired Shurgard's international operations in Europe, which
consist principally of facilities that have been completed in the last few years
and are in various stages of fill-up. Shurgard's international operations have
not been profitable, and there is no assurance they will ultimately be
profitable. Also, Shurgard had a number of non-stabilized properties and
construction activity, and delays in construction and fill-up could result in
additional costs. We have limited experience in European operations, which may
adversely impact our ability to operate profitably in Europe. In addition, these
operations have specific inherent risks, including without limitation the
following:
o currency risks, including currency fluctuations and risks related to
foreign currency hedging activities;
o unexpected changes in legislative and regulatory requirements;
o potentially adverse tax burdens;
o burdens of complying with different permitting standards, environmental
and labor laws and a wide variety of foreign laws;
o obstacles to the repatriation of earnings and cash;
o regional, national and local political uncertainty;
o economic slowdown and/or downturn in foreign markets;
o difficulties in staffing and managing international operations;
o reduced protection for intellectual property in some countries; and
o inability to effectively control less than wholly owned partnerships
and joint ventures.
Shurgard also held many of its properties through interests in joint
ventures that we acquired and which have additional risks, including risks
related to the financial strength, common business goals and strategies and
cooperation of the venture partner, as well as the inability to take some
actions that may require approval by the venture partner. In addition, Shurgard
held substantially all of its real estate investments in Europe indirectly
through partnerships and joint venture arrangements. If we are unable to
effectively control these indirect investments, there is a risk that our
ownership of the joint ventures could cause us to lose our REIT status. These
investments also carry the risks that we may not control the legal entity that
has title to the real estate, that the enterprise in which we invested may have
liabilities that weren't disclosed at the time of the investment, and the risk
that these investments may not be easily sold or readily accepted as collateral
by our lenders.
As a share of total operations, particularly in Europe, Shurgard had
more recently developed properties whose occupancies have not stabilized and had
more construction activity than Public Storage, which increase costs. Delays in
construction and fill-up could result in additional cost.
Some of the facilities we acquired in the Shurgard merger will be
subject to property tax reappraisal that could increase property tax expense and
adversely affect our profitability. Up to 17% of the domestic properties we
acquired in the merger are located in jurisdictions that may provide for
property tax reappraisal upon a change of ownership and so may face such a
reassessment.
We have assumed based on public filings that Shurgard qualified as a
real estate investment trust for United States federal income tax purposes,
referred to hereinafter as a REIT and that we would be able to continue to
qualify as a REIT following the Shurgard merger. However, if Shurgard failed to
qualify as a REIT, we generally would have succeeded to or incurred significant
tax liabilities (including the significant tax liability that would have
resulted from the deemed sale of assets by Shurgard pursuant to the merger) and
we could possibly lose our REIT status should disqualifying activities continue
after the Shurgard merger.
The Shurgard debt agreements we assumed also have covenants that could
limit our activities. Failure to comply with such covenants could cause a
default under the applicable debt agreement, which could allow the lenders or
other debt holders to declare all borrowings outstanding to be due and payable.
PUBLIC STORAGE SHAREHOLDERS INCURRED IMMEDIATE DILUTION FOLLOWING COMPLETION OF
THE SHURGARD MERGER.
18
Public Storage shareholders incurred immediate dilution in connection
with the merger. During 2005, Public Storage shareholders would have incurred a
loss of $0.80 per share (diluted) on a pro forma basis compared to earnings of
$1.97 per share (diluted) on a historical basis primarily as a result of an
increase in depreciation and amortization expense.
THE HUGHES FAMILY COULD CONTROL US AND TAKE ACTIONS ADVERSE TO OTHER
SHAREHOLDERS.
At December 31, 2006, B. Wayne Hughes, Chairman of the Board and his
family (the "Hughes family") owned approximately 26.7% of our aggregate
outstanding shares of common stock. Consequently, the Hughes family could
control matters submitted to a vote of our shareholders, including electing
directors, amending our organizational documents, dissolving and approving other
extraordinary transactions, such as a takeover attempt, even though such actions
may not be favorable to the other common shareholders.
PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS MAY PREVENT CHANGES IN CONTROL.
Restrictions in our organizational documents may further limit changes
in control. Unless our Board of Directors waives these limitations, no
shareholder may own more than (1) 2.0% of our outstanding shares of our common
stock or (2) 9.9% of the outstanding shares of each class or series of our
preferred or equity stock. Our organizational documents in effect provide,
however, that the Hughes family may continue to own the shares of our common
stock held by them at the time of the 1995 reorganization. Our Board has
authorized the Hughes family to acquire additional shares of our common stock to
maintain their pre-merger holding percentage. These limitations are designed, to
the extent possible, to avoid a concentration of ownership that might jeopardize
our ability to qualify as a real estate investment trust or REIT. These
limitations, however, also may make a change of control significantly more
difficult (if not impossible) even if it would be favorable to the interests of
our public shareholders. These provisions will prevent future takeover attempts
not approved by our board of directors even if a majority of our public
shareholders deem it to be in their best interests because they would receive a
premium for their shares over the shares' then market value or for other
reasons.
WE WOULD INCUR ADVERSE TAX CONSEQUENCES IF WE OR SHURGARD FAILED TO QUALIFY AS A
REIT.
We have assumed, based on public filings, that Shurgard qualified as a
real estate investment trust for United States federal income tax purposes,
referred to hereinafter as a REIT, and that we will be able to continue to
qualify as a REIT following the Shurgard merger. However, if Shurgard failed to
qualify as a REIT, we generally would have succeeded to or incurred significant
tax liabilities (including the significant tax liability that would have
resulted from the deemed sale of assets by Shurgard pursuant to the merger) and
we could possibly lose our REIT status should disqualifying activities continue
after the Shurgard merger.
Investors are also subject to the risk that we may not qualify as a
REIT. REITs are subject to a range of complex organizational and operational
requirements. As a REIT, we must distribute with respect to each year at least
90% of our REIT taxable income to our shareholders. Other restrictions apply to
our income and assets. Our REIT status is also dependent upon the ongoing
qualification of our affiliate, PS Business Parks, Inc., as a REIT, as a result
of our substantial ownership interest in that company.
For any taxable year that we fail to qualify as a REIT and are unable
to avail ourselves of certain savings provisions set forth in the Internal
Revenue Code of 1986, we would be subject to federal income tax at the regular
corporate rates on all of our taxable income, whether or not we make any
distributions to our shareholders. Those taxes would reduce the amount of cash
available for distribution to our shareholders or for reinvestment and would
adversely affect our earnings. As a result, our failure to qualify as a REIT
during any taxable year could have a material adverse effect upon us and our
shareholders. Furthermore, unless certain relief provisions apply, we would not
be eligible to elect REIT status again until the fifth taxable year that begins
after the first year for which we fail to qualify.
WE MAY PAY SOME TAXES, REDUCING CASH AVAILABLE FOR SHAREHOLDERS.
Even if we qualify as a REIT for federal income tax purposes, we are
required to pay some federal, state and local taxes on our income and property.
Several corporate subsidiaries of the Company have elected to be treated as
"taxable REIT subsidiaries" of the Company for federal income tax purposes since
19
January 1, 2001. A taxable REIT subsidiary is taxable as a regular corporation
and is limited in its ability to deduct interest payments made to us in excess
of a certain amount. In addition, if we receive certain payments and the
economic arrangements among our taxable REIT subsidiaries and us are not
comparable to similar arrangements among unrelated parties we will be subject to
a 100% penalty tax on those payments. To the extent that the Company or any
taxable REIT subsidiary is required to pay federal, state or local taxes, we
will have less cash available for distribution to shareholders.
WE HAVE BECOME INCREASINGLY DEPENDENT UPON AUTOMATED PROCESSES AND THE INTERNET
AND ARE FACED WITH SECURITY SYSTEM RISKS.
We have become increasingly centralized and dependent upon automated
information technology processes. As a result, we could be severely impacted by
a catastrophic occurrence, such as a natural disaster or a terrorist attack. In
addition, a portion of our business operations are conducted over the Internet,
increasing the risk of viruses that could cause system failures and disruptions
of operations. Experienced computer programmers may be able to penetrate our
network security and misappropriate our confidential information, create system
disruptions or cause shutdowns.
CERTAIN SECURITIES HAVE A LIQUIDATION PREFERENCE OVER OUR COMMON STOCK AND
EQUITY STOCK, SERIES A.
If we liquidated, holders of our preferred securities would be entitled
to receive liquidating distributions, plus any accrued and unpaid distributions,
before any distribution of assets to the holders of our common stock and equity
stock, series A. Holders of preferred securities are entitled to receive, when
declared by our board of directors, cash distributions in preference to holders
of our common stock and equity stock, Series A.
SINCE OUR BUSINESS CONSISTS PRIMARILY OF ACQUIRING AND OPERATING REAL ESTATE, WE
ARE SUBJECT TO REAL ESTATE OPERATING RISKS.
The value of our investments may be reduced by general risks of real
estate ownership. Since we derive substantially all of our income from real
estate operations, we are subject to the general risks of owning real
estate-related assets, including: o lack of demand for rental spaces or units in
a locale;
o changes in general economic or local conditions;
o natural disasters, such as earthquakes;
o potential terrorist attacks;
o changes in supply of or demand for similar or competing facilities in
an area;
o the impact of environmental protection laws;
o changes in interest rates and availability of permanent mortgage funds
which may render the sale or financing of a property difficult or
unattractive;
o changes in tax, real estate and zoning laws; and
o tenant claims.
In addition, we self-insure certain of our property loss, liability,
and workers compensation risks for which other real estate companies may use
third-party insurers. This results in a higher risk of losses that are not
covered by third-party insurance contracts, as described in Note 17 under
"Insurance and Loss Exposure" to our consolidated financial statements at
December 31, 2006.
There is significant competition among self-storage facilities and from
other storage alternatives. Most of our properties are self-storage facilities,
which generated most of our revenue for the year ended December 31, 2006. Local
market conditions will play a significant part in how competition will affect
us. Competition in the market areas in which many of our properties are located
from other self-storage facilities and other storage alternatives is significant
20
and has affected the occupancy levels, rental rates and operating expenses of
some of our properties. Any increase in availability of funds for investment in
real estate may accelerate competition. Further development of self-storage
facilities may intensify competition among operators of self-storage facilities
in the market areas in which we operate.
We may incur significant environmental costs and liabilities. As an
owner and operator of real properties, under various federal, state and local
environmental laws, we are required to clean up spills or other releases of
hazardous or toxic substances on or from our properties. Certain environmental
laws impose liability whether or not the owner knew of, or was responsible for,
the presence of the hazardous or toxic substances. In some cases, liability may
not be limited to the value of the property. The presence of these substances,
or the failure to properly remediate any resulting contamination, whether from
environmental or microbial issues, also may adversely affect the owner's or
operator's ability to sell, lease or operate its property or to borrow using its
property as collateral.
We have conducted preliminary environmental assessments of most of our
properties (and intend to conduct these assessments in connection with property
acquisitions) to evaluate the environmental condition of, and potential
environmental liabilities associated with, our properties. These assessments
generally consist of an investigation of environmental conditions at the
property (not including soil or groundwater sampling or analysis), as well as a
review of available information regarding the site and publicly available data
regarding conditions at other sites in the vicinity. In connection with these
property assessments, our operations and recent property acquisitions, we have
become aware that prior operations or activities at some facilities or from
nearby locations have or may have resulted in contamination to the soil or
groundwater at these facilities. In this regard, some of our facilities are or
may be the subject of federal or state environment investigations or remedial
actions. We have obtained, with respect to recent acquisitions, and intend to
obtain with respect to pending or future acquisitions, appropriate purchase
price adjustments or indemnifications that we believe are sufficient to cover
any related potential liability. Although we cannot provide any assurance, based
on the preliminary environmental assessments, we believe we have funds available
to cover any liability from environmental contamination or potential
contamination and we are not aware of any environmental contamination of our
facilities material to our overall business, financial condition or results of
operation.
There has been an increasing number of claims and litigation against
owners and managers of rental properties relating to moisture infiltration,
which can result in mold or other property damage. When we receive a complaint
concerning moisture infiltration, condensation or mold problems and/or become
aware that an air quality concern exists, we implement corrective measures in
accordance with guidelines and protocols we have developed with the assistance
of outside experts. We seek to work proactively with our tenants to resolve
moisture infiltration and mold-related issues, subject to our contractual
limitations on liability for such claims. However, we can make no assurance that
material legal claims relating to moisture infiltration and the presence of, or
exposure to, mold will not arise in the future.
Delays in development and fill-up of our properties would reduce our
profitability. Since January 1, 2002, through December 31, 2006, we have opened
46 newly developed self-storage facilities. In addition, our development
"pipeline" in the United States and Europe at December 31, 2006 consist of 56
projects with total estimated costs of $266 million. We anticipate the
development of these 56 projects to be completed in the next two years.
Construction delays due to weather, unforeseen site conditions, personnel
problems, and other factors, as well as cost overruns, would adversely affect
our profitability. Delays in the rent-up of newly developed facilities as a
result of competition or other factors would also adversely impact our
profitability.
Property taxes can increase and cause a decline in yields on
investments. Each of our properties is subject to real property taxes. These
real property taxes may increase in the future as property tax rates change and
as our properties are assessed or reassessed by tax authorities. Such increases
could adversely impact our profitability.
We must comply with the Americans with Disabilities Act and fire and
safety regulations, which can require significant expenditures. All our
properties must comply with the Americans with Disabilities Act and with related
regulations (the "ADA"). The ADA has separate compliance requirements for
"public accommodations" and "commercial facilities," but generally requires that
buildings be made accessible to persons with disabilities. Various state laws
impose similar requirements. A failure to comply with the ADA or similar state
laws could result in government imposed fines on us and could award damages to
individuals affected by the failure. In addition, we must operate our properties
in compliance with numerous local fire and safety regulations, building codes,
and other land use regulations. Compliance with these requirements can require
21
us to spend substantial amounts of money, which would reduce cash otherwise
available for distribution to shareholders. Failure to comply with these
requirements could also affect the marketability of our real estate facilities.
Any failure by us to manage acquisitions and other significant
transactions successfully could negatively impact our financial results. As an
increasing part of our business, we acquire other self-storage facilities. We
also evaluate from time to time other significant transactions. If these
facilities are not properly integrated into our system, our financial results
may suffer.
We incur liability from employment related claims. From time to time we
must resolve employment related claims by corporate level and field personnel.
WE HAVE NO INTEREST IN CANADIAN SELF-STORAGE FACILITIES OWNED BY THE HUGHES
FAMILY.
The Hughes Family has ownership interests in, and operates,
approximately 44 self-storage facilities in Canada under the name "Public
Storage." We currently do not own any interests in these facilities nor do we
own any facilities in Canada. We have a right of first refusal to acquire the
stock or assets of the corporation engaged in the operation of the self-storage
facilities in Canada if the Hughes family or the corporation agrees to sell
them. However, we have no ownership interest in the operations of this
corporation, have no right to acquire their stock or assets unless the Hughes
family decides to sell, and receive no benefit from the profits and increases in
value of the Canadian self-storage facilities.
Prior to December 31, 2003, Company personnel were engaged in the
supervision and the operation of these properties and provided certain
administrative services for the Canadian owners, and certain other services,
primarily tax services, with respect to certain other Hughes Family interests.
The Hughes Family and the Canadian owners reimbursed us at cost for these
services in the amount of $542,499 with respect to the Canadian operations and
$151,063 for other services during 2003 (in United States dollars). There were
conflicts of interest in allocating time of our personnel between Company
properties, the Canadian properties, and certain other Hughes Family interests.
The sharing of Company personnel with the Canadian entities was substantially
eliminated by December 31, 2003.
Through our subsidiaries, we continue to reinsure risks relating to
loss of goods stored by tenants in the self-storage facilities in Canada. We
acquired the tenant insurance business on December 31, 2001 through our
acquisition of PSIC. For each of the years ended December 31, 2006 and 2005,
PSIC received $989,000 and $1,052,000 respectively, in reinsurance premiums
attributable to the Canadian Facilities. Since PSIC's right to provide tenant
reinsurance to the Canadian Facilities may be qualified, there is no assurance
that these premiums will continue.
INCREASES IN INTEREST RATES MAY ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK.
One of the factors that influences the market price of our common stock
and our other securities is the annual rate of distributions that we pay on the
securities, as compared with interest rates. An increase in interest rates may
lead purchasers of REIT shares to demand higher annual distribution rates, which
could adversely affect the market price of our common stock and other
securities.
TERRORIST ATTACKS AND THE POSSIBILITY OF WIDER ARMED CONFLICT MAY HAVE AN
ADVERSE IMPACT ON OUR BUSINESS AND OPERATING RESULTS AND COULD DECREASE THE
VALUE OF OUR ASSETS.
Terrorist attacks and other acts of violence or war, such as those that
took place on September 11, 2001, could have a material adverse impact on our
business and operating results. There can be no assurance that there will not be
further terrorist attacks against the United States or its businesses or
interests. Attacks or armed conflicts that directly impact one or more of our
properties could significantly affect our ability to operate those properties
and thereby impair our operating results. Further, we may not have insurance
coverage for losses caused by a terrorist attack. Such insurance may not be
available, or if it is available and we decide to obtain such terrorist
coverage, the cost for the insurance may be significant in relationship to the
risk overall. In addition, the adverse effects that such violent acts and
threats of future attacks could have on the United States economy could
similarly have a material adverse effect on our business and results of
operations. Finally, further terrorist acts could cause the United States to
enter into a wider armed conflict, which could further impact our business and
operating results.
22
DEVELOPMENTS IN CALIFORNIA MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS.
We are headquartered in, and approximately one-fifth of our properties
in the United States are located in, California. California is facing budgetary
problems. Action that may be taken in response to these problems, such as an
increase in property taxes on commercial properties, could adversely impact our
business and results of operations. In addition, we could be adversely impacted
by efforts to reenact legislation mandating medical insurance for employees of
California businesses and members of their families.
ITEM 1B. UNRESOLVED STAFF COMMENTS
-------------------------
Not applicable.
23
ITEM 2. PROPERTIES
At December 31, 2006, we had direct and indirect ownership interests in
2,003 and 166 storage facilities located in 38 states within the U.S. and seven
Western European nations, respectively:
At December 31, 2006
-----------------------------------------
Number of Storage Net Rentable Square
Facilities (a) Feet (in thousands)
-------------------- --------------------
United States:
California:
Southern............... 198 13,399
Northern............... 170 9,845
Texas....................... 235 15,375
Florida..................... 191 12,452
Illinois.................... 123 7,800
Washington.................. 91 5,954
Georgia..................... 90 5,835
North Carolina.............. 69 4,775
Virginia.................... 78 4,407
New York.................... 61 3,921
Colorado.................... 60 3,810
New Jersey.................. 56 3,492
Maryland.................... 55 3,085
Minnesota................... 44 2,990
Michigan.................... 43 2,755
Arizona..................... 37 2,259
Missouri.................... 38 2,144
South Carolina.............. 40 2,131
Oregon...................... 38 1,955
Tennessee................... 33 1,883
Indiana..................... 31 1,880
Pennsylvania................ 28 1,867
Ohio........................ 30 1,860
Nevada...................... 22 1,404
Kansas...................... 22 1,310
Massachusetts............... 19 1,179
Wisconsin................... 16 1,030
Other states (12 states).... 85 4,633
-------------------- --------------------
Total - U.S............ 2,003 125,430
-------------------- --------------------
Europe:
France...................... 50 2,606
Netherlands................. 32 1,664
Sweden...................... 25 1,335
Belgium..................... 21 1,219
United Kingdom.............. 19 905
Germany..................... 11 550
Denmark..................... 8 410
-------------------- --------------------
Total - Europe......... 166 8,689
-------------------- --------------------
Grand Total............ 2,169 134,119
==================== ====================
(a) Includes 2,147 self-storage facilities owned by the Company and entities
consolidated with the Company. The remaining 22 facilities are self-storage
facilities owned by entities in which the Company has an interest; however,
the Company does not consolidate such entities. See Schedule III: Real
Estate and Accumulated Depreciation in the Company's 2006 financials, for a
complete list of properties consolidated by the Company.
24
Our facilities are generally operated to maximize cash flow through the
regular review and, when warranted by market conditions, adjustment of rents
charged to our tenants. For the year ended December 31, 2006, the weighted
average occupancy level and the average total rental income per rentable square
foot for our self-storage facilities were approximately 89% and $12.39,
respectively in the U.S. and 76% and $23.30, respectively in Europe. Included in
the 2,169 storage facilities are 46 newly developed facilities opened since
January 1, 2002.
At December 31, 2006, 263 of our facilities were encumbered by an
aggregate of $984.3 million in mortgage notes payable.
We have no specific policy as to the maximum size of any one particular
self-storage facility. However, none of our facilities involves, or is expected
to involve, 1% or more of our total assets, gross revenues or net income.
DESCRIPTION OF SELF-STORAGE FACILITIES: Self-storage facilities, which
comprise the majority of our investments, are designed to offer accessible
storage space for personal and business use at a relatively low cost. A user
rents a fully enclosed space, which is for the user's exclusive use and to which
only the user has access on an unrestricted basis during business hours. On-site
operation is the responsibility of property managers who are supervised by
district managers. Some self-storage facilities also include rentable uncovered
parking areas for vehicle storage, as well as space for portable storage
containers. Leases for storage facility space may be on a long-term or
short-term basis, although typically spaces are rented on a month-to-month
basis. Rental rates vary according to the location of the property, the size of
the storage space and length of stay. All of our self-storage facilities in the
United States are operated under the "Public Storage" brand name, while our
facilities in Europe are operated under the "Shurgard" brand name.
Users of space in self-storage facilities include individuals and
businesses. Individuals usually obtain this space for storage of furniture,
household appliances, personal belongings, motor vehicles, boats, campers,
motorcycles and other household goods. Businesses normally employ this space for
storage of excess inventory, business records, seasonal goods, equipment and
fixtures.
Our self-storage facilities generally consist of three to seven
buildings containing an aggregate of between 350 to 750 storage spaces, most of
which have between 25 and 400 square feet and an interior height of
approximately 8 to 12 feet.
We experience minor seasonal fluctuations in the occupancy levels of
self-storage facilities with occupancies generally higher in the summer months
than in the winter months. We believe that these fluctuations result in part
from increased moving activity during the summer months.
Our self-storage facilities are geographically diversified and are
located primarily in or near major metropolitan markets in 38 states in the
United States and seven Western European nations. Generally our self-storage
facilities are located in heavily populated areas and close to concentrations of
apartment complexes, single family residences and commercial developments.
However, there may be circumstances in which it may be appropriate to own a
property in a less populated area, for example, in an area that is highly
visible from a major thoroughfare and close to, although not in, a heavily
populated area. Moreover, in certain population centers, land costs and zoning
restrictions may create a demand for space in nearby less populated areas.
Competition from other self-storage facilities as well as other forms
of storage in the market areas in which many of our properties are located is
significant and has affected the occupancy levels, rental rates, and operating
expenses of many of our properties.
Since our investments are primarily self-storage facilities, our
ability to preserve our investments and achieve our objectives is dependent in
large part upon success in this field. Historically, upon stabilization after an
initial fill-up period, our self-storage facility interests have generally shown
a high degree of consistency in generating cash flows, despite changing economic
conditions. We believe that our self-storage facilities, upon stabilization,
have attractive characteristics consisting of high profit margins, a broad
tenant base and low levels of capital expenditures to maintain their condition
and appearance.
25
Commercial Properties: In addition to our interests in 2,169
self-storage facilities, we have an interest in PSB, which, as of December 31,
2006, owns and operates approximately 18.7 million net rentable square feet in
eight states. At December 31, 2006, our investment in PSB represents 2.5% of our
total assets based upon book value of $283.7 million. The market value of our
investment in PSB at December 31, 2006 of approximately $899.7 million
represents 8.0% of the book value of our total assets at December 31, 2006 of
approximately $11.2 billion. We also directly own six commercial properties with
520,000 net rentable square feet, have 1,041,000 net rentable square feet of
commercial space that is located at certain of the self-storage facilities, and
own three industrial facilities with an aggregate of 244,000 net rentable square
feet that are being used by the continuing containerized storage operations.
The commercial properties owned by PSB consist of flex space, office
space and industrial space. Flex space is defined as buildings that are
configured with a combination of part warehouse space and part office space and
can be designed to fit a wide variety of uses. The warehouse component of the
flex space has a variety of uses including light manufacturing and assembly,
storage and warehousing, showroom, laboratory, distribution and research and
development activities. The office component of flex space is complementary to
the warehouse component by enabling businesses to accommodate management and
production staff in the same facility. PSB also owns low-rise suburban office
space, generally either in business parks that combine office and flex space or
in desirable submarkets where the economics of the market demand an office
build-out. PSB also owns industrial space that has characteristics similar to
the warehouse component of the flex space.
ENVIRONMENTAL MATTERS: Our policy is to accrue environmental
assessments and estimated remediation cost when it is probable that such efforts
will be required and the related costs can be reasonably estimated. Our current
practice is to conduct environmental investigations in connection with property
acquisitions. Although there can be no assurance, we are not aware of any
environmental contamination of any of our facilities, which individually or in
the aggregate would be material to our overall business, financial condition, or
results of operations.
ITEM 3. LEGAL PROCEEDINGS
Serrao v. Public Storage, Inc. (filed April 2003)
------------------------------------------------------
(Superior Court of California - Orange County)
-----------------------------------------------
The plaintiff in this case filed a suit against the Company on behalf
of a putative class of renters who rented self-storage units from the Company.
Plaintiff alleges that the Company misrepresented the size of its storage units,
has brought claims under California statutory and common law relating to
consumer protection, fraud, unfair competition, and negligent misrepresentation,
and is seeking monetary damages, restitution, and declaratory and injunctive
relief.
The claim in this case is substantially similar to those in Henriquez
v. Public Storage, Inc., which was disclosed in prior reports. In January 2003,
the plaintiff caused the Henriquez action to be dismissed.
Based upon the uncertainty inherent in any putative class action, we
cannot presently determine the potential damages, if any, or the ultimate
outcome of this litigation. On November 3, 2003, the court granted our motion to
strike the plaintiff's nationwide class allegations and to limit any putative
class to California residents only. In August 2005, we filed a motion to remove
the case to federal court, but the case has been remanded to the Superior Court.
We are vigorously contesting the claims upon which this lawsuit is based,
including class certification efforts.
Drake v. Shurgard Storage Centers, Inc. (filed September 2002)
-----------------------------------------------------------------
(Superior Court of California - Orange County)
----------------------------------------------
26
This is a companion case to the Serrao matter discussed above. The
plaintiff alleges the same set of operative facts and seeks the same relief as
in Serrao against Shurgard Storage Centers, Inc. ("Shurgard"), whose liability
Public Storage assumed following the merger of Public Storage and Shurgard on
August 22, 2006. There is currently pending a motion for class certification,
which has yet to be ruled on. We cannot presently determine the potential total
damages, if any, or the ultimate outcome of the litigation. We vigorously
contested the motion for class certification and will vigorously defend this
action.
Potter, et al v. Hughes, et al (filed December 2004)
----------------------------------------------------------
(United States District Court - Central District of California)
----------------------------------------------------------------
In November 2002, a shareholder of the Company made a demand on the
Board of Directors challenging the fairness of the Company's acquisition of PS
Insurance Company, Ltd. ("PSIC") and related matters. PSIC was previously owned
by the Hughes Family. In June 2003, following the filing by the Hughes Family of
a complaint for declaratory relief asking the court to find that the acquisition
of PSIC and related matters were fair to the Company, it was ruled that the PSIC
transaction was just and reasonable as to the Company and holding that the
Hughes Family was not required to make any payment to the Company.
At the end of December 2004, the same shareholder referred to above and
a second shareholder filed this shareholder's derivative complaint naming as
defendants the Company's directors (and two former directors) and certain
officers of the Company. The matters alleged in this complaint relate to PSIC,
the Hughes Family's Canadian self-storage operations and the Company's 1995
reorganization. In July 2006, the Court granted the defendants' motion to
dismiss the amended Complaint without leave to amend. In August 2006, Plaintiffs
filed a notice of appeal of the Court's decision. The appeal is currently
pending. We believe the litigation will not have any financially adverse effect
on the Company (other than the costs and other expenses relating to the
lawsuit).
27
Brinkley v. Public Storage, Inc. (filed April 2005)
----------------------------------------------------
(Superior Court of California - Los Angeles County)
---------------------------------------------------
The plaintiff sued the Company on behalf of a purported class of
California non-exempt employees based on various California wage and hour laws
and seeking monetary damages and injunctive relief. In May 2006, a motion for
class certification was filed seeking to certify five subclasses. Plaintiff
sought certification for alleged meal period violations, rest period violations,
failure to pay for travel time, failure to pay for mileage reimbursement, and
for wage statement violations. In October 2006, the Court declined to certify
three out of the five subclasses. The Court did, however, certify subclasses
based on alleged meal period and wage statement violations. The maximum
potential liability cannot presently be estimated. We intend to vigorously
contest the substantive merits of the two remaining subclasses that were
certified.
Simas v. Public Storage, Inc. (filed January 2006)
----------------------------------------------------
(Superior Court of California - Orange County)
----------------------------------------------
The plaintiff brings this action against the Company on behalf of a
purported class who bought insurance coverage at Company's facilities alleging
that the Company does not have a license to offer, sell and/or transact storage
insurance. The action was originally brought under California Business and
Professions Code Section 17200 and seeks retention, monetary damages and
injunctive relief. The Company filed a demurrer to the complaint. While the
demurrer was pending, Plaintiff amended the complaint to allege a national class
and claims for unfair business practices, unjust enrichment, money had and
received, and negligent and intentional misrepresentation. Ultimately all claims
except for unjust enrichment were dismissed. There is currently a demurrer
pending on Plaintiff's amended allegations as to unjust enrichment. We are
vigorously contesting the claims upon which this lawsuit is based, including any
efforts for class certification.
Other Items
-----------
We are a party to various claims, complaints, and other legal actions
that have arisen in the normal course of business from time to time that are not
described above. We believe that it is unlikely that the outcome of these other
pending legal proceedings including employment and tenant claims, in the
aggregate, will have a material adverse impact upon our operations or financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did not submit any matter to a vote of security holders in the
fourth quarter of the fiscal year ended December 31, 2006.
28
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------
AND ISSUER PURCHASES OF EQUITY SECURITIES
-----------------------------------------
a. Market Price of the Registrant's Common Equity:
Our Common Stock (NYSE: PSA) has been listed on the New York
Stock Exchange since October 19, 1984. Our Depositary Shares each
representing 1/1,000 of a share of Equity Stock, Series A (NYSE:PSAA)
(see section c. below) have been listed on the New York Stock Exchange
since February 14, 2000.
The following table sets forth the high and low sales prices of
Common Stock on the New York Stock Exchange composite tapes for the
applicable periods.
Range
--------------------------------
Year Quarter High Low
------ ------- ------------- -----------
2005 1st $ 59.490 $ 51.500
2nd 64.500 55.300
3rd 70.450 59.700
4th 72.020 61.360
2006 1st 84.620 67.720
2nd 81.400 70.260
3rd 89.250 75.440
4th 98.050 85.170
The following table sets forth the high and low sales prices of
Depositary Shares Each Representing 1/1,000 of a Share of Equity Stock,
Series A on the New York Stock Exchange composite tapes for the
applicable periods.
Range
--------------------------------
Year Quarter High Low
------ ------- ------------- -----------
2005 1st $ 29.950 $ 27.800
2nd 29.000 27.210
3rd 28.900 27.610
4th 28.650 27.380
2006 1st 27.760 26.200
2nd 27.250 25.600
3rd 28.080 26.350
4th 27.700 26.180
As of February 15, 2007, there were approximately 25,258 holders
of record of Common Stock and approximately 10,786 holders of
Depositary Shares Each Representing 1/1,000 of a share of Equity Stock,
Series A.
b. Dividends
We have paid quarterly distributions to our shareholders since
1981, our first full year of operations. Overall distributions on
Common Stock for 2006 amounted to $298.2 million or $2.00 per share of
Common Stock.
Holders of Common Stock are entitled to receive distributions
when and if declared by our Board of Directors out of any funds legally
available for that purpose. In order to maintain our REIT status for
federal income tax purposes, we are generally required to pay dividends
at least equal to 90% of our real estate investment trust taxable
income for the taxable year (for this purpose, certain dividends paid
in the subsequent year may be taken into account). We intend to pay
distributions sufficient to permit us to maintain our REIT status.
29
For Federal income tax purposes, distributions to shareholders
are treated as ordinary income, capital gains, return of capital or a
combination thereof. For 2006, the dividends paid to the common
shareholders ($2.00 per share), on all the various classes of preferred
stock, and on our Equity Stock, Series A were classified as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
--------------- ------------- -------------- ---------------
Ordinary Income.......... 100.0000% 100.0000% 100.0000% 100.0000%
Long-term Capital Gain... 0.0000% 0.0000% 0.0000% 0.0000%
--------------- ------------- -------------- ---------------
Total.................... 100.0000% 100.0000% 100.0000% 100.0000%
=============== ============= ============== ===============
For 2005, the dividends paid to the common shareholders ($1.90
per share), on all the various classes of preferred stock, and on our
Equity Stock, Series A were classified as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
--------------- ------------- -------------- ---------------
Ordinary Income.......... 98.5488% 99.3947% 99.9589% 100.0000%
Long-term Capital Gain... 1.4512% 0.6053% 0.0411% 0.0000%
--------------- ------------- -------------- ---------------
Total.................... 100.0000% 100.0000% 100.0000% 100.0000%
=============== ============= ============== ===============
A percentage of the long-term capital gain is unrecaptured
Section 1250 gain for each quarter of 2005 as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
--------------- ------------- -------------- ---------------
Unrecaptured ss.1250 Gain.. 7.3110% 0.0000% 8.0542% 0.0000%
=============== ============= ============== ===============
For the corporate shareholders a portion of the long-term capital
gain is required to be recaptured as ordinary income. For each quarter
of 2005 the percentage is as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
--------------- ------------- -------------- ---------------
IRC ss.291 Recapture....... 1.4621% 0.0000% 1.6121% 0.0000%
=============== ============= ============== ===============
The Jobs and Growth Tax Relief Reconciliation Act of 2003
introduced a new rule that reduces the tax rate for "qualified dividend
income." Generally, qualified dividend income is dividend income
received from a corporation that has been taxed on the dividends
distributed to its shareholders. Public Storage, Inc, as a REIT, is
generally not taxed on dividends it distributes annually to its
shareholders, and therefore the dividends shareholders receive are not
qualified dividend income subject to the lower rates.
c. Equity Stock
The Company is authorized to issue 200,000,000 shares of Equity
Stock. The Articles of Incorporation provide that the Equity Stock may
be issued from time to time in one or more series and gives the Board
of Directors broad authority to fix the dividend and distribution
rights, conversion and voting rights, redemption provisions and
liquidation rights of each series of Equity Stock.
In April 2001, we completed a public offering of 2,210,500
depositary shares each representing 1/1,000 of a share of Equity Stock,
Series A, ("Equity Stock A") raising net proceeds of approximately
$51,836,000. In May 2001, we completed a direct placement of 830,000
30
depositary shares, raising net proceeds of approximately $20,294,000.
In November 2001, we completed a direct placement of 100,000 depositary
shares, raising net proceeds of approximately $2,690,000. In January
2000, we issued 4,300,555 depositary shares (2,200,555 shares as part
of a special distribution declared on November 15, 1999 and 2,100,000
shares in a separate public offering). In addition, in the second
quarter of 2000, we issued 52,547 depositary shares to a related party
in connection with the acquisition of real estate facilities. In
December 2000, we issued 1,282,500 depositary shares in a public
offering. All of the issuances of the depositary shares described in
this paragraph were registered under the Securities Act at the time of
issuance.
At December 31, 2006, we had 8,744,193 depositary shares
outstanding, each representing 1/1,000 of a share of Equity Stock A.
The Equity Stock A ranks on a parity with common stock and junior to
the Senior Preferred Stock with respect to distributions and
liquidation and has a liquidation amount which cannot exceed $24.50 per
share. Distributions with respect to each depositary share shall be the
lesser of: a) five times the per share dividend on the Common Stock or
b) $2.45 per annum. Except in order to preserve the Company's Federal
income tax status as a REIT, we may not redeem the depositary shares
before March 31, 2010. On or after March 31, 2010, we may, at our
option, redeem the depositary shares at $24.50 per depositary share. If
the Company fails to preserve its Federal income tax status as a REIT,
each depositary share will be convertible into 0.956 shares of our
common stock. The depositary shares are otherwise not convertible into
common stock. Holders of depositary shares vote as a single class with
our holders of common stock on shareholder matters, but the depositary
shares have the equivalent of one-tenth of a vote per depositary share.
We have no obligation to pay distributions on the depositary shares if
no distributions are paid to common shareholders.
In November 1999, we sold $100,000,000 (4,289,544 shares) of
Equity Stock, Series AAA ("Equity Stock AAA") to a newly formed joint
venture. The Equity Stock AAA ranks on a parity with common stock and
junior to the Senior Preferred Stock with respect to general preference
rights, and has liquidation amount equal to 120% of the amount
distributed to each common share. Annual distributions per share are
equal to the lesser of (i) five times the amount paid per common share
or (ii) $2.1564. We have no obligation to pay distributions if no
distributions are paid to common shareholders.
31
ITEM 6. SELECTED FINANCIAL DATA
For the year ended December 31,
----------------------------------------------------------------------------
2006 (1) 2005 (1) 2004 (1) 2003 (1) 2002 (1)
-------------- ------------- -------------- -------------- -------------
(Amounts in thousands, except per share data)
Revenues:
Rental income and ancillary operations........ $1,349,856 $1,043,600 $952,766 $890,350 $845,273
Interest and other income..................... 31,799 16,447 5,391 2,537 5,210
-------------- ------------- -------------- -------------- -------------
1,381,655 1,060,047 958,157 892,887 850,483
-------------- ------------- -------------- -------------- -------------
Expenses:
Cost of operations (excluding depreciation).. 500,560 378,301 361,944 340,871 309,491
Depreciation and amortization................. 437,984 196,232 182,890 183,863 175,524
General and administrative.................... 84,661 21,115 18,813 17,127 15,619
Interest expense.............................. 33,062 8,216 760 1,121 3,809
-------------- ------------- -------------- -------------- -------------
1,056,267 603,864 564,407 542,982 504,443
-------------- ------------- -------------- -------------- -------------
Income from continuing operations before equity
in earnings of real estate entities, gain
(loss) on disposition of real estate
investments and casualty loss and minority
interest in income............................ 325,388 456,183 393,750 349,905 346,040
Equity in earnings of real estate entities...... 11,895 24,883 22,564 24,966 29,888
Gain(loss) on disposition of real estate
investments and casualty loss................. 2,177 1,182 67 1,007 (2,541)
Foreign currency exchange gain (loss) 336 - - - -
Income from derivatives, net 3,926 - - - -
Minority interest in income (3)................. (31,883) (32,651) (49,913) (43,703) (44,087)
-------------- ------------- -------------- -------------- -------------
Income from continuing operations............... 311,839 449,597 366,468 332,175 329,300
Cumulative effect of change in accounting
principle..................................... 578 - - - -
Discontinued operations (2)..................... 1,609 6,796 (255) 4,478 (10,562)
-------------- ------------- -------------- -------------- -------------
Net income...................................... $314,026 $456,393 $366,213 $336,653 $318,738
============== ============= ============== ============== =============
PER COMMON SHARE:
Distributions................................... $2.00 $1.90 $1.80 $1.80 $1.80
Net income - Basic.............................. $0.33 $1.98 $1.39 $1.29 $1.15
Net income - Diluted............................ $0.33 $1.97 $1.38 $1.28 $1.14
Weighted average common shares - Basic.......... 142,760 128,159 127,836 125,181 123,005
Weighted average common shares - Diluted........ 143,715 128,819 128,681 126,517 124,571
BALANCE SHEET DATA:
Total assets.................................... $11,198,473 $5,552,486 $5,204,790 $4,968,069 $4,843,662
Total debt...................................... $1,848,542 $149,647 $145,614 $76,030 $115,867
Minority interest (other partnership interests). $181,030 $28,970 $118,903 $141,137 $154,499
Minority interest (preferred partnership $325,000 $225,000 $310,000 $285,000 $285,000
interests)......................................
Shareholders' equity............................ $8,208,045 $4,817,009 $4,429,967 $4,219,799 $4,158,969
OTHER DATA:
Net cash provided by operating activities....... $791,700 $692,048 $616,664 $571,387 $591,283
Net cash used in investing activities........... $(487,496) $(443,656) $(157,638) $(205,133) $(325,786)
Net cash used in financing activities........... $(244,395) $(121,146) $(297,604) $(264,545) $(211,720)
(1) During 2006, 2005, 2004, 2003 and 2002, we completed several significant
asset acquisitions, business combinations and equity transactions. See our
consolidated financial statements and notes thereto.
(2) Commencing January 1, 2002, we adopted and modified a business plan that
included the closure or consolidation of certain non-strategic
containerized storage facilities. We sold two commercial properties - one
in 2002, the other in 2004. During 2003 we sold five self-storage
facilities. The historical operations of these facilities are classified as
discontinued operations, with the rental income, cost of operations,
depreciation expense and gain or loss on disposition of these facilities
for current and prior periods included in the line-item "Discontinued
Operations" on the consolidated income statement.
32
(3) During 2004, holders of $200,000,000 of our Series N preferred partnership
units agreed to a restructuring which included reducing their distribution
rate from 9.5% to 6.4% in exchange for a special distribution of
$8,000,000. This special distribution, combined with $2,063,000 in costs
incurred at the time the units were originally issued that were charged
against income in accordance with the Securities and Exchange Commission's
clarification of EITF Topic D-42, are included in minority interest in
income.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The following discussion and analysis should be read in conjunction
with our consolidated financial statements and notes thereto.
FORWARD LOOKING STATEMENTS: All statements in this document, 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 in Item 1A, "Risk
Factors" in Part I of this Annual Report on Form 10-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 integrating Public Storage and
Shurgard, loss of personnel as a result of the merger, and the impact of the
merger on occupancy and rental rates, the inability to realize or delays in
realizing expected results from the merger, unanticipated operating costs
resulting 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, which could adversely
affect our profitability; 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, which would impede our ability to grow; delays in the development
process; economic uncertainty due to the impact of war or terrorism. We disclaim
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 document, except where
expressly required by law.
OVERVIEW
In the United States, the self-storage industry is highly fragmented
and is composed predominantly of numerous local and regional operators.
Competition in the markets in which we operate is significant and has increased
over the past several years due to additional development of self-storage
facilities as well as the expansion of the containerized storage business by
competitors. We believe that the increase in competition has had a negative
impact on our occupancy levels and rental rates in many markets. However, we
believe that we possess several distinguishing characteristics that enable us to
compete effectively with other owners and operators.
We are the largest owner and operator of self-storage facilities in the
United States with direct and indirect ownership interests as of December 31,
2006 in 2,003 self-storage facilities containing approximately 125 million net
rentable square feet. All of our facilities in the United States are operated
under the "Public Storage" brand name, which we believe is the most recognized
and established name in the self-storage industry. Located in the major
metropolitan markets of 38 states, our self-storage facilities are
geographically diverse, giving us national recognition and prominence. This
concentration establishes us as one of the dominant providers of self-storage
space in most markets in which we operate and enables us to use a variety of
promotional activities, such as television advertising as well as targeted
discounting and referrals, which are generally not economically viable to most
of our competitors. In addition, we believe that the geographic diversity of the
portfolio reduces the impact from regional economic downturns and provides a
greater degree of revenue stability.
On August 22, 2006, we merged with Shurgard Storage Centers, Inc.
("Shurgard"). As a result of the merger, we acquired 487 self-storage facilities
33
located in the United States and 166 facilities located in seven countries in
Western Europe. This marks the first time we have owned self-storage facilities
outside of the United States. The self-storage industry in Europe is still
relatively new as compared to the United States where it is a mature industry.
Customer awareness of the product in Europe is emerging. All of our facilities
in Europe are operating under the "Shurgard" brand name. While competition in
Europe has been increasing, we believe we are the single largest self-storage
operator in Europe as of December 31, 2006.
We will continue to focus our growth strategies on: (i) improving the
operating performance of our existing self-storage properties, (ii) acquiring
self-storage properties owned and operated by others, (iii) expanding and
repackaging our existing self-storage facilities, (iv) developing new
self-storage locations, and (v) participating in the growth of PS Business
Parks, Inc. ("PSB"). Major elements of these strategies are as follows:
o We will focus on enhancing the operating performance of our
self-storage properties, primarily through increases in revenues
achieved through the telephone reservation center and associated
marketing efforts, as well as management of expense growth.
As indicated above, in connection with the merger with Shurgard, we
acquired 487 self-storage facilities located in the United States.
Substantially all of these facilities are located in the same
markets that we currently operate in. We believe that the merger
will provide us with additional economies of scale with respect to
certain operating costs that will ultimately improve operating
margins. In addition, at August 31, 2006, the average occupancy
level of the 487 self-storage facilities was approximately 84.4% as
compared to our existing portfolio's 89.7%. We believe that we will
be able to increase the average occupancy level of the acquired
portfolio to those experienced by our own. These potential benefits
will take time to develop and there can be no assurance that we
will be able to such benefits.
In Europe, we believe there is opportunity to enhance the operating
performance. Since the merger closed, our European management has
upgraded systems, reduce overhead costs, and improve revenue growth
by both improving occupancy levels and rental rates.
o We will acquire facilities from third parties. Aside from the
Shurgard merger, during 2004, 2005 and 2006, we acquired interests
in 89 self-storage facilities from third parties at an aggregate
cost of approximately $618 million. We believe that our national
telephone reservation system and our marketing and promotional
activities present an opportunity to increase revenues at these
facilities through higher occupancies, as well as cost efficiencies
through greater critical mass. During 2006, our acquisition
activities slowed down significantly, primarily because we focused
our attention on the merger with Shurgard. Notwithstanding, finding
high quality self-storage facilities, in desirable markets, at
attractive prices is becoming more difficult.
o We will look to expand and further invest into our existing
self-storage locations by (i) improving their visual and structural
appeal, (ii) expanding our facilities' density, at a per-square
foot cost that is favorable compared to a ground-up development, to
take advantage of increases in local demand since the facilities
were developed, and (iii) converting existing vacant space
previously used by our containerized storage operations into
traditional self-storage space. At December 31, 2006, we have a
"pipeline" of 48 such projects in the United States to expand or
repackage our existing facilities, and to convert substantially all
of the remaining vacant space previously used by our containerized
storage operations, for an aggregate of approximately $188 million,
which will add approximately 2,256,000 net rentable square feet.
Completion of these projects is subject to contingencies, including
obtaining governmental agency approvals. We continue to evaluate
our existing real estate portfolio to identify additional expansion
and repackaging opportunities.
34
o In 2005 and 2006, our rate of development of new self-storage
facilities has declined due to increases in construction cost,
increases in competition with retail, condominium, and apartment
operators for quality self-storage sites in urban locations, and
more difficult zoning and permitting requirements. We will,
however, continue to seek favorable sites and markets for
development.
o Through our investment in PSB, we will continue to participate in
the potential growth of this company's investment in approximately
18.7 million net rentable square feet of commercial space at
December 31, 2006.
CRITICAL ACCOUNTING POLICIES
Management's Discussion and Analysis of Financial Condition and Results
of Operations discusses our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States ("GAAP"). The preparation of our financial statements and related
disclosures in conformity with GAAP and our discussion and analysis of our
financial condition and results of operations requires management to make
judgments, assumptions and estimates that affect the amounts reported in our
consolidated financial statements and accompanying notes. Note 2 to our
consolidated financial statements in Item 8 of this Form 10-K summarizes the
significant accounting policies and methods used in the preparation of our
consolidated financial statements and related disclosures.
Management believes the following are critical accounting policies
whose application has a material impact on the Company's financial presentation.
That is, they are both important to the portrayal of our financial condition and
results, and they require management to make judgments and estimates about
matters that are inherently uncertain.
QUALIFICATION AS A REIT - INCOME TAX EXPENSE: We believe that we have
been organized and operated, and we intend to continue to operate, as a
qualifying Real Estate Investment Trust ("REIT") under the Internal Revenue Code
and applicable state laws. We also believe that Shurgard qualified as a REIT. A
qualifying REIT generally does not pay corporate level income taxes on its
taxable income that is distributed to its shareholders, and accordingly, we do
not pay income tax on the share of our taxable income that is distributed to our
shareholders.
We therefore do not estimate or accrue any federal income tax expense.
This estimate could be incorrect, because due to the complex nature of the REIT
qualification requirements, the ongoing importance of factual determinations and
the possibility of future changes in our circumstances, we cannot be assured
that we actually have satisfied or will satisfy the requirements for taxation as
a REIT for any particular taxable year. For any taxable year that we fail or
have failed to qualify as a REIT and applicable relief provisions did not apply,
we would be taxed at the regular corporate rates on all of our taxable income,
whether or not we made or make any distributions to our shareholders. Any
resulting requirement to pay corporate income tax, including any applicable
penalties or interest, could have a material adverse impact on our financial
condition or results of operations. Unless entitled to relief under specific
statutory provisions, we also would be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
There can be no assurance that we would be entitled to any statutory relief. In
addition, if Shurgard failed to qualify as a REIT, we generally would have
succeeded to or incurred significant tax liabilities.
IMPAIRMENT OF LONG-LIVED ASSETS: Substantially all of our assets
consist of long-lived assets, including real estate, goodwill, and other
intangible assets. We evaluate our goodwill for impairment on an annual basis,
and on a quarterly basis evaluate other long-lived assets for impairment. As
described in Note 2 to our consolidated financial statements, the evaluation of
goodwill for impairment entails valuation of the reporting unit to which
goodwill is allocated, which involves significant judgment in the area of
projecting earnings, determining appropriate price-earnings multiples, and
discount rates. In addition, the evaluation of other long-lived assets for
impairment requires determining whether indicators of impairment exist, which is
a subjective process. When any indicators of impairment are found, the
evaluation of such long-lived assets then entails projections of future
operating cash flows, which also involves significant judgment. We identified
impairment charges in the year ended December 31, 2004 related to our plan to
close and consolidate certain containerized storage facilities - see Note 4 to
our consolidated financial statements. Future events, or facts and circumstances
that currently exist, that we have not yet identified, could cause us to
conclude in the future that other long-lived assets are impaired. Any resulting
impairment loss could have a material adverse impact on our financial condition
and results of operations.
35
ESTIMATED USEFUL LIVES OF LONG-LIVED ASSETS: Substantially all of our
assets consist of depreciable, long-lived assets. We record depreciation expense
with respect to these assets based upon their estimated useful lives. Any change
in the estimated useful lives of those assets, caused by functional or economic
obsolescence or other factors, could have a material adverse impact on our
financial condition or results of operations.
ESTIMATED LEVEL OF RETAINED RISK AND UNPAID TENANT CLAIM LIABILITIES:
As described in Notes 2 and 17 to our consolidated financial statements, we
retain certain risks with respect to property perils, legal liability, and other
such risks. In addition, a wholly-owned subsidiary of the Company reinsures
policies against claims for losses to goods stored by tenants in our
self-storage facilities. In connection with these risks, we accrue losses based
upon the estimated level of losses incurred using certain actuarial assumptions
followed in the insurance industry and based on recommendations from an
independent actuary that is a member of the American Academy of Actuaries. While
we believe that the amounts of the accrued losses are adequate, the ultimate
liability may be in excess of or less than the amounts recorded. At December 31,
2006, we had approximately 403,000 reinsured policies in the United States
outstanding representing aggregate coverage of approximately $1 billion.
ACCRUALS FOR CONTINGENCIES: We are exposed to business and legal
liability risks with respect to events that have occurred, but in accordance
with GAAP, we have not accrued for such potential liabilities because the loss
is either not probable or not estimable or because we are not aware of the
event. Future events and the result of pending litigation could result in such
potential losses becoming probable and estimable, which could have a material
adverse impact on our financial condition or results of operations. Some of
these potential losses, of which we are aware, are described in Note 17 to our
consolidated financial statements.
ACCRUALS FOR OPERATING EXPENSES: We accrue for property tax expense and
certain other operating expenses based upon estimates and historical trends and
current and anticipated local and state government rules and regulations. If
these estimates and assumptions are incorrect, our expenses could be misstated.
Cost of operations, interest expense, general and administrative expense, as
well as television, yellow page, and other advertising expenditures are expensed
as incurred.
VALUATION OF DERIVATIVES: As described in our Significant Accounting
Policies in Note 2 to our consolidated financial statements, our derivative
instruments are not considered effective hedges. Accordingly, any changes in
value of these derivatives are reflected as an increase or decrease in net
income. The determination of the value of derivatives is based upon significant
judgment and assumptions including interest rates, currency rates, and expected
rates of return. The actual value of derivative instruments is dependent upon
many factors that our judgments and assumptions may not consider, or may not
consider effectively.
VALUATION OF ASSETS AND LIABILITIES ACQUIRED IN THE MERGER WITH
SHURGARD: In recording the merger with Shurgard, we have estimated the value of
real estate, intangible assets, debt, and the other assets and other liabilities
of Shurgard that we acquired. In addition, we have estimated the fair market
value of the 38.9 million shares that we issued to the Shurgard shareholders.
These value estimates are based upon many assumptions, including interest rates,
market values of land and buildings in the United States and Europe, estimated
future cash flows from the tenant base in place, and the recoverability of
certain assets. While we believe that the assumptions we used are reasonable,
these assumptions are subject to a significant degree of judgment, and others
could come to materially different conclusions as to value. If these assumptions
were computed differently, our depreciation and amortization expense, interest
expense, real estate, debt, and intangible assets could be materially different.
Further, these valuation estimates are preliminary, subject to further analysis,
and could change.
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
NET INCOME: Net income for the year ended December 31, 2006 was
$314,026,000 compared to $456,393,000 for the same period in 2005, representing
a decrease of $142,367,000, or 31%. This decrease is primarily due to
significant increases in depreciation and amortization expense, general and
administrative expense and interest expense. Depreciation and amortization
36
increased by approximately $242 million due primarily to the addition of real
estate facilities and intangible assets acquired in the merger with Shurgard and
the corresponding depreciation and amortization related to such assets. General
and administrative expense increased by approximately $64 million principally
from incurring approximately $44 million in integration expenses related to the
Shurgard merger. At December 31, 2006, we have $1.3 billion of debt outstanding
that was assumed in the Shurgard merger, and, as a result, interest expense
increased by approximately $25 million.
Net income for the year ended December 31, 2005 was $456,393,000
compared to $366,213,000 for the same period in 2004, representing an increase
of $90,180,000, or 25%. This increase is primarily due to improved net operating
income (before depreciation) from our Same Store, newly developed and acquired
self-storage facilities, reduced minority interest in income, increased gains on
the disposition of real estate assets and higher interest income. These items
were partially offset by increases in depreciation associated with acquisition
and development activities, general and administrative expense, and interest
expense.
ALLOCATIONS OF INCOME AMONG SHAREHOLDERS: In computing the net income
allocable to common shareholders for each period, we have deducted from net
income (i) distributions paid to the holders of the Equity Stock, Series A
totaling $21,424,000 in 2006, $21,443,000 in 2005 and $21,501,000 in 2004, (ii)
distributions paid to our preferred shareholders totaling $214,218,000 in 2006,
$173,017,000 in 2005 and $157,925,000 in 2004, and (iii) amounts allocated to
preferred shareholders in connection with preferred stock redemption activities
as described below, totaling $31,493,000 in 2006, $7,538,000 in 2005 and
$8,724,000 in 2004. The year-over-year increase in the distributions paid to our
preferred shareholders 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.
NET INCOME PER SHARE: Net income allocable to our common shareholders
(after allocating net income to our preferred and equity shareholders) was
$46,891,000 or $0.33 per common share on a diluted basis for the year ended
December 31, 2006 compared to $254,395,000 or $1.97 per common share on a
diluted basis for the same period in 2005, representing a decrease of $1.64 per
common share, or a decrease of 83%. The decreases in net income allocable to
common shareholders and earnings per common diluted share are due primarily to
the impact of the factors described above, in addition to increased income
allocated to preferred shareholders, described below. Weighted average diluted
shares increased to 143,715,000 for year ended December 31, 2006 from
128,819,000 for the year ended December 31, 2005. The increase in weighted
average diluted shares is due primarily to the issuance of approximately 38.9
million shares in the merger with Shurgard, which are included in our weighted
averages shares from August 22, 2006 through December 31, 2006.
Net income was $1.97 per diluted common share for 2005 compared to
$1.38 per diluted common share for 2004. This increase was attributable to the
factors denoted above with respect to net income offset partially by an increase
in income allocated to preferred shareholders, as described above, and an
increase in diluted shares outstanding from 128,681,000 in 2004 to 128,819,000
in 2005. The increase in shares outstanding was due primarily to the issuance of
shares in connection with the exercise of employee stock options.
As described more fully under "Liquidity and Capital Resources" below,
we have approximately $172,500,000 in higher coupon preferred stock that becomes
available for redemption during 2007. While there is no assurance that we will
be able to raise the necessary capital and at appropriate rates to redeem these
securities, if we do redeem these securities, we expect allocations to our
preferred shareholders based upon distributions paid to decrease. However,
during 2007 there would be an additional allocation to the preferred
shareholders of approximately $5.6 million if these redemptions are completed.
REAL ESTATE OPERATIONS
--------------------------------------------------------------------------------
Domestic Self-Storage Operations: Our domestic self-storage operations
are by far the largest component of our operating activities, representing
approximately 90% of our total revenues generated for the year ended December
31, 2006. Rental income with respect to our domestic self-storage operations has
37
grown from $951,370,000 in 2005 to $1,180,234,000 in 2006, representing an
increase of $228,864,000, or approximately 24.1%. The year-over-year
improvements in rental income are due to improvements in the performance of
those facilities that we owned prior to January 1, 2004 (our "Same Store"
facilities), and the addition of new facilities to our portfolio, either through
our acquisition or development activities.
To enhance year-over-year comparisons, the following table summarizes,
and the ensuing discussion describes the operating results of these three
groups, our Same Store group, acquisition facilities and development facilities.
Domestic self - storage operations summary:
Year Ended December 31, Year Ended December 31,
------------------------------------- ---------------------------------------
Percentage Percentage
2006 2005 Change 2005 2004 Change
------------- ----------- ----------- ----------- ------------ ------------
(Dollar amounts in thousands)
Rental income:
Same Store Facilities....................... $ 859,776 $ 818,378 5.1% $ 818,378 $ 779,259 5.0%
Acquired Facilities......................... 207,746 39,691 423.4% 39,691 4,705 743.6%
Development Facilities...................... 112,712 93,301 20.8% 93,301 77,701 20.1%
------------- ----------- ----------- ----------- ------------ ------------
Total rental income....................... 1,180,234 951,370 24.1% 951,370 861,665 10.4%
------------- ----------- ----------- ----------- ------------ ------------
Cost of operations before depreciation and
amortization (a):
Same Store Facilities....................... 284,624 271,330 4.9% 271,330 270,261 0.4%
Acquired Facilities......................... 76,084 16,780 353.4% 16,780 1,606 944.8%
Development Facilities...................... 38,052 32,479 17.2% 32,479 28,488 14.0%
------------- ----------- ----------- ----------- ------------ ------------
Total cost of operations................. 398,760 320,589 24.4% 320,589 300,355 6.7%
------------- ----------- ----------- ----------- ------------ ------------
Net operating income before depreciation and
amortization(a):
Same Store Facilities....................... 575,152 547,048 5.1% 547,048 508,998 7.5%
Acquired Facilities......................... 131,662 22,911 474.7% 22,911 3,099 639.3%
Development Facilities...................... 74,660 60,822 22.7% 60,822 49,213 23.6%
------------- ----------- ----------- ----------- ------------ ------------
Total net operating income before
depreciation and amortization (a)...... 781,474 630,781 23.9% 630,781 561,310 12.4%
------------- ----------- ----------- ----------- ------------ ------------
Depreciation and amortization expense:
Same Store Facilities....................... (150,487) (156,832) (4.0)% (156,832) (153,405) 2.2%
Acquired Facilities......................... (196,393) (10,120) 1,840.6% (10,120) (892) 1,034.5%
Development Facilities...................... (27,963) (24,150) 15.8% (24,150) (21,933) 10.1%
------------- ----------- ----------- ----------- ------------ ------------
Total depreciation and amortization expense. (374,843) (191,102) 96.2% (191,102) (176,230) 8.4%
------------- ----------- ----------- ----------- ------------ ------------
Net operating income (loss):
Same Store Facilities....................... 424,665 390,216 8.8% 390,216 355,593 9.7%
Acquired Facilities......................... (64,731) 12,791 (606.1)% 12,791 2,207 479.6%
Development Facilities...................... 46,697 36,672 27.3% 36,672 27,280 34.4%
------------- ----------- ----------- ----------- ------------ ------------
Total net operating income.................. $406,631 $ 439,679 (7.5)% $ 439,679 $ 385,080 14.2%
============= =========== =========== =========== ============ =============
Weighted average for the fiscal year........... 88.6% 89.6% (1.1)% 89.9% 90.0% (0.1)%
Number of self-storage facilities (at end of
period)........................................ 1,981 1,461 35.6% 1,461 1,423 2.7%
Net rentable square feet (in thousands, at end
of period):................................. 124,003 89,023 39.3% 89,023 85,149 4.5%
(a) Total net operating income before depreciation and amortization, which is a
non-GAAP measure, for our self-storage segment is presented in Note 15 to
our December 31, 2006 consolidated financial statements, "Segment
Information," which includes a reconciliation of net operating income
before depreciation and amortization for this segment to our consolidated
net income.
38
In the above table, the significant changes in various operating
metrics in 2006 as compared to 2005, is primarily due to the acquisition of
self-storage facilities in connection with the merger with Shurgard which was
completed on August 22, 2006 (see Note 3 to the consolidated financial
statements). As a result of the merger, we acquired interests in 487
self-storage facilities (32.3 million net rentable square feet) located in the
United States, including 459 wholly-owned facilities and 28 facilities owned by
joint ventures in which we have an interest. The operating results of all of the
facilities acquired in the merger and located in the United States are included
in our financial statements and in the above table for the period from the close
of the merger through December 31, 2006.
Immediately preceding the close of the merger, all of the acquired
facilities in the United States were integrated into our property management
systems, centralized pricing systems, national call center, and website.
Temporary signage, re-branding the facilities from "Shurgard" to "Public
Storage", was also put into place immediately after the close of the merger.
Over the past few months, we have been replacing the temporary signage with
permanent signage and we anticipate that this process will be completed by March
31, 2007.
In the field our property management personnel worked diligently to
absorb this large acquisition of facilities. Training and hiring new property
managers were key elements for the successful integration process. New employees
needed to be trained on how to use our property management systems and follow
our operating policies and procedures. As expected in a merger of this nature,
immediately following the close of the merger turnover at the property manager
level was higher than we normally experience. In anticipation of such turnover,
we hired additional "bench" property managers to fill openings when turnover
occurred. Although this strategy was effective at keeping properties opened for
business, it did result in incurring additional payroll costs in the fourth
quarter of 2006 due to the additional head count.
As a result of the merger, the amount of vacant space increased
significantly in our system. The acquired Shurgard portfolio of 487 facilities
in the United States had in aggregate average square foot occupancy of 84.4% at
August 31, 2006 as compared to 89.7% for the existing Public Storage portfolio.
Average rental rates were approximately the same for each of the portfolios. One
of our goals is to improve rental income generated by the Shurgard portfolio by
improving its overall occupancy level to the occupancy level experienced by our
existing portfolio. In order to increase move-in volumes and ultimately increase
occupancy levels as quickly as possible, we began to be much more aggressive
with our pricing, promotional discounts and marketing programs during the fourth
quarter of 2006 and into the 2007. This strategy has put some pressure on
occupancies and rental rate growth on the Public Storage Same Store facilities
(as discussed below) as we shift demand to the other properties and as we adjust
the level of discounts and monthly rents. Compounding the difficulties in
improving the occupancy levels of the Shurgard portfolio is that the fourth
quarter is seasonally the lowest with respect to demand for storage space.
It is often difficult to see the benefits of these programs in the
short-term as promotional discounts and marketing expense adversely affect
earnings in the month the customer moves in. Our strategy will be to continue
with aggressive pricing, promotional discounts and marketing to improve overall
occupancy levels.
We continue to believe that the acquisition of the Shurgard portfolio
will provide operational efficiencies, specifically in the areas of marketing,
national call center, and indirect overhead costs that support the operations of
the facilities. Such efficiencies have yet to be realized due to the recent
integration, increased property manager head count and increased marketing
costs, as noted above.
In the discussion that follows, we present realized annual rent per
occupied square foot, which is computed by dividing rental income, before late
charges and administrative fees, by the weighted average occupied square footage
for the period. We also present annualized rental income per available square
foot ("REVPAF"), which represents annualized rental income, before late charges
and administrative fees, divided by total available net rentable square feet.
Late charges and administrative fees are excluded to more effectively measure
our ongoing level of revenue associated with the leasing of the units.
Domestic - Same Store Facilities
The Same Store Facilities contain approximately 73.9 million net
rentable square feet, representing approximately 60% of the aggregate net
rentable square feet of our consolidated domestic self-storage portfolio.
39
Revenues and operating expenses with respect to this group of properties are set
forth in the above Self-Storage Operations table under the caption, "Same Store
Facilities." These facilities are included in the Same Store Facilities because
they are all stabilized and owned since January 1, 2004 and therefore provide
meaningful comparative data for 2004, 2005 and 2006. The following table sets
forth additional operating data with respect to the Same Store Facilities:
SAME STORE FACILITIES
Year Ended December 31, Year Ended December 31,
------------------------------------- -------------------------------------
Percentage Percentage
2006 2005 Change 2005 2004 Change
------------- ----------- ----------- ------------- ----------- -----------
(Dollar amounts in thousands, except weighted average amounts)
Rental income...................................... $ 821,204 $ 782,076 5.0% $ 782,076 $ 746,461 4.8%
Late charges and administrative fees collected..... 38,572 36,302 6.3% 36,302 32,798 10.7%
------------- ----------- ----------- ------------- ----------- -----------
Total rental income............................. 859,776 818,378 5.1% 818,378 779,259 5.0%
------------- ----------- ----------- ------------- ----------- -----------
Cost of operations before depreciation and amortization:
Payroll expense............................... 86,919 82,468 5.4% 82,468 83,984 (1.8)%
Property taxes................................ 78,152 74,931 4.3% 74,931 72,986 2.7%
Repairs and maintenance....................... 27,980 26,237 6.6% 26,237 26,294 (0.2)%
Advertising and promotion..................... 25,194 23,862 5.6% 23,862 22,338 6.8%
Utilities..................................... 18,822 17,426 8.0% 17,426 16,168 7.8%
Property insurance............................ 8,937 8,125 10.0% 8,125 9,090 (10.6)%
Telephone reservation center.................. 7,932 7,960 (0.4)% 7,960 10,699 (25.6)%
Other cost of management...................... 30,688 30,321 1.2% 30,321 28,702 5.6%
------------- ----------- ----------- ------------- ----------- -----------
Total cost of operations........................ 284,624 271,330 4.9% 271,330 270,261 0.4%
------------- ----------- ----------- ------------- ----------- -----------
Net operating income before depreciation and
amortization (e)................................... 575,152 547,048 5.1% 547,048 508,998 7.5%
Depreciation and amortization...................... (150,487) (156,832) (4.0)% (156,832) (153,405) 2.2%
------------- ----------- ----------- ------------- ----------- -----------
Net operating income.............................. $ 424,665 $ 390,216 8.8% $ 390,216 $ 355,593 9.7%
============= =========== =========== ============= =========== ===========
Gross margin (before depreciation and amortization) 66.9% 66.8% 0.1% 66.8% 65.3% 2.3%
Weighted average for the fiscal year:
Square foot occupancy (a)....................... 90.9% 91.1% (0.2)% 91.1% 91.0% 0.1%
Realized annual rent per occupied square foot (b) $12.22 $11.61 5.3% $11.61 $11.09 4.7%
REVPAF (c)...................................... $11.11 $10.58 5.0% $10.58 $10.09 4.9%
Weighted average at December 31:
Square foot occupancy........................... 89.4% 89.8% (0.4)% 89.8% 90.1% (0.3)%
In place annual rent per occupied square foot (d) $13.32 $12.86 3.6% $12.86 $12.21 5.3%
Total net rentable square feet (in thousands)...... 73,946 73,946 73,946 73,946
(a) Square foot occupancies represent weighted average occupancy levels over
the entire period.
(b) Realized annual rent per occupied square foot is computed by dividing
rental income, prior to late charges and administrative fees, 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.
(c) Annualized rental income per available square foot ("REVPAF") represents
annualized rental income, prior to late charges and administrative fees,
divided by total available net rentable square feet.
(d) 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.
(e) Total net operating income before depreciation and amortization, which is a
non-GAAP measure, for our Same Store facilities represents a portion of our
total self-storage segment's net operating income before depreciation and
amortization, and is reconciled to the segment total in the table
"self-storage operations summary" above. A reconciliation of our total
self-storage segment's net operating income before depreciation and
amortization to consolidated net income is included in Note 15 to our
December 31, 2006 consolidated financial statements, "Segment Information."
40
Rental income increased approximately 5.1% in 2006 as compared to 2005.
This increase was primarily attributable to higher average realized annual
rental rates per occupied square foot, which were 5.3% higher in 2006 as
compared to 2005, offset partially by slightly lower occupancy levels. Rental
income increased approximately 5.0% in 2005 as compared to 2004. This increase
was primarily attributable to higher average realized annual rental rates per
occupied square foot, which were 4.7% higher in 2005 as compared to 2004. Our
occupancy levels remained flat on a year-over-year basis at approximately 91%
for each period.
In 2005, the quarterly year-over-year growth in rental income was
consistent for each quarter: 5.1% for the quarter ended March 31, 2005, 4.9% for
the quarter ended June 30, 2005, 5.0% for the quarter ended September 30, 2005
and 5.1% for the quarter ended December 31, 2005. These trends continued into
2006, as rental income growth was 5.1% for the quarter ended March 31, 2006, and
started accelerating to 5.7% for the quarter ended June 30, 2006 and 6.1% for
the quarter ended September 30, 2006. For the quarter ended December 31, 2006,
the year-over-year growth in rental income slowed to 3.4%. This reduction in
growth was the result of lower occupancy levels combined with a reduction in
year-over-year growth in realized rents.
It is difficult for us to pin point the exact causes for this slow down
and to the degree that such causes have negatively affected the growth in rental
income. We believe, however, that the reduction was due to a number of factors
including; (i) the increased number of vacant spaces added to our overall system
as a result of the Shurgard merger, (ii) hurricane activity that created unusual
demand for storage space in our Florida markets in 2005 and 2004, making
year-over-year trends in 2006 less favorable, (iii) general economic conditions,
specifically the slow down in housing sales and moving activity, and (iv)
increased competition. Many of these factors are beyond our control.
As indicated above, it is our objective to close the occupancy gap
between the acquired Shurgard properties versus the Public Storage existing
portfolio. We believe, at least in the short term, this strategy will put
pressure on occupancies and rental rate growth on our existing Same Store
facilities as demand appears to have shifted somewhat to the acquired Shurgard
facilities as we adjust the level of discounts and monthly rents at the acquired
Shurgard facilities to accelerate occupancy growth. Notwithstanding, it is
important for us to maintain our occupancy levels in our Same Store portfolio,
accordingly, we have adjusted rental rates and the level of promotional
discounts offered to new tenants as a means to expand move-in volumes throughout
the entire portfolio. It has been, and will continue to be, challenging in the
near term to maintain occupancy levels at our Same Store group of facilities,
while at the same time trying to rapidly improve the occupancy levels of the
acquired Shurgard facilities. Compounding this challenge is that the months
following the close of the merger are months when demand for storage is
typically weak. We experience seasonal fluctuations in the occupancy levels of
self-storage facilities with occupancies generally higher in the summer months
than in the winter months. We believe that these fluctuations result in part
from increased moving activity during the summer.
Cost of operations (excluding depreciation and amortization) increased
by 4.9% in 2006 as compared to the same period in 2005. Cost of operations
increased by 0.4% in 2005 as compared to 2004.
Payroll expense has increased 5.4% in 2006 as compared to 2005, due
principally to higher wage rates required for some of our job classifications
because of a tighter labor market in several market areas, higher overtime hours
required due to understaffing issues, and the absence of an adjustment to
workers compensation made in 2005. The underlying compensation to our personnel
increased in 2004 and 2005, as our field organization focused upon improving
customer service and productivity. However, over the last few years we have
bolstered our safety programs and improved our workers compensation claims
management skills. These efforts had a positive impact on reducing workers
compensation claims, and reduced the level of liability for future claims during
2005. This resulted in a significant reduction in workers compensation expense
in 2005 and 2004 with the adjustment being much higher in 2005 and resulting in
a decrease in overall payroll expense as compared to 2004.
Repairs and maintenance expenditures increased 6.6% in 2006 as compared
to 2005. During the second quarter, we experienced higher repair and maintenance
costs to address certain deferred maintenance issues localized to a few markets.
We expect this trend to continue in 2007. Repairs and maintenance includes snow
removal costs, which decreased $769,000 or 37% in 2006 as compared to 2005. Snow
removal costs had increased in 2005 as compared to 2004, however, overall
repairs and maintenance costs were flat.
Advertising and promotion is comprised principally of media (television
and radio), yellow page, and internet advertising. Advertising and promotion
costs increased 5.6% in 2006 as compared to 2005 as we significantly expanded
41
our media programs to advertise our aggressive pricing and promotional discount
programs in order to improve incremental move-in volumes throughout the domestic
portfolio. Advertising and promotion costs increased 6.8% in 2005 as compared to
2004. Yellow page advertising has stayed relatively stable in each of the
periods. Media advertising, principally television, has increased from
$10,458,000 in 2004 to $10,998,000 in 2005 and $11,275,000 in 2006. Our internet
advertising expense has continued to increase as a percentage of our overall
expenditures, increasing from $704,000 in 2004 to $1,984,000 in 2005 and
$2,779,000 in 2006. We expect that internet advertising will continue to grow as
that marketing channel becomes a more important source of new tenants, and that
yellow page advertising will remain relatively stable. Future media advertising
expenditures are not determinable at this time, and will be driven in part by
demand for our self-storage spaces as well as our evaluation of the most
effective mix of yellow page, media, and internet advertising.
As described below under "Shurgard Domestic Same-Store Facilities,"
certain cost savings in the area of yellow page advertising, payroll, and call
center expenses will benefit the same-store facilities as these benefits are
allocated among all the facilities in our portfolio.
Utility expenses increased 7.8% in 2005 and 8.0% in 2006 due
principally to higher energy costs. These levels of increases are expected to
persist during 2007.
Insurance expense increased 10.0% in 2006 as compared to 2005
reflecting significant increases in property insurance resulting primarily from
the hurricanes experienced in 2005. These rate increases became effective with
our policy year starting April 1, 2006. We expect to realize certain economies
due to the merger with Shurgard and, accordingly, expect the increases to
moderate in the first quarter of 2007. In 2005, insurance expense declined 10.6%
as compared to 2004 due to improved cost controls as well as a somewhat softer
insurance market allowing us to get improved premiums on our policies.
Telephone reservation center costs were $10,699,000 in 2004, $7,960,000
in 2005 and $7,932,000 in 2006. During the last half of 2006, we began to
realize certain benefits from increased staffing through better conversion
ratios and lower temporary staffing costs. We believe that the 2005 and 2006
expenses represents the stabilized level of expenditures for our telephone
reservation center given the current number of self-storage facilities in our
portfolio and the related call volume.
The following table summarizes selected quarterly financial data with
respect to the Same Store Facilities:
42
For the Quarter Ended
-----------------------------------------------------------------------
March 31 June 30 September 30 December 31 Entire Year
---------------- ----------------- ----------------- ---------------- -------------------
(Amounts in thousands, except for per square foot amount)
Total rental income:
2006 $ 208,228 $ 214,832 $ 221,386 $ 215,330 $ 859,776
2005 $ 198,059 $ 203,302 $ 208,745 $ 208,272 $ 818,378
2004 $ 188,535 $ 193,833 $ 198,754 $ 198,137 $ 779,259
Total cost of operations
(excluding depreciation
and amortization):
2006 $ 72,030 $ 72,749 $ 71,115 $ 68,730 $ 284,624
2005 $ 69,991 $ 67,736 $ 67,730 $ 65,873 $ 271,330
2004 $ 68,439 $ 67,057 $ 66,514 $ 68,251 $ 270,261
Property tax expense:
2006 $ 20,663 $ 19,346 $ 20,376 $ 17,767 $ 78,152
2005 $ 19,931 $ 18,402 $ 19,573 $ 17,025 $ 74,931
2004 $ 19,379 $ 17,745 $ 18,746 $ 17,116 $ 72,986
Media advertising expense:
2006 $ 3,978 $ 2,611 $ 1,002 $ 3,684 $ 11,275
2005 $ 3,588 $ 2,955 $ 2,314 $ 2,141 $ 10,998
2004 $ 3,377 $ 1,972 $ 2,019 $ 3,090 $ 10,458
REVPAF:
2006 $ 10.77 $ 11.10 $ 11.43 $ 11.12 $ 11.11
2005 $ 10.25 $ 10.52 $ 10.77 $ 10.76 $ 10.58
2004 $ 9.76 $ 10.05 $ 10.31 $ 10.27 $ 10.09
Weighted average realized
annual rent per occupied
square foot:
2006 $ 11.94 $ 12.05 $ 12.50 $ 12.39 $ 12.22
2005 $ 11.41 $ 11.42 $ 11.75 $ 11.89 $ 11.61
2004 $ 10.88 $ 10.98 $ 11.21 $ 11.31 $ 11.09
Weighted average occupancy
levels for the period:
2006 90.2% 92.1% 91.4% 89.8% 90.9%
2005 89.9% 92.1% 91.7% 90.5% 91.1%
2004 89.7% 91.5% 91.9% 90.8% 91.0%
43
ANALYSIS OF REGIONAL TRENDS
The following table sets forth regional trends in our Same Store Facilities:
Year Ended December 31, Year Ended December 31,
--------------------------------------- ---------------------------------------
2006 2005 Change 2005 2004 Change
------------- ------------- ----------- ------------ ------------- ------------
(Amounts in thousands, except for weighted average data)
Same Store Facilities Operating Trends
by Region
Rental income:
Southern California
(126 facilities)................. $ 140,578 $ 134,303 4.7% $ 134,303 $ 126,016 6.6%
Northern California
(127 facilities)................. 104,103 98,758 5.4% 98,758 95,095 3.9%
Texas (149 facilities).......... 75,787 71,986 5.3% 71,986 70,213 2.5%
Florida (130 facilities)........ 89,414 83,473 7.1% 83,473 75,594 10.4%
Illinois (91 facilities)........ 63,630 61,128 4.1% 61,128 59,238 3.2%
Georgia (58 facilities)......... 29,688 27,507 7.9% 27,507 25,585 7.5%
All other states (585 facilities) 356,576 341,223 4.5% 341,223 327,518 4.2%
------------- ------------- ----------- ------------ ------------- ------------
Total rental income................. 859,776 818,378 5.1% 818,378 779,259 5.0%
Cost of operations before depreciation and amortization:
Southern California.............. 31,381 29,265 7.2% 29,265 29,786 (1.7)%
Northern California.............. 27,078 25,591 5.8% 25,591 25,097 2.0%
Texas............................ 33,439 31,030 7.8% 31,030 31,000 0.1%
Florida.......................... 29,924 28,024 6.8% 28,024 29,247 (4.2)%
Illinois......................... 27,778 24,859 11.7% 24,859 26,118 (4.8)%
Georgia.......................... 10,098 9,511 6.2% 9,511 9,455 0.6%
All other states................. 124,926 123,050 1.5% 123,050 119,558 2.9%
------------- ------------- ----------- ------------ ------------- ------------
Total cost of operations............ 284,624 271,330 4.9% 271,330 270,261 0.4%
Net operating income before depreciation and amortization:
Southern California.............. 109,197 105,038 4.0% 105,038 96,230 9.2%
Northern California.............. 77,025 73,167 5.3% 73,167 69,998 4.5%
Texas............................ 42,348 40,956 3.4% 40,956 39,213 4.4%
Florida.......................... 59,490 55,449 7.3% 55,449 46,347 19.6%
Illinois......................... 35,852 36,269 (1.1)% 36,269 33,120 9.5%
Georgia.......................... 19,590 17,996 8.9% 17,996 16,130 11.6%
All other states................. 231,650 218,173 6.2% 218,173 207,960 4.9%
------------- ------------- ----------- ------------ ------------- ------------
Total net operating income before
depreciation and amortization.... $ 575,152 $ 547,048 5.1 $ 547,048 $ 508,998 7.5%
Weighted average occupancy:
Southern California.............. 91.2% 92.3% (1.2)% 92.3% 92.1% 0.2%
Northern California.............. 90.2% 90.5% (0.3)% 90.5% 89.3% 1.3%
Texas............................ 90.8% 90.0% 0.9% 90.0% 90.1% (0.1)%
Florida.......................... 92.9% 93.2% (0.3)% 93.2% 92.4% 0.9%
Illinois......................... 89.4% 89.5% (0.1)% 89.5% 89.9% (0.4)%
Georgia.......................... 92.3% 92.4% (0.1)% 92.4% 91.5% 1.0%
All other states................. 90.6% 90.8% (0.2)% 90.8% 91.2% (0.4)%
------------- ------------- ----------- ------------ ------------- ------------
Total weighted average occupancy.... 90.9% 91.1% (0.2)% 91.1% 91.0% 0.1%
REVPAF:
Southern California.............. $ 17.10 $ 16.33 4.7% $ 16.33 $ 15.34 6.5%
Northern California.............. 14.42 13.68 5.4% 13.68 13.20 3.6%
Texas............................ 7.79 7.42 5.0% 7.42 7.25 2.3%
Florida.......................... 11.43 10.68 7.0% 10.68 9.62 11.0%
Illinois......................... 10.96 10.53 4.1% 10.53 10.25 2.7%
Georgia.......................... 8.34 7.76 7.5% 7.76 7.23 7.3%
All other states................. 10.14 9.71 4.4% 9.71 9.35 3.9%
------------- ------------- ----------- ------------ ------------- ------------
Total REVPAF........................ $ 11.11 $ 10.58 5.0% $ 10.58 $ 10.09 4.9%
44
Same Store Facilities Operating
Trends by Region (Continued)
Year Ended December 31, Year Ended December 31,
--------------------------------------- ---------------------------------------
2006 2005 Change 2005 2004 Change
------------- ------------- ----------- ------------ ------------- ------------
Realized annual rent per occupied square foot:
Southern California.............. $ 18.75 $ 17.69 6.0% $ 17.69 $ 16.66 6.2%
Northern California.............. 15.98 15.12 5.7% 15.12 14.78 2.3%
Texas............................ 8.58 8.24 4.1% 8.24 8.05 2.4%
Florida.......................... 12.31 11.46 7.4% 11.46 10.42 10.0%
Illinois......................... 12.26 11.77 4.2% 11.77 11.41 3.2%
Georgia.......................... 9.04 8.40 7.6% 8.40 7.90 6.3%
All other states................. 11.20 10.69 4.8% 10.69 10.25 4.3%
------------- ------------- ----------- ------------ ------------- ------------
Total realized rent per square foot. $ 12.22 $ 11.61 5.3% $ 11.61 $ 11.09 4.7%
============= ============= =========== ============ ============= ============
In place annual rent per occupied square foot at December 31:
Southern California................. $ 20.31 $ 19.46 4.3% $ 19.46 $ 18.26 6.6%
Northern California................. 17.38 16.73 3.9% 16.73 16.00 4.5%
Texas............................... 9.38 9.06 3.6% 9.06 8.72 3.8%
Florida............................. 13.40 12.71 5.4% 12.71 11.67 8.9%
Illinois............................ 13.36 12.90 3.5% 12.90 12.52 2.9%
Georgia............................. 10.15 9.48 7.0% 9.48 8.87 6.8%
All other states.................... 12.21 11.86 2.9% 11.86 11.32 4.8%
------------- ------------- ----------- ------------ ------------- ------------
Total in place rent per occupied
square foot:........................ $ 13.32 $ 12.86 3.6% $ 12.86 $ 12.21 5.3%
============= ============= =========== ============ ============= ============
The Southern California Market consists principally of the greater Los
Angeles area and San Diego, and has historically been a source of strong growth
due to its diverse economy and continued population growth. In addition,
barriers to entry in the form of difficult permitting requirements tend to
reduce the potential for increased competition in the infill locations where we
focus our operations.
The Northern California market consists principally of San Francisco
and related peripheral areas. While this area has a vibrant economy and
relatively strong population growth, it has been subject to general economic
conditions, principally issues associated with the technology sector. In
addition, there has been increased competition in the areas that we do business,
principally in the peripheral areas near San Francisco, due to new supply. As a
result, revenue growth in this area has been average relative to our other
markets.
The Texas market principally includes Dallas, Houston and San Antonio.
This market has historically been subject to volatility due to minimal
regulatory restraint upon building, which results in cycles of overbuilding and
absorption. For the last few years, we have been in a period of increased supply
and competition in the areas we operate, and as a result revenue growth has been
average relative to other markets.
The Florida market principally includes Miami, Orlando, Tampa, and West
Palm Beach. These markets have been our strongest in terms of revenue growth in
2006, due in part to increased moving and storage demand resulting from the
impact of hurricane activity in 2005 and 2004. In addition, over the longer term
we believe that this market benefits from continued strong population growth and
barriers to entry. We expect growth in revenues during 2007 to moderate due
primarily to the lack of hurricane activity during the 2006 season resulting in
difficult year-over-year comparisons.
The Illinois market is composed principally of Chicago. Revenue growth
has been weak in Chicago due, we believe, to increased competition from building
that is comprised principally of conversions of industrial type facilities into
self-storage facilities, as well as weaker population growth.
45
Georgia, which includes principally Atlanta, has been benefiting from a
reduction in new supply relative to population growth in the last few years and,
as a result, revenue growth has been favorable in the last three years. We
believe that these conditions should continue and expect Atlanta to be one of
our strongest markets in 2007.
Domestic - Acquired Self-Storage Facilities
During 2004, 2005 and 2006, in addition to the 487 self-storage
facilities we acquired in the Shurgard merger, we acquired a total of 89
self-storage facilities containing 6,383,000 net rentable square feet. Also,
commencing January 1, 2006, we began consolidating the accounts of 16 facilities
previously accounted for on the equity method. The following table summarizes
operating data with respect to these facilities.
DOMESTIC -ACQUIRED SELF-STORAGE FACILITIES
Year Ended December 31, Year Ended December 31,
--------------------------------------- -------------------------------------
2006 2005 Change 2005 2004 Change
------------- ------------ ------------ ----------- ------------- -----------
(Dollar amounts in thousands, except square foot amounts)
Rental income:
Facilities acquired in 2006:
Facilities acquired in merger with Shurgard $ 128,131 $ - $ 128,131 $ - $ - $ -
Newly consolidated......................... 14,610 - 14,610 - - -
Other acquisitions......................... 6,246 - 6,246 - - -
Facilities acquired in 2005................... 24,949 9,285 15,664 9,285 - 9,285
Facilities acquired in 2004................... 33,810 30,406 3,404 30,406 4,705 25,701
------------- ------------ ------------ ----------- ------------- -----------
Total rental income........................... 207,746 39,691 168,055 39,691 4,705 34,986
------------- ------------ ------------ ----------- ------------- -----------
Cost of operations before depreciation and
amortization :
Facilities acquired in 2006:
Facilities acquired in merger with Shurgard 47,362 - 47,362 - - -
Newly consolidated......................... 3,515 - 3,515 - - -
Other acquisitions......................... 2,974 - 2,974 - - -
Facilities acquired in 2005................... 9,703 4,148 5,555 4,148 - 4,148
Facilities acquired in 2004................... 12,530 12,632 (102) 12,632 1,606 11,026
------------- ------------ ------------ ----------- ------------- -----------
Total cost of operations...................... 76,084 16,780 59,304 16,780 1,606 15,174
------------- ------------ ------------ ----------- ------------- -----------
Net operating income before depreciation and
amortization:
Facilities acquired in 2006:
Facilities acquired in merger with Shurgard 80,769 - 80,769 - - -
Newly consolidated......................... 11,095 - 11,095 - - -
Other acquisitions......................... 3,272 - 3,272 - - -
Facilities acquired in 2005................... 15,246 5,137 10,109 5,137 - 5,137
Facilities acquired in 2004................... 21,280 17,774 3,506 17,774 3,099 14,675
------------- ------------ ------------ ----------- ------------- -----------
Total net operating income before depreciation and
amortization (a).............................. 131,662 22,911 108,751 22,911 3,099 19,812
Depreciation and amortization.................... (196,393) (10,120) (186,273) (10,120) (892) (9,228)
------------- ------------ ------------ ----------- ------------- -----------
Net operating income (loss)................... $ (64,731) $ 12,791 $ (77,522) $ 12,791 $ 2,207 $ 10,584
============= ============ ============ =========== ============= ===========
Weighted average square foot occupancy during the
period:
Facilities acquired in 2006:
Facilities acquired in merger.............. 84.4% - - - - -
Newly consolidated......................... 88.5% - - - - -
Other acquisitions......................... 71.2% - - - - -
Facilities acquired in 2005................... 84.7% 86.8% (2.4)% 86.8% - -
Facilities acquired in 2004................... 88.1% 87.0% 1.3% 87.0% 80.4% 8.2%
------------- ------------ ------------ ----------- ------------- -----------
84.8% 87.0% (2.5)% 87.0% 80.4% 8.2%
============= ============ ============ =========== ============= ===========
Weighted average realized annual rent per occupied
square foot for the period:
Facilities acquired in 2006:
Facilities acquired in merger.............. $ 12.75 $ - - $ $ -
Newly consolidated......................... 16.53 - - - - -
Other acquisitions......................... 13.17 - - - - -
Self-storage facilities acquired in 2005...... 11.74 10.17 15.4% 10.17 - -
Self-storage facilities acquired in 2004...... 11.84 10.80 9.6% 10.80 9.51 13.6%
------------- ------------ ------------ ----------- ------------- -----------
$ 12.65 $ 10.65 18.8% $ 10.65 $ 9.51 12.0%
============= ============ ============ =========== ============= ===========
46
In place annual rent per occupied square foot at
December 31:
Facilities acquired in 2006:
Facilities acquired in merger.............. $ 13.71 $ - - $ - $ - -
Newly consolidated......................... 18.46 - - - - -
Other acquisitions......................... 14.31 - - - - -
Self-storage facilities acquired in 2005...... 13.25 12.00 10.4% 12.00 - -
Self-storage facilities acquired in 2004...... 12.97 12.14 6.8% 12.14 11.47 5.8%
------------- ------------ ------------ ----------- ------------- -----------
$ 13.76 $ 12.08 13.9% $ 12.08 $ 11.47 5.3%
============= ============ ============ =========== ============= ===========
At December 31:
Number of Facilities ........................ 592 77 515 77 45 32
Net rentable square feet..................... 39,531 5,511 34,020 5,511 3,109 2,402
Cumulative acquisition cost.................. $5,527,546 $ 514,036 $5,013,510 $ 514,036 $ 259,487 $254,549
(a) Total net operating income before depreciation, which is a non-GAAP
measure, for our self-storage facilities represents a portion of our total
self-storage segment's net operating income before depreciation, and is
denoted in the table "self-storage operations summary" above. A
reconciliation of our total self-storage segment's net operating income
before depreciation to consolidated net income is included in Note 15 to
our December 31, 2006 consolidated financial statements, "Segment
Information."
The acquisitions were acquired at various dates throughout each period.
Accordingly, rental income, cost of operations, depreciation, net operating
income, weighted average square foot occupancies and realized rents per square
foot represent the operating results for the partial period that we owned the
facilities during the year acquired. In addition, in place rents per occupied
square foot at December 31, 2006, 2005 and 2004, reflect the amounts for those
facilities we owned at each of those respective dates.
During 2004, we acquired a total of 45 self-storage facilities for
approximately $259,487,000, containing an aggregate of approximately 3,109,000
net rentable square feet and are located principally in the Buffalo, Dallas,
Miami, Milwaukee, and Minneapolis metropolitan areas.
During 2005, we acquired a total of 32 self-storage facilities,
principally in single-property transactions, for an aggregate cost of
$254,549,000. These facilities contain in the aggregate approximately 2,390,000
net rentable square feet and are located principally in the Atlanta, Chicago,
Miami, and New York metropolitan areas.
For the year ended December 31, 2006, in addition to the 487
self-storage facilities we acquired in the merger with Shurgard, we acquired a
total of 12 self-storage facilities, each in a single-property transaction.
These 12 facilities contain in aggregate approximately 877,000 net rentable
square feet and were acquired for an aggregate cost of $103,544,000. The 12
facilities are located in California, Florida, Illinois, New York, Virginia, New
Jersey, Delaware, Georgia and Colorado.
Effective January 1, 2006, as described in Note 2 to our consolidated
financial statements, we are including the accounts of three limited
partnerships that we had previously accounted for under the equity method of
accounting. The three limited partnerships collectively own 16 facilities and
have an aggregate of 879,000 net rentable square feet. These facilities are
substantially all mature facilities that we have managed and had an interest in
for several years. Accordingly, their future operating characteristics and past
operating history are similar to those of our Same Store facilities.
47
We believe our presence in and knowledge of substantially all of the
major markets in the United States enhances our ability to identify attractive
acquisition opportunities and capitalize on the overall fragmentation in the
storage industry. Our acquisitions consist of facilities that have been
operating for a number of years as well as newly constructed facilities that
were in the process of filling up to stabilized occupancy levels. In either
case, we have been able to leverage off of our operating strategies and improve
the occupancy levels of the facilities, or with respect to the newly developed
facilities we have been able to accelerate the fill-up pace.
We expect that our acquisitions will continue to provide earnings
growth during 2007 as these facilities continue to improve their occupancy
levels as well as realized rental rates.
The 487 self-storage facilities in the U.S. acquired in the Shurgard
merger are located in 23 states and contain in aggregate 32.3 million net
rentable square feet. The operating data presented in the table above reflects
the historical data from August 22, 2006 through December 31, 2006, the period
owned and operated by Public Storage. Many of these new acquired facilities,
however, have been operating at a stabilized occupancy level for several years
under the Shurgard system and then under the Public Storage system following the
merger. To provide additional comparative operating data, the table below sets
forth the operations of the 366 facilities that have been operating at a
stabilized basis (the "Shurgard Domestic Same Stores") from August 22, 2006
through December 31, 2006, the period operated under Public Storage and
consolidated in our financial statements, and then for 2004, 2005, and 2006
including the time period when the facilities were operated by Shurgard. The
data presented does not reflect the actual results included in our operations
for the years ended December 31, 2006, 2005 and 2004 and does not purport to
project results of operations for any future date or period.
Selected Operating Data for the 366 facilities
operated by Shurgard on a stabilized basis since
January 1, 2004 ("Shurgard Domestic Same Store
Facilities"): (a)
From August
22, 2006 Year Ended December 31 (a) Year Ended December 31 (a)
through ---------------------------------- --------------------------------
December 31, Percentage Percentage
2006 (b) 2006 2005 Change 2005 2004 Change
-------------- ----------- ----------- ---------- ----------- --------- ----------
(Dollar amounts in thousands, except square foot amounts)
Total rental income (c)........................ $ 107,961 $ 273,537 $ 261,309 4.7% $ 261,309 $ 248,571 5.1%
Total cost of operations (excluding
depreciation)(c)............................. 40,650 103,250 101,693 1.5% 101,693 93,950 8.2%
-------------- ----------- ----------- ---------- ----------- --------- ----------
Net operating income (excluding depreciation) (d) $ 67,311 $ 170,287 $ 159,616 6.7% $ 159,616 $ 154,621 3.2%
============== =========== =========== ========== =========== ========= ==========
Gross margin (before depreciation)............. 62.3% 62.3% 61.1% 2.0% 61.1% 62.2% (1.8)%
Weighted average for the period:
Square foot occupancy (e)................... 85.3% 84.6% 85.2% (0.7)% 85.2% 84.7% (0.6)%
Realized annual rent per occupied square foot
(f).................................... $ 14.54 $ 13.34 $ 12.64 5.5% $ 12.64 $ 12.08 4.6%
REVPAF (g) (h).............................. $ 12.40 $ 11.28 $ 10.77 4.7% $ 10.77 $ 10.23 5.3%
Weighted average at December 31:
Square foot occupancy....................... 85.5% 85.5% 84.0% 1.8% 84.0% 85.8% (2.1)%
Total net rentable square feet (in thousands) 23,425 23,425 23,425 - 23,425 23,425 -
(a) Operating data reflects the operations of these facilities without regard
to the time period in which Public Storage owned the facilities.
(b) Operating data from August 22, 2006 through December 31, 2006 represents
the period when the facilities were owned by Public Storage, and these
amounts are included in the Company's operating results.
(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 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
48
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.
(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. We have not presented
depreciation expense for these facilities because the depreciation expense
is based upon historical cost, which is substantially different before the
merger and after.
(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 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.
As noted above, our 1,266 Same-Store facilities had occupancies of
approximately 89.4% at December 31, 2006, as compared to 85.5% for the acquired
Shurgard Domestic Same Store portfolio. It is our objective to close this
occupancy gap in order to increase REVPAF. In attempting to accomplish this
objective, we have significantly expanded our domestic pricing, promotional, and
media programs, and aggregate media costs increased significantly in the fourth
quarter of 2006 versus the aggregate level of spending incurred in the fourth
quarter of 2005. There can be no assurance that we will meet our objectives or
that any increase in occupancies will not be offset by lower realized rent per
occupied square foot either due to promotional discounts or lower monthly rent
in the acquired Shurgard facilities or the Same Store facilities.
On the date of the merger, we successfully installed our real-time
property operation system at all U.S. Shurgard locations. As a result, these
facilities are integrated into our national call center, website, and management
structure. The integration of these facilities into our operations should have
additional benefits and cost savings.
Beginning January 2007, all field personnel will be under a revised
Public Storage compensation and benefit plan. The cost savings from implementing
the new plan along with a more efficient staffing mix are expected to be in
excess of $5 million per year.
Marketing costs, exclusive of media, will be lower as a result of
combining Yellow Page advertising and terminating Shurgard's marketing programs.
There will be approximately $5 million in savings that will phase in over the
next year as a result of eliminating yellow page expenses incurred by Shurgard,
there will also be lower per-property expenses for all of the facilities in our
portfolio as costs are spread over a larger base. We expect property tax expense
to be higher than that experienced by Shurgard due to higher assessments
following the merger.
Domestic - Development Self-Storage Facilities
----------------------------------------------
We have a total of 123 facilities which are unstabilized due to
development activities.
We have 46 of these facilities that have been developed from the ground
up between 2002 and 2006. At December 31, 2006, these newly developed facilities
have an aggregate of 3,345,000 net rentable square feet of self-storage space,
and were developed at an aggregate cost of $371,741,000. These facilities are
presented in the table below based upon the year of opening.
49
We also have 77 facilities that were originally opened prior to 2002
that have been expanded or are in the process of being expanded (these 77
facilities are referred to as the "Expansion Facilities" below). In addition to
entirely self-storage facilities, this group of facilities includes 17
facilities that were developed originally to combine self-storage and
containerized storage space, but have been substantially all converted entirely
to self-storage space at December 31, 2006. We have incurred an aggregate of
$127,553,000 during the three years ended December 31, 2006 to expand,
repurpose, or otherwise enhance the revenue generating capacity of these 77
Expansion Facilities.
The following table sets forth the operating results and selected
operating data with respect to the Developed and Expansion Facilities:
DOMESTIC - DEVELOPMENT SELF-STORAGE FACILITIES
Year Ended December 31, Year Ended December 31,
---------------------------------------- -----------------------------------------
2006 2005 Change 2005 2004 Change
-------------- ------------ ------------ ------------- ------------- -------------
(Amounts in thousands, except per square foot amounts and facility count)
Rental income:
Facilities opened in 2006.................... $ 1,056 $ - $ 1,056 $ - $ - $ -
Facilities opened in 2005.................... 2,599 464 2,135 464 - 464
Facilities opened in 2004.................... 7,431 5,336 2,095 5,336 1,234 4,102
Facilities opened in 2003 and 2002........... 27,842 24,803 3,039 24,803 19,049 5,754
Expansion facilities......................... 73,784 62,698 11,086 62,698 57,418 5,280
-------------- ------------ ------------ ------------- ------------- -------------
Total rental income....................... 112,712 93,301 19,411 93,301 77,701 15,600
-------------- ------------ ------------ ------------- ------------- -------------
Cost of operations before depreciation:
Facilities opened in 2006.................... 959 - 959 - - -
Facilities opened in 2005.................... 1,734 568 1,166 568 - 568
Facilities opened in 2004.................... 2,277 2,068 209 2,068 1,149 919
Facilities opened in 2003 and 2002........... 8,219 8,347 (128) 8,347 7,797 550
Expansion facilities......................... 24,863 21,496 3,367 21,496 19,542 1,954
-------------- ------------ ------------ ------------- ------------- -------------
Total cost of operations before depreciation 38,052 32,479 5,573 32,479 28,488 3,991
-------------- ------------ ------------ ------------- ------------- -------------
Net operating income before depreciation:
Facilities opened in 2006.................... $ 97 $ - $ 97 $ - $ - $ -
Facilities opened in 2005.................... 865 (104) 969 (104) - (104)
Facilities opened in 2004.................... 5,154 3,268 1,886 3,268 85 3,183
Facilities opened in 2003 and 2002........... 19,623 16,456 3,167 16,456 11,252 5,204
Expansion facilities......................... 48,921 41,202 7,719 41,202 37,876 3,326
-------------- ------------ ------------ ------------- ------------- -------------
Net operating income before depreciation (a) 74,660 60,822 13,838 60,822 49,213 11,609
Depreciation.................................. (27,963) (24,150) (3,813) (24,150) (21,933) (2,217)
-------------- ------------ ------------ ------------- ------------- -------------
Net operating income........................ $ 46,697 $ 36,672 $ 10,025 $ 36,672 $ 27,280 $ 9,392
============== ============ ============ ============= ============= =============
Weighted average square foot occupancy during
the period:
Self-storage facilities opened in 2006....... 28.5% - - - - -
Self-storage facilities opened in 2005....... 45.7% 26.9% 69.9% 26.9% - -
Self-storage facilities opened in 2004....... 87.9% 74.2% 18.5% 74.2% 35.2% 110.8%
Self-storage facilities opened in 2003 and 2002 91.8% 90.5% 1.4% 90.5% 89.1% 1.6%
Expansion facilities......................... 80.2% 77.0% 4.2% 77.0% 81.2% (5.2)%
-------------- ------------ ------------ ------------- ------------- -------------
79.1% 82.8% (4.5)% 82.8% 76.3% 8.5%
============== ============ ============ ============= ============= =============
Weighted average realized rent per occupied
square foot during the period (b):
Self-storage facilities opened in 2006....... $14.71 $ - - $ - $ - -
Self-storage facilities opened in 2005....... 11.60 8.47 37.0% 8.47 - -
Self-storage facilities opened in 2004....... 16.19 14.12 14.7% 14.12 10.97 28.7%
Self-storage facilities opened in 2003 and 2002 15.05 13.55 11.1% 13.55 12.49 8.5%
Expansion facilities......................... 12.59 11.97 5.2% 11.97 12.47 (4.0)%
-------------- ------------ ------------ ------------- ------------- -------------
$14.92 $13.52 10.4% $13.52 $12.31 9.8%
============== ============ ============ ============= ============= =============
In place annual rent per occupied square foot at
December 31 (c):
Self-storage facilities opened in 2006....... $22.75 $ - - $ - $ - -
Self-storage facilities opened in 2005....... 14.60 12.90 13.2% 12.90 - -
Self-storage facilities opened in 2004....... 17.76 16.78 5.8% 16.78 16.02 4.7%
Self-storage facilities opened in 2003 and 2002 16.44 15.28 7.6% 15.28 14.16 7.9%
Expansion facilities......................... 14.09 13.48 4.5% 13.48 13.68 (1.5)%
-------------- ------------ ------------ ------------- ------------- -------------
$16.85 $15.41 9.3% $15.41 $14.53 6.0%
============== ============ ============ ============= ============= =============
50
Number of facilities at December 31:
Facilities opened in 2006.................... 5 - 5 - - -
Facilities opened in 2005.................... 6 6 - 6 - 6
Facilities opened in 2004.................... 7 7 - 7 7 -
Facilities opened in 2003 and 2002........... 28 28 - 28 28 -
Expansion facilities......................... 77 77 - 77 77 -
-------------- ------------ ------------ ------------- ------------- -------------
123 118 5 118 112 6
============== ============ ============ ============= ============= =============
Square Footage at December 31:
Facilities opened in 2006.................... 440 - 440 - - -
Facilities opened in 2005.................... 463 463 - 463 - 463
Facilities opened in 2004.................... 505 505 - 505 505 -
Facilities opened in 2003 and 2002........... 1,937 1,937 - 1,937 1,937 -
Expansion facilities......................... 7,181 6,661 520 6,661 5,652 1,009
-------------- ------------ ------------ ------------- ------------- -------------
10,526 9,566 960 9,566 8,094 1,472
============== ============ ============ ============= ============= =============
Cumulative development cost at December 31:
Facilities opened in 2006.................... $ 68,962 $ - $ 68,962 $ - $ - $ -
Facilities opened in 2005.................... 37,857 37,073 784 37,073 - 37,073
Facilities opened in 2004.................... 60,579 60,579 - 60,579 60,579 -
Facilities opened in 2003 and 2002........... 204,343 204,343 - 204,343 204,343 -
Expansion facilities (d)..................... 127,553 82,253 45,300 82,253 32,438 49,815
-------------- ------------ ------------ ------------- ------------- -------------
Net operating income........................ $ 499,294 $ 384,248 $115,046 $ 384,248 $ 297,360 $ 86,888
============== ============ ============ ============= ============= =============
(a) Total net operating income before depreciation, which is a non-GAAP
measure, for our developed self-storage facilities represents a portion of
our total self-storage segment's net operating income before depreciation,
and is denoted in the table "self-storage operations summary" above. A
reconciliation of our total self-storage segment's net operating income
before depreciation to consolidated net income is included in Note 15 to
our December 31, 2006 consolidated financial statements, "Segment
Information."
(b) Realized annual rent per occupied square foot is computed by dividing
rental income, prior to late charges and administrative fees, 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, and therefore amounts for the years ended
December 31, 2006, 2005 and 2004 may not be comparable to the same periods
in prior years for self-storage facilities opened in 2006, 2005 and 2004.
We typically provide significant promotional discounts to new tenants when
a facility first opens for operations. As facilities reach a stabilized
occupancy level, the amounts of discounts given will be reduced
significantly.
(c) 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.
(d) We have spent an aggregate of approximately $127,553,000 to expand the
square footage or otherwise enhance the revenue potential of these
facilities during the three years ended December 31, 2006 of these
facilities, adding an aggregate of 2,373,000 net rentable self-storage
space.
51
Unlike many other forms of real estate, we are unable to pre-lease
newly developed storage space due to the nature of our tenants. Accordingly, at
the time newly developed space first opens, it is entirely vacant generating no
rental income. Historically, we estimated that on average it takes approximately
24 to 36 months for a newly developed facility to fill up and reach a targeted
occupancy level of approximately 90%.
As these facilities approach the targeted occupancy level of
approximately 90%, rates are increased, resulting in further improvement in net
operating income as the existing tenants, which moved in at lower rates, have
their rates increased or are replaced by new tenants paying higher rates. This
process of reaching stabilized rental rates can take approximately another 12 to
24 months following the time when the facilities reach a stabilized occupancy
level of 90%. In addition, move-in discounts have a more pronounced effect upon
realized rental rates for the newly developed facilities, because such
facilities tend to have a higher ratio of newer tenants.
Property operating expenses are substantially fixed, consisting
primarily of payroll, property taxes, utilities, and marketing costs. The rental
revenue of a newly developed facility will generally not cover its property
operating expenses (excluding depreciation) until the facility has reached an
occupancy level of approximately 30% to 35%. However, at that occupancy level,
the rental revenues from the facility are still not sufficient to cover related
depreciation expense and cost of capital with respect to the facility's
development cost. During construction of the self-storage facility, we
capitalize interest costs and include such cost as part of the overall
development cost of the facility. Once the facility is opened for operations
interest is no longer capitalized.
The annualized yield on costs for the 46 newly developed facilities for
the year ended December 31, 2006, based on net operating income before
depreciation, was approximately 6.9%, which is lower than our ultimate yield
expectations. We expect these yields to increase as these facilities reach
stabilization of both occupancy levels and realized rents. Properties that were
developed before 2005 have contributed greatly to our earnings growth. The
growth in properties developed in 2004 was principally due to occupancy growth,
and growth for properties developed in 2003 and 2002 were due principally to
rate increases. We expect that these facilities will continue to provide growth
to our earnings.
Development of self-storage facilities causes short-term earnings
dilution because, as mentioned above, of the extended time to stabilize a
self-storage facility. We have developed self-storage facilities, despite the
short-term earnings dilution, because it is advantageous for us to continue to
expand our asset base and benefit from the resulting increased critical mass,
with facilities that will improve our portfolio's overall average construction
and location quality.
The decision to commence development of any particular self-storage
location is based upon several factors with respect to that local market,
including our estimate of current and future general economic conditions,
demographic conditions, population growth, the likelihood of and cost of
obtaining permits, construction costs, as well as the level of demand at our
existing self-storage facilities in proximity to the prospective facility. Our
level of new development starts has declined significantly in the last few years
due to increases in construction costs, increases in competition with retail,
condominium, and apartment operators for quality construction sites in urban
locations, and more difficult zoning and permitting requirements, which has
reduced the number of attractive sites available for development and reduced our
development of facilities. It is unclear when, or if, these conditions will
improve.
SHURGARD EUROPEAN OPERATING DATA
--------------------------------
In the merger with Shurgard, we acquired 160 facilities located in
seven European countries with an aggregate of 8,385,000 net rentable square
feet. During the last three months of 2006, six additional facilities were
opened in Europe with an aggregate of 306,000 net rentable square feet. The
following chart sets forth the operations of the Shurgard Facilities from August
22, 2006 through December 31, 2006, the period operated under Public Storage and
consolidated in our financial statements (amounts in thousands):
52
From August 22,
2006 through
December 31, 2006
------------------
Rental income:
Same Store - 96 facilities................ $ 41,132
Non-Same Store - 70 facilities............ 18,583
------------------
Total rental income.......................... 59,715
Cost of operations (excluding depreciation):
Same Store................................ 17,302
Non-Same Store............................ 13,134
------------------
Total cost of operations..................... 30,436
Net operating income before depreciation (a):
Same Store................................ 23,830
Non-Same Store............................ 5,449
------------------
Total net operating income before
depreciation................................. 29,279
Depreciation and amortization................ (59,803)
------------------
Net operating loss........................ $ (30,524)
==================
Weighted average square foot occupancy
during the period:........................... 81.1%
Weighted average realized annual rent per
occupied square foot for the period:......... $ 23.30
In place annual rent per occupied square
foot at December 31:......................... $ 23.12
(a) Total net operating income before depreciation, which is a non-GAAP
measure, for our commercial property segment is presented in Note 15 to our
condensed consolidated financial statements, "Segment Information," which
includes a reconciliation of net operating income before depreciation for
this segment to our consolidated net income.
The operating data presented in the table below reflect the historical
data through August 22, 2006, the period for which the facilities were operated
under Shurgard combined with the historical data from August 22, 2006 through
December 31, 2006, the period operated under Public Storage. Accordingly, the
data presented below does not reflect the actual results included in our
operations for the years ended December 31, 2006, 2005 and 2004. We have applied
our definition of what qualifies as a Same Store. As a result, the number of
properties included in the Shurgard European Same Store portfolio has decreased
from 123 facilities (as reported by Shurgard in the second quarter of 2006) to
96 facilities as is currently being reported.
SELECTED OPERATING DATA FOR THE 96 FACILITIES
---------------------------------------------------
OPERATED BY SHURGARD EUROPE ON A STABILIZED BASIS
----------------------------------------------------
SINCE JANUARY 1, 2004 ("EUROPE SAME STORE
---------------------------------------------------
FACILITIES"): (a)
----------------
Year Ended December 31, Year Ended December 31,
------------------------------------- ---------------------------------------
Percentage Percentage
2006 2005 Change 2005 2004 Change
------------ ------------ ----------- ------------ ------------ -----------
(Dollar amounts in thousands, except weighted average data, utilizing constant
exchange rates) (b)
Revenues:
Rental income................................. $ 106,581 $ 94,455 12.8% $ 94,455 $ 83,722 12.8%
Late charges and administrative fees collected 1,033 881 17.3% 881 689 27.9%
------------ ------------ ----------- ------------ ------------ -----------
Total revenues (c)............................ 107,614 95,336 12.9% 95,336 84,411 12.9%
Cost of operations (excluding depreciation):
Property taxes ............................... 4,912 4,571 7.5% 4,571 4,325 5.7%
Payroll expense............................... 21,104 21,558 (2.1)% 21,558 21,236 1.5%
Advertising and promotion..................... 5,353 7,016 (23.7)% 7,016 7,156 (2.0)%
Utilities..................................... 2,959 2,769 6.9% 2,769 2,462 12.5%
Repairs and maintenance....................... 3,303 3,246 1.8% 3,246 3,752 (13.5)%
Property insurance............................ 1,432 1,522 (5.9)% 1,522 1,452 4.8%
Leasehold expense............................. 2,459 2,327 5.7% 2,327 1,897 22.7%
Other costs of management..................... 8,852 10,414 (15.0)% 10,414 9,927 4.9%
------------ ------------ ----------- ------------ ------------ -----------
Total cost of operations (c).................... 50,374 53,423 (5.7)% 53,423 52,207 2.3%
------------ ------------ ----------- ------------ ------------ -----------
Net operating income (excluding depreciation) (d) $ 57,240 $ 41,913 36.6% $ 41,913 $ 32,204 30.1%
Gross margin (before depreciation)................ 53.2% 44.0% 20.9% 44.0% 38.2% 15.2%
Weighted average for the period:
Square foot occupancy (e)....................... 85.2% 78.5% 8.5% 78.5% 69.1% 13.6%
Realized annual rent per occupied square foot (f) $ 23.64 $ 22.74 4.0% $ 22.74 $ 22.90 (0.7)%
REVPAF (g) (h).................................. $ 20.14 $ 17.85 12.8% $ 17.85 $ 15.82 12.8%
Weighted average at December 31:
Square foot occupancy........................... 89.1% 82.2% 8.4% 82.2% 71.9% 14.3%
In place annual rent per occupied square foot (i) $ 22.61 $ 21.72 4.1% $ 21.72 $ 22.00 (1.3)%
Total net rentable square feet (in thousands)..... 5,291 5,291 - 5,291 5,291 -
53
(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 August 23, 2006 through December 31, 2006 are
included in our consolidated operating results.
(b) Amounts for all periods have been translated from local currencies to U.S.
dollars at a constant exchange rate of 1.26 US Dollars to Euros.
(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 necessary 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.
(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.
(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 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.
The European team is selectively adapting various operating strategies
we use in the United States and incorporating them into their operating model.
54
The following table sets forth certain regional trends in the Europe Same Store
facilities:
Year Ended December 31, Year Ended December 31,
------------------------------------ -----------------------------------------
Percentage Percentage
2006 2005 Change 2005 2004 Change
------------ ----------- ----------- ----------- ------------- -------------
(Dollar amounts in thousands, except per square foot amounts)
Rental income:
Belgium..................................... $ 13,498 $ 12,830 5.2% $ 12,830 $ 12,362 3.8%
Denmark..................................... 4,740 4,034 17.5% 4,034 3,151 28.0%
France...................................... 27,657 25,623 7.9% 25,623 22,888 11.9%
Netherlands................................. 21,303 18,261 16.7% 18,261 15,427 18.4%
Sweden...................................... 23,045 19,457 18.4% 19,457 16,872 15.3%
United Kingdom.............................. 17,371 15,131 14.8% 15,131 13,711 10.3%
------------ ----------- ----------- ----------- ------------- -------------
Total rental income....................... $107,614 $95,336 12.9% $ 95,336 $ 84,411 12.9%
============ =========== =========== =========== ============= =============
Cost of operations before depreciation and
amortization (a):
Belgium..................................... $ 6,837 $ 6,662 2.6%$ 6,662 $ 6,661 -
Denmark..................................... 2,401 2,610 (8.0)% 2,610 2,845 (8.3)%
France...................................... 13,425 14,468 (7.2)% 14,468 14,116 2.5%
Netherlands................................. 9,988 10,921 (8.5)% 10,921 10,582 3.2%
Sweden...................................... 10,099 11,213 (9.9)% 11,213 10,433 7.5%
United Kingdom.............................. 7,624 7,549 1.0% 7,549 7,570 (0.3)%
------------ ----------- ----------- ----------- ------------- -------------
Total cost of operations before
depreciation and amortization............. $50,374 $53,423 (5.7)% $ 53,423 $ 52,207 2.3%
============ =========== =========== =========== ============= =============
Weighted average occupancy levels for the period:
Belgium..................................... 80.6% 76.4% 5.5% 76.4% 72.5% 5.4%
Denmark..................................... 90.8% 85.4% 6.3% 85.4% 66.8% 27.8%
France...................................... 87.3% 83.4% 4.7% 83.4% 75.5% 10.5%
Netherlands................................. 83.3% 72.3% 15.2% 72.3% 59.7% 21.1%
Sweden...................................... 89.3% 80.9% 10.4% 80.9% 70.6% 14.6%
United Kingdom.............................. 82.7% 76.8% 7.7% 76.8% 66.8% 15.0%
------------ ----------- ----------- ----------- ------------- -------------
85.2% 78.5% 8.5% 78.5% 69.1% 13.6%
============ =========== =========== =========== ============= =============
Weighted average realized annual rent per
occupied square foot:
Belgium..................................... $16.56 $16.63 (0.4)% $16.63 $16.90 (1.6)%
Denmark..................................... $24.55 $22.18 10.7% $22.18 $22.18 -
France...................................... $25.31 $24.55 3.1% $24.55 $24.29 1.1%
Netherlands................................. $21.62 $21.37 1.2% $21.37 $21.91 (2.5)%
Sweden...................................... $22.67 $21.13 7.3% $21.13 $20.97 0.8%
United Kingdom.............................. $38.49 $36.14 6.5% $36.14 $37.65 (4.0)%
------------ ----------- ----------- ----------- ------------- -------------
$23.64 $22.74 4.0% $22.74 $22.90 (0.7)%
============ =========== =========== =========== ============= =============
55
Net rentable square feet (in thousands):
Belgium..................................... 1,001 1,001 - 1,001 1,001 -
Denmark..................................... 211 211 - 211 211 -
France...................................... 1,234 1,234 - 1,234 1,234 -
Netherlands................................. 1,173 1,173 - 1,173 1,173 -
Sweden...................................... 1,130 1,130 - 1,130 1,130 -
United Kingdom.............................. 542 542 - 542 542 -
------------ ----------- ----------- ----------- ------------- -------------
5,291 5,291 - 5,291 5,291 -
============ =========== =========== =========== ============= =============
Number of facilities:
Belgium..................................... 17 17 - 17 17 -
Denmark..................................... 4 4 - 4 4 -
France...................................... 23 23 - 23 23 -
Netherlands................................. 22 22 - 22 22 -
Sweden...................................... 20 20 - 20 20 -
United Kingdom.............................. 10 10 - 10 10 -
------------ ----------- ----------- ----------- ------------- -------------
96 96 - 96 96 -
============ =========== =========== =========== ============= =============
56
ANCILLARY OPERATIONS: Ancillary operations include (i) the reinsurance
of policies against losses to goods stored by tenants in our self-storage
facilities, (ii) sale of merchandise at our self-storage facilities, (iii)
containerized storage operations, (iv) truck rentals at our self-storage
facilities and (v) commercial property operations, and (vi) management of
facilities owned by third-party owners and facilities owned by affiliates that
are not included in our consolidated financial statements.
The following table sets forth our ancillary operations:
Year Ended December 31, Year Ended December 31,
--------------------------- -------------------------
2006 2005 Change 2005 2004 Change
------------ ------------ ----------- ------------ ------------ ------------
(Amounts in thousands)
Revenues:
Tenant reinsurance premiums..... $ 37,520 $ $24,889 $ 12,631 $ 24,889 $ 24,243 $ 646
Merchandise sales............... 26,806 22,464 4,342 22,464 21,336 1,128
Containerized storage .......... 16,454 16,497 (43) 16,497 19,355 (2,858)
Truck rentals................... 13,689 13,853 (164) 13,853 12,646 1,207
Commercial property operations.. 12,966 11,560 1,406 11,560 10,750 810
Property management............. 2,472 2,967 (495) 2,967 2,771 196
------------ ------------ ----------- ------------ ------------ ------------
Total revenues............... 109,907 92,230 17,677 92,230 91,101 1,129
------------ ------------ ----------- ------------ ------------ ------------
Cost of operations:
Tenant reinsurance.............. 14,794 8,234 6,560 8,234 13,508 (5,274)
Merchandise sales............... 23,204 18,773 4,431 18,773 18,901 (128)
Containerized storage 15,334 12,886 2,448 12,886 11,774 1,112
Truck rentals................... 12,622 12,733 (111) 12,733 12,421 312
Commercial property operations.. 5,223 4,448 775 4,448 4,328 120
Property management............. 187 638 (451) 638 657 (19)
------------ ------------ ----------- ------------ ------------ ------------
Total cost of operations..... 71,364 57,712 13,652 57,712 61,589 (3,877)
------------ ------------ ----------- ------------ ------------ ------------
Depreciation:
Tenant reinsurance.............. - - - - - -
Merchandise sales............... - - - - - -
Containerized storage........... (897) (2,808) 1,911 (2,808) (4,546) 1,738
Truck rentals................... - - - - - -
Commercial property operations.. (2,441) (2,322) (119) (2,322) (2,114) (208)
Property management............. - - - - - -
------------ ------------ ----------- ------------ ------------ ------------
Total depreciation........... (3,338) (5,130) 1,792 (5,130) (6,660) 1,530
------------ ------------ ----------- ------------ ------------ ------------
Net Income:
Tenant reinsurance.............. 22,726 16,655 6,071 16,655 10,735 5,920
Merchandise sales............... 3,602 3,691 (89) 3,691 2,435 1,256
Containerized storage........... 223 803 (580) 803 3,035 (2,232)
Truck rentals................... 1,067 1,120 (53) 1,120 225 895
Commercial property operations.. 5,302 4,790 (512) 4,790 4,308 482
Property management............. 2,285 2,329 (44) 2,329 2,114 215
------------ ------------ ----------- ------------ ------------ ------------
Total net income................ $ 35,205 $ 29,388 $ 5,817 $ 29,388 $ 22,852 $ 6,536
============ ============ =========== ============ ============ ============
TENANT REINSURANCE OPERATIONS: We reinsure policies offered through a
non-affiliated insurance broker against losses to goods stored by tenants in our
self-storage facilities. Revenues are comprised of fees charged to tenants
electing such policies. Cost of operations primarily includes claims paid that
are not covered by our outside third-party insurers, as well as claims adjusting
expenses.
57
The future level of tenant reinsurance revenues is largely dependent
upon the number of new tenants electing to purchase policies, premiums charged
for such insurance and existing tenant retention to continue participating in
the insurance program. For the years ended December 31, 2006, 2005 and 2004,
approximately 35.1%, 32.4% and 35.0%, respectively, of our self-storage tenant
base had such policies. During 2005 and 2004, we experienced damage caused by
hurricanes to several of our facilities in our Florida and New Orleans markets.
As a result of such damage, we recorded estimated tenant claim expense during
the quarter in which the damage occurred. As time progressed, the tenant claims
liabilities were adjusted, either increasing or decreasing the liabilities,
based on actual claims history. As a result of these adjustments, we experienced
significant volatility in our reported quarterly cost of operations,
particularly with respect to 2005. In 2004, we recorded an estimated loss of
approximately $1,500,000 with respect to potential tenant insured losses as a
result of several hurricanes affecting the southeastern United States. During
2005, we determined that this accrual was too high based upon claims history,
and accordingly we reduced the estimated liability by approximately $500,000 and
reduced cost of operations in 2005 by a corresponding amount.
The future cost of operations will be dependent primarily upon the
level of losses incurred, including the level of catastrophic events, such as
hurricanes, that occur and affect our properties.
For the year December 31, 2006, tenant reinsurance revenues and cost of
operations, respectively, included $3,243,000 and $1,285,000 with respect to the
Shurgard facilities we acquired in the U.S., and $2,732,000 and $995,000 for the
Shurgard facilities in Europe.
MERCHANDISE AND TRUCK RENTAL OPERATIONS: One of our subsidiaries sells
locks, boxes, and packing supplies to our tenants as well as the general public.
Revenues and cost of operations for these activities are included in the table
above as "Merchandise Sales." In addition, at selected locations, our subsidiary
maintains trucks on site for rent to our self-storage customers and the general
public on a short-term basis for local use. In addition, we also act as an agent
for a national truck rental company to provide their rental trucks to customers
for long-distance use. The revenues and cost of operations for these activities
are included in the table above as "Truck rentals."
These activities generally serve as an adjunct to our self-storage
operations providing our tenants with goods and services that they need in
connection with moving and storing their goods.
The revenues and expenses of these activities have remained relatively
stable through the three years ended December 31, 2006, 2005, and 2004. The
primary factors impacting the level of operations of these activities is the
level of customer and tenant traffic at our self-storage facilities, including
the level of move-ins.
For the year ended December 31, 2006, merchandise revenues and related
cost of operations, respectively, included $2,674,000 and $1,664,000 with
respect to the Shurgard facilities we acquired in the United States, and
$2,390,000 and $1,216,000 for the Shurgard facilities in Europe.
For the year ended December 31, 2006, truck revenues and cost of
operations, respectively, included $795,000 and $924,000 with respect to the
Shurgard facilities we acquired in the U.S.
CONTAINERIZED STORAGE OPERATIONS: We have closed many of our
containerized storage facilities since 2002, and have refined our market and
product focus to 13 facilities located in eight densely populated markets with
above-average rent and income. The operations with respect to the facilities
other than the 13 ongoing facilities are included in "Discontinued Operations"
on our income statement. The operations of the 13 remaining facilities are
included in continuing operations and are reflected on the table above.
Rental and other income includes monthly rental charges to customers
for storage of the containers, service fees charged for pickup and delivery of
containers to customers' homes and businesses and certain non-core services
which were eliminated, such as handling and packing customers' goods from city
to city. At December 31, 2006, there were approximately 19,937 occupied
containers in the continuing facilities.
58
Direct operating costs principally includes payroll, equipment lease
expense, utilities and vehicle expenses (fuel and insurance). Direct operating
costs for the year ended December 31, 2006 also includes approximately
$1,780,000 in research and development costs. No such costs were incurred during
2005 and 2004. Facility lease expense has increased significantly as we have
moved the operations from wholly-owned combination facilities to facilities that
we lease from third parties.
There can be no assurance as to the level of the containerized storage
business's expansion, level of gross rentals, level of move-outs or
profitability. We continue to evaluate the business operations, and additional
facilities may be closed.
COMMERCIAL PROPERTY OPERATIONS: Commercial property operations included
in our consolidated financial statements include commercial space owned by the
Company and entities consolidated by the Company. We have a much larger interest
in commercial properties through our ownership interest in PSB. Our investment
in PSB is accounted for using the equity method of accounting, and accordingly
our share of PSB's earnings is reflected as "Equity in earnings of real estate
entities", see below.
Our commercial operations are comprised of 1,561,000 net rentable
square feet of commercial space which is principally operated at certain of the
self-storage facilities.
Our commercial property operations consist primarily of facilities that
are at a stabilized level of operations, and generally reflect the conditions in
the markets in which they operate. We do not expect any significant growth in
net operating income from this segment of our business for 2007.
Equity in earnings of real estate entities: In addition to our
ownership of equity interests in PSB, we had general and limited partnership
interests in five limited partnerships at December 31, 2006 (PSB and the limited
partnerships are collectively referred to as the "Unconsolidated Entities"). Due
to our limited ownership interest and limited control of these entities, we do
not consolidate the accounts of these entities for financial reporting purposes,
and account for such investments using the equity method.
Equity in earnings of real estate entities for the year ended December
31, 2006 consists of our pro-rata share of the Unconsolidated Entities based
upon our ownership interest for the period. The following table sets forth the
significant components of equity in earnings of real estate entities:
Historical summary:
------------------- Year Ended December 31, Year Ended December 31,
------------------------ -------------------------
2006 2005 Change 2005 2004 Change
------------ ----------- ------------ ------------- ----------- -------------
(Amounts in thousands)
Property operations:
PSB.................................... $ 73,850 $ 68,768 $ 5,082 $ 68,768 $ 68,545 $ 223
Acquisition Joint Venture.............. 411 277 134 277 23 254
Newly consolidated partnerships (1).... - 5,229 (5,229) 5,229 4,980 249
Other Investments (2).................. 2,845 2,674 171 2,674 1,607 1,067
------------ ----------- ------------ ------------- ----------- -------------
77,106 76,948 158 76,948 75,155 1,793
------------ ----------- ------------ ------------- ----------- -------------
Depreciation:
PSB.................................... (37,919) (33,593) (4,326) (33,593) (32,063) (1,530)
Acquisition Joint Venture.............. (276) (269) (7) (269) (96) (173)
Newly consolidated partnerships (1).... - (839) 839 (839) (896) 57
Other Investments (2).................. (695) (724) 29 (724) (665) (59)
------------ ----------- ------------ ------------- ----------- -------------
(38,890) (35,425) (3,465) (35,425) (33,720) (1,705)
------------ ----------- ------------ ------------- ----------- -------------
Other: (3)
PSB (4)................................ (26,167) (16,418) (9,749) (16,418) (19,587) 3,169
Newly consolidated partnerships (1).... - (143) 143 (143) (127) (16)
Other Investments (2).................. (154) (79) (75) (79) 843 (922)
------------ ----------- ------------ ------------- ----------- -------------
(26,321) (16,640) (9,681) (16,640) (18,871) 2,231
------------ ----------- ------------ ------------- ----------- -------------
Total equity in earnings of real estate entities:
PSB.................................... 9,764 18,757 (8,993) 18,757 16,895 1,862
Acquisition Joint Venture.............. 135 8 127 8 (73) 81
Newly consolidated partnerships (1).... - 4,247 (4,247) 4,247 3,957 290
Other Investments (2).................. 1,996 1,871 125 1,871 1,785 86
------------ ----------- ------------ ------------- ----------- -------------
$ 11,895 $ 24,883 $ (12,988) $24,883 $22,564 $ 2,319
============ =========== ============ ============= =========== =============
59
(1) As described more fully in Note 2 to our consolidated financial statements,
we commenced consolidating the accounts of three limited partnerships that
we had previously accounted for under the equity method of accounting.
Accordingly, equity in income with respect to these partnerships ceased
effective January 1, 2006.
(2) Amounts primarily reflect equity in earnings recorded for investments that
have been held consistently throughout each of the years ended December 31,
2006, 2005 and 2004.
(3) "Other" reflects our share of general and administrative expense, interest
expense, interest income, and other non-property; non-depreciation related
operating results of these entities.
(4) "Other" with respect to PSB also includes our pro-rata share of gains on
sale of real estate assets, impairment charges relating to pending sales of
real estate and the impact of PSB's application of the SEC's clarification
of EITF Topic D-42 on redemptions of preferred securities.
Equity in earnings of PSB represents our pro rata share (approximately
44% throughout the years ended December 31, 2006, 2005 and 2004) of the earnings
of PSB. Throughout 2004, 2005 and 2006, we owned 5,418,273 common shares and
7,305,355 operating partnership units (units which are convertible into common
shares on a one-for-one basis) in PSB. At December 31, 2006, PSB owned and
operated 18.7 million net rentable square feet of commercial space located in
eight states. PSB also manages commercial space owned by the Company and
affiliated entities at December 31, 2006 pursuant to property management
agreements.
Equity in earnings of real estate entities includes our pro rata share
of the net impact of gains/losses on sales of assets and impairment charges
relating to the impending sale of real estate assets as well as our pro rata
share of the impact of the application of EITF Topic D-42 on redemptions of
preferred securities recorded by PSB. Our net pro rata share from these items
resulted in a net increase (decrease) of equity in earnings of ($1,042,000),
$7,727,000 and $4,544,000 for the years ended December 31, 2006, 2005 and 2004,
respectively.
The impact of the PSB items discussed above led to a decrease in equity
in earnings of real estate entities totaling $12,988,000 when comparing the year
ended December 31, 2006 to the same period in 2005. These PSB items also led to
an increase in equity in earnings of real estate entities totaling $2,319,000
when comparing the year ended December 31, 2005 to the same period in 2004. In
addition, equity in earnings real estate entities decreased due to our
consolidation of three limited partnerships effective January 1, 2006 as
described in Note 2 to our consolidated financial statements. As a result of
this consolidation, equity in income with respect to these partnerships ceased
effective January 1, 2006.
Our future equity income from PSB will be dependent entirely upon PSB's
operating results. Our investment in PSB provides us with some diversification
into another asset type. We have no plans of disposing of our investment in PSB.
PSB's filings and selected financial information can be accessed through the
Securities and Exchange Commission, and on its website, www.psbusinessparks.com.
In January 2004, we entered into a joint venture partnership with an
institutional investor for the purpose of acquiring up to $125.0 million of
existing self-storage properties in the United States from third parties (the
"Acquisition Joint Venture"). The venture is funded entirely with equity
consisting of 30% from us and 70% from the institutional investor. As described
more fully in Note 9 to our consolidated financial statements for the year ended
December 31, 2006, our pro-rata share of earnings with respect to two of the
facilities acquired directly from third parties by the Acquisition Joint Venture
in 2004, at an aggregate cost of $9,086,000, are reflected in Equity in Earnings
in the table above. Our initial investment in the Acquisition Joint Venture with
respect to these two facilities was approximately $2,930,000. Our future equity
in earnings with respect to the Acquisition Joint Venture will be dependent upon
the level of earnings generated by these two properties.
The "Other Investments" are comprised primarily of our equity in
earnings from four limited partnerships, for which we held an approximate
consistent level of equity interest throughout 2004, 2005 and 2006. The Company
formed these limited partnerships during the 1980's. We are the general partner
in each limited partnership, and manage each of these facilities for a
60
management fee that is included in "Ancillary operations." The limited partners
consist of numerous individual investors, including the Company, which
throughout the 1990's acquired units of limited partnership interests in these
limited partnerships in various transactions.
Our future earnings with respect to the "Other Investments" will be
dependent upon the operating results of the 20 self-storage facilities that
these entities own. The operating characteristics of these facilities are
similar to those of the Company's self-storage facilities, and are subject to
the same operational issues as the Same Store Facilities as discussed above. See
Note 6 to our consolidated financial statements for the operating results of
these entities for the years ended December 31, 2006, 2005 and 2004.
OTHER INCOME AND EXPENSE ITEMS
--------------------------------------------------------------------------------
INTEREST AND OTHER INCOME: Interest and other income was $31,799,000
for the year ended December 31, 2006 as compared to $16,447,000 for the same
period in 2005 and $5,391,000 in 2004. These increases are due to earning higher
interest rates on invested cash balances combined with significantly higher
average cash balances invested in interest-bearing accounts as compared to
respective prior year periods.
As discussed more fully in "Liquidity and Capital Resources" below, at
December 31, 2006, we had cash balances totaling approximately $555.6 million.
In addition, during the first quarter of 2007, we issued approximately $500.0
million of our 6.625% Series M Cumulative Preferred Stock. The net proceeds from
this issuance and our December 31, 2006 cash balances will be used primarily to
fund future development, acquisition, and preferred redemption activities (see
also "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources"). In the interim, the net proceeds
from our cash balances are expected to earn interest income (currently at
approximately 5.3% at December 31, 2006) relative to the corresponding divided
requirement (approximately 6.625% with respect to our Series M Cumulative
Preferred Stock). This difference will result in an estimated reduction to
earnings per common share. In addition, we may issue additional preferred stock
during the early part of 2007, raising the necessary funds in anticipation of
the potential redemption of approximately $172,500,000 in higher-rate preferred
stock that becomes available for redemption in September 2007. This issuance
similarly will have a negative impact on earnings per share until the proceeds
are utilized.
DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense
was $437,984,000, $196,232,000 and $182,890,000 for the years ended December 31,
2006, 2005 and 2004, respectively.
The increase in depreciation and amortization for the year ended
December 31, 2006, as compared to the same period in 2005 is due primarily to
$175,944,000 in amortization expense recorded during the year ended December 31,
2006 on the intangible assets for the value of the storage tenants in place
which we acquired in the Shurgard merger. Intangible assets of $530,528,000,
represented by the value of the storage tenants in place at the time of the
merger are being amortized relative to the expected future benefit of the
tenants in place to each period. Other intangible assets of $34,813,000,
represented by the land leases with rent payments that are below market value
are being amortized over the life of the underlying leases. Amortization of
these finite-lived intangible assets is expected to be approximately
$243,282,000 during 2007.
The remainder of the increase in depreciation and amortization for the
year ended December 31, 2006 as compared to the same period in 2005 is due
primarily to assets acquired in the Shurgard merger and to our newly developed
and acquired facilities. See Notes 2 and 3 to our consolidated financial
statements for further discussion of the Shurgard merger and the acquisition of
tangible and intangible assets. The increase from 2004 to 2005 is due to the
acquisition and development of additional real estate facilities.
Also included in depreciation and amortization expense for the year
ended December 31, 2006 is $1,651,000 related to the amortization of
intangibles, and $6,604,000 for each of the years ended December 31, 2005 and
2004. Amortization ceased as of April 1, 2006, as described more fully in Note 2
to our consolidated financial statements.
61
General and administrative expense: General and administrative expense
was $84,661,000, $21,115,000 and $18,813,000 for the years ended December 31,
2006, 2005 and 2004 respectively. General and administrative expense principally
consists of Shurgard merger integration costs, state income taxes, investor
relations expenses and corporate and executive salaries. In addition, general
and administrative expenses includes expenses that vary depending on the
Company's activity levels in certain areas, such as overhead associated with the
acquisition and development of real estate facilities, employee severance and
stock-based compensation, and product research and development expenditures.
General and administrative expense for the year ended December 31, 2006
include costs and expenses totaling $47,405,000 incurred in connection with the
integration of Shurgard and Public Storage, costs for cancelled development
projects in the U.S. and Europe totaling $10,211,000 and contract termination
fees of $2,413,000. We expect to incur approximately $5 million in additional
merger integration costs through June 30, 2007.
Restricted stock and stock option expense amounted to approximately
$6,309,000, $4,758,000 and $2,963,000 for the year ended December 31, 2006, 2005
and 2004, respectively.
INTEREST EXPENSE: Interest expense was $33,062,000 for the year ended
December 31, 2006, as compared to $8,216,000 for the same period in 2005 and
$760,000 in 2004. The increase in interest expense in 2006 is primarily due to
$24,855,000 in interest incurred on the debt and other obligations we assumed in
the Shurgard merger partially offset by a decrease of $893,000 in interest
expense due to lower balances on our outstanding notes. See also Notes 8 and 9
to our consolidated financial statements for a schedule of our debt balances,
principal repayment requirements, and average interest rates.
During the year ended December 31, 2006, we paid $1,900,000 related to
interest rate and currency swaps acquired in the Shurgard merger. We have
included this $1,900,000 as a reduction of income on derivatives, net on our
consolidated statement of operations for the year ended December 31, 2006. See
discussion below under Income from Derivatives, net.
The increase in interest expense in 2005 compared to 2004 was caused by
the assumption of mortgage notes payable in connection with property
acquisitions in the fourth quarter of 2004, interest expense with respect to
debt due a joint venture partner, interest expense paid to a related party in
2005 and a decrease in capitalized interest due to lower average in-process
development balances.
During the later part of 2004, we assumed mortgage notes payable with
an aggregate principal balance of $94.7 million and having an average interest
rate of approximately 5.2% in connection with property acquisitions. We incurred
interest expense with respect to these mortgage notes of $879,000 in 2004 for
the partial period these notes became our liabilities. Interest expense with
respect to these mortgage notes totaled $4,739,000 in 2005, representing a
year-over-year increase of $3,860,000.
As described more fully in Note 11 to the consolidated financial
statements, during 2005 we incurred interest expense totaling $1,458,000 with
respect to debt due a related party. This debt was extinguished on November 17,
2005.
Capitalized interest expense totaled $2,716,000, $2,820,000 and
$3,617,000 for the years ended December 31, 2006, 2005 and 2004, respectively,
in connection with our development activities. Included in the interest
capitalized for 2006 is $935,000 in connection with our development activities
in Europe.
MINORITY INTEREST IN INCOME: Minority interest in income represents the
income that is allocable to equity interests in the Consolidated Entities, which
are not owned by the Company. The following table summarizes minority interest
in income for each of the three years ended December 31, 2006:
62
Year Ended Year Ended
December 31, December 31,
------------------------ -------------------------
2006 2005 Change 2005 2004 Change
---------- ----------- ---------- ---------- ------------ ------------
(Amounts in thousands)
Preferred partnership interests:
Ongoing distributions (a)................. $ 19,055 $ 16,147 $ 2,908 $ 16,147 $ 22,423 $ (6,276)
Special Distribution and EITF Topic D-42 (b) - 874 (874) 874 10,063 (9,189)
Acquired minority interests (c).............. - 1,197 (1,197) 1,197 4,048 (2,851)
Newly consolidated partnerships (d).......... 5,259 - 5,259 - - -
Convertible Partnership Units (e)............ 151 469 (318) 469 328 141
Shurgard U.S. minority interests (f)......... 417 - 417 - - -
Shurgard European minority interests (g)..... (3,631) - (3,631) - - -
Other minority interests (h)................. 10,632 13,964 (3,332) 13,964 13,051 913
---------- ----------- ---------- ---------- ------------ ------------
Total minority interests in income....... $ 31,883 $ 32,651 $ (768) $ 32,651 $ 49,913 $ (17,262)
========== =========== ========== ========== ============ ============
(a) The increase in ongoing distributions is due to the issuance of additional
preferred partnership units offset by the redemption of $40,000,000 of our
9.5% Series N Preferred Units on March 17, 2005 and $45,000,000 of our
9.125% Series O Preferred units on March 29, 2005.
(b) In accordance with the Securities and Exchange Commissions clarification of
EITF Topic D-42, are original issuance costs with respect to our first
quarter of 2005 redemption of preferred units included in minority interest
in income for the year s ended December 31, 2005 and 2004, totaling
$874,000 and $2,063,000, respectively. Amounts for 2004 also include a
special distribution of $8,000,000 described below.
(c) These amounts reflect income allocated to minority interests that the
Company acquired in 2005 and are no longer outstanding at December 31,
2006. Included in income allocated to the Acquired minority interests is
$295,000 and $1,197,000 in depreciation expense for the years ended
December 31, 2005 and 2004, respectively.
(d) These amounts reflect income allocated to minority interests for three
entities that we commenced consolidating the accounts for effective January
1, 2006 (see Note 2 to our consolidated financial statements). Included in
minority interest in income for the year ended December 31, 2006 was
$32,000 in depreciation expense.
(e) These amounts reflect the minority interests represented by the Convertible
Partnership Units (see Note 11 to our consolidated financial statements).
Included in income allocated to the Convertible Partnership Units was
$710,000, $385,000 and $333,000 in depreciation expense for the years ended
December 31, 2006, 2005 and 2004, respectively.
(f) These amounts reflect income allocated to minority interests in entities we
acquired in the merger with Shurgard, and include $55,000 in depreciation
in the year ended December 31, 2006.
(g) These amounts reflect income allocated to minority interests from entities
we acquired in the merger with Shurgard. These interests include the 80%
partner's interests in the European joint ventures, First Shurgard and
Second Shurgard, as well as those in domestic joint ventures. Included in
minority interest in income is $3,013,000 for the year ended December 31,
2006 in depreciation.
(h) These amounts reflect income allocated to minority interests that were
outstanding consistently throughout the years ended December 31, 2006, 2005
and 2004. Included in minority interest in income is $828,000, $897,000 and
$697,000 in depreciation expense for the years ended December 31, 2006,
2005 and 2004, respectively, as well as gain on sale of assets totaling
$251,000 in 2005 (none in 2006 or 2004).
Other minority interests reflect income allocated to minority interests
that have maintained a consistent level of interest throughout 2004, 2005 and
2006, comprised of investments in the Consolidated Entities described in Note 6
to our consolidated financial statements. The level of income allocated to these
interests in the future is dependent upon the operating results of the storage
facilities that these entities own, as well as any minority interests that the
Company acquires in the future.
Income has been allocated to our Preferred partnership interests based
upon (i) "Ongoing distributions", representing distributions paid during the
period and (ii) "Redemptions of preferred units" representing the differences
between the redemption amount and the carrying amount of preferred partnership
units that have been redeemed. The reduction in income allocated to preferred
partnership interests for ongoing distributions and for redemptions are due to
the following issuances and redemptions of our preferred units:
63
On May 9, 2006, one of our Consolidated Entities issued $100,000,000 of
its 7.25% Series J Preferred Partnership Units. Accordingly, ongoing
distributions with respect to preferred partnership interest are expected to
increase.
In March 2005, we redeemed our 9.5% Series N Preferred Units ($40.0
million) and our 9.125% Series O Preferred Units ($45.0 million) for cash. We
allocated $874,000 to the minority interests, reflected as "allocations
associated with redemptions" with respect to these redemptions in accordance
with EITF Topic D-42, representing the excess of the stated amount of the
preferred units over their carrying amount. This reduced annual ongoing
distributions following the redemption by approximately $7,906,000.
In December 2004, we issued $25,000,000 of our 6.25% Series Z Preferred
Units in connection with a property portfolio acquisition. This increased annual
ongoing distributions following issuance by approximately $1,563,000.
On March 22, 2004, certain investors who held $200 million of our 9.5%
Series N Cumulative Redeemable Perpetual Preferred Units agreed, in exchange for
a special distribution of $8,000,000, to a reduction in the distribution rate on
their preferred units from 9.50% per year to 6.40% per year, and an extension of
the call date for these securities to March 17, 2010. The investors also
received their distribution that accrued from January 1, 2004 through the
effective date of the exchange. The $8,000,000 special distribution, combined
with $2,063,000, representing the excess of the stated amount of the preferred
units over their carrying amount, is reflected above in "Redemptions." This
transaction reduced ongoing annual distributions after March 22, 2004 by
approximately $6.2 million.
On August 5, 2005, we acquired the institutional investors interest in
PSAC Investors, LLC. As part of the acquisition, we also obtained and
subsequently exercised the right to acquire Mr. Hughes' interest in PSAC
Investors, LLC which we acquired November 17, 2005 (see Note 9 to our
consolidated financial statements). As a result of these events: (i) we ceased
allocating income to minority interests with respect to the Consolidated
Development Joint Venture effective August 5, 2005, and (ii) Mr. Hughes'
interest in the Consolidated Development Joint Venture was classified as debt on
our balance sheet and income with respect to Mr. Hughes' interest in the
Consolidated Development Joint Venture for the period from August 5, 2005
through November 17, 2005, has been classified as interest expense on our
consolidated statements of income.
LIQUIDITY AND CAPITAL RESOURCES
--------------------------------------------------------------------------------
We believe that our internally generated net cash provided by operating
activities will continue to be sufficient to enable us to meet our operating
expenses, capital improvements, debt service requirements and distributions to
shareholders for the foreseeable future.
Operating as a real estate investment trust ("REIT"), our ability to
retain cash flow for reinvestment is restricted. In order for us to maintain our
REIT status, a substantial portion of our operating cash flow must be used to
make distributions to our shareholders (see "Requirement to Pay Distributions"
below). However, despite the significant distribution requirements, we have been
able to retain a significant amount of our operating cash flow. The following
table summarizes our ability to fund distributions to the minority interest,
capital improvements to maintain our facilities, and distributions to our
shareholders through the use of cash provided by operating activities. The
remaining cash flow generated is available to make both scheduled and optional
principal payments on debt and for reinvestment.
64
For the Year Ended December 31,
-----------------------------------------
2006 2005 2004
------------ ------------ ------------
(Amount in thousands)
Net cash provided by operating activities............................. $791,700 $692,048 $616,664
Allocable to minority interests (Preferred Units) - ongoing distributions (19,055) (16,147) (22,423)
Allocable to minority interests (Preferred Units) - special distribution
(a)................................................................ - - (8,000)
Allocable to minority interests (common equity)....................... (16,300) (18,177) (21,349)
------------ ------------ ------------
Cash from operations allocable to our shareholders.................... 756,345 657,724 564,892
Capital improvements to maintain our facilities....................... (79,326) (25,890) (35,868)
------------ ------------ ------------
Remaining operating cash flow available for distributions to our
shareholders....................................................... 677,019 631,834 529,024
Distributions paid:
Preferred stock dividends.......................................... (214,218) (173,017) (157,925)
Equity Stock, Series A dividends................................... (21,424) (21,443) (21,501)
Common shareholders................................................ (298,219) (244,200) (230,834)
------------ ------------ ------------
Cash available for principal payments on debt and reinvestment........ $143,158 $193,174 $118,764
============ ============ ============
(a) The $8.0 million special distribution was paid to a unitholder of our 9.5%
Series N Cumulative Redeemable Perpetual Preferred Units in conjunction
with a March 22, 2004 agreement that, among other things, lowered the
distribution rate from 9.5% to 6.4%.
Cash available for principal payments on debt and reinvestment declined
from $193.2 million in 2005 to $143.2 million in 2006 principally due to the
impact of merger integration expenses of approximately $47.4 million for the
year ended December 31, 2006, as well as the impact of paying two entire
quarters' distribution to the 38.9 million shares issued to former Shurgard
shareholders while the operating cash flows were reflected only from August 22,
2006 through December 31, 2006.
Our financial profile is characterized by a low level of debt-to-total
capitalization and a conservative dividend payout ratio with respect to the
common stock. We expect to fund our growth strategies and debt obligations with
(i) cash on hand at December 31, 2006, (ii) internally generated retained cash
flows and (iii) proceeds from issuing equity securities. In general, our current
strategy is to continue to finance our growth with permanent capital; either
common or preferred equity.
Over the past three years, we have funded substantially all of our
acquisitions with permanent capital (both common and preferred securities). We
have elected to use preferred securities as a form of leverage despite the fact
that the dividend rates of our preferred securities exceed the prevailing market
interest rates on conventional debt. We have chosen this method of financing for
the following reasons: (i) under the REIT structure, a significant amount of
operating cash flow needs to be distributed to our shareholders, making it
difficult to repay debt with operating cash flow alone, (ii) our perpetual
preferred stock has no sinking fund requirement or maturity date and does not
require redemption, all of which eliminate any future refinancing risks, (iii)
after the end of a non-call period, we have the option to redeem the preferred
stock at any time, which enable us to refinance higher coupon preferred stock
with new preferred stock at lower rates if appropriate, (iv) preferred stock
does not contain covenants, thus allowing us to maintain significant financial
flexibility, and (v) dividends on the preferred stock can be applied to satisfy
our REIT distribution requirements.
Our credit ratings on each of our series of Cumulative Preferred Stock
are "Baa1" by Moody's and "BBB+" by Standard & Poor's.
We also have a $200 million line of credit that we use as temporary
"bridge" financing. At December 31, 2006, we had $45 million in outstanding
borrowings under this credit facility which has increased to $80 million at
February 28, 2007. This credit facility expires on April 10, 2007. We are
currently in the process of obtaining a new credit facility which we anticipate
will have $300 million of available borrowing capacity, as well as improved
financing spreads and covenants. We expect the new credit facility to be in
place prior to the expiration of the existing facility.
RECENT ISSUANCE OF PREFERRED STOCK AND PROJECTED REDEMPTION OF
PREFERRED SECURITIES: One of our financing objectives over the past several
years has been to reduce our average cost of capital with respect to our
preferred securities. Accordingly, we have redeemed higher rate preferred
securities outstanding and have financed the redemption with cash on-hand or
from the proceeds from the issuance of lower rate preferred securities.
65
We believe that our size and financial flexibility enables us to access
capital when appropriate. Since the beginning of 2004 through December 31, 2006,
we have raised approximately $2.4 billion of our Cumulative Preferred Stock, and
used approximately $1.3 billion of these net proceeds in order to redeem
higher-coupon preferred securities.
On January 18, 2007, we redeemed our 7.625% Series T Cumulative
Preferred Stock totaling $152.2 million and on February 20, 2007, we redeemed
our 7.625% Series U Cumulative Preferred Stock totaling $150.0 million. These
redemptions were funded with cash on hand and funds raised through the issuance
of $500 million of our 6.625% Series M preferred stock. In addition to the
Series T and U Preferred securities, we currently have approximately $172.5
million of additional preferred securities that become redeemable at our option
in 2007.
From time-to-time, we may raise additional capital primarily through
the issuance of lower rate preferred securities, in advance of the redemption
dates to ensure that we have available funds to redeem these securities. The
timing and our ability to issue additional preferred securities are dependent on
many factors. There is no assurance that we will be able to raise the necessary
capital and at appropriate rates to redeem these securities.
REQUIREMENT TO PAY DISTRIBUTIONS: We have operated, and intend to
continue to operate, in such a manner as to qualify as a REIT under the Internal
Revenue Code of 1986, but no assurance can be given that we will at all times so
qualify. To the extent that the Company continues to qualify as a REIT, we will
not be taxed, with certain limited exceptions, on the taxable income that is
distributed to our shareholders, provided that at least 90% of our taxable
income is so distributed to our shareholders prior to filing of the Company's
tax return. We have satisfied the REIT distribution requirement since 1980.
Aggregate dividends paid during 2006 totaled $214.2 million to the
holders of our Cumulative Preferred Stock, $298.2 million to the holders of our
Common Stock and $21.4 million to the holders of our Equity Stock, Series A.
Although we have not finalized the calculation of our 2006 taxable income, we
believe that the aggregate dividends paid in 2006 to our shareholders enabled us
to continue to meet our REIT distribution requirements.
During 2006, we paid distributions totaling $19.1 million with respect
to our Preferred Partnership Units. We estimate the 2007 distribution
requirements with respect to the preferred partnership units outstanding at
December 31, 2006, to be approximately $21.6 million.
For 2007, distributions with respect to the Common Stock and Equity
Stock, Series A will be determined based upon our REIT distribution requirements
after taking into consideration distributions to the preferred shareholders. We
anticipate that, at a minimum, quarterly distributions per common share will
remain at $0.50 per common share. For the first quarter of 2007, a quarterly
distribution of $0.50 per common share has been declared by our Board of
Directors.
With respect to the depositary shares of Equity Stock, Series A, we
have no obligation to pay distributions if no distributions are paid to the
common shareholders. To the extent that we do pay common distributions in any
year, the holders of the depositary shares receive annual distributions equal to
the lesser of (i) five times the per share dividend on the common stock or (ii)
$2.45. The depositary shares are non-cumulative, and have no preference over our
Common Stock either as to dividends or in liquidation.
CAPITAL IMPROVEMENT REQUIREMENTS: During 2007, we have budgeted
approximately $65 million for capital improvements for our facilities. Capital
improvements include major repairs or replacements to the facilities, which keep
the facilities in good operating condition and maintain their visual appeal.
Capital improvements do not include costs relating to the development or
expansion of facilities.
DEBT SERVICE REQUIREMENTS: At December 31, 2006, we have total
outstanding debt of approximately $1.8 billion. We do not believe we have any
significant refinancing risks with respect to our debt.
In connection with the Shurgard merger, we assumed approximately $2.0
billion of debt from Shurgard and its affiliates. Through December 31, 2006, we
have retired approximately $671.0 million of such debt. On January 2, 2007, we
retired an additional approximately $429 million of such debt, as discussed
below.
66
In late December 2006, we entered into a short-term unsecured bridge
loan with a commercial bank for borrowings up to $300 million and immediately
borrowed the entire amount, increasing our cash balances to $555.6 million as of
December 31, 2006. A substantial portion of this cash was utilized on January 2,
2007, to retire approximately $429 million of debt assumed from Shurgard that
was secured by substantially all of our wholly-owned facilities in Europe. The
bridge loan was subsequently repaid and terminated on January 10, 2007 with the
proceeds from the issuance of preferred securities.
Our portfolio of real estate facilities remains substantially
unencumbered. At December 31, 2006, we have domestic mortgage debt outstanding
of $266.7 million, which encumbers 102 self-storage facilities with an aggregate
net book value of approximately $674.9 million. In Europe, mortgage debt at
December 31, 2006 totaled of $724.3 million, which encumbers 161 facilities with
an aggregate net book value of approximately $1.4 billion at December 31, 2006.
As indicated above, on January 2, 2007, we retired approximately $429 million of
the debt in Europe which had encumbered a total of 101 facilities.
We anticipate that our retained operating cash flow will continue to be
sufficient to enable us to make scheduled principal payments. See Notes 8 and 9
to our consolidated financial statements for approximate principal maturities of
such borrowings. It is our current intention to fully amortize our outstanding
debt as opposed to refinance debt maturities with additional debt.
Alternatively, we may prepay debt and finance such prepayments with retained
operating cash flow or proceeds from the issuance of preferred securities.
ACQUISITION AND DEVELOPMENT OF FACILITIES: During 2007, we will
continue to seek to acquire additional self-storage facilities from third
parties; however, it is difficult to estimate the amount of third party
acquisitions we will undertake.
At December 31, 2006, we have a development "pipeline" of 48 projects
in the U.S. consisting of self-storage facilities, conversion of space at
facilities that was previously used for containerized storage and expansions to
existing self-storage facilities. At December 31, 2006, we have acquired the
land for all of these projects.
The development and fill-up of these storage facilities is subject to
significant contingencies such as obtaining appropriate governmental approvals.
We estimate that the amount remaining to be spent to complete development to be
approximately $185 million and will be incurred over the next 24 months. The
following table sets forth certain information with respect to our development
pipeline.
67
DEVELOPMENT PIPELINE SUMMARY
AS OF DECEMBER 31, 2006
Total
Number Net estimated Costs incurred
of rentable development through Costs to
projects sq. ft. costs 12/31/06 complete
---------- -------- -------------- ---------------- ---------------
(Amounts in thousands, except number of projects)
U.S. under construction 15 610 $ 46,747 $ 31,833 $ 14,914
U.S. in development, land acquired 33 1,646 140,869 7,669 133,200
Europe under construction, land acquired 8 389 78,465 41,916 36,549
---------- -------- -------------- ---------------- ---------------
Total Development Pipeline 56 2,645 $ 266,081 $ 81,418 $ 184,663
========== ======== ============== ================ ===============
We also have five parcels of land held for development in the United
States with an aggregate cost of $8,620,000 at December 31, 2006.
The development and fill-up of these storage facilities is subject to
significant contingencies such as obtaining appropriate governmental approvals.
We estimate that the amount remaining to be spent to complete development will
be incurred over the next 24 months. Substantially all of the future costs for
the European projects will be funded by the Shurgard European Joint Ventures, in
which we have a 20% interest, and which have a substantial degree of funding by
debt.
68
CONTRACTUAL OBLIGATIONS
Our significant contractual obligations at December 31, 2006 and their
impact on our cash flows and liquidity are summarized below for the years ending
December 31 (amounts in thousands):
Total 2007 2008 2009 2010 2011 Thereafter
------------ ------------ ------------ ------------ ----------- ----------- --------------
Long-term debt:
Public Storage (1) ......... $ 130,143 $ 20,868 $ 9,597 $ 9,515 $ 9,281 $ 22,935 $ 57,947
Shurgard U.S. (2)........... 816,514 92,381 58,896 39,057 47,017 233,262 345,901
Shurgard Europe (2)......... 756,271 453,169 183,379 119,723 - - -
Line of credit and other
short-term bank financing (3). 345,676 345,676 - - - - -
Preferred stock called for
redemption (4) 304,255 304,255 - - - - -
Capital leases (5)............ 40,774 674 714 728 675 1,307 36,676
Operating leases:
Public Storage (6).......... 66,943 10,687 9,414 5,907 2,840 1,910 36,185
Shurgard U.S. (6)........... 64,467 5,437 3,883 3,713 3,779 3,824 43,831
Shurgard Europe (6)......... 146,465 5,623 5,683 5,523 4,831 4,724 120,081
Construction commitments (7).. 51,463 40,834 10,629 - - - -
------------ ------------ ------------ ------------ ----------- ----------- --------------
Total......................... $ 2,722,971 $1,279,604 $ 282,195 $ 184,166 $ 68,423 $ 267,962 $ 640,621
============ ============ ============ ============ =========== =========== ==============
(1) Amounts include interest payments on our notes payable based on their
contractual terms. See Note 8 to our consolidated financial statements for
additional information on our notes payable. Debt to Joint Venture Partner
is not reflected since we have not exercised our option to acquire our
partner's interest.
(2) Amounts include interest payments on our notes payable based on their
contractual terms that we assumed in the merger with Shurgard. On January
2, 2007, we prepaid the (euro)325 million collateralized notes ($429
million at December 31, 2006) at our European operations that were
otherwise payable in 2011. Accordingly, we have not included any other
payments on the (euro)325 million collateralized for any other periods in
the table above. See Note 8 to our consolidated financial statements for
additional information on our notes payable.
(3) Amounts include borrowings under our $200 million revolving line of credit
and $300 million short-term bank financing. See Note 7 to our consolidated
financial statements for additional information on our line of credit and
other short-term bank financing.
(4) In December 2006, we called for redemption our Series T and Series U
Cumulative Preferred Stock, at par, plus accrued dividends. Amounts include
the aggregated redemption value of $302,150,000 of these two series, plus
$2,105,000 in accrued dividends.
(5) This line item reflects amounts due on five European properties with
commitments extending to April 2052 that we assumed in the merger with
Shurgard.
(6) We lease trucks, land, equipment and office space under various operating
leases. Certain leases are cancelable with substantial penalties.
(7) Includes obligations for facilities currently under construction at
December 31, 2006 as described above under "Acquisition and Development of
Real Estate Facilities."
69
In January 2004, we entered into a joint venture partnership with an
institutional investor for the purpose of acquiring up to $125,000,000 of
existing self-storage properties in the U.S. from third parties (the
"Acquisition Joint Venture"). As described more fully in Note 9 to our
consolidated financial statements, our partner's equity contributions with
respect to certain transactions are classified as debt under the caption "Debt
to Joint Venture Partner" in our consolidated balance sheets. At December 31,
2006, our Debt to Joint Venture Partner was $37,258,000. For a six-month period
beginning 54 months after formation, we have the right to acquire our partner's
interest based upon the market value of the properties. If we do not exercise
our option, our partner can elect to purchase our interest in the properties
during a six-month period commencing upon expiration of our six-month option
period. If our partner fails to exercise its option, the Acquisition Joint
Venture will be liquidated and the proceeds will be distributed to the partners
according to the joint venture agreement. We have not included our Debt to Joint
Venture Partner as a contractual obligation in the table above, since we only
have the right, rather than a contractual obligation, to acquire our partner's
interest.
In January 2007, we entered into a contract to purchase one
self-storage facility in Hawaii (total approximate net rental square feet of
79,000) at an aggregate cost of $22,500,000. This contract is subject to
significant contingencies, and there is no assurance that this facility will be
acquired.
OFF-BALANCE SHEET ARRANGEMENTS
At December 31, 2006, we had no off-balance sheet arrangements as
defined under Regulation S-K 303(a)(4) and the instructions thereto.
Stock Repurchase Program: Our Board of Directors 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. During 2004, we
repurchased 445,700 shares for approximately $20.3 million. During 2005, we
repurchased 84,000 shares for approximately $5.0 million. During 2006, we did
not repurchase any shares. From the inception of the repurchase program through
December 31, 2006, we have repurchased a total of 22,201,720 shares of common
stock at an aggregate cost of approximately $567.2 million.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
To limit our exposure to market risk, we principally finance our
operations and growth with permanent equity capital consisting either of common
stock or preferred stock. At December 31, 2006, our debt as a percentage of
total shareholders' equity (based on book values) was 26.2%.
Our preferred stock is not redeemable at the option of the holders.
Except under certain conditions relating to the Company's qualification as a
REIT, the Preferred Stock is not redeemable by the Company prior to the
following dates: Series V - September 30, 2007, Series W - October 6, 2008,
Series X - November 13, 2008, Series Y - January 2, 2009, Series Z - March 5,
2009, Series A - March 31, 2009, Series B - June 30, 2009, Series C - September
13, 2009, Series D - February 28, 2010, Series E - April 27, 2010, Series F -
August 23, 2010, Series G - December 12, 2010, Series H - January 19, 2011,
Series I - May 3, 2011, Series K - August 8, 2011, Series L - October 20, 2011
and Series M - January 9, 2012. On or after the respective dates, each of the
series of Preferred Stock will be redeemable at the option of the Company, in
whole or in part, at $25 per depositary share (or share in the case of the
Series Y), plus accrued and unpaid dividends through the redemption date.
Our market risk sensitive instruments include notes payable, which
totaled $1,466,284,000 at December 31, 2006. The table below summarizes the
annual debt maturities and weighted-average interest rates on our outstanding
debt, excluding the debt acquired in the merger with Shurgard, at the end of
each year (dollar amounts in thousands):
70
2007 2008 2009 2010 2011 Thereafter Total Fair Value
---------- --------- --------- --------- -------- ---------- ---------- ------------
Fixed rate debt (a).... $ 16,098 $ 5,155 $ 5,358 $ 5,404 $19,704 $50,970 $ 102,689 $ 100,249
Variable rate debt (b). 345,000 - - - - - 345,000 345,000
---------- --------- --------- --------- -------- ---------- ---------- ------------
$ 361,098 $ 5,155 $ 5,358 $ 5,404 $19,704 $50,970 $ 447,689 $ 445,249
========== ========= ========= ========= ======== ========== ========== ============
(a) Average interest rate of 5.25%.
(b) Amounts include borrowings under our line of credit and other short-term
bank financings, which expire in 2007, which incurred average variable
interest rates at December 31, 2006 of 5.66%.
We are exposed to changes in interest rates primarily from the floating
rate debt arrangements we acquired in the merger with Shurgard.
We have foreign currency exposures related to our investment in the
construction, acquisition, and operation of storage centers in countries outside
the U.S. to the extent such activities are financed with financial instruments
or equity denominated in non-functional currencies. The aggregate book value of
our real estate and intangibles was approximately $1.6 billion at December 31,
2006. Since all foreign debt is denominated in the corresponding functional
currency, our currency exposure is limited to our equity investment in those
countries. Countries in which Shurgard had exposure to foreign currency
fluctuations include Belgium, France, the Netherlands, Sweden, Denmark, Germany
and the United Kingdom.
The table below summarizes annual debt maturities and weighted-average
interest rates on outstanding debt that we acquired in the merger with Shurgard
at the end of each year (based on relevant LIBOR of 5.30% and a EURIBOR of
3.633% at December 31, 2006 and the applicable forward curve for following
years) and fair values required to evaluate our expected cash-flows under debt
agreements and our sensitivity to interest rate changes at December 31, 2006
(dollar amounts in thousands).
2007 2008 2009 2010 2011 Thereafter Total Fair Value
---------- ---------- ----------- ----------- ---------- ------------ ----------- -------------
Fixed rate debt........ $ 56,386 $ 25,687 $ 7,175 $ 9,230 $ 209,311 $ 323,100 $ 630,889 $642,315
Average interest rate.. 6.61% 6.61% 6.60% 6.61% 5.88% 5.88%
----------------------------------------------------------------------------------------------------------------------------
Variable rate debt..... $ 892 $ 326 $ 349 $ 6,861 $ - $ - $8,428 $ 8,428
Average interest rate.. 7.30% 7.08% 7.07% 7.19%
----------------------------------------------------------------------------------------------------------------------------
Variable rate EURIBOR
debt (1)............. $431,135 $ 170,449 $ 116,094 $ - $ - $ - $ 717,678 $717,678
Average interest rate.. 6.07% 6.23% 6.25%
----------------------------------------------------------------------------------------------------------------------------
Interest rate swaps
Swap on EURIBOR........ $ - $ 314 $ 1,041 $ - $ 4,908 $ - $ 6,263 $ 6,263
(1) First Shurgard and Second Shurgard have senior credit agreements
denominated in euros to borrow, in aggregate, up to (euro)271 million
($357.5 million as of December 31, 2006). As of December 31, 2006, the
available amount under those credit facilities was in aggregate (euro)52
million ($68.6 million).
At December 31, 2006, through our merger with Shurgard, we were party
to pay-fixed, receive-variable interest rate swaps. The notional amounts, the
weighted-average pay rates and the terms of these agreements are summarized as
follows:
71
2007 2008 2009 2010 2011 Thereafter
------------ ----------- ---------- ---------- --------- ----------
Notional amounts (in millions).. $ 748.1 $ 653.4 $ 520.2 $ 428.8 $ - $ -
Weighted average interest rate.. 4.99% 4.83% 4.54% 4.23% - -
Based on our outstanding variable-rate EURIBOR debt and interest rate
swaps at December 31, 2006, a hypothetical increase in the interest rates of 100
basis points would cause the value of our derivative financial instruments to
increase by $24.5 million. Conversely, a hypothetical decrease in the interest
rates of 100 basis points would cause the value of our derivative financial
instruments to decrease by $25.0 million.
On January 2, 2007, we prepaid the (euro)325 million collateralized
notes ($429 million at December 31, 2006) at our European operations that were
otherwise payable in 2011. To fund the prepayment of these notes, we entered
into and used proceeds from a $300 million bridge loan, which was fully drawn at
year end 2006, together with borrowings of approximately $45 million under our
existing revolving credit agreement and cash on hand. Subsequently in January
2007, both the bridge loan and revolver credit facility were repaid. We also
terminated the related European currency and interest rate hedges. Accordingly,
the remaining debt in Europe relates to the joint venture properties, in which
we have a 20% equity interest, but which are consolidated for financial
reporting purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company at December 31, 2006 and
December 31, 2005 and for each of the three years in the period ended December
31, 2006 and the report of Ernst & Young LLP, Independent Registered Public
Accounting Firm, thereon and the related financial statement schedule, are
included elsewhere herein. Reference is made to the Index to Financial
Statements and Schedules in Item 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in reports the
Company files and submits under the Exchange Act, is recorded, processed,
summarized and reported within the time periods specified in accordance with SEC
guidelines and that such information is communicated to the Company's
management, including its Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure based on the definition
of "disclosure controls and procedures" in Rules 13a-15(e) of the Exchange Act.
In designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures in
reaching that level of reasonable assurance. Also, the Company has investments
in certain unconsolidated entities. As the Company does not control or manage
these entities, its disclosure controls and procedures with respect to such
entities are substantially more limited than those it maintains with respect to
its consolidated subsidiaries.
As of December 31, 2006, the Company carried out an evaluation, under
the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and the Company's Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Act of 1934 as amended). The scope
of our evaluation excluded the operations of Shurgard Self-Storage SCA
("Shurgard Europe"), our subsidiary based in Europe. For the year ended December
31, 2006, our total revenues were $1.4 billion, of which Shurgard Europe
represented $65 million; our total net assets at December 31, 2006 were $8.2
billion, of which Shurgard Europe represented $445 million. Based on that
evaluation, and considering the relative significance of Shurgard Europe to our
operations, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were effective
as of December 31, 2006.
72
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Exchange
Act Rules 13a-15(f). Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
we conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control-Integrated
Framework issued by the Committee on Sponsoring Organizations of the Treadway
Commission. The scope of our evaluation excluded the operations of Shurgard
Self-Storage SCA ("Shurgard Europe"), our subsidiary based in Europe. For the
year ended December 31, 2006, our total revenues were $1.4 billion, of which
Shurgard Europe represented $65 million; our total net assets at December 31,
2006 were $8.2 billion, of which Shurgard Europe represented $445 million. Based
on our evaluation under the framework in Internal Control-Integrated Framework,
and considering the relative significance of Shurgard Europe, our management
concluded that our internal control over financial reporting was effective as of
December 31, 2006.
Our management's assessment of the effectiveness of our internal
control over financial reporting as of December 31, 2006 has been audited by
Ernst & Young LLP, an independent registered public accounting firm, as stated
in their report which is included herein.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any changes in our internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the quarter to which this report relates that have
materially affected, or are reasonable likely to materially affect, our internal
control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not Applicable.
73
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Public Storage, Inc.:
We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Public
Storage, Inc. maintained effective internal control over financial reporting as
of December 31, 2006, based on criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Public Storage,
Inc.'s management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on
management's assessment and an opinion on the effectiveness of the company's
internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
As indicated in the accompanying Management's Report on Internal
Controls, management's assessment of and conclusion on the effectiveness of
internal control over financial reporting did not include the internal controls
of Shurgard Self Storage SCA and subsidiaries, which is included in the 2006
consolidated financial statements of Public Storage, Inc. and constituted $2,108
million and $445 million of total and net assets, respectively, as of December
31, 2006 and $65 million of revenues and a net loss of $43 million for the year
then ended. Our audit of internal control over financial reporting of Public
Storage, Inc. and subsidiaries also did not include an evaluation of the
internal control over financial reporting of Shurgard Self Storage SCA and
subsidiaries.
In our opinion, management's assessment that Public Storage, Inc. maintained
effective internal control over financial reporting as of December 31, 2006, is
fairly stated, in all material respects, based on the COSO criteria. Also, in
our opinion, Public Storage, Inc. maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2006,
based on the COSO criteria.
74
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
Public Storage, Inc. as of December 31, 2006 and 2005, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 2006 of Public Storage, Inc.
and our report dated March 10, 2006 expressed an unqualified opinion thereon.
Ernst & Young LLP
Los Angeles, CA
February 28, 2007
75
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item with respect to directors is
hereby incorporated by reference to the material appearing in the Company's
definitive proxy statement filed in connection with the annual shareholders'
meeting scheduled to be held on May 3, 2007 (the "Proxy Statement") under the
caption "Election of Directors."
The information required by this item with respect to the nominating
process, the audit committee and the audit committee financial expert is hereby
incorporated by reference to the material appearing in the Proxy Statement under
the caption "Corporate Governance."
The information required by this item with respect to Section 16(a)
compliance is hereby incorporated by reference to the material appearing in the
Proxy Statement under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance."
The information required by this item with respect to a code of ethics
is hereby incorporated by reference to the material appearing in the Proxy
Statement under the caption "Corporate Governance." Any amendments to or waivers
of the code of ethics granted to the Company's executive officers or the
controller will be published promptly on our website or by other appropriate
means in accordance with SEC rules and regulations.
The following is a biographical summary of the current executive
officers of the Company:
Ronald L. Havner, Jr., age 49, has been the Vice-Chairman, Chief
Executive Officer and a director of Public Storage since November 2002 and
President since July 1, 2005. Mr. Havner has been Chairman of the Company's
affiliate, PS Business Parks, Inc. (PSB), since March 1998 and was Chief
Executive Officer of PSB from March 1998 until August 2003. Mr. Havner joined
Public Storage in 1986. He is also a member of the Board of Governors and the
Executive Committee of the National Association of Real Estate Investment
Trusts, Inc. (NAREIT) and a director of Pac Van Inc. and Union BanCal
Corporation.
John Reyes, age 46, a certified public accountant, joined the Company
in 1990 and was Controller of the Company from 1992 until December 1996 when he
became Chief Financial Officer. He became a Vice President of the Company in
November 1995 and a Senior Vice President of the Company in December 1996. From
1983 to 1990, Mr. Reyes was employed by Ernst & Young.
John S. Baumann, age 46, became Senior Vice President and Chief Legal
Officer of the Company in June 2003. From 1998 to 2002, Mr. Baumann was Senior
Vice President and General Counsel of Syncor International Corporation, an
international high technology health care services company. From 1995 to 1998,
he was Associate General Counsel of KPMG LLP, an international accounting, tax
and consulting firm.
John E. Graul, age 55, became Senior Vice President and President,
Self-Storage Operations, in February 2004, with overall responsibility for the
Company's national operations. From 1982 until joining the Company, Mr. Graul
was employed by McDonald's Corporation where he served in various management
positions, most recently as Vice President and General Manager - Pacific Sierra
Region.
David F. Doll, age 48, became Senior Vice President and President, Real
Estate Group, in February 2005, with responsibility for Company's real estate
activities, including property acquisitions, developments, and repackagings.
Before joining the Company, Mr. Doll was Senior Executive Vice President of
Development for Westfield Corporation, a major international owner and operator
of shopping malls, where he was employed since 1995.
76
Candace N. Krol, age 45, became Senior Vice Present of Human Resources
in September 2005. From 1985 until joining the Company, Ms. Krol was employed by
Parsons Corporation, a global engineering and construction firm, where she
served in various management positions, most recently as Vice President of Human
Resources for the Infrastructure and Technology global business unit.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the captions
"Corporate Governance," "Executive Compensation," "Compensation Committee
Interlocks and Insider Participation," and "Report of the Compensation
Committee."
77
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
-------------------------------------------------------------------
RELATED SHAREHOLDER MATTERS
---------------------------
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the captions
"Stock Ownership of Certain Beneficial Owners and Management."
The following table sets forth information as of December 31, 2006 on
the Company's equity compensation plans:
Number of
securities to be Weighted
issued upon average Number of
exercise of exercise price securities
outstanding of outstanding remaining available
options, options, for future issuance
warrants and warrants and under equity
rights rights compensation plans
----------------- ---------------- --------------------
Equity compensation plans approved
by security holders (a)............. 2,149,535 (b) $ 58.28 1,499,700
Equity compensation plans not
approved by security holders (c).... 69,869 $ 23.33 831,671
The Company's stock option and stock incentive plans are described more
fully in Note 14 to the consolidated financial statements. All plans other than
the 2000 and 2001 Non-Executive/Non-Director Plans, were approved by the
Company's shareholders.
Includes 616,470 restricted stock units that, if and when vested, will
be settled in shares of common stock of the Company on a one for one basis.
The outstanding options granted under plans not approved by the
Company's shareholders were granted under the Company's 2000 and 2001
Non-Executive/Non-Director Plan, which does not allow participation by the
Company's executive officers and directors. The principal terms of these plans
are as follows: (1) 2,500,000 shares of common stock were authorized for grant,
(2) this plan is administered by the Equity Awards Committee, except that grants
in excess of 100,000 shares to any one person requires approval by the Executive
Equity Awards Committee, (3) options are granted at fair market value on the
date of grant, (4) options have a ten year term and (5) options vest over three
years in equal installments, or as indicated by the applicable grant agreement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
------------------------------------------------------------------
INDEPENDENCE
------------
The information required by this item is hereby incorporated by
reference to the material appearing in the Proxy Statement under the captions
"Corporate Governance" and "Certain Relationships and Related Transactions and
Legal Proceedings."
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item with respect to fees and services
provided by the Company's independent auditors is hereby incorporated by
reference to the material appearing in the Proxy Statement under the caption
"Ratification of Auditors--Fees Billed to the Company by Ernst & Young LLP for
2006 and 2005".
78
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
------------------------------------------
a. 1. Financial Statements
The financial statements listed in the accompanying Index to Financial
Statements and Schedules hereof are filed as part of this report.
2. Financial Statement Schedules
The financial statements schedules listed in the accompanying Index to
Financial Statements and Schedules are filed as part of this report.
3. Exhibits
See Index to Exhibits contained herein.
b. Exhibits:
See Index to Exhibits contained herein.
c. Financial Statement Schedules
Not applicable.
79
PUBLIC STORAGE, INC.
INDEX TO EXHIBITS(1)
(Items 15(a)(3) and 15(c))
3.1 Restated Articles of Incorporation of Storage Equities, Inc. Filed with
Registrant's Registration Statement on Form S-4 (SEC File No. 33-54557)
and incorporated herein by reference.
3.2 Certificate of Amendment of Articles of Incorporation of Storage
Equities, Inc. Filed with Registrant's Registration Statement on Form
S-3/A (SEC File No. 33-63947) and incorporated herein by reference.
3.3 Certificate of Amendment of Articles of Incorporation of Public Storage,
Inc. Filed with Registrant's Registration Statement on Form S-3 (SEC File
No. 333-18395) and incorporated herein by reference.
3.4 Certificate of Determination of Preferences of 10% Cumulative Preferred
Stock, Series A of Storage Equities, Inc. Filed with Registrant's
Registration Statement on Form S-4 (SEC File No. 33-54557) and
incorporated herein by reference.
3.5 Amendment to Certificate of Determination of Preferences of 10%
Cumulative Preferred Stock, Series A of Public Storage, Inc. Filed with
the Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2004 and incorporated herein by reference.
3.6 Certificate of Determination of Preferences of 9.20% Cumulative Preferred
Stock, Series B of Storage Equities, Inc. Filed with Registrant's
Registration Statement on Form S-4 (SEC File No. 33-54557) and
incorporated herein by reference.
3.7 Amendment to Certificate of Determination of Preferences of 9.20%
Cumulative Preferred Stock, Series B of Storage Equities, Inc. Filed with
Registrant's Registration Statement on Form S-4 (SEC File No. 33-56925)
and incorporated herein by reference.
3.8 Amendment to Certificate of Determination of Preferences of 9.20%
Cumulative Preferred Stock, Series B of Public Storage, Inc. Filed with
the Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2004 and incorporated herein by reference.
3.9 Certificate of Determination of Preferences of 8.25% Convertible
Preferred Stock of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form S-4 (SEC File No. 33-54557) and
incorporated herein by reference.
3.10 Certificate of Determination of Preferences of Adjustable Rate Cumulative
Preferred Stock, Series C of Storage Equities, Inc. Filed with
Registrant's Registration Statement on Form S-4 (SEC File No. 33-54557)
and incorporated herein by reference.
3.11 Amendment to Certificate of Determination of Preferences of Adjustable
Rate Cumulative Preferred Stock, Series C of Public Storage, Inc. Filed
with Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2004 and incorporated herein by reference.
3.12 Certificate of Determination of Preferences of 9.50% Cumulative Preferred
Stock, Series D of Storage Equities, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the 9.50% Cumulative
Preferred Stock, Series D and incorporated herein by reference.
80
3.13 Amendment to Certificate of Determination of Preferences of 9.50%
Cumulative Preferred Stock, Series D of Public Storage, Inc. Filed with
Registrant's Annual Report on Form 10-K for the year ended December 31,
2004 and incorporated herein by reference.
3.14 Certificate of Determination of Preferences of 10% Cumulative Preferred
Stock, Series E of Storage Equities, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the 10% Cumulative
Preferred Stock, Series E and incorporated herein by reference.
3.15 Amendment to Certificate of Determination of Preferences of 10%
Cumulative Preferred Stock, Series E of Public Storage, Inc. Filed with
Registrant's Current Report on Form 8-K dated April 25, 2005 and
incorporated herein by reference.
3.16 Certificate of Determination of Preferences of 9.75% Cumulative Preferred
Stock, Series F of Storage Equities, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the 9.75% Cumulative
Preferred Stock, Series F and incorporated herein by reference.
3.17 Amendment to Certificate of Determination of Preferences of 9.750%
Cumulative Preferred Stock, Series F of Public Storage, Inc. Filed with
Registrant's Current Report on Form 8-K dated August 17, 2005 and
incorporated herein by reference.
3.18 Certificate of Determination of Preferences of 8-7/8% Cumulative
Preferred Stock, Series G of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8-7/8% Cumulative Preferred
Stock, Series G and incorporated herein by reference.
3.19 Certificate of Determination of Preferences of 8.45% Cumulative Preferred
Stock, Series H of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8.45% Cumulative Preferred Stock,
Series H and incorporated herein by reference.
3.20 Certificate of Determination of Preferences of Convertible Preferred
Stock, Series CC of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form S-4 (SEC File No. 333-03749) and
incorporated herein by reference.
3.21 Certificate of Correction of Certificate of Determination of Preferences
of Convertible Participating Preferred Stock of Public Storage, Inc.
Filed with Registrant's Registration Statement on Form S-4 (SEC File No.
333-08791) and incorporated herein by reference.
3.22 Certificate of Determination of Preferences of 8 5/8% Cumulative
Preferred Stock, Series I of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8 5/8% Cumulative Preferred
Stock, Series I and incorporated herein by reference.
3.23 Certificate of Determination of Equity Stock, Series A of Public Storage,
Inc. Filed with Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1997 and incorporated herein by
reference.
3.24 Certificate of Determination of Preferences of 8% Cumulative Preferred
Stock, Series J of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8% Cumulative Preferred Stock,
Series J and incorporated herein by reference.
81
3.25 Certificate of Correction of Certificate of Determination of Preferences
of 8.25% Convertible Preferred Stock of Public Storage, Inc. Filed with
Registrant's Registration Statement on Form S-4 (SEC File No. 333-61045)
and incorporated herein by reference.
3.26 Certificate of Determination of Preferences of 8 1/4% Cumulative
Preferred Stock, Series K of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8 1/4% Cumulative Preferred
Stock, Series K and incorporated herein by reference.
3.27 Certificate of Determination of Preferences of 8 1/4% Cumulative
Preferred Stock, Series L of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8 1/4% Cumulative Preferred
Stock, Series L and incorporated herein by reference.
3.28 Certificate of Determination of Preferences of 8.75% Cumulative Preferred
Stock, Series M of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A relating to the Depositary Shares
Each Representing 1/1,000 of a Share of 8.75% Cumulative Preferred Stock,
Series M and incorporated herein by reference.
3.29 Certificate of Determination of Equity Stock, Series AA of Public
Storage, Inc. Filed with Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1999 and incorporated herein by
reference.
3.30 Certificate Decreasing Shares Constituting Equity Stock, Series A of
Public Storage, Inc. Filed with Registrant's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1999 and incorporated
herein by reference.
3.31 Certificate of Determination of Equity Stock, Series A of Public Storage,
Inc. Filed with Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1999 and incorporated herein by
reference.
3.32 Certificate of Amendment of Certificate of Determination of Equity Stock,
Series A of Public Storage, Inc. Filed with Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2001 and
incorporated herein by reference.
3.33 Certificate of Determination of Equity Stock, Series AAA of Public
Storage, Inc. Filed with Registrant's Current Report on Form 8-K dated
November 15, 1999 and incorporated herein by reference.
3.34 Certificate of Determination of Preferences of 9.5% Cumulative Preferred
Stock, Series N of Public Storage, Inc. Filed with Registrant's Annual
Report on Form 10-K for the year ended December 31, 1999 and incorporated
herein by reference.
3.35 Certificate of Determination of Preferences of 9.125% Cumulative
Preferred Stock, Series O of Public Storage, Inc. Filed with Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2000 and incorporated herein by reference.
3.36 Certificate of Determination of Preferences of 8.75% Cumulative Preferred
Stock, Series P of Public Storage, Inc. Filed with Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2000 and
incorporated herein by reference.
82
3.37 Certificate of Determination of Preferences of 8.600% Cumulative
Preferred Stock, Series Q of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A/A (No. 001-08389) relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 8.600%
Cumulative Preferred Stock, Series Q and incorporated herein by
reference.
3.38 Certificate of Amendment of Certificate of Determination of Equity Stock,
Series A of Public Storage, Inc. Filed with Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2001 and
incorporated herein by reference.
3.39 Certificate of Determination of Preferences of 8.000% Cumulative
Preferred Stock, Series R of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 8.000% Cumulative Preferred Stock,
Series R and incorporated herein by reference.
3.40 Certificate of Determination of Preferences of 7.875% Cumulative
Preferred Stock, Series S of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.875% Cumulative Preferred Stock,
Series S and incorporated herein by reference.
3.41 Certificate of Determination of Preferences of 7.625% Cumulative
Preferred Stock, Series T of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock,
Series T and incorporated herein by reference.
3.42 Certificate of Determination of Preferences of 7.625% Cumulative
Preferred Stock, Series U of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to Depositary Shares Each
Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock,
Series U and incorporated herein by reference.
3.43 Amendment to Certificate of Determination of Preferences of 7.625%
Cumulative Preferred Stock, Series T of Public Storage, Inc. Filed with
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2002 and incorporated herein by reference.
3.44 Certificate of Determination of Preferences of 7.500% Cumulative
Preferred Stock, Series V of Public Storage, Inc. Filed with Registrant's
Registration Statement Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.500% Cumulative Preferred Stock,
Series V and incorporated herein by reference.
3.45 Certificate of Determination of Preferences of 6.500% Cumulative
Preferred Stock, Series W of Public Storage, Inc. Filed with Registrant's
Registration Statement Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.500% Cumulative Preferred Stock,
Series W and incorporated herein by reference.
3.46 Certificate of Determination of Preferences 6.450% Cumulative Preferred
Stock, Series X of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.450% Cumulative Preferred Stock,
Series X and incorporated herein by reference.
3.47 Certificate of Determination of Preferences of 6.85% Cumulative Preferred
Stock, Series Y of Public Storage, Inc. Filed with the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2004 and incorporated herein by reference.
3.48 Certificate of Determination of Preferences of 6.250% Cumulative
Preferred Stock, Series Z of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.250% Cumulative Preferred Stock,
Series Z and incorporated herein by reference.
3.49 Certificate of Determination of Preferences of 6.125% Cumulative
Preferred Stock, Series A of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.125% Cumulative Preferred Stock,
Series A and incorporated herein by reference.
83
3.50 Certificate of Determination of Preferences of 6.40% Cumulative Preferred
Stock, Series NN of Public Storage, Inc. Filed with Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2004 and incorporated herein by reference.
3.51 Certificate of Determination of Preferences of 7.125% Cumulative
Preferred Stock, Series B of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.125% Cumulative Preferred Stock,
Series B and incorporated herein by reference.
3.52 Certificate of Determination of Preferences of 6.60% Cumulative Preferred
Stock, Series C of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.60% Cumulative Preferred Stock,
Series C and incorporated herein by reference.
3.53 Certificate of Determination of Preferences of 6.18% Cumulative Preferred
Stock, Series D of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.18% Cumulative Preferred Stock,
Series D and incorporated herein by reference.
3.54 Certificate of Determination of Preferences of 6.75% Cumulative Preferred
Stock, Series E of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a share of 6.75% Cumulative Preferred Stock,
Series E and incorporated herein by reference.
3.55 Certificate of Determination of Preferences of 6.45% Cumulative Preferred
Stock, Series F of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.45% Cumulative Preferred Stock,
Series F and incorporated herein by reference.
3.56 Amendment to Certificate of Determination of Preferences 6.45% Cumulative
Preferred Stock, Series F of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.45% Cumulative Preferred Stock,
Series F and incorporated herein by reference.
3.57 Certificate of Determination of Preferences of 7.00% Cumulative Preferred
Stock, Series G of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.00% Cumulative Preferred Stock,
Series G and incorporated herein by reference.
3.58 Certificate of Determination of Preferences of 6.95% Cumulative Preferred
Stock, Series H of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.95% Cumulative Preferred Stock,
Series H and incorporated herein by reference.
3.59 Certificate of Determination of Preferences of 7.25% Cumulative Preferred
Stock, Series I of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.25% Cumulative Preferred Stock,
Series I and incorporated herein by reference.
3.60 Certificate of Determination of Preferences of 7.25% Cumulative Preferred
Stock, Series J of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.25% Cumulative Preferred Stock,
Series J and incorporated herein by reference.
84
3.61 Certificate of Determination of Preferences of 7.25% Cumulative Preferred
Stock, Series K of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.25% Cumulative Preferred Stock,
Series K and incorporated herein by reference.
3.62 Certificate of Determination of Preferences of 6.75% Cumulative Preferred
Stock, Series L of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.75% Cumulative Preferred Stock,
Series L and incorporated herein by reference.
3.63 Certificate of Determination of Preferences of 6.625% Cumulative
Preferred Stock, Series M of Public Storage, Inc. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 6.625% Cumulative Preferred Stock,
Series M and incorporated herein by reference
3.64 Amendment to Certificate of Determination of Determination of Preferences
of Cumulative Preferred Stock, Series G (8.875%), H (8.45%), I (8.625%),
J (8%), K (8.25%), L (8.25%), M (8.75%), N (9.5%), O (9.125%) and P
(8.75%) of Public Storage, Inc. Filed with Registrant's Current Report on
Form 8-K dated November 22, 2005 and incorporated herein by reference.
3.65 Amendment to Certificate of Determination of Determination of Preferences
of Cumulative Preferred Stock, Series Q (8.60%) and R (8.00%) of Public
Storage, Inc. Filed with Registrant's Current Report on Form 8-K dated
October 18, 2006 and incorporated herein by reference.
3.66 Amendment to Certificate of Determination of Determination of Preferences
of Cumulative Preferred Stock, Series S (7.875%). Filed with Registrant's
Current Report on Form 8-K dated January 4, 2007 and incorporated herein
by reference.
3.67 Revised Bylaws of Storage Equities, Inc. Filed with Registrant's
Registration Statement on Form S-4/A (SEC File No. 33-64971) and
incorporated herein by reference.
3.68 Amendment to Bylaws of Public Storage, Inc. adopted on May 9, 1996. Filed
with Registrant's Registration Statement on Form S-4 (Sec File No.
333-03749) and incorporated herein by reference.
3.69 Amendment to Bylaws of Public Storage, Inc. adopted on June 26, 1997.
Filed with Registrant's Registration Statement on Form S-3/A (SEC File
No. 333-41123) and incorporated herein by reference.
3.70 Amendment to Bylaws of Public Storage, Inc. adopted on January 6, 1998.
Filed with Registrant's Registration Statement on Form S-3/A (SEC File
No. 333-41123) and incorporated herein by reference.
3.71 Amendment to Bylaws of Public Storage, Inc. adopted on February 10, 1998.
Filed with Registrant's Current Report on Form 8-K dated February 10,
1998 and incorporated herein by reference.
3.72 Amendment to Bylaws of Public Storage, Inc. adopted on March 4, 1999.
Filed with Registrant's Current Report on Form 8-K dated March 4, 1999
and incorporated herein by reference.
3.73 Amendment to Bylaws of Public Storage, Inc. adopted on May 6, 1999. Filed
with Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999 and incorporated herein by reference.
85
3.74 Amendment to Bylaws of Public Storage, Inc. adopted on November 7, 2002.
Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2002 and incorporated herein by reference.
3.75 Amendment to Bylaws of Public Storage, Inc. adopted on May 8, 2003. Filed
with Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2003 and incorporated herein by reference.
3.76 Amendment to Bylaws of Public Storage, Inc. adopted on August 5, 2003.
Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2003 and incorporated herein by reference.
3.77 Amendment to Bylaws of Public Storage, Inc. adopted on March 11, 2004.
Filed with Registrant's Annual Report on Form 10-K for the year ended
December 31, 2003 and incorporated herein by reference.
3.78 Amendment to Bylaws of Public Storage, Inc. effective August 22, 2006.
Filed with Registrant's Report on Form 8-K filed on August 23, 2006 and
incorporated herein by reference.
3.79 Amendment to Bylaws of Public Storage, Inc. effective January 1, 2007.
Filed with Registrant's Report on Form 8-K filed on December 28, 2006 and
incorporated herein by reference.
10.1 Amended Management Agreement between Registrant and Public Storage
Commercial Properties Group, Inc. dated as of February 21, 1995. Filed
with Registrant's Annual Report on Form 10-K for the year ended December
31, 1994 and incorporated herein by reference.
10.2 Second Amended and Restated Management Agreement by and among Registrant
and the entities listed therein dated as of November 16, 1995. Filed with
PS Partners, Ltd.'s Annual Report on Form 10-K for the year ended
December 31, 1996 (SEC File No. 001-11186) and incorporated herein by
reference.
10.3 Limited Partnership Agreement of PSAF Development Partners, L.P. Filed
with Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1997 and incorporated herein by reference.
10.4 Agreement of Limited Partnership of PS Business Parks, L.P. Filed with PS
Business Parks, Inc.'s Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1998 (SEC File No. 001-10709) and incorporated
herein by reference.
10.5 Amended and Restated Agreement of Limited Partnership of Storage Trust
Properties, L.P. (March 12, 1999). Filed with Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1999 and
incorporated herein by reference.
10.6 Limited Partnership Agreement of PSAC Development Partners, L.P. Filed
with Registrant's Current Report on Form 8-K dated November 15, 1999 and
incorporated herein by reference.
10.7 Agreement of Limited Liability Company of PSAC Storage Investors, L.L.C.
Filed with Registrant's Current Report on Form 8-K dated November 15,
1999 and incorporated herein by reference.
10.8 Amended and Restated Agreement of Limited Partnership of PSA
Institutional Partners, L.P. Filed with Registrant's Annual Report on
Form 10-K for the year ended December 31, 1999 and incorporated herein by
reference.
10.9 Amendment to Amended and Restated Agreement of Limited Partnership of PSA
Institutional Partners, L.P. Filed with Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2000 and incorporated
herein by reference.
86
10.10 Second Amendment to Amended and Restated Agreement of Limited Partnership
of PSA Institutional Partners, L.P. Filed with Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2004 and
incorporated herein by reference.
10.11 Third Amendment to Amended and Restated Agreement of Limited Partnership
of PSA Institutional Partners, L.P. Filed with Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2004 and
incorporated herein by reference.
10.12 Limited Partnership Agreement of PSAF Acquisition Partners, L.P. Filed
with Registrant's Annual Report on Form 10-K for the year ended December
31, 2003 and incorporated herein by reference.
10.13 Credit Agreement by and among Registrant, Wells Fargo Bank, National
Association, as agent, and the financial institutions party thereto dated
as of November 1, 2001. Filed with Registrant's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 2001 and incorporated
herein by reference.
10.14 Second Amendment to Credit Agreement by and among Registrant, Wells Fargo
Bank, National Association, as agent, and the financial institutions
party thereto dated as of March 25, 2004. Filed with Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2004 and incorporated herein by reference.
10.15 Note Purchase Agreement with respect to $100,000,000 of Senior Notes of
Storage Trust Properties, L.P. dated as of January 20, 1997. Filed with
Storage Trust Realty's Annual Report on Form 10-K for the year ended
December 31, 1996 (SEC File No. 001-13462) and incorporated herein by
reference.
10.16 Agreement and Plan of Merger by and among Storage Trust Realty,
Registrant and Newco Merger Subsidiary, Inc. dated as of November 12,
1998. Filed with Registrant's Registration Statement on Form S-4 (SEC
File No. 333-68543) and incorporated herein by reference.
10.17 Amendment No. 1 to Agreement and Plan of Merger by and among Storage
Trust Realty, Registrant, Newco Merger Subsidiary, Inc. and STR Merger
Subsidiary, Inc. dated as of January 19, 1999. Filed with Registrant's
Registration Statement on Form S-4/A (SEC File No. 333-68543) and
incorporated herein by reference.
10.18 Deposit Agreement dated as of January 14, 2000 among Registrant,
BankBoston, N.A. and the holders of the depositary receipts evidencing
the Depositary Shares Each Representing 1/1,000 of a Share of Equity
Stock, Series A. Filed with Registrant's Registration Statement on Form
8-A/A relating to the Depositary Shares Each Representing 1/1,000 of a
Share of Equity Stock, Series A and incorporated herein by reference.
10.19 Deposit Agreement dated as of January 18, 2002 among Registrant,
Equiserve Trust Company, N.A. and the holders of the depositary receipts
evidencing the Depositary Shares Each Representing 1/1,000 of a Share of
7.625% Cumulative Preferred Stock, Series T. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock,
Series T and incorporated herein by reference.
10.20 Deposit Agreement dated as of February 19, 2002 among Registrant,
Equiserve Trust Company, N.A. and the holders of the depositary receipts
evidencing the Depositary Shares Each Representing 1/1,000 of a Share of
7.625% Cumulative Preferred Stock, Series U. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.625% Cumulative Preferred Stock,
Series U and incorporated herein by reference.
10.21 Deposit Agreement dated as of September 30, 2002 among Registrant,
Equiserve Trust Company, N.A. and the holders of the depositary receipts
evidencing the Depositary Shares Each Representing 1/1,000 of a Share of
7.500% Cumulative Preferred Stock, Series V. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a Share of 7.500% Cumulative Preferred Stock,
Series V and incorporated herein by reference.
87
10.22 Deposit Agreement dated as of October 6, 2003 among Registrant,
Equiserve, Inc., Equiserve Trust Company, N.A. and the holders of the
depositary receipts evidencing the Depositary Shares Each Representing
1/1,000 of a Share of 6.500% Cumulative Preferred Stock, Series W. Filed
with Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 6.500%
Cumulative Preferred Stock, Series W and incorporated herein by
reference.
10.23 Deposit Agreement dated as of November 13, 2003 among Registrant,
Equiserve, Inc., Equiserve Trust Company, N.A. and the holders of the
depositary receipts evidencing the Depositary Shares Each Representing
1/1,000 of a Share of 6.450% Cumulative Preferred Stock, Series X. Filed
with Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 6.450%
Cumulative Preferred Stock, Series X and incorporated herein by
reference.
10.24 Deposit Agreement dated as of March 5, 2004 among Registrant, Equiserve,
Inc., Equiserve Trust Company, N.A. and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of a
Share of 6.250% Cumulative Preferred Stock, Series Z. Filed with
Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 6.250%
Cumulative Preferred Stock, Series Z and incorporated herein by
reference.
10.25 Deposit Agreement dated as of March 31, 2004 among Registrant, Equiserve,
Inc., Equiserve Trust Company, N.A. and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of a
Share of 6.125% Cumulative Preferred Stock, Series A. Filed with
Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 6.125%
Cumulative Preferred Stock, Series A and incorporated herein by
reference.
10.26 Deposit Agreement dated as of June 30, 2004 among Registrant, Equiserve,
Inc., Equiserve Trust Company, N.A. and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of a
Share of 7.125% Cumulative Preferred Stock, Series B. Filed with
Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 7.125%
Cumulative Preferred Stock, Series B and incorporated herein by
reference.
10.27 Deposit Agreement dated as of September 13, 2004 among Registrant,
Equiserve, Inc., Equiserve Trust Company, N.A. and the holders of the
depositary receipts evidencing the Depositary Shares Each Representing
1/1,000 of a Share of 6.60% Cumulative Preferred Stock, Series C. Filed
with Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 6.60%
Cumulative Preferred Stock, Series C and incorporated herein by
reference.
10.28 Deposit Agreement dated as of February 28, 2005 among Registrant,
Equiserve, Inc., Equiserve Trust Company, N.A. and the holders of the
depositary receipts evidencing the Depositary Shares Each Representing
1/1,000 of a Share of 6.18% Cumulative Preferred Stock, Series D. Filed
with Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 6.18%
Cumulative Preferred Stock, Series D and incorporated herein by
reference.
10.29 Deposit Agreement dated as of April 27, 2005 among Registrant, Equiserve,
Inc., Equiserve Trust Company, N.A. and the holders of the depositary
receipts evidencing the Depositary Shares Each Representing 1/1,000 of a
Share of 6.75% Cumulative Preferred Stock, Series E. Filed with
Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a Share of 6.75%
Cumulative Preferred Stock, Series E and incorporated herein by
reference.
10.30 Deposit Agreement dated as of August 23, 2005 among Registrant,
Computershare Shareholder Services, Inc., Equiserve Trust Company, N.A.
and the holders of depositary receipts evidencing Depositary Shares Each
Representing 1/1,000 of a Share of 6.45% Cumulative Preferred Stock,
Series F. Filed with Registrant's Registration Statement on Form 8-A
relating to Depositary Shares Each Representing 1/1,000 of a Share of
6.45% Cumulative Preferred Stock, Series F and incorporated herein by
reference.
88
10.31 Deposit Agreement dated as of October 3, 2005 among Registrant,
Computershare Shareholder Services, Inc., Equiserve Trust Company, N.A.
and the holders of depositary receipts evidencing additional Depositary
Shares Each Representing 1/1,000 of a Share of 6.45% Cumulative Preferred
Stock, Series F. Filed with Registrant's Registration Statement on Form
8-A relating to the Depositary Shares Each Representing 1/1,000 of a
Share of 6.45% Cumulative Preferred Stock, Series F and incorporated
herein by reference.
10.32 Deposit Agreement dated December 12, 2005 among Registrant and
Computershare Shareholder Services, Inc., Equiserve Trust Company, N.A.
and the holders of the depositary receipts evidencing the Depositary
Shares Each Representing 1/1,000 of a share of 7.00% Cumulative Preferred
Stock, Series G. Filed with Registrant's Registration Statement on Form
8-A relating to the Depositary Shares Each Representing 1/1,000 of a
Share of 7.00% Cumulative Preferred Stock, Series G and incorporated
herein by reference.
10.33 Deposit Agreement dated January 19, 2006 among Registrant and
Computershare Trust Company N.A. and the holders of the depository
receipts evidencing the Depositary Shares Each Representing 1/1,000 of a
share of 6.95% Cumulative Preferred Stock, Series H. Filed with
Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a share of 6.95%
Cumulative Preferred Stock, Series H and incorporated herein by
reference. Amendment to Certificate of Determination of Determination of
Preferences of Cumulative Preferred Stock, Series G (8.875%), H (8.45%),
I (8.625%), J (8%), K (8.25%), L (8.25%), M (8.75%), N (9.5%), O (9.125%)
and P (8.75%) of Public Storage, Inc. Filed with Registrant's Current
Report on Form 8-K dated November 22, 2005 and incorporated herein by
reference.
10.34 Deposit Agreement dated May 3, 2006 among Registrant and Computershare
Trust Company N.A. and the holders of the depository receipts evidencing
the Depositary Shares Each Representing 1/1,000 of a share of 7.25%
Cumulative Preferred Stock, Series I. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a share of 7.25% Cumulative Preferred Stock,
Series I and incorporated herein by reference.
10.35 Deposit Agreement dated August 8, 2006 among Registrant and Computershare
Trust Company N.A. and the holders of the depository receipts evidencing
the Depositary Shares Each Representing 1/1,000 of a share of 7.25%
Cumulative Preferred Stock, Series K. Filed with Registrant's
Registration Statement on Form 8-A relating to the Depositary Shares Each
Representing 1/1,000 of a share of 7.25% Cumulative Preferred Stock,
Series K and incorporated herein by reference.
10.36 Deposit Agreement dated October 20, 2006 among Registrant and
Computershare Trust Company N.A. and the holders of the depository
receipts evidencing the Depositary Shares Each Representing 1/1,000 of a
share of 6.75% Cumulative Preferred Stock, Series L. Filed with
Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a share of 6.75%
Cumulative Preferred Stock, Series L and incorporated herein by
reference.
10.37 Deposit Agreement dated January 9, 2007 among Registrant and
Computershare Trust Company N.A. and the holders of the depository
receipts evidencing the Depositary Shares Each Representing 1/1,000 of a
share of 6.625% Cumulative Preferred Stock, Series M. Filed with
Registrant's Registration Statement on Form 8-A relating to the
Depositary Shares Each Representing 1/1,000 of a share of 6.625%
Cumulative Preferred Stock, Series M and incorporated herein by
reference.
10.38 Senior Credit Agreement dated May 26, 2003, as amended by Amendment
Agreements dated July 11, 2003 and December 2, 2003, by and among First
Shurgard Sprl, First Shurgard Finance Sarl, First Shurgard Deutschland
GmbH, Societe Generale and others. Incorporated by reference to Exhibit
10.1 filed with the Current Report on Form 8-K dated February 21, 2005
filed by Shurgard Storage Centers, Inc. ("Shurgard").
89
10.39 Amendment and Waiver Agreement dated February 21, 2005 to the Senior
Credit Agreement dated May 26, 2003, as amended as of December 2, 2003,
by and among First Shurgard Sprl, First Shurgard Finance Sarl, First
Shurgard Deutschland GmbH, Societe Generale and others. Incorporated by
reference to Exhibit 10.2 filed with the Current Report on Form 8-K dated
February 21, 2005 filed by Shurgard.
10.40 Credit Facility Agreement dated July 12, 2004, between Second Shurgard
SPRL, Second Shurgard Finance SARL, the Royal Bank of Scotland as
Mandated Lead Arranger, the Royal Bank of Scotland PLC as Facility Agent.
Incorporated by reference to Exhibit 10.43 filed with the Report on Form
10-Q for the quarter ended June 30, 2004 filed by Shurgard.
10.41* Employment Agreement between Registrant and B. Wayne Hughes dated as of
November 16, 1995. Filed with Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995 and incorporated herein by reference.
10.42* Registrant's 1996 Stock Option and Incentive Plan. Filed with
Registrant's Annual Report on Form 10-K for the year ended December 31,
2000 and incorporated herein by reference.
10.43* Storage Trust Realty 1994 Share Incentive Plan. Filed with Storage Trust
Realty's Annual Report on Form 10-K for the year ended December 31, 1997
(SEC File No. 001-13462) and incorporated herein by reference.
10.44* Storage Trust Realty Retention Bonus Plan effective as of November 12,
1998. Filed with Registrant's Registration Statement on Form S-4 (SEC
File No. 333-68543) and incorporated herein by reference.
10.45* Registrant's 2000 Non-Executive/Non-Director Stock Option and Incentive
Plan. Filed with Registrant's Registration Statement on Form S-8 (SEC
File No. 333-52400) and incorporated herein by reference.
10.46* Registrant's 2001 Non-Executive/Non-Director Stock Option and Incentive
Plan. Filed with Registrant's Registration Statement on Form S-8 (SEC
File No. 333-59218) and incorporated herein by reference.
10.47* Registrant's 2001 Stock Option and Incentive Plan. Filed with
Registrant's Registration Statement on Form S-8 (SEC File No. 333-59218)
and incorporated herein by reference.
10.48* Form of 2001 Stock Option and Incentive Plan Non-qualified Stock Option
Agreement. Filed with Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2004 and incorporated herein by
reference.
10.49* Form of Restricted Stock Unit Agreement. Filed with the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2004 and incorporated herein by reference.
10.50* Form of 2001 Stock Option and Incentive Plan Stock Option Agreement.
Filed with Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2004 and incorporated herein by reference.
10.51* Public Storage, Inc. Performance Based Compensation Plan for Covered
Employees. Filed with Registrant's Current Report on Form 8-K dated May
11, 2005 and incorporated herein by reference.
10.52* Form of Indemnity Agreement. Filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 2004 and incorporated herein by
reference.
90
11 Statement Re: Computation of Earnings per Share. Filed herewith.
12 Statement Re: Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends. Filed herewith.
14 Code of Ethics for Senior Financial Officers. Filed with the Registrant's
Annual Report on Form 10-K for the year ended December 31, 2003 and
incorporated herein by reference.
21 Subsidiaries of the Registrant. Filed herewith.
23 Consent of Independent Auditors. Filed herewith.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
* Compensatory benefit plan or arrangement or management contract.
(1) SEC File No. 001-08389 unless otherwise indicated.
91
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
PUBLIC STORAGE, INC.
Date: March 1, 2007 By: /s/ Ronald L. Havner, Jr.
-------------------------
Ronald L. Havner, Jr., Vice-Chairman of
the Board, Chief Executive Officer and
President
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------------------------------- ------------------------------------------------------- -------------------
/s/ Ronald L. Havner, Jr. Vice-Chairman of the Board, Chief March 1, 2007
-------------------------------
Ronald L. Havner, Jr. Executive Officer, President and Director
(principal executive officer)
/s/ John Reyes Senior Vice President and March 1, 2007
-------------------------------
John Reyes Chief Financial Officer
(principal financial officer and principal accounting
officer)
/s/ B. Wayne Hughes Chairman of the Board March 1, 2007
-------------------------------
B. Wayne Hughes
/s/ Dann V. Angeloff Director March 1, 2007
-------------------------------
Dann V. Angeloff
/s/ William C. Baker Director March 1, 2007
-------------------------------
William C. Baker
/s/ John T. Evans Director March 1, 2007
-------------------------------
John T. Evans
/s/ Uri P. Harkham Director March 1, 2007
-------------------------------
Uri P. Harkham
/s/ B. Wayne Hughes, Jr. Director March 1, 2007
-------------------------------
B. Wayne Hughes, Jr.
/s/ Harvey Lenkin Director March 1, 2007
-------------------------------
Harvey Lenkin
/s/ Gary E. Pruitt Director March 1, 2007
-------------------------------
Gary E. Pruitt
/s/ Daniel C. Staton Director March 1, 2007
-------------------------------
Daniel C. Staton
92
PUBLIC STORAGE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULES
(Item 15 (a))
Page References
Report of Independent Registered Public Accounting Firm...............F-1
Consolidated balance sheets as of December 31, 2006 and 2005..........F-2
For each of the three years in the period ended December 31, 2006:
Consolidated statements of income.....................................F-3
Consolidated statements of shareholders' equity ......................F-4
Consolidated statements of cash flows..............................F-5 - F-7
Notes to consolidated financial statements.........................F-8 - F-47
SCHEDULE:
III - Real estate and accumulated depreciation....................F-48 - F-117
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or notes thereto.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
The Board of Directors and Shareholders
Public Storage, Inc.
We have audited the accompanying consolidated balance sheets of Public Storage,
Inc. as of December 31, 2006 and 2005, and the related consolidated statements
of income, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 2006. Our audits also included the financial
statement schedule listed in the Index at Item 15(a). These financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Public
Storage, Inc. at December 31, 2006 and 2005, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2006, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Public Storage,
Inc.'s internal control over financial reporting as of December 31, 2006, based
on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated February 28, 2007 expressed an unqualified opinion thereon.
ERNST & YOUNG LLP /s/
Los Angeles, California
February 28, 2007
F-1
PUBLIC STORAGE, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, DECEMBER 31,
2006 2005
-------------------- --------------------
ASSETS
Cash and cash equivalents.................................................... $ 555,584 $ 493,501
Real estate facilities, at cost:
Land...................................................................... 2,959,875 1,540,357
Buildings................................................................. 8,301,990 4,390,127
-------------------- --------------------
11,261,865 5,930,484
Accumulated depreciation.................................................. (1,754,362) (1,500,128)
-------------------- --------------------
9,507,503 4,430,356
Construction in process................................................... 90,038 54,472
-------------------- --------------------
9,597,541 4,484,828
Investment in real estate entities........................................... 301,905 328,555
Goodwill..................................................................... 174,634 176,285
Intangible assets, net....................................................... 414,602 -
Other assets................................................................. 154,207 69,317
-------------------- --------------------
Total assets................................................... $ 11,198,473 $ 5,552,486
==================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Borrowings on bank credit facilities......................................... $ 345,000 $ -
Notes payable................................................................ 1,466,284 113,950
Debt to joint venture partner................................................ 37,258 35,697
Preferred stock called for redemption........................................ 302,150 172,500
Accrued and other liabilities................................................ 333,706 159,360
-------------------- --------------------
Total liabilities................................................... 2,484,398 481,507
Minority interest:
Preferred partnership interests........................................... 325,000 225,000
Other partnership interests............................................... 181,030 28,970
Commitments and contingencies (Note 17)
Shareholders' equity:
Cumulative Preferred Stock, $0.01 par value, 50,000,000 shares authorized,
1,712,600 shares issued (in series) and outstanding, (1,698,336 at
December 31, 2005) at liquidation preference............................ 2,855,000 2,498,400
Common Stock, $0.10 par value, 200,000,000 shares authorized, 169,144,467
shares issued and outstanding (128,089,563 at December 31, 2005)........ 16,915 12,809
Equity Stock, Series A, $0.01 par value, 200,000,000 shares authorized,
8,744.193 shares issued and outstanding................................. - -
Paid-in capital........................................................... 5,661,507 2,430,671
Cumulative net income..................................................... 3,503,292 3,189,266
Cumulative distributions paid............................................. (3,847,998) (3,314,137)
Accumulated other comprehensive income.................................... 19,329 -
-------------------- --------------------
Total shareholders' equity.......................................... 8,208,045 4,817,009
-------------------- --------------------
Total liabilities and shareholders' equity..................... $ 11,198,473 $ 5,552,486
==================== ====================
See accompanying notes.
F-2
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2006
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2006 2005 2004
--------------- --------------- -----------------
REVENUES:
Self-storage rental income................................... $ 1,239,949 $ 951,370 $ 861,665
Ancillary operating revenue.................................. 109,907 92,230 91,101
Interest and other income.................................... 31,799 16,447 5,391
--------------- --------------- -----------------
1,381,655 1,060,047 958,157
--------------- --------------- -----------------
EXPENSES:
Cost of operations (excluding depreciation and amortization):
Self-storage facilities................................... 429,196 320,589 300,355
Ancillary operations...................................... 71,364 57,712 61,589
Depreciation and amortization................................. 437,984 196,232 182,890
General and administrative.................................... 84,661 21,115 18,813
Interest expense, including interest paid to related party
(Note 13)..................................................... 33,062 8,216 760
--------------- --------------- -----------------
1,056,267 603,864 564,407
--------------- --------------- -----------------
Income from continuing operations before equity in earnings of
real estate entities, casualty loss, gain on disposition of
real estate and real estate investments, foreign currency
exchange gain, income (expense) from derivatives and minority
interest in income........................................... 325,388 456,183 393,750
Equity in earnings of real estate entities...................... 11,895 24,883 22,564
Casualty loss .................................................. - (1,917) (1,250)
Gain on disposition of real estate and real estate investments.. 2,177 3,099 1,317
Foreign currency exchange gain.................................. 336 - -
Income (expense) from derivatives, net.......................... 3,926 - -
Minority interest in income..................................... (31,883) (32,651) (49,913)
--------------- --------------- -----------------
Income from continuing operations............................... 311,839 449,597 366,468
Cumulative effect of a change in accounting principle........... 578 - -
Discontinued operations......................................... 1,609 6,796 (255)
--------------- --------------- -----------------
Net income...................................................... $ 314,026 $ 456,393 $ 366,213
=============== =============== =================
Net income allocation:
----------------------
Allocable to preferred shareholders:
Based on distributions paid ............................... $ 214,218 $ 173,017 $ 157,925
Based on redemptions of preferred stock (Note 2)........... 31,493 7,538 8,724
Allocable to Equity Stock, Series A.......................... 21,424 21,443 21,501
Allocable to common shareholders............................. 46,891 254,395 178,063
--------------- --------------- -----------------
$ 314,026 $ 456,393 $ 366,213
=============== =============== =================
Net income per common share - basic
-----------------------------------
Continuing operations........................................ $ 0.32 $ 1.93 $ 1.39
Discontinued operations...................................... 0.01 0.05 -
--------------- --------------- -----------------
$ 0.33 $ 1.98 $ 1.39
=============== =============== =================
Net income per common share - diluted
-------------------------------------
Continuing operations........................................ $ 0.32 $ 1.92 $ 1.38
Discontinued operations...................................... 0.01 0.05 -
--------------- --------------- -----------------
$ 0.33 $ 1.97 $ 1.38
=============== =============== =================
Net income per depositary share of Equity Stock, Series A (basic
and diluted) ................................................ $ 2.45 $ 2.45 $ 2.45
=============== =============== =================
Basic weighted average common shares outstanding................ 142,760 128,159 127,836
=============== =============== =================
Diluted weighted average common shares outstanding.............. 143,715 128,819 128,681
=============== =============== =================
Weighted average shares of Equity Stock, Series A (basic and
diluted) .................................................... 8,744 8,752 8,776
=============== =============== =================
See accompanying notes.
F-3
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2006
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Cumulative
Preferred Common Paid-in Cumulative
Stock Stock Capital Net Income
-------------- ----------- ------------- --------------
BALANCES AT DECEMBER 31, 2003...................................... $1,867,025 $ 12,699 $ 2,438,632 $ 2,366,660
Issuance of Cumulative Preferred Stock; (1,618,050 shares)...... 491,250 - (15,016) -
Redemption of Cumulative Preferred Stock (3,401,850) shares..... (256,125) - (81) -
Restructuring of preferred partnership units (Note 11).......... - - 2,063 -
Issuance of common stock (1,985,416 shares) (Note 12) 199 49,730
Repurchase of common stock (445,700 shares) (Note 12)........... - (45) (20,250) -
Stock option and restricted stock expense (Note 14)............. - - 2,490 -
Net income...................................................... - - - 366,213
Distributions to shareholders:
Cumulative Preferred Stock.................................... - - - -
Equity Stock, Series A........................................ - - - -
Common Stock ($1.80 per share)................................ - - - -
-------------- ----------- ------------- --------------
BALANCES AT DECEMBER 31, 2004...................................... 2,102,150 12,853 2,457,568 2,732,873
Issuance of Cumulative Preferred Stock (25,050 shares) ........... 626,250 - (19,665) -
Redemption of Cumulative Preferred Stock (2,306,900 shares)..... (230,000) - (34) -
Repurchase of preferred partnership units (Note 11) ............ - - 874 -
Issuance of common stock (282,998 shares) (Note 12) ............ 28 7,483 -
Repurchase of common stock (84,000 shares) (Note 12)............ - (8) (4,982) -
Stock distribution from unconsolidated real estate entities
(635,885 common - (64) (14,456) -
shares and 31,909 Equity Stock, Series A, depositary shares)
(Note 6)...................................................
Stock option and restricted stock expense (Note 14)............. - - 3,883 -
Net income...................................................... - - - 456,393
Distributions to shareholders:
Cumulative Preferred Stock.................................... - - - -
Equity Stock, Series A........................................ - - - -
Common Stock ($1.90 per share)................................ - - - -
-------------- ----------- ------------- --------------
BALANCES AT DECEMBER 31, 2005...................................... 2,498,400 12,809 2,430,671 3,189,266
Issuance of Cumulative Preferred Stock (52,500 shares) ......... 1,312,500 - (39,932) -
Redemption of Cumulative Preferred Stock (38,236 shares)........ (955,900) - - -
Issuance of common stock (41,054,904 shares) (Note 12) ......... 4,106 3,267,564 -
Stock option and restricted stock expense (Note 14)............. - - 3,204 -
Net income...................................................... - - - 314,026
Distributions to shareholders:
Cumulative Preferred Stock.................................... - - - -
Equity Stock, Series A........................................ - - - -
Common Stock ($2.00 per share)................................ - - - -
Accumulated other comprehensive income:
Foreign currency translation adjustments..................... - - - -
-------------- ----------- ------------- --------------
BALANCES AT DECEMBER 31, 2006...................................... $ 2,855,000 $ 16,915 $ 5,661,507 $ 3,503,292
============== =========== ============= ==============
Accumulated
Other Total
Cumulative Comprehensive Shareholders'
Distributions Income Equity
--------------- --------------- ----------------
BALANCES AT DECEMBER 31, 2003...................................... $ (2,465,217) $ - $ 4,219,799
Issuance of Cumulative Preferred Stock; (1,618,050 shares)...... - - 476,234
Redemption of Cumulative Preferred Stock (3,401,850) shares..... - - (256,206)
Restructuring of preferred partnership units (Note 11).......... - - 2,063
Issuance of common stock (1,985,416 shares) (Note 12) 49,929
Repurchase of common stock (445,700 shares) (Note 12)........... - - (20,295)
Stock option and restricted stock expense (Note 14)............. - - 2,490
Net income...................................................... - - 366,213
Distributions to shareholders:
Cumulative Preferred Stock.................................... (157,925) - (157,925)
Equity Stock, Series A........................................ (21,501) - (21,501)
Common Stock ($1.80 per share)................................ (230,834) - (230,834)
--------------- --------------- ----------------
BALANCES AT DECEMBER 31, 2004...................................... (2,875,477) - 4,429,967
Issuance of Cumulative Preferred Stock (25,050 shares) ........... - - 606,585
Redemption of Cumulative Preferred Stock (2,306,900 shares)..... - - (230,034)
Repurchase of preferred partnership units (Note 11) ............ - - 874
Issuance of common stock (282,998 shares) (Note 12) ............ - - 7,511
Repurchase of common stock (84,000 shares) (Note 12)............ - - (4,990)
Stock distribution from unconsolidated real estate entities
(635,885 common - - (14,520)
shares and 31,909 Equity Stock, Series A, depositary shares)
(Note 6)...................................................
Stock option and restricted stock expense (Note 14)............. - - 3,883
Net income...................................................... - - 456,393
Distributions to shareholders:
Cumulative Preferred Stock.................................... (173,017) - (173,017)
Equity Stock, Series A........................................ (21,443) - (21,443)
Common Stock ($1.90 per share)................................ (244,200) - (244,200)
--------------- --------------- ----------------
BALANCES AT DECEMBER 31, 2005...................................... (3,314,137) - 4,817,009
Issuance of Cumulative Preferred Stock (52,500 shares) ......... - - 1,272,568
Redemption of Cumulative Preferred Stock (38,236 shares)........ - - (955,900)
Issuance of common stock (41,054,904 shares) (Note 12) ......... - - 3,271,670
Stock option and restricted stock expense (Note 14)............. - - 3,204
Net income...................................................... - - 314,026
Distributions to shareholders:
Cumulative Preferred Stock.................................... (214,218) - (214,218)
Equity Stock, Series A........................................ (21,424) - (21,424)
Common Stock ($2.00 per share)................................ (298,219) - (298,219)
Accumulated other comprehensive income:
Foreign currency translation adjustments..................... - 19,329 19,329
--------------- --------------- ----------------
BALANCES AT DECEMBER 31, 2006...................................... $ (3,847,998) $ 19,329 $ 8,208,045
=============== =============== ================
See accompanying notes.
F-4
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2006
(AMOUNTS IN THOUSANDS)
2006 2005 2004
--------------- -------------- ---------------
Cash flows from operating activities:
Net income.................................................................. $ 314,026 $ 456,393 $ 366,213
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of note premium (Note 8)...................................... (3,109) (1,026) -
Gain on sales of real estate assets, net, including discontinued operations (4,547) (8,279) (2,288)
Real estate impairment associated with casualty losses (Note 5)......... 996 2,592 1,250
Depreciation and amortization........................................... 437,984 196,232 182,890
Write off of capitalized development project costs...................... 10,354 - -
Equity in earnings of real estate entities.............................. (11,895) (24,883) (22,564)
Foreign currency exchange gain.......................................... (336) - -
Income from derivatives, net............................................ (3,926) - -
Distributions received from the real estate entities (Note 6)........... 17,699 23,112 20,961
Non-cash portion of stock-based compensation expense.................... 3,204 3,883 2,490
Minority interest in income............................................. 31,883 32,651 49,913
Other operating activities............................................... (633) 11,373 17,799
--------------- -------------- ---------------
Total adjustments.................................................... 477,674 235,655 250,451
--------------- -------------- ---------------
Net cash provided by operating activities............................ 791,700 692,048 616,664
--------------- -------------- ---------------
Cash flows from investing activities:
Repayment of notes receivable due from affiliate........................ - - 100,000
Capital improvements to real estate facilities ......................... (79,326) (25,890) (35,868)
Construction in process................................................. (119,648) (86,248) (71,602)
Acquisition of minority interests (Note 11)............................. (62,300) (92,815) (24,851)
Acquisitions of real estate facilities.................................. (98,954) (254,549) (139,794)
Merger with Shurgard (Note 3)........................................... (137,261) - -
Consolidation of partnerships (Note 2).................................. 3,024 - -
Investments in real estate entities..................................... - - (3,005)
Proceeds from sales of real estate and real estate investments.......... 14,545 14,755 12,648
Proceeds from sales of held-to-maturity investments (Note 2) .......... 13,074 7,452 20,729
Acquisition of held-to-maturity investments (Note 2).................... - (6,361) (13,663)
Other investing activities.............................................. (20,650) - (2,232)
--------------- -------------- ---------------
Net cash used in investing activities................................ (487,496) (443,656) (157,638)
--------------- -------------- ---------------
Cash flows from financing activities:
Principal payments on notes payable and bank credit facilities.......... (711,557) (14,543) (41,204)
Repayment of debt to related party (Note 11) ........................... - (64,513) -
Proceeds from borrowings on bank credit facilities...................... 360,000 - -
Proceeds from borrowing on European notes payable ...................... 28,891 - -
Contributions received from European minority interests ................ 15,800 - -
Net proceeds from issuances of common stock............................. 85,369 7,511 49,929
Net proceeds from issuances of cumulative preferred stock............... 1,272,568 606,585 476,234
Repurchases of common stock............................................. - (4,990) (20,295)
Redemption of cumulative preferred stock................................ (826,250) (112,409) (316,331)
Redemption of preferred partnership interests........................... - (85,000) -
Issuance of preferred partnership interests............................. 100,000 - -
Distributions paid to shareholders...................................... (533,861) (438,660) (410,260)
Distributions paid to holders of preferred partnership interests (Note
11).................................................................. (19,055) (16,147) (30,423)
Distributions paid to other minority interests,......................... (16,300) (18,177) (21,349)
Net proceeds from financing through acquisition joint venture (Note 9).. - 19,197 16,095
--------------- -------------- ---------------
Net cash used in financing activities................................ (244,395) (121,146) (297,604)
--------------- -------------- ---------------
Net increase in cash and cash equivalents................................... 59,809 127,246 161,422
Net effect of foreign exchange translation on cash.......................... 2,274 - -
Cash and cash equivalents at the beginning of the year...................... 493,501 366,255 204,833
--------------- -------------- ---------------
Cash and cash equivalents at the end of the year............................ $ 555,584 $ 493,501 $ 366,255
=============== ============== ===============
F-5
See accompanying notes.
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2006
(AMOUNTS IN THOUSANDS)
(CONTINUED)
2006 2005 2004
--------------- -------------- -------------
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES:
Real estate acquired in exchange for assumption of notes payable....... $ (4,590) - -
Notes payable assumed in connection with the acquisition of real estate 4,590 - -
Merger with Shurgard Storage Centers, Inc. (Note 3):
Real estate facilities............................................. (4,887,507) - -
Construction in process............................................ (91,000) - -
Intangible assets.................................................. (584,165) - -
Other assets....................................................... (95,899) - -
Accrued and other liabilities...................................... 190,419 - -
Minority interest.................................................. 144,196 - -
Notes payable...................................................... 2,000,549 - -
Common stock....................................................... 3,891 - -
Paid in capital................................................... 3,182,255 - -
Consolidation of affiliated entities:
Minority interest.................................................. 3,963 - -
Real estate facilities............................................. (22,459) - -
Investments........................................................ 20,846 - -
Other assets....................................................... (167) - -
Accrued and other liabilities...................................... 841 - -
Revaluation of debt to joint venture partner (Note 9):
Debt due to joint venture partner.................................. 1,386 - -
Other assets....................................................... (1,386) - -
Foreign currency adjustment:
Real estate facilities............................................. (34,696) - -
Construction in process............................................ (1,373) - -
Intangible assets, net............................................. (6,381) - -
Other assets....................................................... (717) - -
Notes payable...................................................... 17,970 - -
Accrued and other liabilities...................................... 4,237 - -
Minority interests................................................. 3,905 - -
Equity............................................................. 19,329 - -
Partnership units converted into shares of common stock (Note 11):
Minority interest (155) - -
Common stock 1 - -
Paid-in capital 154 - -
Retirement of Common Stock and Equity Stock, Series A, received as a
distribution from affiliated entities (Note 6):
Common Stock....................................................... - (64) -
Paid-in capital.................................................... - (14,456) -
Investment in real estate entities................................. - 14,520 -
See accompanying notes.
F-6
PUBLIC STORAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2006
(AMOUNTS IN THOUSANDS)
2006 2005 2004
--------------- -------------- -------------
Acquisition of minority interest in Consolidated Joint Venture in exchange
for debt (Note 9):...................................................
Minority interest - Other partnership interests.................... - (62,013) -
Real estate facilities............................................. - (2,500) -
Debt to related party.............................................. - 64,513 -
Acquisition of real estate facilities in exchange for minority interests and
assumption of mortgage notes payable:
Real estate facilities.............................................. - - (119,693)
Mortgage notes payable.............................................. - - 94,693
Preferred partnership interests..................................... - - 25,000
See accompanying notes.
F-7
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
1. Description of the business
---------------------------
Public Storage, Inc. (referred to herein as "the Company", "we", "us"
or "our") is a California corporation, which was organized in 1980. We are a
fully integrated, self-administered and self-managed real estate investment
trust ("REIT") whose principal business activities include the acquisition,
development, ownership and operation of self-storage facilities which offer
storage spaces for lease, generally on a month-to-month basis, for personal and
business use. Our self-storage facilities are located primarily in the United
States. As a result of the merger with Shurgard Storage Centers, Inc.
("Shurgard") on August 22, 2006, we have facilities located in several Western
European countries (Note 3).
In addition to our self-storage facilities, we own (i) interests in
commercial properties, containing commercial and industrial rental space, (ii)
interests in facilities that lease storage containers, and (iii) other ancillary
operations comprised principally of reinsurance of policies against losses to
goods stored by our self-storage tenants, retail sales of storage related
products and truck rentals at our self-storage locations.
At December 31, 2006, we had direct and indirect equity interests in
2,003 self-storage facilities located in 38 states operating under the "Public
Storage" name, and 166 self-storage facilities located in seven Western European
nations which operate under the "Shurgard Storage Centers" name. We also have
direct and indirect equity interests in approximately 20 million net rentable
square feet of commercial space located in 11 states in the United States.
References throughout to the number of facilities and square footage are
unaudited.
2. Summary of significant accounting policies
------------------------------------------
Basis of presentation
---------------------
The consolidated financial statements are presented on an accrual basis
in accordance with accounting principles generally accepted in the United States
and include the accounts of the Company and our consolidated subsidiaries. All
intercompany balances and transactions have been eliminated in consolidation.
Certain amounts previously reported have been reclassified to conform
to the December 31, 2006 presentation. In previous presentations, intangible
assets were reported separately from goodwill on the Company's consolidated
balance sheet. We have now reclassified the intangible assets to goodwill (see
"Goodwill and Intangible Assets" below). Certain reclassifications have also
been made from previous presentations as a result of discontinued operations
(See Note 4).
Consolidation policy
--------------------
Entities in which we have an interest are first evaluated to determine
whether, in accordance with the provisions of the Financial Accounting Standards
Board's Interpretation No. 46R, "Consolidation of Variable Interest Entities,"
they represent Variable Interest Entities. We have determined that we have
several Variable Interest Entities that we are the primary beneficiaries of and,
accordingly such entities are consolidated.
Entities that are not Variable Interest Entities are consolidated when
we control the entity. For purposes of determining control, when we are the
general partner, we are considered to control the partnership unless the limited
partners possess substantial "kick-out" or "participative" rights as defined in
Emerging Issues Task Force Statement 04-5 - "Determining whether a general
partner or the general partners as a group, controls a limited partnership or
similar entity when the limited partners have certain rights" ("EITF 04-5").
F-8
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
The accounts of the entities we control along with the accounts of the
Variable Interest Entities that we are the primary beneficiary of (collectively,
the "Consolidated Entities") are included in our consolidated financial
statements along with those of the Company. All significant intercompany
balances and transactions have been eliminated.
In accordance with the guidance of EITF 04-5, effective January 1, 2006
we commenced consolidating the accounts of three partnerships that we previously
accounted for on the equity method. Our investment in these entities, totaling
$20,846,000, was allocated to the real estate facilities, cash, other assets,
liabilities, and minority interests of these entities as described in the table
below (amounts in thousands).
Total
-------------
Real estate facilities......... $ 22,459
Cash........................... 3,024
Other assets................... 167
Accrued and other liabilities.. (841)
Minority interest ............. (3,963)
-------------
$ 20,846
=============
We account for affiliated entities over which we have significant
influence (the "Unconsolidated Entities") using the equity method of accounting.
Use of estimates
----------------
The preparation of the consolidated financial statements in conformity
with U.S. generally accepted accounting principles 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
those estimates.
Income taxes
------------
For all taxable years subsequent to 1980, the Company qualified and
intends to continue to qualify as a REIT, as defined in Section 856 of the
Internal Revenue Code. As a REIT, we are not taxed on that portion of our
taxable income which is distributed to our shareholders, provided that we meet
certain tests. We believe we have met these tests during 2006, 2005, and 2004
and, accordingly, no provision for income taxes has been made in the
accompanying consolidated financial statements.
Financial instruments
---------------------
We have estimated the fair value of our financial instruments using
available market information and appropriate valuation methodologies.
Considerable judgment is required in interpreting market data to develop
estimates of fair value. Accordingly, estimated fair values are not necessarily
indicative of the amounts that could be realized in current market exchanges.
For purposes of financial statement presentation, we consider all
highly liquid financial instruments such as short-term treasury securities or
investment grade short-term commercial paper to be cash equivalents.
Due to the short period to maturity of our cash and cash equivalents,
accounts receivable, other financial instruments included in other assets, line
of credit and short-term bank financing, variable rate debt, and accrued and
other liabilities, the carrying values as presented on the consolidated balance
sheets are reasonable estimates of fair value.
F-9
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Financial assets that are exposed to credit risk consist primarily of
cash and cash equivalents and accounts receivable. Cash and cash equivalents,
which consist of short-term investments, including commercial paper, are only
invested in entities with an investment grade rating. Accounts receivable are
not a significant portion of total assets and are comprised of a large number of
individual customer balances.
Due to the acquisition of European subsidiaries in the merger with
Shurgard, the results of our operations and our financial position are affected
by the fluctuations in the value of the euro, and to a lesser extent, other
European currencies, against the U.S. dollar. Also, we are exposed to foreign
currency exchange risk related to intercompany debt with or between our European
subsidiaries that are not denominated in the functional currency of the
subsidiary or the investee.
Included in cash and cash equivalents at December 31, 2006 is
$32,496,000 ($18,962,000 at December 31, 2005) held by our captive insurance
entities. Insurance and other regulations place significant restrictions on our
ability to withdraw these funds for purposes other than insurance activities.
Other assets at December 31, 2006 include investments totaling $6,764,000
($19,838,000 at December 31, 2005) primarily held-to-maturity Federal government
agency securities stated at amortized cost, which approximates fair value. Other
assets at December 31, 2006 also include derivative financial instruments
totaling $11,810,000 (none at December 31, 2005) reported at fair value. See
Note 10 for further discussion of the fair value of our derivative financial
instruments, and Note 8 for further discussion of the fair value of our notes
payable.
Real Estate Facilities
----------------------
Real estate facilities are recorded at cost. Costs associated with the
acquisition, development, construction, renovation, and improvement of
properties are capitalized. Interest, property taxes, and other costs associated
with development incurred during the construction period are capitalized as
building cost. Expenditures for repairs and maintenance expense are charged to
expense when incurred. Depreciation is computed using the straight-line method
over the estimated useful lives of the buildings and improvements, which are
generally between 5 and 25 years.
Evaluation of asset impairment
------------------------------
We evaluate impairment of goodwill annually through a two-step process.
In the first step, if the fair value of the reporting unit to which the goodwill
applies is equal to or greater than the carrying amount of the assets of the
reporting unit, including the goodwill, the goodwill is considered unimpaired
and the second step is unnecessary. If, however, the fair value of the reporting
unit including goodwill is less than the carrying amount, the second step is
performed. In this test, we compute the implied fair value of the goodwill based
upon the allocations that would be made to the goodwill, other assets and
liabilities of the reporting unit if a business combination transaction were
consummated at the fair value of the reporting unit. An impairment loss is
recorded to the extent that the implied fair value of the goodwill is less than
the goodwill's carrying amount. No impairments of our goodwill were identified
in our annual evaluations at December 31, 2006, 2005, or 2004.
We evaluate impairment of long-lived assets on a quarterly basis. We
first evaluate these assets for indicators of impairment such as a) a
significant decrease in the market price of a long-lived asset, b) a significant
adverse change in the extent or manner in which a long-lived asset is being used
or in its physical condition, c) a significant adverse change in legal factors
or the business climate that could affect the value of the long-lived asset, d)
an accumulation of costs significantly in excess of the amount originally
projected for the acquisition or construction of the long-lived asset, or e) a
current-period operating or cash flow loss combined with a history of operating
or cash flow losses or a projection or forecast that demonstrates continuing
losses associated with the use of the long-lived asset. When any such indicators
of impairment are noted, we compare the carrying value of these assets to the
future estimated undiscounted cash flows attributable to these assets. If the
asset's recoverable amount is less than the carrying value of the asset, then an
impairment charge is booked for the excess of carrying value over the asset's
fair value.
F-10
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Any long-lived assets which we expect to sell or otherwise dispose of
prior to their previously estimated useful life are stated at what we estimate
to be the lower of their estimated net realizable value (less cost to sell) or
their carrying value. During 2004 we recorded impairment charges related to
containers, trucks, and other equipment in our containerized storage segment
identified for closure (see Note 4). These impairment charges were based upon
the differential between book value and the estimated net realizable value,
which was based upon prices for similar assets, and were equal to the net
proceeds ultimately received. No additional impairments were identified from our
evaluations, except as noted under "Accounting for casualty losses" below.
Accounting for casualty losses
------------------------------
Our policy is to record casualty losses or gains in the period the
casualty occurs equal to the differential between (a) the book value of assets
destroyed and (b) insurance proceeds, if any, that we expect to receive in
accordance with our insurance contracts. Potential insurance proceeds that are
subject to uncertainties, such as interpretation of deductible provisions of the
governing agreements, are treated as a contingent proceeds in accordance with
Statement of Financial Accounting Standards No. 5 ("SFAS 5"), and not recorded
until the uncertainties are satisfied. During 2005 and 2004 we incurred casualty
losses totaling $1,917,000 and $1,250,000, respectively, due to damage caused by
hurricanes.
Accounting for stock-based compensation
---------------------------------------
We utilize the Fair Value Method (as defined in Note 14) of accounting
for our employee stock options issued after December 31, 2001, and utilize the
APB 25 Method (as defined in Note 14) for employee stock options issued prior to
January 1, 2002. Restricted stock unit expense is recorded over the relevant
vesting period. See Note 14 for more information with respect to our accounting
for employee stock options and restricted stock units.
Other assets
------------
Other assets primarily consists of prepaid expenses, investments in
held to maturity debt securities, accounts receivable, assets associated with
our containerized storage business, merchandise inventory and rental trucks.
Accrued and other liabilities
-----------------------------
Accrued and other liabilities consist primarily of real property tax
accruals, value-added tax with respect to our European operations, prepayments
of rents, trade payables, losses and loss adjustment liabilities for our
self-insured risks (described below), and accrued interest. Prepaid rent totaled
$64,291,000 at December 31, 2006 ($26,145,000 at December 31, 2005), while
property and value-added tax accruals approximated $80,336,000 at December 31,
2006 ($45,360,000 at December 31, 2005).
We are self-insured for a portion of the risks associated with our
property and casualty losses. We also utilize third-party insurance carriers to
provide property and liability insurance coverage to limit our self insurance
exposure. We accrue liabilities for uninsured losses and loss adjustment
expense, which at December 31, 2006 totaled $31,532,000 ($32,797,000 at December
31, 2005). Liabilities for losses and loss adjustment expenses include an amount
we determine from loss reports and individual cases and an amount, based on
recommendations from an independent actuary that is a member of the American
Academy of Actuaries using a frequency and severity method, for losses incurred
but not reported. Determining the liability for unpaid losses and loss
adjustment expense is based upon estimates.
F-11
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Through a wholly-owned subsidiary, we reinsure policies against claims
for losses to goods stored by tenants in our self-storage facilities. For our
United States operations, we have third-party insurance coverage for losses from
any individual event that exceeds a loss of $1,500,000, to a maximum of
$9,000,000. Estimated uninsured losses are accrued as ancillary costs of
operations.
While we believe that the amount of estimated accrued liabilities with
respect to tenant claims and property and casualty losses are adequate, the
ultimate losses may be in excess of or less than the amounts that we have
accrued. The methods for making such estimates and for establishing the
resulting liabilities are regularly reviewed.
Intangible assets and goodwill
------------------------------
Goodwill represents the excess of acquisition cost over the fair value
of net tangible and identifiable intangible assets acquired in business
combinations. Each business combination from which our goodwill arose was for
the acquisition of single businesses and accordingly, the allocation of our
goodwill to our business segments (principally Domestic Self-Storage) is based
directly on such acquisitions. Our goodwill has an indeterminate life in
accordance with the provisions of Statement of Financial Accounting Standards
No. 142 ("SFAS 142").
In prior periods, intangible assets (original acquisition cost of
$165,000,000 and net book value of $98,081,000 at December 31, 2005) were
presented on our consolidated balance sheets. For all periods presented herein,
we have reclassified this intangible asset to goodwill and, in accordance with
the provisions of SFAS 142 as applied to the reclassification effective April 1,
2006, we ceased amortization. Included in depreciation and amortization expense
for the year ended December 31, 2006 is $1,651,000 ($6,604,000 for the years
ended December 31, 2005 and 2004) with respect to these assets. Our goodwill
balances of $174,634,000 and $176,285,000 are reported net of accumulated
amortization of $85,085,000 and $83,434,000 at December 31, 2006 and 2005,
respectively, on our accompanying consolidated balance sheets.
As a result of the merger with Shurgard (Note 3), we acquired
finite-lived intangible assets comprised of storage tenants in place valued at
$530,528,000, certain land leases with rent payments that are below market
valued at $34,813,000, and the "Shurgard" tradename, which we continue to use in
Europe, valued at $18,824,000. Our intangible assets were increased by
$6,381,000 in the year ended December 31, 2006 due to the impact of changes in
exchange rates.
The tenant intangible assets are amortized relative to the expected
future benefit of the tenants in place to each period, and the land lease
intangibles are amortized relative to the benefit of the below-market lease. The
Shurgard tradename has an indefinite life and, accordingly, we do not amortize
this asset but instead analyze it on an annual basis for recoverability.
Amortization expense of $175,944,000 was recorded for our finite-lived
intangible assets for the year ended December 31, 2006. The estimated annual
amortization expense for our finite-lived intangible assets for each of the next
five years ending December 31 is as follows:
2007 $ 243,282,000
2008 70,518,000
2009 22,395,000
2010 13,830,000
2011 and beyond 39,372,000
F-12
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Revenue and expense recognition
-------------------------------
Rental income, which is generally earned pursuant to month-to-month
leases for storage space, is recognized as earned. Promotional discounts are
recognized as a reduction to rental income over the promotional period, which is
generally during the first month of occupancy. Late charges and administrative
fees are recognized as income when collected. Tenant reinsurance premiums are
recognized as premium revenue when earned. Revenues from merchandise sales and
truck rentals are recognized when earned. Interest income is recognized as
earned. Equity in earnings of real estate entities is recognized based on our
ownership interest in the earnings of each of the Unconsolidated Entities.
We accrue for property tax expense based upon estimates and historical
trends. If these estimates are incorrect, the timing of expense recognition
could be affected.
Cost of operations, general and administrative expense, interest
expense, as well as television, yellow page, and other advertising expenditures
are expensed as incurred.
Foreign Exchange Translation Policy
-----------------------------------
The local currency is the functional currency for our European
subsidiaries. Assets and liabilities are translated at end-of-period exchange
rates while revenues and expenses are translated at the average exchange rates
in effect during the period. Equity is translated at historical rates and the
resulting cumulative translation adjustments are included as a component of
accumulated other comprehensive income (loss) until the translation adjustments
are realized.
For the year ended December 31, 2006, we recorded foreign currency
exchange gains of $336,000 on our consolidated statement of income. Included in
other accumulated comprehensive income was a cumulative foreign currency
translation adjustment gain of $19,329,000 at December 31, 2006.
Derivative Financial Instruments
--------------------------------
In connection with our merger with Shurgard, we acquired certain
preexisting derivative financial instruments held by Shurgard (the "Shurgard
Derivatives"), including interest rate caps, interest rate swaps, cross-currency
swaps and foreign currency forward contracts. These derivatives were entered
into by Shurgard in order to mitigate currency and exchange rate fluctuation
risk in connection with European borrowings. We do not intend to use derivative
financial instruments for speculative or trading purposes.
In accordance with the provisions of Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Financial Instruments and Hedging
Activities ("SFAS 133"), derivative financial instruments are measured at fair
value and recognized on the balance sheet as assets or liabilities.
As of December 31, 2006, and for the year then ended, none of the
Shurgard Derivatives were considered effective hedges because we believe it is
not highly likely that the debt and the related derivative instruments will
remain outstanding for their entire contractual period. Accordingly, all changes
in the fair values of the derivatives are reflected in earnings, along with the
related cash flows from these instruments, under "Income (expense) from
derivatives, net" on our consolidated statement of income.
F-13
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Other Comprehensive Income
--------------------------
Our comprehensive income is as follows:
For the Year Ended December 31,
2006 2005 2004
------------ ------------ -----------
(Amounts in thousands)
Net income................................ $ 314,026 $ 456,393 $ 366,213
Accumulated other comprehensive income:
Foreign currency translation adjustments 19,329 - -
------------ ------------ -----------
Total comprehensive income................ $ 333,355 $ 456,393 $ 366,213
============ ============ ============
The foreign currency translation adjustment represents the net currency
translation adjustment gains and losses related to our European subsidiaries
acquired in the merger with Shurgard measured from the date of the merger
through December 31, 2006. Amounts are presented net of minority interests.
Environmental costs
-------------------
Our policy is to accrue environmental assessments and estimated
remediation cost when it is probable that such efforts will be required and the
related costs can be reasonably estimated. Our current practice is to conduct
environmental investigations in connection with property acquisitions. Although
there can be no assurance, we are not aware of any environmental contamination
of any of our facilities, which individually or in the aggregate would be
material to our overall business, financial condition, or results of operations.
Net income per common share
---------------------------
In computing net income allocated to our common shareholders, we first
allocate net income to our preferred shareholders. Net income allocated to our
preferred shareholders consists of (i) distributions paid to the holders
totaling $214,218,000, $173,017,000, and $157,925,000 for the years ended
December 31, 2006, 2005, and 2004, respectively, combined with (ii) the effect
of applying Emerging Issues Task Force Topic D-42 ("EITF D42"), "The Effect on
the Calculation of Earnings per Share for the Redemption or the Induced
Conversion of Preferred Stock." EITF D-42 provides, among other things, that any
excess of the fair value of the consideration transferred to the holders of
preferred stock redeemed over the carrying amount of the preferred stock should
be subtracted from net earnings to determine net earnings available to common
stockholders in the calculation of earnings per share. The application of EITF
D42 resulted in an additional $31,493,000, $7,538,000, and $8,724,000 for the
years ended December 31, 2006, 2005, and 2004, respectively, of net income
allocated to our preferred shareholders.
Income allocated to our common shareholders has been further allocated
among our two classes of common stock; our regular common stock and our Equity
Stock, Series A. The allocation among each class was based upon the two-class
method. Under the two-class method, earnings per share for each class of common
stock are determined according to dividends declared (or accumulated) and
participation rights in undistributed earnings, or to the extent of contractual
participation in losses. The Equity Stock, Series A is deemed to contractually
participate in losses if its liquidation proceeds, assuming liquidation of the
Company at book value, is reduced as a result of the loss. Under the two-class
method, the Equity Stock, Series A was allocated net income of $21,424,000,
$21,443,000, and $21,501,000 for the years ended December 31, 2006, 2005, and
2004, respectively. Remaining income of $46,891,000, $254,395,000, and
$178,063,000 for the years ended December 31, 2006, 2005 and 2004, respectively,
was allocated to the regular common stockholders.
Basic net income per share is computed using the weighted average
common shares outstanding (prior to the dilutive impact of stock options and
restricted stock units outstanding). Diluted net income per common share is
computed using the weighted average common shares outstanding (adjusted for the
dilutive impact of stock options and restricted stock units outstanding computed
using the treasury stock method, that totaled 955,000 in 2006, 660,000 in 2005,
and 845,000 in 2004).
F-14
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
3. Merger with Shurgard
--------------------
On August 22, 2006, the Company merged with Shurgard Storage Centers,
Inc. ("Shurgard"), a REIT which had interests in 487 self-storage facilities in
the United States and 160 self-storage facilities in Europe. We believe this
merger will provide a number of strategic and financial benefits and growth
opportunities for us by solidifying our position as the largest owner and
operator of self-storage facilities in the United States, enhancing access to
capital, eliminating duplicative general and administrative expenses, improving
cost efficiencies, increasing growth opportunities and providing greater
geographic and financial diversification.
Shurgard shareholders received 0.82 shares of our common stock for each
share of Shurgard common stock they owned. Total consideration for the merger
approximated $5,323,956,000, comprised of (i) the issuance of 38,913,187 shares
of Public Storage common stock (valued at approximately $3,116,850,000 based
upon the average of Public Storage's share closing price for five days before,
the day of and five days after the acquisition announcement date of March 7,
2006), (ii) the assumption of Shurgard's domestic and European notes payable and
capital leases with a fair value of approximately $1,396,777,000 of which
$67,275,000 was repaid following the merger, (iii) the assumption of Shurgard's
line of credit totaling $603,772,000, which was repaid following the merger,
(iv) the issuance of vested common stock options in exchange for Shurgard stock
options, with an estimated intrinsic value of approximately $69,296,000, and (v)
$137,261,000 in cash, comprised of $137,916,000 to redeem Shurgard's outstanding
preferred stock at liquidation value, approximately $47,524,000 in direct costs
of the merger, less $48,179,000 in cash held by Shurgard at the date of the
merger.
We have allocated this aggregate purchase price to the tangible and
intangible net assets, as follows (amounts in thousands):
Operating real estate facilities $ 4,887,507
Construction in process 91,000
Intangible assets (Note 2) 584,165
Other assets 95,899
Accrued and other liabilities (190,419)
Minority interest 144,196)
--------------
Total allocated Purchase Price to net assets acquired $ 5,323,956
==============
F-15
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
As described more fully in Note 2, intangible assets consist of the
estimated value of Shurgard's existing tenants in place, the estimated value of
Shurgard's existing land leases, and the estimated value of Shurgard's
tradename, which we expect to continue to use in Europe.
The results of operations of the facilities acquired from Shurgard have
been included in our consolidated financial statements since the merger date of
August 22, 2006. The unaudited pro forma data presented below assumes that the
merger occurred as of the beginning of the respective periods, and includes pro
forma adjustments to (i) increase depreciation expense to reflect our book basis
for the buildings acquired, (ii) increase amortization expense to reflect the
intangible assets acquired in the merger, (iii) decrease interest income and
increase income allocated to preferred shareholders to reflect the financing of
the merger with cash on hand and the proceeds from preferred stock, and (iv)
decrease the historical general and administrative expense of Shurgard that is
expected to be eliminated as a result of the merger. The unaudited pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of the results of operations that would have occurred had the
merger been consummated at the beginning of the periods presented.
For the Year ended
December 31,
2006 2005
------------ ----------
(Amounts in thousands,
except per share data)
(Unaudited)
Revenues.......................... $1,704,757 $1,539,087
Net income........................ $ 200,321 $ 103,958
Loss per common share:
Basic........................... $ (0.40) $ (0.80)
Diluted......................... $ (0.40) $ (0.80)
4. Discontinued operations
-----------------------
We segregate all of our disposed components that have operations that
can be distinguished from the rest of the Company and will be eliminated from
the ongoing operations of the Company in a disposal transaction. Discontinued
operations principally consists of the historical operations related to
facilities that were closed and are no longer in operation and facilities that
have been disposed of either through condemnation by a local governmental agency
or sale. The following table summarizes the historical operations with respect
to these facilities:
DISCONTINUED OPERATIONS:
------------------------
For the Year Ended December 31,
-----------------------------------
2006 2005 2004
---------- ------------ -----------
(Amounts in thousands)
Rental income..................... $ 688 $ 1,470 $ 9,599
Cost of operations................ (219) (744) (7,379)
Depreciation expense.............. (234) (253) (1,455)
Asset impairment charges.......... (996) - (1,575)
Lease termination costs........... - - (416)
Net gain on dispositions.......... 2,370 6,323 971
---------- ------------ -----------
Total discontinued operations..... $ 1,609 $ 6,796 $ (255)
========== ============ ===========
F-16
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
5. Real estate facilities
----------------------
Activity in real estate facilities during 2006, 2005 and 2004 is as
follows:
2006 2005 2004
---------------- ---------------- ----------------
(Amounts in thousands)
Operating facilities, at cost:
Beginning balance....................................... $ 5,930,484 $ 5,510,750 $ 5,125,498
Facilities consolidated pursuant to EITF 04-5 (Note 2).. 22,459 - -
Acquired in the merger with Shurgard (Note 3)........... 4,887,507 - -
Acquisition of real estate facilities................... 103,544 254,549 259,487
Dispositions............................................ (5,860) (8,582) (6,785)
Newly developed facilities opened for operations........ 161,131 86,888 93,017
Casualty loss (Note 2).................................. - (8,953) (2,874)
Abandoned facility...................................... (1,545) - -
Acquisition of minority interests (Note 11)............. 50,123 69,942 6,539
Capital improvements.................................... 79,326 25,890 35,868
Impact of foreign exchange rate changes................. 34,696 - -
---------------- ---------------- ----------------
Ending balance.......................................... 11,261,865 5,930,484 5,510,750
---------------- ---------------- ----------------
Accumulated depreciation:
Beginning balance....................................... (1,500,128) (1,320,200) (1,153,059)
Additions during the year............................... (255,615) (186,048) (169,471)
Casualty loss (Note 2).................................. - 2,966 1,624
Abandoned facility...................................... 549 - -
Dispositions............................................ 832 3,154 706
Impact of foreign exchange rate changes................. - - -
---------------- ---------------- ----------------
Ending balance.......................................... (1,754,362) (1,500,128) (1,320,200)
---------------- ---------------- ----------------
Construction in process:
Beginning balance....................................... 54,472 56,160 81,856
Current development..................................... 119,648 86,248 71,602
Acquired in the merger with Shurgard (Note 3)........... 91,000 - -
Write off of development costs.......................... (10,354) - -
Dispositions............................................ (4,970) (1,048) (4,281)
Newly developed facilities opened for operations........ (161,131) (86,888) (93,017)
Impact of foreign exchange rate changes................. 1,373 - -
---------------- ---------------- ----------------
Ending balance.......................................... 90,038 54,472 56,160
---------------- ---------------- ----------------
Total real estate facilities............................. $ 9,597,541 $ 4,484,828 $ 4,246,710
================ ================ ================
During 2006, we completed several development and expansion projections
which in aggregate added approximately 1,266,000 net rentable square feet of
self-storage space at a total cost of $161,131,000 (1,472,000 net rentable
square feet at a total cost of $86,888,000 in 2005 and 1,217,000 net rentable
square feet at a total cost of $93,017,000 in 2004) . During 2006, 2005 and
2004, we also sold several parcels of vacant land and disposed of real estate as
a result of condemnation by local governmental agencies. As a result of the
dispositions in 2006, we received proceeds totaling $14,545,000 and recorded an
aggregate gain on disposition of $4,547,000 (proceeds totaled $14,755,000 and
$12,648,000 in 2005 and 2004, respectively, and related gain on disposition
totaled $8,279,000 and $2,288,000 in 2005 and 2004, respectively).
Excluding self-storage facilities acquired in the merger with Shurgard
(see Note 3), during 2006, we acquired 12 self-storage facilities (877,000 net
rentable square feet) from third parties at an aggregate cost of $103,544,000,
consisting of $98,954,000 in cash and assumed mortgage debt totaling $4,590,000.
In 2005, we acquired from third parties 32 self-storage facilities
(2,390,000 net rentable square feet) at an aggregate cost of $254,549,000 in
cash. In 2004 we acquired interests from third parties in 45 self-storage
facilities (3,109,000 net rentable square feet) at an aggregate cost of
$259,487,000, comprised of $139,794,000 cash, $94,693,000 in assumed debt, and
the issuance of $25 million of our Series Z Perpetual Preferred Units.
F-17
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
In 2005 and 2004, we recorded casualty losses of $1,917,000 and
$1,250,000, respectively as a result of damage to our facilities from
hurricanes. These casualty losses were comprised of the book value of assets
damaged ($5,987,000 in 2005 and $1,250,000 in 2004) less, in the case of 2005,
insurance proceeds of approximately $4,070,000. No insurance proceeds were
received for losses occurring in 2004.
One of these facilities damaged by the aforementioned hurricanes was
abandoned in 2006, because it was deemed economically impractical to rebuild.
Because the book value is no longer recoverable, we recorded an impairment
charge of $996,000 in the year ended December 31, 2006, representing the
remaining book value of the facility. This impairment charge, along with the
historical operations of this facility, is included in discontinued operations.
Construction in process at December 31, 2006 includes 48 projects
(2,256,000 net rentable square feet, unaudited) which expand or enhance the
visual and structural appeal of our existing self-storage facilities with costs
incurred of $39,502,000 at December 31, 2006 and total estimated costs to
complete of $148,114,000 (unaudited). In addition, we have 8 projects to develop
new self-storage facilities in Europe (389,000 aggregate net rentable square
feet, unaudited), with costs incurred at December 31, 2006 of $41,916,000 and
total estimated costs to complete of $36,549,000 (unaudited). We also have five
parcels held for development with an aggregate of $8,620,000 in costs.
We capitalize interest incurred on debt during the course of
construction of our self-storage facilities. Interest capitalized for the years
ended December 31, 2006, 2005 and 2004 was $2,716,000, $2,820,000 and
$3,617,000, respectively.
At December 31, 2006, the adjusted basis of real estate facilities for
federal tax purposes was approximately $9.0 billion (unaudited).
6. Investments in real estate entities
-----------------------------------
At December 31, 2006, investments in real estate entities consist of
our ownership interests in the Unconsolidated Entities. These interests are
non-controlling interests of less than 50% and are accounted for using the
equity method of accounting. Accordingly, earnings are recognized based upon our
ownership interest in each of these entities. The accounting policies of these
entities are similar to those of the Company.
Approximately $50 million of our consolidated retained earnings is
represented by undistributed earnings of these Unconsolidated Entities.
During 2006, 2005, and 2004, we recognized earnings from our
investments in real estate entities of $11,895,000, $24,883,000, and
$22,564,000, respectively, and received cash distributions totaling $17,699,000,
$23,112,000, and $20,961,000, respectively. In addition, during 2005, we
received a distribution from affiliated entities of 635,885 shares of our common
stock and 31,909 depositary shares of our Equity Stock, Series A, with an
aggregate book value of $14,520,000.
Equity in earnings of real estate entities includes our pro rata share
of the net impact of gains/losses on sales of assets and impairment charges
relating to the impending sale of real estate assets as well as our pro rata
share of the impact of the application of EITF Topic D-42 on redemptions of
preferred securities recorded by PSB. See the condensed financial information
with respect to PSB below for further information regarding these items recorded
by PSB.
F-18
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
The following table sets forth our investments in the real estate
entities at December 31, 2006 and 2005 and our equity in earnings of real estate
entities for each of the three years ended December 31, 2006 (amounts in
thousands):
Investments in Real Estate Equity in Earnings of Real Estate Entities
Entities at December 31, for the Year Ended December 31,
----------------------------- -------------------------------------------
2006 2005 2006 2005 2004
------------- -------------- ------------- ------------- ------------
Investment in PSB (a).......... $ 283,700 $ 288,694 $ 9,764 $ 18,757 $ 16,895
Other investments (b).......... 18,205 39,861 2,131 6,126 5,669
------------- -------------- ------------- ------------- ------------
Total...................... $ 301,905 $ 328,555 $ 11,895 $ 24,883 $ 22,564
============= ============== ============= ============= ============
(a) Included in equity in earnings is the net impact of PSB's gains on sale of
real estate, impairment charges, and the impact from applying EITF Topic
D-42 aggregating a loss of $1,042,000, and income of $7,727,000, and
$4,544,000 in 2006, 2005, and 2004, respectively.
(b) As described in Note 2, effective January 1, 2006 we commenced
consolidating the accounts of three limited partnerships previously
accounted for under the equity method of accounting. As a result, we
decreased our investment in these partnerships by approximately $20,846,000
on January 1, 2006.
Investment in PS Business Parks, Inc. ("PSB")
---------------------------------------------
PS Business Parks, Inc. is a REIT traded on the American Stock
Exchange, which controls an operating partnership (collectively, the REIT and
the operating partnership are referred to as "PSB"). We have a 44% common equity
interest in PSB as of December 31, 2006. This common equity interest is
comprised of our ownership of 5,418,273 shares of PSB's common stock and
7,305,355 limited partnership units in the operating partnership at December 31,
2006 and 2005. The limited partnership units are convertible at our option,
subject to certain conditions, on a one-for-one basis into PSB common stock.
Based upon the closing price at December 31, 2006 ($70.71 per share of PSB
common stock), the shares and units had a market value of approximately $899.7
million as compared to a book value of $283.7 million.
At December 31, 2006, PSB owned and operated approximately 18.7 million
net rentable square feet of commercial space. In addition, PSB manages
commercial space owned by the Company and the Consolidated Entities pursuant to
property management agreements.
The following table sets forth selected financial information of PSB;
the amounts represent 100% of PSB's balances and not our pro-rata share.
2006 2005
--------------- ----------------
(Amounts in thousands)
For the year ended December 31,
-------------------------------
Total operating revenue.............................. $ 242,839 $ 220,183
Costs of operations and other operating expenses..... (81,717) (71,627)
Other income and expense, net........................ 4,299 3,558
Depreciation and amortization........................ (86,216) (76,178)
Discontinued operations (a).......................... 1,643 15,620
Minority interest.................................... (16,268) (16,262)
--------------- ----------------
Net income......................................... $ 64,580 $ 75,294
=============== ================
At December 31,
---------------
Total assets (primarily real estate)................. $ 1,462,864 $ 1,463,678
Total debt........................................... 67,048 25,893
Other liabilities.................................... 42,394 39,126
Preferred equity and preferred minority interests.... 705,250 729,100
Common equity and common minority interests.......... 648,172 669,559
(a) Included in discontinued operations are net gains on sale of real estate
facilities totaling $2,328,000 and $18,109,000 for the years ended December
31, 2006 and 2005, respectively.
F-19
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Other Investments
-----------------
Other investments consist primarily of an average approximately 22%
common equity ownership in five limited partnerships that own an aggregate of 22
self-storage facilities.
The following table sets forth certain condensed financial information
(representing 100% of these entities' balances and not our pro-rata share) with
respect to these other investments:
2006 2005
--------------- ---------------
(Amounts in thousands)
For the year ended December 31,
-------------------------------
Total revenue........................ $ 17,459 $ 16,563
Cost of operations and other expenses (6,674) (6,390)
Depreciation and amortization........ (2,031) (2,039)
--------------- ---------------
Net income....................... $ 8,754 $ 8,134
=============== ===============
At December 31,
----------------
Total assets (primarily storage $ 48,002 $ 48,255
facilities)......................
Total liabilities.................... 1,104 1,240
Total Partners' equity............... 46,898 47,015
7. Bank Credit Facilities
----------------------
On December 27, 2006, we entered into a $300 million unsecured
short-term credit agreement (the "Bridge Loan") with a commercial bank that
matures April 1, 2007. Pursuant to the credit agreement, we borrowed $300
million at an initial interest rate of LIBOR plus 0.30% (5.63% at December 31,
2006). We used the proceeds from this facility in funding the prepayment of the
(euro)325 million collateralized notes payable that were otherwise due in 2011.
See Note 8 for further discussion of this prepayment. At December 31, 2006, our
outstanding borrowings under this facility totaled $300 million. On January 10,
2007, borrowings under this facility were repaid in full and the Bridge Loan
terminated.
We also have a revolving line of credit (the "Credit Agreement") with
an aggregate limit with respect to borrowings and letters of credit of $200
million, that has a maturity date of April 1, 2007 and bears an annual interest
rate ranging from the London Interbank Offered Rate ("LIBOR") plus 0.50% to
LIBOR plus 1.20% depending on our credit ratings (LIBOR plus 0.50% at December
31, 2006). In addition, we are required to pay a quarterly commitment fee
ranging from 0.15% per annum to 0.30% per annum depending on our credit ratings
(0.15% per annum at December 31, 2006). Outstanding borrowings on our revolving
line of credit totaled $45 million and $80 million at December 31, 2006 and
February 28, 2007 (unaudited), respectively.
The Credit Agreement includes various covenants, the more significant
of which require us to (i) maintain a balance sheet leverage ratio of less than
0.55 to 1.00, (ii) maintain certain quarterly interest and fixed-charge coverage
ratios (as defined therein) of not less than 2.25 to 1.0 and 1.5 to 1.0,
respectively, and (iii) maintain a minimum total shareholders' equity (as
defined therein). In addition, we are limited in our ability to incur additional
borrowings (we are required to maintain unencumbered assets with an aggregate
book value equal to or greater than 1.5 times our unsecured recourse debt). We
were in compliance with all covenants of the Credit Agreement at December 31,
2006.
At December 31, 2006 and February 28, 2007 (unaudited), we had undrawn
standby letters of credit, which reduces our borrowing capability with respect
to our line of credit by the amount of the letter of credit, totaling
$21,068,000 ($17,985,000 at December 31, 2005). The beneficiaries of these
standby letters of credit were certain insurance companies associated with our
captive insurance and tenant re-insurance activities, collateral for certain
construction projects, and a mortgage note.
F-20
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
8. Notes payable
-------------
Notes payable at December 31, 2006 and 2005 consist of the following
(dollar amounts in thousands):
December 31, 2006 December 31, 2005
-------------------------------- --------------------------------
Carrying Fair Carrying Fair
amount value amount value
---------------- --------------- ----------------- --------------
DOMESTIC UNSECURED NOTES PAYABLE:
5.875% effective and stated note rate, interest only and
payable semi-annually, matures in March 2013......... $ 200,000 $ 205,999 $ - $ -
5.73% effective rate, 7.75% stated note rate, interest only
and payable semi-annually, matures in February 2011
(carrying amount includes $14,033 of unamortized premium
at December 31, 2006) ............................... 214,033 221,244 - -
6.53% effective rate, 7.625% stated note rate, interest only
and payable semi-annually, matures in April 2007
(carrying amount includes $119 of unamortized premium at
December 31, 2006) .................................. 50,119 50,119 - -
7.66% senior unsecured note due January 2007............ 11,200 11,200 22,400 23,060
DOMESTIC MORTGAGE NOTES:
Fixed rate mortgage notes payable, secured by 63 real estate
facilities with a net book value of $459,764 at
December 31, 2006, average effective interest rates of 5.59%
and stated note rates between 4.95% and 8.78%, due between
December 2006 and August 2015 (carrying amount includes
$4,145 of unamortized premium at December 31, 2006) . 166,737 164,953 - -
Variable rate mortgage notes payable, secured by six real
estate facilities with a net book value of $20,895 at
December 31, 2006,(average interest rate of 7.32% at
December 31, 2006) which approximate market rates, due
between December 2007 and August 2010 ............... 8,428 8,428 - -
Fixed rate mortgage notes payable, secured by 33 real estate
facilities with a net book value of $194,285 at
December 31, 2006, stated note rates between 5.05% and 8.75%,
principal and interest payable monthly, due at varying dates
between October 2009 and September 2028 (carrying
amount includes $4,471 of unamortized premium at December
31, 2006)............................................ 91,489 89,049 91,550 89,822
EUROPEAN SECURED NOTES PAYABLE:
(euro)325 million notes payable due in 2011, collateralized
by 101 real estate facilities with a net book value of
$951,548 at December 31, 2006 (interest rate of
EURIBOR + 0.51%, 3.826% average for year ended
December 31, 2006, 3.928% rate at December 31, 2006). 428,760 428,670 - -
First and Second Shurgard credit agreement, due in 2008 and
2009, secured by 60 real estate facilities with a net book
value of $426,555 at December 31, 2006 (interest rate of
EURIBOR + 2.25%, 5.534% average for year ended
December 31, 2006, 5.915% rate at December 31, 2006 which
approximate market rates)............................ 288,918 288,918 - -
Liability under Capital Leases.......................... 6,600 6,600 - -
---------------- --------------- ----------------- --------------
Total notes payable.............................. $ 1,466,284 $ 1,475,180 $ 113,950 $ 112,882
================ =============== ================= ==============
F-21
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
The 5.875%, 5.73%, and 6.53% effective rate domestic unsecured notes
payable were assumed in connection with the merger with Shurgard. The notes were
recorded at their estimated fair value based upon estimated market rates for
debt with similar terms and ratings upon assumption. As of the date of the
merger with Shurgard, the aggregate fair value of these notes was approximately
$465,692,000 as compared to the actual assumed balances of $450,000,000. This
initial premium of $15,692,000 is being amortized over the remaining term of the
notes using the effective interest method.
The domestic unsecured notes payable have various restrictive
covenants, the more significant of which require us to (i) maintain a ratio of
debt to total assets (as defined therein) of less than 0.60 to 1.00, (ii)
maintain a ratio secured debt to total assets (as defined therein) of less than
0.40 to 1.00, (iii) maintain a debt service coverage ratio (as defined therein)
of greater than 1.50 to 1.00, and (iv) maintain a ratio of unencumbered assets
to unsecured debt (as defined therein) of greater than 150%, all of which have
been met at December 31, 2006.
The 5.59% fixed rate domestic mortgage notes were also assumed in
connection with the merger. These mortgage notes were recorded at their
estimated fair value based upon the estimated market rate upon assumption of
approximately 5.59%, an aggregate of approximately $184,592,000 as compared to
the actual assumed balances of an aggregate of $179,827,000. This initial
premium of $4,765,000 is being amortized over the remaining term of the mortgage
notes using the effective interest method. These mortgage notes require interest
and principal payments to be paid monthly and have various restrictive
covenants, all of which have been met at December 31, 2006.
We also assumed an additional $671,047,000 in debt in the merger with
Shurgard, comprised of Shurgard's line of credit totaling $603,772,000, and
certain variable rate notes totaling $67,275,000. This debt was repaid
immediately following the merger.
We assumed a 5.58% mortgage note in connection with a property
acquisition during the first quarter of 2006. The note was recorded at the
stated rate, which we believe approximates the market rate for similar mortgage
notes.
On January 2, 2007, we repaid the (euro)325 million collateralized
European notes that were otherwise payable in 2011. We also terminated the
related European currency and interest rate hedges.
First Shurgard and Second Shurgard (see Note 11) have senior credit
agreements denominated in euros to borrow, in aggregate, up to (euro)271 million
($357.5 million as of December 31, 2006). As of December 31, 2006, the available
amount under those credit facilities was, in aggregate, (euro)52 million ($68.6
million). Our draws under the First Shurgard and Second Shurgard credit
facilities are determined on a development project basis, or on an acquisition
project basis when applicable for Second Shurgard, and can be limited if the
completion of projects is not timely and if we have certain cost overruns. The
credit facilities also require us to maintain a maximum loan to value of the
collateral ratio and a minimum debt service ratio. As of December 31, 2006, we
were in compliance with these financial covenants.
F-22
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
At December 31, 2006, approximate principal maturities of our notes
payable are as follows (amounts in thousands):
Domestic
Domestic Mortgage Notes European Capital Leases
Notes Payable Payable Notes Payable - Europe Total
---------------- ----------------- ---------------- --------------- --------------
2007......................... $ 63,483 $ 9,892 $ 2,375 $ 95 $ 75,845
2008......................... 3,320 27,848 170,449 104 201,721
2009......................... 3,515 9,367 116,095 114 129,091
2010......................... 3,722 17,775 - 79 21,576
2011......................... 201,312 27,703 428,759 723 658,497
Thereafter................... 200,000 174,069 - 5,485 379,554
---------------- ----------------- ---------------- --------------- --------------
$ 475,352 $ 266,654 $ 717,678 $6,600 $1,466,284
================ ================= ================ =============== ==============
Weighted average rate........ 5.3% 5.4% 5.0% 8.8% 5.2%
================ ================= ================ =============== ==============
We incurred interest expense with respect to our notes payable,
excluding capital leases, aggregating $31,949,000, $6,639,000 and $4,377,000 for
the years ended December 31, 2006, 2005 and 2004, respectively. These amounts
were comprised of $35,058,000, $7,665,000 and $4,377,000 in cash for the years
ended December 31, 2006 and 2005 and 2004, respectively, less $3,109,000,
$1,026,000 and nil in amortization of premium, respectively.
The present value of net minimum capital lease payments at December 31,
2006, was as follows (amounts in thousands):
PRESENT VALUE OF NET MINIMUM CAPITAL LEASE PAYMENTS
---------------------------------------------------
Capital lease future payments.......... $40,774
Amount representing interest........... (34,174)
Present value of net minimum capital lease payments $6,600
The net book value of the properties under capital leases was $6.6
million as of December 31, 2006, which is net of accumulated depreciation of
$1.6 million. We recognized depreciation expense on these properties totaling
$0.1 million for the year ended December 31, 2006.
9. Debt to Joint Venture Partner
-----------------------------
On December 31, 2004, we sold seven self-storage facilities to an
unconsolidated affiliated joint venture for $22,993,000. On January 14, 2005, we
sold an 86.7% interest in three additional self-storage facilities to the joint
venture for an aggregate amount of $27,424,000. Our partner's combined equity
contribution with respect to these transactions was $35,292,000. Due to our
continuing interest in these facilities and the likelihood that we will exercise
our option to acquire our partner's interest, we have accounted for our
partner's investment in these facilities as, in substance, debt financing.
Accordingly, our partner's investment with respect to these facilities is
accounted for as a liability on our accompanying consolidated balance sheets.
Our partner's share of operations with respect to these facilities has been
accounted for as interest expense on our accompanying consolidated statements of
income.
The outstanding balances of $37,258,000 and $35,697,000 due the joint
venture partner as of December 31, 2006 and 2005, respectively, approximate the
fair value of our partners' interest in these facilities as of each respective
date. On a quarterly basis, we review the fair value of this liability, and to
the extent fair value exceeds the carrying value of the liability, an adjustment
is made to increase the liability to fair value, and to increase other assets,
with the other assets amortized over the remaining period term of the joint
venture. We increased the note balance by $1,386,000 during 2006 as a result of
our periodic review of fair value.
F-23
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
A total of $3,036,000 and $2,939,000 was recorded as interest expense
on our consolidated statements of income with respect to the Debt to Joint
Venture Partner during the years ended December 31, 2006 and 2005, respectively,
representing our partner's pro rata share of the net earnings with respect to
the properties (an 8.5% return on their investment). This interest expense was
comprised of a total of $2,862,000 and $2,534,000 paid to our joint venture
partner (an 8.0% return payable currently in accordance with the partnership
agreement) during the years ended December 31, 2006 and 2005, respectively, and
increases in Debt to Joint Venture Partner of $175,000 and $405,000 for the
years ended December 31, 2006 and 2005, respectively.
We expect that this debt will be repaid during 2008, assuming that we
exercise our option to acquire our partner's interest in the joint venture.
10. Derivative Financial Instruments
--------------------------------
As described in Note 2, under Derivative Financial Instruments, we
report these derivative financial instruments at fair value on our consolidated
balance sheet at December 31, 2006 and changes in fair values from the date of
the Shurgard merger through December 31, 2006, have been recognized in earnings.
The respective balances of these financial instruments are included in other
assets and accrued and other liabilities as follows:
December 31, 2006
---------------------
(Amounts in
thousands)
Assets:
Interest rate contracts............................. $ 11,810
Foreign currency exchange contracts................. -
---------------------
$ 11,810
=====================
Liabilities:
Interest rate contracts............................. $ (4,162)
Foreign currency exchange contracts................. (7,837)
---------------------
$ (11,999)
=====================
For the year ended December 31, 2006, net income from derivatives was
comprised of a change in value of the related instruments representing a gain of
$5,826,000, less $1,900,000 in net payments incurred during the period under the
underlying instruments.
On January 2, 2007, in connection with our prepayment of the (euro)325
million collateralized notes at our European operations, we terminated the
related European currency and interest rate hedges. These terminated hedges
comprised approximately $8,605,000 of the $11,810,000 in assets and $10,175,000
of the $11,999,000 in liabilities included in the table above.
11. Minority Interest
-----------------
In consolidation, we classify ownership interests in the net assets of
each of the Consolidated Entities, other than our own, as minority interest on
our consolidated financial statements. Minority interest in income consists of
the minority interests' share of the operating results of the Consolidated
Entities, or in the case of preferred partnership interests, distributions paid,
plus amounts associated with the application of EITF topic D-42 as it relates to
the redemption of preferred partnership interests.
F-24
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Preferred partnership interests:
--------------------------------
At December 31, 2006 and 2005, we had the following series of preferred
partnership units outstanding:
At December 31, 2006 At December 31, 2005
Earliest Redemption Distribution Units Carrying Units Carrying
Series Date Rate Outstanding Amount Outstanding Amount
---------------- --------------------- -------------- ------------ ------------ --------------- ------------
(amounts in thousands)
Series NN...... March 17, 2010 6.400% 8,000 $ 200,000 8,000 $ 200,000
Series Z....... October 12, 2009 6.250% 1,000 25,000 1,000 25,000
Series J ...... May 9, 2011 7.250% 4,000 100,000 - -
----------- ------------ --------------- ------------
Total.......... 13,000 $ 325,000 9,000 $ 225,000
=========== ============ =============== ============
On May 9, 2006, one of the Consolidated Entities issued 4,000,000 units
of 7.25% Series J Preferred Partnership Units for cash proceeds of $100.0
million.
Subject to certain conditions, the Series NN preferred partnership
units are convertible into shares of our 6.40% Series NN Cumulative Preferred
Stock, the Series Z preferred partnership units are convertible into shares of
our 6.25% Series Z Cumulative Preferred Stock and the Series J preferred
partnership units are convertible into shares of our 7.25% Series J Cumulative
Preferred Stock. The preferred partnership units are not redeemable during the
first five years, thereafter, at our option, we can call the units for
redemption at the issuance amount plus any unpaid distributions. The Series NN
and Series J preferred partnership units are not redeemable by the holder. The
holders of the Series Z preferred partnership units have a one-time option,
exercisable five years from issuance, to require us to redeem their units for
$25.0 million in cash plus any unpaid distributions.
For each of the years ended December 31, 2006, 2005, and 2004, the
holders of the preferred partnership units were paid in aggregate approximately
$19,055,000, $16,147,000, and $30,423,000, respectively, in distributions
(excluding the special distribution paid on March 22, 2004, described below),
and received an equivalent allocation of minority interest in earnings. In
addition, in 2005 and 2004, income allocated to minority interests was increased
by $874,000 and $2,063,000, respectively, due to the application of EITF Topic
D-42.
Other partnership interests
---------------------------
Minority interest at December 31, 2006 and 2005, and minority interest
in income for each of the three years in the period ended December 31, 2006 with
respect to the other partnership interests are comprised of the following:
Minority interest at Minority interest in income for the year ended
-------------------------------- ----------------------------------------------------
December 31, December 31, December 31, December 31, December 31,
Description of Minority Interest 2006 2005 2006 2005 2004
---------------------------------- --------------- ---------------- ----------------- --------------- ------------------
(Amounts in thousands)
European joint ventures.......... $ 140,034 $ - $ (3,631) $ - $ -
Newly Consolidated Partnerships.. 4,085 - 5,259 - -
Shurgard domestic joint ventures. 8,023 - 417 - -
Consolidated Development
Joint Venture............. - - - 4,229 5,652
Convertible Partnership Units.... 5,710 6,177 151 469 328
Other Consolidated Partnerships.. 23,178 22,793 10,632 10,932 11,447
--------------- ---------------- ----------------- --------------- ------------------
Total other partnership interests $ 181,030 $ 28,970 $ 12,828 $ 15,630 $ 17,427
=============== ================ ================= =============== ==================
F-25
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
European Joint Ventures
-----------------------
Through the merger with Shurgard, we acquired two joint venture
entities: First Shurgard SPRI ("First Shurgard") formed in January 2003 and
Second Shurgard SPRL ("Second Shurgard") formed in May 2004. Those joint
ventures were expected to develop or acquire up to approximately 75 storage
facilities in Europe. Through a wholly-owned subsidiary, we have a 20% interest
in each of these ventures. We have determined that First Shurgard and Second
Shurgard are each VIEs, and that we are the primary beneficiary. Accordingly,
First Shurgard and Second Shurgard have been consolidated in our consolidated
financial statements. At December 31, 2006, First Shurgard and Second Shurgard
had aggregate total assets of $497.2 million, total liabilities of $322.1
million, and credit facilities collateralized by assets with a net book value of
$288.9 million. At December 31, 2006, First Shurgard's and Second Shurgard's
creditors had no recourse to the general credit of Public Storage or Shurgard
Europe other than a commitment, previously made by Shurgard, to subscribe to up
to $20 million and an additional (euro)7.5 million ($9.9 million as of December
31, 2006) in preferred bonds in order for First Shurgard to fulfill its
obligations under its senior credit agreement. We have an option to put 80% of
the bonds issued by First Shurgard to Crescent Euro Self Storage Investments,
Shurgard Europe's partner in the joint venture.
On September 5, 2006, we informed the joint venture partners of First
Shurgard and Second Shurgard of our intention to purchase their interests in
First Shurgard and Second Shurgard, pursuant to an "exit procedure" that we
believe is provided for in the respective agreements. Our joint venture partners
currently contest whether we have the right to purchase their interests under
this procedure. Further, the exit procedure can, in certain circumstances,
result in a third party acquiring the facilities owned by First and Second
Shurgard, including our interest in these facilities. Accordingly, it is
uncertain as to whether we will acquire their interests pursuant to these
provisions. On January 17, 2007, we filed an arbitration request to compel
arbitration of the matter.
Newly Consolidated Partnerships
-------------------------------
As further described in Note 2, effective January 1, 2006 we commenced
consolidating the accounts of three partnerships that we had previously
accounted for under the equity method of accounting. This consolidation resulted
in a $3,963,000 increase in minority interest on January 1, 2006. Effective
January 1, 2006, the income allocated to the interests we do not own in these
three partnerships is shown in the table above under Newly Consolidated
Partnerships.
Shurgard Domestic Joint Ventures
--------------------------------
Following the merger with Shurgard, we acquired the minority interests
in certain of Shurgard's joint ventures, for an aggregate of approximately
$62,300,000 in cash. As a result of these transactions, we obtained the
remaining interest in a total of 68 self-storage facilities. This acquisition
was recorded as a reduction in minority interest totaling $12,177,000, with the
remainder allocated to real estate ($50,123,000).
The partnership agreements of the joint ventures have termination dates
that cannot be unilaterally extended by the Company and, upon termination of
each partnership, the net assets of these entities would be liquidated and paid
to the minority interests and the Company based upon their relative ownership
interests.
Consolidated Development Joint Venture
--------------------------------------
In November 1999, we formed a development joint venture (the
"Consolidated Development Joint Venture") with a joint venture partner (PSAC
Storage Investors, LLC, referred to as "PSAC") whose partners included a third
party institutional investor and B. Wayne Hughes ("Mr. Hughes"), the Chairman of
the Board of the Company, to develop approximately $100 million of self-storage
facilities and to purchase $100 million of the our Equity Stock, Series AAA. We
owned a controlling interest in the Consolidated Development Joint Venture and
included the accounts of this partnership in our consolidated financial
statements since its inception. PSAC's interest in the Consolidated Development
Joint Venture was accounted for as minority interest, as denoted in the above
table.
F-26
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
On August 5, 2005, we acquired the institutional investor's interest in
PSAC for approximately $41,420,000 in cash. This acquisition gave us a
controlling position in PSAC and the right to acquire the remaining interest in
PSAC, held by Mr. Hughes, for a stipulated amount on November 17, 2005. We
immediately notified Mr. Hughes of our intent to acquire his interest on
November 17, 2005.
On August 5, 2005, we commenced consolidating the accounts of PSAC. The
total acquisition cost of the transaction was $105,933,000, comprised of the
$41,420,000 in cash paid to the institutional investor and $64,513,000 in debt
due to Mr. Hughes. Mr. Hughes' interest in PSAC was accounted for as debt due to
the exercise of our right to acquire his interest. The total acquisition cost
eliminated the book value of minority interest on the date of acquisition
($62,013,000) with the remainder allocated to real estate ($43,920,000).
The preferred return that Mr. Hughes accrued from August 5, 2005
through November 17, 2005 amounting to $1,458,000 is reflected on our
consolidated statements of income as interest expense. On November 17, 2005, we
acquired Mr. Hughes' interest for an aggregate of $64,513,000 in cash, plus
accrued and unpaid interest, extinguishing the debt.
Convertible Partnership Units
-----------------------------
At December 31, 2006, one of the Consolidated Entities had
approximately 231,978 convertible partnership units ("Convertible Units")
outstanding (237,934 at December 31, 2005) representing a limited partnership
interest in the partnership. The Convertible Units are convertible on a
one-for-one basis (subject to certain limitations) into common stock of the
Company at the option of the unit-holder. Minority interest in income with
respect to Convertible Units reflects the Convertible Units' share of our net
income, with net income allocated to minority interests with respect to weighted
average outstanding Convertible Units on a per unit basis equal to diluted
earnings per common share. During the year ended December 31, 2006, a total of
5,956 units were converted into common shares (none during 2005 and 2004). As a
result of this conversion, minority interest was reduced by $155,000.
Other Consolidated Partnerships
-------------------------------
The partnership agreements of the Other Consolidated Partnerships
included in the table above have termination dates that cannot be unilaterally
extended by the Company and, upon termination of each partnership, the net
assets of these entities would be liquidated and paid to the minority interests
and the Company based upon their relative ownership interests.
At December 31, 2006 and 2005, the Other Consolidated Partnerships
reflect common equity interests that we do not own in 22 entities owning an
aggregate of 73 self-storage facilities.
In January 2005, we acquired a portion of the minority interest we did
not own in one of the Consolidated Entities for an aggregate of $4,366,000 in
cash. The acquisition resulted in the reduction of minority interest by
$2,828,000 with the excess of cost over underlying book value ($1,538,000)
allocated to real estate.
F-27
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
In April 2005, we acquired minority interests we did not own in two
Consolidated Entities for an aggregate of $32,432,000 in cash. The acquisition
resulted in a reduction of minority interest of $15,394,000 with the excess of
cost over underlying book value ($17,038,000) allocated to real estate.
In August 2005, we acquired the remaining minority interests we did not
own in the Consolidated Entities for an aggregate of $14,597,000 in cash. The
acquisition resulted in a reduction of minority interest of $7,151,000 with the
excess of cost over underlying book value ($7,446,000) allocated to real estate.
Impact of SFAS No. 150
----------------------
In May 2003, the FASB issued Statement of Financial Accounting
Standards No. 150 - "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity" (SFAS No. 150"). This statement
prescribes reporting standards for financial instruments that have
characteristics of both liabilities and equity. This standard generally
indicates that certain financial instruments that give the issuer a choice of
setting an obligation with a variable number of securities or settling an
obligation with a transfer of assets, any mandatorily redeemable security, and
certain put options and forward purchase contracts, should be classified as a
liability on the balance sheet. With the exception of minority interests,
described below, we implemented SFAS No. 150 on July 1, 2003, and the adoption
had no impact on our financial statements.
The provisions of SFAS No. 150 indicate that the Other Minority
Interests would have to be treated as a liability, because these partnerships
have termination dates that cannot be unilaterally extended by us and, upon
termination, the net assets of these entities would be liquidated and paid to
the minority interest and us based upon relative ownership interests. However,
on October 29, 2003, the FASB decided to defer indefinitely a portion of the
implementation of SFAS No. 150, which thereby deferred our requirement to
recognize these minority interest liabilities. We estimate that the fair value
of the Other Partnership Interests is approximately $450 million at December
31, 2006.
F-28
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
12. Shareholders' equity
--------------------
Cumulative Preferred Stock
--------------------------
At December 31, 2006 and 2005, we had the following series of
Cumulative Preferred Stock outstanding:
At December 31, 2006 At December 31, 2005
---------------------------- --------------------------
Earliest
Redemption Dividend Shares Carrying Shares Carrying
Series Date Rate Outstanding Amount Outstanding Amount
--------------------- -------------- ------------ -------------- ------------- ------------- ------------
(Dollar amounts in thousands)
Series R 9/28/06 8.000% - $ - 20,400 $ 510,000
Series S 10/31/06 7.875% - - 5,750 143,750
Series T 1/18/07 7.625% - - 6,086 152,150
Series U 2/19/07 7.625% - - 6,000 150,000
Series V 9/30/07 7.500% 6,900 172,500 6,900 172,500
Series W 10/6/08 6.500% 5,300 132,500 5,300 132,500
Series X 11/13/08 6.450% 4,800 120,000 4,800 120,000
Series Y 1/2/09 6.850% 1,600,000 40,000 1,600,000 40,000
Series Z 3/5/09 6.250% 4,500 112,500 4,500 112,500
Series A 3/31/09 6.125% 4,600 115,000 4,600 115,000
Series B 6/30/09 7.125% 4,350 108,750 4,350 108,750
Series C 9/13/09 6.600% 4,600 115,000 4,600 115,000
Series D 2/28/10 6.180% 5,400 135,000 5,400 135,000
Series E 4/27/10 6.750% 5,650 141,250 5,650 141,250
Series F 8/23/10 6.450% 10,000 250,000 10,000 250,000
Series G 12/12/10 7.000% 4,000 100,000 4,000 100,000
Series H 1/19/11 6.950% 4,200 105,000 - -
Series I 5/3/11 7.250% 20,700 517,500 - -
Series K 8/8/11 7.250% 18,400 460,000 - -
Series L 10/20/11 6.750% 9,200 230,000 - -
------------- -------------- ------------- -------------
Total Cumulative Preferred Stock 1,712,600 $ 2,855,000 1,698,336 $ 2,498,400
============= ============== ============= =============
During 2006, we issued four series of Cumulative Preferred Stock:
Series H - issued January 19, 2006, net proceeds totaling $101,492,000, Series I
- issued May 3, 2006, net proceeds totaling $501,601,000, Series K - issued
August 8, 2006, net proceeds totaling $445,852,000 and Series L - issued October
20, 2006, aggregate net proceeds totaling $223,623,000. During 2005, we issued
four series of Cumulative Preferred Stock: Series D - issued February 28, 2005,
net proceeds totaling $130,548,000, Series E - issued April 27, 2005, net
proceeds totaling $136,601,000, Series F - issued August 23, 2005, net proceeds
totaling $242,550,000 and Series G - issued December 12, 2005, aggregate net
proceeds totaling $96,886,000. During 2004, we issued five series of Cumulative
Preferred Stock: Series Y - issued January 2, 2004, net proceeds $40,000,000,
Series Z - issued March 5, 2004, net proceeds $108,756,000, Series A - issued
March 31, 2004, net proceeds $111,177,000, Series B - issued June 30, 2004, net
proceeds $105,124,000, Series C - issued September 13, 2004, net proceeds
$111,177,000.
Upon issuance of our Cumulative Preferred Stock, we classify the
liquidation value as preferred stock, with any issuance costs recorded as a
reduction in Paid-in Capital.
During 2006, we redeemed our Series R and Series S Cumulative Preferred
Stock at par value plus accrued dividends. In December 2006, we called for
redemption our Series T and Series U Cumulative Preferred Stock, at par. The
aggregated redemption value of $302,150,000 of these two series has been
classified as a liability at December 31, 2006. During 2005, we redeemed our
Series F Cumulative Preferred Stock, at par value plus accrued dividends. In
November 2005, we called for redemption our Series Q Cumulative Preferred Stock,
at par. The total redemption value for this series was classified as a liability
at December 31, 2005. During 2004, we redeemed our Series K, Series L, Series M,
and Series D Cumulative Preferred Stocks (including redemption expenses) at par
plus accrued dividends.
F-29
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Except under certain conditions relating to the Company's qualification
as a REIT, the various series of Cumulative Preferred Stock are not redeemable
prior to the dates indicated. On or after the dates indicated, each series of
Cumulative Preferred Stock will be redeemable, at our option, in whole or in
part, at $25.00 per depositary share (or per share in the case of the Series Y),
plus accrued and unpaid dividends. The holders of our Cumulative Preferred Stock
have general preference rights with respect to liquidation and quarterly
distributions and, except under certain conditions and as noted below, will not
be entitled to vote on most matters. In the event of a cumulative arrearage
equal to six quarterly dividends or failure to maintain a Debt Ratio (as
defined) of 50% or less, holders of all outstanding series of preferred stock
(voting as a single class without regard to series) will have the right to elect
two additional members to serve on the Company's Board of Directors until events
of default have been cured. At December 31, 2006, there were no dividends in
arrears and the Debt Ratio was 16.6%.
Common Stock
------------
During 2006, 2005 and 2004, activity with respect to our Common Stock
was as follows:
2006 2005 2004
------------------------- -------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
------------ ------------ ------------- ------------ ------------ -------------
(Dollar amounts in thousands)
Merger with Shurgard:
Issuance of common stock.... 38,913,187 $ 3,116,850 - $ - - $ -
Conversion of stock options. - 69,296 - - - -
Employee stock-based
compensation................ 2,135,761 85,369 282,998 7,511 1,985,416 49,929
Shares received as a distribution
from unconsolidated entities. - - (635,885) (14,520) - -
Conversion of partnership units.. 5,956 155 - - - -
Repurchases of common stock...... - - (84,000) (4,990) (445,700) (20,295)
------------ ------------ ------------- ------------ ------------ -------------
41,054,904 $ 3,271,670 (436,887) $ (11,999) 1,539,716 $ 29,634
============ ============ ============= ============ ============ =============
In connection with the merger with Shurgard, we issued 38,913,187
common shares to the former Shurgard shareholders. In addition, we issued vested
common stock options in exchange for Shurgard stock options, with an intrinsic
value of $69,296,000 at the merger date.
During 2005, we received a distribution of 503,110 shares, and one of
the Consolidated Entities received 132,775 shares, of our Common Stock
previously held by the Unconsolidated Entities. The 503,110 shares that we
received were retired.
At December 31, 2006 and 2005, certain Consolidated Entities owned
1,146,207 shares of our Common Stock. In the consolidation process, these shares
and the related balance sheet amounts have been eliminated. In addition, these
shares are not included in the computation of weighted average shares
outstanding. These shares continue to be legally issued and outstanding.
Our Board of Directors 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. Through December 31, 2006, we have
repurchased a total of 22,201,720 shares of our Common Stock pursuant to this
authorization.
F-30
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
At December 31, 2006 and 2005, we had 3,025,747 and 4,735,647 shares of
Common Stock reserved in connection with our stock-based incentive plans,
respectively, (see Note 14) and 231,978 and 237,934 shares reserved for the
conversion of Convertible Partnership Units, respectively.
Equity Stock
------------
The Company is authorized to issue up to 200,000,000 shares of Equity
Stock. The Articles of Incorporation provide that the Equity Stock may be issued
from time to time in one or more series and gives the Board of Directors broad
authority to fix the dividend and distribution rights, conversion and voting
rights, redemption provisions and liquidation rights of each series of Equity
Stock.
Equity Stock, Series A
----------------------
At December 31, 2006 and 2005, we had 8,744,193 depositary shares
outstanding each representing 1/1,000 of a share of Equity Stock, Series A
("Equity Stock A"). We received 31,909 depositary shares from a distribution
from affiliated entities during 2005 (see Note 6). The Equity Stock, Series A
ranks on parity with common stock and junior to the Cumulative Preferred Stock
with respect to general preference rights and has a liquidation amount which
cannot exceed $24.50 per share. Distributions with respect to each depositary
share shall be the lesser of: i) five times the per share dividend on the common
stock or ii) $2.45 per annum. We have no obligation to pay distributions on the
depositary if no distributions are paid to common shareholders.
Except in order to preserve the Company's federal income tax status as
a REIT, we may not redeem the depositary shares before March 31, 2010. On or
after March 31, 2010, we may, at our option, redeem the depositary shares at
$24.50 per depositary share. If the Company fails to preserve its federal income
tax status as a REIT, each depositary share will be convertible at the option of
the shareholder into .956 shares of our common stock. The depositary shares are
otherwise not convertible into common stock. Holders of depositary shares vote
as a single class with our holders of our common stock on shareholder matters,
but the depositary shares have the equivalent of one-tenth of a vote per
depositary share.
Dividends
---------
The unaudited characterization of dividends for Federal income tax
purposes is made based upon earnings and profits of the Company, as defined by
the Internal Revenue Code. For the tax year ended December 31, 2006,
distributions for the common stock, Equity Stock, Series A, and all the various
series of preferred stocks were classified as follows:
2006 (unaudited)
----------------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
---------------- ------------------- ----------------- ------------------
Ordinary Income 100.00% 100.00% 100.00% 100.00%
Long-Term Capital Gain 0.00% 0.00% 0.00% 0.00%
---------------- ------------------- ----------------- ------------------
Total 100.00% 100.00% 100.00% 100.00%
================ =================== ================= ==================
F-31
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
The following table summarizes dividends for the years ended December
31, 2006, 2005 and 2004:
2006 2005 2004
---------------------- ---------------------- -------------------------
Per share Total Per share Total Per share Total
----------- ---------- ------------ --------- --------------- ---------
(Amounts in thousands, except per share data)
Cumulative Preferred Stock
--------------------------
Series D - - - - $1.776 2,131
Series E - - $0.208 457 $2.500 5,488
Series F - - $0.819 1,884 $2.437 5,606
Series K - - - - $0.109 501
Series L - - - - $0.395 1,818
Series M - - - - $1.373 3,089
Series Q $0.108 742 $2.150 14,835 $2.150 14,835
Series R $1.483 30,255 $2.000 40,800 $2.000 40,800
Series S $1.641 9,437 $1.969 11,320 $1.969 11,320
Series T $1.906 11,601 $1.906 11,601 $1.906 11,601
Series U $1.906 11,438 $1.906 11,438 $1.906 11,438
Series V $1.875 12,938 $1.875 12,938 $1.875 12,938
Series W $1.625 8,612 $1.625 8,612 $1.625 8,612
Series X $1.613 7,740 $1.613 7,740 $1.613 7,740
Series Y $1.713 2,740 $1.713 2,740 $1.708 2,732
Series Z $1.563 7,031 $1.563 7,031 $1.289 5,801
Series A $1.531 7,044 $1.531 7,044 $1.153 5,302
Series B $1.781 7,748 $1.781 7,748 $0.896 3,896
Series C $1.650 7,590 $1.650 7,590 $0.495 2,277
Series D $1.545 8,344 $1.292 6,976 - -
Series E $1.688 9,536 $1.144 6,463 - -
Series F $1.613 16,124 $0.543 5,430 - -
Series G $1.750 7,000 $0.093 370 - -
Series H $1.654 6,945 - - - -
Series I $1.203 24,908 - - - -
Series K $0.725 13,340 - - - -
Series L $0.338 3,105 - - - -
----------- --------- --------
214,218 173,017 157,925
Common Equivalent Stock
-----------------------
Common Stock $2.000 298,219 $1.900 244,200 $1.800 230,834
Equity Stock, Series A $2.450 21,424 $2.450 21,443 $2.450 21,501
----------- --------- --------
Total Distributions $533,861 $438,660 $410,260
=========== ========= ========
13. Related party transactions
--------------------------
Relationships and transactions with the Hughes Family
-----------------------------------------------------
Mr. Hughes and his family (collectively the "Hughes Family") have
ownership interests in, and operate approximately 44 self-storage facilities in
Canada under the name "Public Storage" ("PS Canada") pursuant to a license
agreement with the Company. We currently do not own any interests in these
facilities nor do we own any facilities in Canada. The Hughes Family owns
approximately 27% of our Common Stock outstanding at December 31, 2006. We have
a right of first refusal to acquire the stock or assets of the corporation that
manages the 44 self-storage facilities in Canada, if the Hughes Family or the
corporation agrees to sell them. However, we have no interest in the operations
of this corporation, we have no right to acquire this stock or assets unless the
Hughes Family decides to sell, the right of first refusal does not apply to the
self-storage facilities, and we receive no benefit from the profits and
increases in value of the Canadian self-storage facilities.
F-32
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
In October 2005, the Company's Board of Directors (with Mr. Hughes and
B. Wayne Hughes Jr. abstaining) approved the reimbursement of CAD $653,424, plus
CAD $52,274 in interest accrued at 4% per annum, representing the amount
previously charged to the Canadian entities for system development costs that
Company no longer permits them to use. These amounts were reimbursed in November
2005.
Through consolidated entities, we continue to reinsure risks relating
to loss of goods stored by tenants in the self-storage facilities in Canada.
During 2006, 2005, and 2004, respectively, we received $989,000, $1,052,000, and
$1,069,000, respectively, in reinsurance premiums attributable to the Canadian
facilities. Since our right to provide tenant reinsurance to the Canadian
facilities may be qualified, there is no assurance that these premiums will
continue.
In November 1999, we formed the Consolidated Development Joint Venture
with a joint venture partner whose partners include an institutional investor
and Mr. Hughes (Note 11). On August 5, 2005, we acquired the institutional
investor's interest in PSAC. This acquisition gave us a controlling position in
PSAC and the right to acquire the remaining interest in PSAC which was held by
Mr. Hughes. We exercised this right and on November 17, 2005, we acquired Mr.
Hughes' interest in PSAC for $64,513,000 plus an accrued preferred return.
The Company and Mr. Hughes are co-general partners in certain
consolidated entities and affiliated entities of the Company that are not
unconsolidated. The Hughes Family also owns limited partnership interests in
certain of these entities. The Company and the Hughes Family receive
distributions from these partnerships in accordance with the terms of the
partnership agreements.
Other Related Party Transactions
--------------------------------
Ronald L. Havner, Jr. is our Vice-Chairman and Chief Executive Officer,
and he is Chairman of the Board of PSB.
Dann V. Angeloff, a director of the Company, is the general partner of
a limited partnership formed in June of 1973 that owns a self-storage facility
that is managed by us. We recorded management fees with respect to this facility
amounting to $68,000, $45,000, and $41,000 for the years ended December 31,
2006, 2005, and 2004, respectively.
PSB manages certain of the commercial facilities that we own pursuant
to management agreements for a management fee equal to 5% of revenues. We paid a
total of $625,000, $579,000, and $562,000 for the years ended December 31, 2006,
2005 and 2004, respectively, in management fees with respect to PSB's property
management services. At December 31, 2006, we have recorded amounts owed to PSB
of $871,000 ($551,000 at December 31, 2005), for management fees and certain
other operating expenses related to the managed facilities, paid by PSB on our
behalf. These amounts are the result of a time lag between PSB paying such
expenditures and being reimbursed by us.
We manage our wholly-owned self-storage facilities as well as the
facilities owned by the Consolidated Entities and affiliated entities that are
not consolidated on a joint basis, in order to take advantage of scale and other
efficiencies. As a result, significant components of self-storage operating
costs, such as payroll costs, advertising and promotion, data processing, and
insurance expenses are shared and allocated among the various entities using
methodologies meant to fairly allocate such costs based upon the related
activities. The amount of such expenses allocated to Unconsolidated Entities was
approximately $2.3 million, $4.1 million, and $4.2 million for the years ended
December 31, 2006, 2005, and 2004, respectively.
F-33
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Pursuant to a cost-sharing and administrative services agreement, PSB
reimburses us for certain administrative services that we provide to them. PSB's
share of these costs totaled approximately $320,000 for the year ended December
31, 2006 and $340,000 for each of the years ended December 31, 2005 and 2004,
respectively.
Stor-RE, a consolidated entity, and third party insurance carriers
provided PS Canada, the Company, PSB, and other affiliates of the Company with
liability and casualty insurance coverage until March 31, 2004. PS Canada owns a
2.2% interest and PSB owns a 4.0% interest in Stor-RE. PS Canada and PSB
obtained their own liability and casualty insurance covering occurrences after
April 1, 2004. For occurrences before April 1, 2004, STOR-Re continues to
provide liability and casualty insurance coverage consistent with the relevant
agreements.
14. Stock-based Compensation
------------------------
Description of Stock-Based Incentive Plan
-----------------------------------------
We have a 1990 Stock Option Plan (the "1990 Plan"), which provides for
the grant of non-qualified stock options. We have a 1994 Stock Option Plan (the
"1994 Plan"), a 1996 Stock Option and Incentive Plan (the "1996 Plan"), a 2000
Non-Executive/Non-Director Stock Option and Incentive Plan (the "2000 Plan"), a
2001 Non-Executive/Non-Director Stock Option and Incentive Plan (the "2001
Non-Executive Plan") and a 2001 Stock Option and Incentive Plan (the "2001
Plan"), each of which provides for the grant of non-qualified options and
incentive stock options. (The 1990 Plan, the 1994 Plan, the 1996 Plan and the
2000 Plan are collectively referred to as the "PSI Plans"). Under the PSI Plans,
the Company has granted non-qualified options to certain directors, officers and
key employees to purchase shares of the Company's common stock at a price equal
to the fair market value of the common stock at the date of grant. Generally,
options under the PSI Plans vest over a three-year period from the date of grant
at the rate of one-third per year (options granted after, December 31, 2002 vest
generally over a five-year period) and expire (i) under the 1990 Plan, five
years after the date they became exercisable and (ii) under the 1994 Plan, the
1996 Plan and the 2000 Plan, ten years after the date of grant. The 1996 Plan,
the 2000 Plan, the 2001 Non-Executive Plan and the 2001 Plan also provide for
the grant of restricted stock (see below) to officers, key employees and service
providers on terms determined by an authorized committee of the Board of
Directors. A total of approximately 2,331,371 and 3,012,671 securities were
available for grant at December 31, 2006 and 2005, respectively.
F-34
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Stock Options
-------------
Information with respect to stock options during 2006, 2005 and 2004 is
as follows:
2006 2005 2004
----------------------------- ---------------------------- ------------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
of Price per of Price per of Price per
Options Share Options Share Options Share
------------- --------------- ------------- -------------- ------------- -----------
Options outstanding January 1 1,423,146 $41.46 1,441,901 $35.07 3,088,618 $27.14
Granted (a) 2,208,328 49.67 288,000 62.56 353,500 51.46
Exercised (b) (c) (2,026,540) 41.99 (249,520) 30.10 (1,957,907) 25.51
Cancelled (2,000) 52.98 (57,235) 36.84 (42,310) 32.75
------------- --------------- ------------- -------------- ------------- -----------
Options outstanding December 31 (d) (e) 1,602,934 $52.08 1,423,146 $41.46 1,441,901 $35.08
============= =============== ============= ============== ============= ===========
Price range of options outstanding at
December 31: (e) $22.94 to $96.61 $18.00 to $69.87 $14.88 to $39.23
Options exercisable at December 31 (f): 856,993 $38.96 780,350 $31.38 651,013 $27.13
============= =============== ============= ============== ============= ===========
(a) On August 22, 2006, in connection with our merger with Shurgard, we
converted each outstanding Shurgard stock option into 0.82 options
exercisable for shares of the Company's Common Stock. This conversion
resulted in the issuance of 1,912,828 stock options.
(b) The aggregate intrinsic value of shares exercised during each year,
representing the differential between the market price and the exercise
price on the respective dates of exercise, amounted to approximately
$10,791,000, $7,508,000, and $45,673,000 for the years ended December 31,
2006, 2005, and 2004, respectively.
(c) As of December 31, 2006, 1,814,467 of the 1,912,828 stock options issued in
the exchange in connection with our merger with Shurgard were exercised.
(d) The options outstanding at December 31, 2006, have remaining average
contractual lives of 7.2 years, and an aggregate intrinsic value, based
upon the December 31, 2006 closing price of our common stock, of
approximately $72,800,000.
(e) Approximately 263,205, 372,570 and 472,788 options have exercise prices
less than $30 at December 31, 2006, 2005, and 2004, respectively.
Approximately 894,000, 624,000 and 336,000 options have exercise prices
greater than $45 at December 31, 2006, 2005 and 2004, respectively.
(f) The aggregate intrinsic value of exercisable options at December 31, 2006,
based upon the closing price of our common stock at December 31, 2006,
amounted to approximately $50,200,000. Options exercisable at December 31,
2006 have a weighted average remaining contractual life of approximately 7
years.
We recognize compensation expense for stock option awards based upon
their fair value on the date of grant amortized over the applicable vesting
period (the "Fair Value Method"), less an allowance for estimated future
forfeited awards with respect to stock options granted after January 1, 2002.
The fair value of the stock options is determined utilizing the Black-Scholes
option pricing model. The Black-Scholes option pricing model utilizes several
assumptions, including the estimated life of the stock options, the average
risk-free rate, the expected dividend yield, and expected volatility. We
establish these assumptions based generally upon historical trends.
We do not recognize compensation expense for stock option awards prior
to January 1, 2002, instead, we disclose the amount of stock option expense that
would have been recognized in each year with respect to these options had we
utilized the Fair Value Method with respect to these awards, in the table below.
Because stock-based awards had a vesting period of three years, our accounting
method with respect to these pre-2002 awards has no effect after December 31,
2004.
Outstanding stock options are included on a one-for-one basis in our
diluted weighted average shares, less a reduction for the treasury stock method
applied to a) the average cumulative measured but unrecognized compensation
expense during the period and b) the strike price proceeds expected from the
employee upon exercise.
F-35
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
The following table sets forth financial disclosures with respect to
the accounting for stock options:
For the years ended December 31,
----------------------------------------------
SELECTED INFORMATION WITH RESPECT TO EMPLOYEE STOCK OPTIONS: 2006 2005 2004
---------------- -------------- ------------
(Dollar amounts in thousands, except per-share
amounts)
Average estimated value per option granted, utilizing the
Black-Scholes method.............................................. $9.72 $6.77 $4.40
ASSUMPTIONS USED IN VALUING OPTIONS WITH THE BLACK-SCHOLES METHOD:
Expected life of options in years (a)......................... 5 5 5
Risk-free interest rate....................................... 4.6% 4.0% 3.5%
Expected volatility (b)....................................... 0.227 0.234 0.210
Expected dividend yield....................................... 7.0% 7.0% 7.0%
NET INCOME INFORMATION WITH RESPECT TO EACH YEAR:
Net income, as reported........................................... $314,026 $456,393 $366,213
Add back: stock-based employee compensation expense included in net
income (c)..................................................... 1,173 1,010 709
Less: stock-based employee compensation cost that would have been
included if the fair value method were applied for all awards.. (1,173) (1,010) (874)
---------------- -------------- ------------
Net income, assuming consistent application of the fair value method $314,026 $456,393 $366,048
================ ============== ============
EARNINGS PER SHARE, AS REPORTED:
Basic ......................................................... $0.33 $1.98 $1.39
Diluted........................................................ $0.33 $1.97 $1.38
EARNINGS PER SHARE, ASSUMING CONSISTENT APPLICATION OF THE FAIR VALUE
METHOD
Basic ......................................................... $0.33 $1.98 $1.39
Diluted........................................................ $0.33 $1.97 $1.38
(a) Expected life is based upon our expectations of stock option recipients'
expected exercise and termination patterns.
(b) Expected volatility is based upon the level of volatility historically
experienced.
(c) At December 31, 2006, the total compensation cost related to nonvested
stock option awards amounts to approximately $6,161,000, which will be
recognized over the remaining vesting period.
Restricted Stock Units
----------------------
Outstanding restricted stock units vest over a five or eight-year
period from the date of grant at the rate of one-fifth or one-eighth per year,
respectively. The employee receives additional compensation equal to the
per-share dividends received by common shareholders with respect to restricted
stock units outstanding. Such compensation is accounted for as dividends paid.
Any dividends paid on units which are subsequently forfeited are expensed. Upon
vesting, the employee receives common shares equal to the number of vested
restricted stock units in exchange for the units.
The total value of each restricted stock unit grant, based upon the
market price of our common stock at the date of grant, is amortized over the
vesting period as compensation expense. The related employer portion of payroll
taxes is expensed as incurred. Until December 31, 2005 (see below), forfeitures
were recognized as experienced, reducing compensation expense.
F-36
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Effective January 1, 2006, in accordance with Statement of Financial
Accounting Standards No. 123 - revised ("SFAS 123R"), we began recording
compensation expense net of estimates for future forfeitures (the "Estimated
Forfeiture Method"). In addition, we estimated the cumulative compensation
expense that would have been recorded through December 31, 2005, had we used the
Estimated Forfeiture Method, would have been $578,000 ($0.01 per diluted common
share) lower. Accordingly, as prescribed by SFAS 123R, we recorded this
adjustment as a cumulative effect of change in accounting principal on our
accompanying consolidated statement of income for the year December 31, 2006.
During the year ended December 31, 2006, 419,170 restricted stock units
were granted with an aggregate fair value on the date of grant of approximately
$33,861,000, 31,370 restricted stock units were forfeited (aggregate grant-date
fair value of $1,924,000), and 71,160 restricted stock units vested (aggregate
grant-date fair value of $3,438,000) with an aggregate fair value on the date of
vesting of $5,918,000. This vesting resulted in the issuance of 47,159 shares of
common stock. In addition, cash compensation was paid to employees in lieu of
24,001 shares of common stock based upon the market value of the stock at the
date of vesting, and used to settle the employees' tax liability generated by
the vesting.
During the year ended December 31, 2005, 169,750 restricted stock units
were granted with an aggregate fair value on the date of grant of approximately
$9,633,000, 74,200 restricted stock units were forfeited (aggregate grant-date
fair value of $3,388,000), and 47,760 restricted stock units vested (aggregate
grant-date fair value of $2,053,000) with an aggregate fair value on the date of
vesting of $3,156,000. This vesting resulted in the issuance of 33,478 shares of
common stock. In addition, cash compensation was paid to employees in lieu of
14,282 shares of common stock based upon the market value of the stock at the
date of vesting, and used to settle the employees' tax liability generated by
the vesting.
During the year ended December 31, 2004, 94,500 restricted stock units
were granted with an aggregate fair value on the date of grant of $4,649,000,
48,650 restricted stock units were forfeited, and 42,810 restricted stock units
vested with an aggregate fair value on the date of vesting of approximately
$2,419,000. This vesting resulted in the issuance of 27,509 shares of common
stock. In addition, cash compensation was paid to employees in lieu of 15,301
shares of common stock based upon the market value of the stock at the date of
vesting, and used to settle the employees' tax liability generated by the
vesting. During the year ended December 31, 2003, we granted 249,000 restricted
stock units to employees of the Company with an aggregate fair value on the date
of grant of approximately $10,180,000.
At December 31, 2006, approximately 616,470 restricted stock units were
outstanding (299,830 and 252,040 at December 31, 2005 and 2004, respectively)
with an aggregate fair value at December 31, 2006, based upon the closing price
of our common stock, of approximately $60,106,000. The aggregate grant-date fair
value of the 616,470 restricted stock units outstanding at December 31, 2006 was
approximately $43,421,000 ($14,922,000 for the 299,830 restricted stock units at
December 31, 2005), which will be recognized over the remaining vesting period
of approximately 4 years. A total of $5,136,000, $3,748,000, and $2,254,000 in
restricted stock expense was recorded for the years ended December 31, 2006,
2005 and 2004, respectively, which includes amortization of the fair value of
the grant reflected as an increase to paid-in capital, as well as payroll taxes
we incurred upon each respective vesting.
Outstanding restricted stock units are included on a one-for-one basis
in our diluted weighted average shares, less a reduction for the treasury stock
method applied to the average cumulative measured but unrecognized compensation
expense during the period.
F-37
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
15. Disclosures Regarding Segment Reporting
---------------------------------------
Description of Each Reportable Segment
--------------------------------------
Our reportable segments reflect significant operating activities that
are evaluated separately by management, comprised of the following segments
which are organized based upon their operating characteristics.
Our domestic self-storage segment comprises the direct ownership,
development, and operation of traditional storage facilities in the U.S., and
the ownership of equity interests in entities that own storage properties in the
U.S. Our European self-storage segment comprises our self-storage and associated
activities owned by affiliated entities based in Europe.
Our domestic ancillary operating segment represents all of our other
segments, which are reported as a group, including (i) containerized storage,
(ii) commercial property operations, which reflects our interest in the
ownership, operation, and management of commercial properties both directly and
through our interest in PSB (iii) the reinsurance of policies against losses to
goods stored by tenants in our self-storage facilities, (ii) sale of merchandise
at our self-storage facilities, (iv) truck rentals at our self-storage
facilities and (v) management of facilities owned by third-party owners and
facilities owned by the Unconsolidated Entities.
Measurement of Segment Income (Loss) and Segment Assets - Domestic
-----------------------------------------------------------------------
Self-Storage and Domestic Ancillary
-----------------------------------
The domestic self-storage and domestic ancillary segments are evaluated
by management based upon the net segment income of each segment. Net segment
income represents net income in conformity with GAAP and our significant
accounting policies as denoted in Note 2, before interest and other income,
interest expense, and corporate general and administrative expense. Interest and
other income, interest expense, corporate general and administrative expense,
minority interest in income and gains and losses on sales of real estate assets
are not allocated to these segments because management does not utilize them to
evaluate the results of operations of each segment. In addition, there is no
presentation of segment assets for these other segments because total assets are
not considered in the evaluation of these segments.
Measurement of Segment Income (Loss) and Segment Assets - European
-----------------------------------------------------------------------
Operations
----------
The European segment operations are primarily independent of the other
segments, with separate management, debt, financing activities, and capital
allocation decisions. Accordingly, this segment is evaluated by management as a
stand-alone business unit and the European segment presentation includes all of
the revenues, expenses, and operations of this business unit, including interest
expense and general and administrative expense. Assets of our European
operations at December 31, 2006 include approximately $480 million in cash (of
which approximately $429 million was utilized on January 2, 2007 to prepay the
325M euro collateralized notes), real estate with a book value of approximately
$1.4 billion, intangibles with a book value of approximately $161 million, and
other assets with a book value of approximately $65 million.
F-38
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Presentation of Segment Information
-----------------------------------
The following table reconciles the performance of each segment, in
terms of segment income, to our consolidated net income (amounts in thousands):
For the year ended December 31, 2006
DOMESTIC OTHER ITEMS NOT
DOMESTIC EUROPEAN ANCILLARY ALLOCATED TO TOTAL
SELF-STORAGE OPERATIONS OPERATIONS SEGMENTS CONSOLIDATED
---------------- --------------- ---------------- --------------- -------------
(Amounts in thousands)
REVENUES:
Self-storage rental income.................... $ 1,180,234 $ 59,715 $ - $ - $ 1,239,949
Ancillary operating revenue................... - 5,121 104,786 - 109,907
Interest and other income..................... - - - 31,799 31,799
---------------- --------------- ---------------- --------------- -------------
1,180,234 64,836 104,786 31,799 1,381,655
---------------- --------------- ---------------- --------------- -------------
EXPENSES:
Cost of operations (excluding depreciation and
amortization below):
Self-storage facilities.................... 398,760 30,436 - - 429,196
Ancillary operations....................... - 2,210 69,154 - 71,364
Depreciation and amortization.................. 374,843 59,803 3,338 - 437,984
General and administrative..................... - 10,245 - 74,416 84,661
Interest expense............................... - 13,109 - 19,953 33,062
---------------- --------------- ---------------- --------------- -------------
773,603 115,803 72,492 94,369 1,056,267
---------------- --------------- ---------------- --------------- -------------
Income (loss) from continuing operations before
equity in earnings of real estate entities,
gain on disposition of real estate and real
estate investments, foreign currency exchange
gain, income from derivatives and minority
interest in income............................ 406,631 (50,967) 32,294 (62,570) 325,388
Equity in earnings of real estate entities....... 2,131 - 9,764 - 11,895
Gain on disposition of real estate and real
estate investments............................ - - - 2,177 2,177
Foreign currency exchange gain................... - 336 - - 336
Income from derivatives, net..................... - 3,926 - - 3,926
Minority interest in income..................... (16,459) 3,631 - (19,055) (31,883)
---------------- --------------- ---------------- --------------- -------------
Income (loss) from continuing operations......... 392,303 (43,074) 42,058 (79,448) 311,839
Cumulative effect of a change in accounting - - - 578 578
principle.....................................
Discontinued operations.......................... - - - 1,609 1,609
---------------- --------------- ---------------- --------------- -------------
Net income (loss)................................ $ 392,303 $ (43,074) $ 42,058 $ (77,261) $ 314,026
================ =============== ================ =============== =============
F-39
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
For the year ended December 31, 2005
DOMESTIC OTHER ITEMS NOT
DOMESTIC EUROPEAN ANCILLARY ALLOCATED TO TOTAL
SELF-STORAGE OPERATIONS OPERATIONS SEGMENTS CONSOLIDATED
---------------- --------------- ---------------- --------------- -------------
(Amounts in thousands)
REVENUES:
Self-storage rental income.................... $ 951,370 $ - $ - $ - $ 951,370
Ancillary operating revenue................... - - 92,230 - 92,230
Interest and other income..................... - - - 16,447 16,447
---------------- --------------- ---------------- --------------- -------------
951,370 - 92,230 16,447 1,060,047
---------------- --------------- ---------------- --------------- -------------
EXPENSES:
Cost of operations (excluding depreciation and
amortization below):
Self-storage facilities.................... 320,589 - - - 320,589
Ancillary operations....................... - - 57,712 - 57,712
Depreciation and amortization.................. 191,102 - 5,130 - 196,232
General and administrative..................... - - - 21,115 21,115
Interest expense............................... - - - 8,216 8,216
---------------- --------------- ---------------- --------------- -------------
511,691 - 62,842 29,331 603,864
---------------- --------------- ---------------- --------------- -------------
Income (loss) from continuing operations before
equity in earnings of real estate entities,
casualty loss, gain on disposition of real
estate and real estate investments and
minority interest in income................... 439,679 - 29,388 (12,884) 456,183
Equity in earnings of real estate entities....... 6,126 - 18,757 - 24,883
Casualty loss ................................... - - - (1,917) (1,917)
Gain on disposition of real estate and real
estate investments............................ - - - 3,099 3,099
Minority interest in income..................... (15,630) - - (17,021) (32,651)
---------------- --------------- ---------------- --------------- -------------
Income from continuing operations................ 430,175 - 48,145 (28,723) 449,597
Discontinued operations.......................... - - - 6,796 6,796
---------------- --------------- ---------------- --------------- -------------
Net income (loss)................................ $ 430,175 $ - $ 48,145 $ (21,927) $ 456,393
================ =============== ================ =============== =============
For the year ended December 31, 2004
DOMESTIC OTHER ITEMS NOT
DOMESTIC EUROPEAN ANCILLARY ALLOCATED TO TOTAL
SELF-STORAGE OPERATIONS OPERATIONS SEGMENTS CONSOLIDATED
---------------- --------------- ---------------- --------------- -------------
(Amounts in thousands)
REVENUES:
Self-storage rental income.................... $ 861,665 $ - $ - $ - $ 861,665
Ancillary operating revenue................... - - 91,101 - 91,101
Interest and other income..................... - - - 5,391 5,391
---------------- --------------- ---------------- --------------- -------------
861,665 - 91,101 5,391 958,157
---------------- --------------- ---------------- --------------- -------------
EXPENSES:
Cost of operations (excluding depreciation and
amortization below):
Self-storage facilities.................... 300,355 - - - 300,355
Ancillary operations....................... - - 61,589 - 61,589
Depreciation and amortization.................. 176,230 - 6,660 - 182,890
General and administrative..................... - - - 18,813 18,813
Interest expense............................... - - - 760 760
---------------- --------------- ---------------- --------------- -------------
476,585 - 68,249 19,573 564,407
---------------- --------------- ---------------- --------------- -------------
Income (loss) from continuing operations before
equity in earnings of real estate entities,
casualty loss, gain on disposition of real
estate and realestate investments and
minority interest in income................... 385,080 - 22,852 (14,182) 393,750
Equity in earnings of real estate entities....... 5,669 - 16,895 - 22,564
Casualty loss ................................... - - - (1,250) (1,250)
Gain on disposition of real estate and real
estate investments............................ - - - 1,317 1,317
Minority interest in income..................... (17,427) - - (32,486) (49,913)
---------------- --------------- ---------------- --------------- -------------
Income (loss) from continuing operations......... 373,322 - 39,747 (46,601) 366,468
Discontinued operations.......................... - - - (255) (255)
---------------- --------------- ---------------- --------------- -------------
Net income (loss)................................ $ 373,322 $ - $ 39,747 $ (46,856) $ 366,213
================ =============== ================ =============== =============
F-40
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006
16. Recent Accounting Pronouncements and Guidance
---------------------------------------------
Accounting for Uncertainty in Income Taxes
------------------------------------------
In July 2006, the Financial Accounting Standards Board (the "FASB")
issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN
48"). This interpretation, among other things, creates a two-step approach for
evaluating uncertain tax positions. Recognition (step one) occurs when an
enterprise concludes that a tax position, based solely on its technical merits,
is more-likely-than-not to be sustained upon examination. Measurement (step two)
determines the amount of benefit that more-likely-than-not will be realized upon
settlement. Derecognition of a tax position that was previously recognized would
occur when a company subsequently determines that a tax position no longer meets
the more-likely-than-not threshold of being sustained. FIN 48 specifically
prohibits the use of a valuation allowance as a substitute for derecognition of
tax positions, and it has expanded disclosure requirements. FIN 48 is effective
for fiscal years beginning after December 15, 2006, in which the impact of
adoption should be accounted for as a cumulative-effect adjustment to the
beginning balance of retained earnings. The Company is evaluating FIN 48 and has
not yet determined the impact the adoption will have on the consolidated
financial statements.
Fair Value Measurement
----------------------
In 2006, the FASB issued SFAS No. 157, "Fair Value Measurement" (SFAS
No. 157). SFAS No. 157 provides guidance for using fair value to measure assets
and liabilities. The standard expands required disclosures about the extent to
which companies measure assets and liabilities at fair value, the information
used to measure fair value, and the effect of fair value measurements on
earnings. SFAS No. 157 applies whenever other standards require (or permit)
assets or liabilities to be measured at fair value. SFAS No. 157 does not expand
the use of fair value in any new circumstances. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. We do not expect the impact to be
material to our financial condition or results of operations.
Effects of Prior Year Misstatements
-----------------------------------
In 2006, the SEC issued Staff Accounting Bulletin No. 108 (SAB No. 108)
which addresses quantifying the financial statement effects of misstatements,
specifically, how the effects of prior year uncorrected errors must be
considered in quantifying misstatements in the current year financial
statements. SAB No. 108 is effective for fiscal years ending after November 15,
2006. We adopted the provisions of SAB No. 108 as of December 31, 2006. The
adoption of SAB No. 108 had no material impact on our financial position,
operating results or cash flows.
Accounting Changes and Error Corrections
----------------------------------------
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Errors Corrections - a replacement of APB Opinion No. 20 and FASB Statement No.
3." This statement replaces APB Opinion No. 20, "Accounting Changes," and SFAS
No. 3, "Reporting Accounting Changes in Interim Financial Statements," and
changes the requirements for the accounting for and reporting of a voluntary
change in accounting principle. It also applies to changes required by an
accounting pronouncement in the instance that the pronouncement does not include
specific transition provisions. APB Opinion No. 20 previously required that most
voluntary changes in accounting principle be recognized by including in net
income of the period the cumulative effect of changing to the new accounting
principle. SFAS No. 154 requires retrospective application of changes in
accounting principle to prior periods' financial statements, unless it is
impracticable to determine either the period-specific effects or the cumulative
effect of the change. We adopted the provisions of SFAS No. 154 as of January 1,
2006. The adoption of SAB No. 154 had no material impact on our financial
position, operating results or cash flows.
F-41
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
17. Commitments and Contingencies
-----------------------------
Serrao v. Public Storage, Inc. (filed April 2003)
----------------------------------------------------
(Superior Court of California - Orange County)
----------------------------------------------
The plaintiff in this case filed a suit against the Company on behalf
of a putative class of renters who rented self-storage units from the Company.
Plaintiff alleges that the Company misrepresented the size of its storage units,
has brought claims under California statutory and common law relating to
consumer protection, fraud, unfair competition, and negligent misrepresentation,
and is seeking monetary damages, restitution, and declaratory and injunctive
relief.
The claim in this case is substantially similar to those in Henriquez
v. Public Storage, Inc., which was disclosed in prior reports. In January 2003,
the plaintiff caused the Henriquez action to be dismissed.
Based upon the uncertainty inherent in any putative class action, we
cannot presently determine the potential damages, if any, or the ultimate
outcome of this litigation. On November 3, 2003, the court granted our motion to
strike the plaintiff's nationwide class allegations and to limit any putative
class to California residents only. In August 2005, we filed a motion to remove
the case to federal court, but the case has been remanded to the Superior Court.
We are vigorously contesting the claims upon which this lawsuit is based,
including class certification efforts.
Drake v. Shurgard Storage Centers, Inc. (filed September 2002)
-----------------------------------------------------------------------
(Superior Court of California - Orange County)
----------------------------------------------
This is a companion case to the Serrao matter discussed above. The
plaintiff alleges the same set of operative facts and seeks the same relief as
in Serrao against Shurgard Storage Centers, Inc. ("Shurgard"), whose liability
Public Storage assumed following the merger of Public Storage and Shurgard on
August 22, 2006. There is currently pending a motion for class certification,
which has yet to be ruled on. We cannot presently determine the potential total
damages, if any, or the ultimate outcome of the litigation. We vigorously
contested the motion for class certification and will vigorously defend this
action.
Potter, et al v. Hughes, et al (filed December 2004)
--------------------------------------------------------
(United States District Court - Central District of California)
---------------------------------------------------------------
In November 2002, a shareholder of the Company made a demand on the
Board of Directors challenging the fairness of the Company's acquisition of PS
Insurance Company, Ltd. ("PSIC") and related matters. PSIC was previously owned
by the Hughes Family. In June 2003, following the filing by the Hughes Family of
a complaint for declaratory relief asking the court to find that the acquisition
of PSIC and related matters were fair to the Company, it was ruled that the PSIC
transaction was just and reasonable as to the Company and holding that the
Hughes Family was not required to make any payment to the Company.
At the end of December 2004, the same shareholder referred to above and
a second shareholder filed this shareholder's derivative complaint naming as
defendants the Company's directors (and two former directors) and certain
officers of the Company. The matters alleged in this complaint relate to PSIC,
the Hughes Family's Canadian self-storage operations and the Company's 1995
reorganization. In July 2006, the Court granted the defendants' motion to
dismiss the amended Complaint without leave to amend. In August 2006, Plaintiffs
filed a notice of appeal of the Court's decision. The appeal is currently
pending. We believe the litigation will not have any financially adverse effect
on the Company (other than the costs and other expenses relating to the
lawsuit).
F-42
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Brinkley v. Public Storage, Inc. (filed April 2005)
----------------------------------------------------
(Superior Court of California - Los Angeles County)
---------------------------------------------------
The plaintiff sued the Company on behalf of a purported class of
California non-exempt employees based on various California wage and hour laws
and seeking monetary damages and injunctive relief. In May 2006, a motion for
class certification was filed seeking to certify five subclasses. Plaintiff
sought certification for alleged meal period violations, rest period violations,
failure to pay for travel time, failure to pay for mileage reimbursement, and
for wage statement violations. In October 2006, the Court declined to certify
three out of the five subclasses. The Court did, however, certify subclasses
based on alleged meal period and wage statement violations. The maximum
potential liability cannot presently be estimated. We intend to vigorously
contest the substantive merits of the two remaining subclasses that were
certified.
Simas v. Public Storage, Inc. (filed January 2006)
----------------------------------------------------
(Superior Court of California - Orange County)
----------------------------------------------
The plaintiff brings this action against the Company on behalf of a
purported class who bought insurance coverage at Company's facilities alleging
that the Company does not have a license to offer, sell and/or transact storage
insurance. The action was originally brought under California Business and
Professions Code Section 17200 and seeks retention, monetary damages and
injunctive relief. The Company filed a demurrer to the complaint. While the
demurrer was pending, Plaintiff amended the complaint to allege a national class
and claims for unfair business practices, unjust enrichment, money had and
received, and negligent and intentional misrepresentation. Ultimately all claims
except for unjust enrichment were dismissed. There is currently a demurrer
pending on Plaintiff's amended allegations as to unjust enrichment. We are
vigorously contesting the claims upon which this lawsuit is based, including any
efforts for class certification.
Other Items
-----------
We are a party to various claims, complaints, and other legal actions
that have arisen in the normal course of business from time to time that are not
described above. We believe that it is unlikely that the outcome of these other
pending legal proceedings including employment and tenant claims, in the
aggregate, will have a material adverse impact upon our operations or financial
position.
INSURANCE AND LOSS EXPOSURE
We have historically carried comprehensive insurance, including
property, earthquake, general liability and workers compensation, through
nationally recognized insurance carriers and through our captive insurance
programs. Our insurance programs also insure affiliates of the Company. Our
maximum aggregate annual exposure for losses that are below the deductibles set
forth in the third-party insurance contracts, assuming multiple significant
events occur, is approximately $35 million. In addition, if losses exhaust the
third-party insurers' limit of coverage of $125 million for property coverage (a
maximum of $80,000,000 with respect to earthquake coverage) and $102 million for
general liability, our exposure could be greater. These limits are higher than
estimates of maximum probable losses that could occur from individual
catastrophic events (i.e. earthquake and wind damage) determined in recent
engineering and actuarial studies.
Our tenant insurance program reinsures policies against claims for
losses to goods stored by tenants at our self-storage facilities. We have
third-party insurance coverage for claims paid exceeding $1,500,000 resulting
from any individual event, to a limit of $9,000,000. At December 31, 2006, we
had approximately 403,000 reinsured policies outstanding representing aggregate
coverage of approximately $1 billion.
F-43
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
DEVELOPMENT AND ACQUISITION OF REAL ESTATE FACILITIES
We currently have 56 projects in our development pipeline, including
expansions and enhancements to existing self-storage facilities. The total
estimated cost of these facilities (unaudited) is approximately $266,081,000 of
which $81,418,000 has been spent at December 31, 2006. These projects are
subject to contingencies. We expect to incur these expenditures over the next 12
- 24 months. As of February 28, 2007, we are under contract to purchase one
self-storage facility in Hawaii (total approximate net rental square feet of
79,000) at an aggregate cost of $22,500,000. We anticipate that this acquisition
will be funded entirely by us. This contract is subject to significant
contingencies, and there is no assurance that this facility will be acquired.
OPERATING LEASE OBLIGATIONS
We lease trucks, land, equipment and office space. As a result of the
merger with Shurgard, we obtained additional operating leases for land,
buildings and equipment. .At December 31, 2006, the future minimum rental
payments required under our operating leases for the years ending December 31
are as follows (amounts in thousands):
2007...................................... $21,747
2008...................................... 18,980
2009...................................... 15,143
2010...................................... 11,450
2011...................................... 10,458
Thereafter................................ 200,097
--------
$277,875
--------
We lease trucks, land, equipment and office space under various
operating leases. Certain leases are cancelable with substantial penalties.
Amounts include leases for land, equipment and office space under various
operating leases that we assumed in the merger with Shurgard. Certain leases are
cancelable with substantial penalties. Certain of our European land operating
leases have indefinite terms or extension options exercisable at the discretion
of the lessee. For such land leases we have disclosed operating lease
obligations over the estimated useful life of the related property.
Expenses under operating leases were approximately $9.8 million, $6.3
million and $6.0 million for the years ended December 31, 2006, 2005 and 2004,
respectively. Certain of our land leases include escalation clauses, and we
recognize related lease expenses on a straight-line basis.
18. Income Taxes
------------
For all taxable years subsequent to 1980, the Company qualified and we
intend to continue to qualify the Company as a REIT, as defined in Section 856
of the Internal Revenue Code. As a REIT, the Company is generally not taxed on
the portion of its REIT taxable income that is distributed to its shareholders,
provided that it meets certain organizational and operational requirements. We
believe that the Company has met these REIT requirements during 2006.
Domestic operations other than rental real estate are primarily
conducted through taxable REIT subsidiaries. Income of our taxable REIT
subsidiaries is subject to federal, state and local income taxes.
As of August 22, 2006, the date of the Shurgard merger, the Company
started to consolidate the income tax provision of the former Shurgard domestic
and European activities, the latter of which are subject to income taxes in the
jurisdictions of the countries where they operate.
F-44
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
The provision for income tax for the years ended December 31 is as
follows:
2006 2005
--------------- --------------
(Amounts in thousands)
Current:
Federal....................... $ 5,100 $ -
State......................... - -
Foreign....................... - -
--------------- --------------
Total Current.................... $ 5,100 $ -
Deferred
Federal....................... $ - $ -
State......................... - -
Foreign....................... - -
--------------- --------------
Total Deferred................... $ - $ -
--------------- --------------
$ 5,100 $ -
=============== ==============
Under SFAS No. 109, "Accounting for Income Taxes", deferred tax assets
and liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities, and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. SFAS No. 109 provides for the recognition of deferred tax assets if
realization of such assets is more likely than not. Based on the weight of
available evidence, a valuation allowance may be provided against certain
deferred tax assets.
The foreign and domestic components of the Company's net deferred tax
asset are as follows:
December 31, December 31,
2006 2005
--------------- ----------------
(Amounts in thousands)
Federal $ 9,953 $ 4,342
State 3,611 2,298
Foreign 104,369 -
--------------- ----------------
Net deferred tax asset before valuation allowance 117,933 6,640
Valuation Allowance (117,933) (6,640)
--------------- ----------------
Net deferred tax asset $ - $ -
=============== ================
Significant components of our deferred tax assets and liabilities were
as follows:
December 31, December 31,
2006 2005
---------------- ----------------
Deferred Tax Assets: (Amounts in thousands)
Current:
UNICAP $ 66 $ 126
Discounted Unearned Premium Reserves 210 180
Discounted Unpaid Losses 928 603
Other Current Deferred Assets 1,094 368
Noncurrent:
Partnership and Other Investments 2,610 2,337
Asset Impairment 730 -
Accrued Closing Costs 161 -
Net Operating Loss Carryforward 133,944 3,935
---------------- ----------------
Total Deferred Tax Assets 139,743 7,549
F-45
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
December 31, December 31,
2006 2005
---------------- ----------------
Deferred Tax Liabilities: (Amounts in thousands)
Current:
Deferred Revenue 350 353
State Deferred Taxes 211 134
Exchange Losses 6,419 -
Noncurrent:
Depreciation & Amortization 14,830 422
---------------- ----------------
Total Deferred Tax Liabilities 21,810 909
Net Deferred Tax Asset Before Valuation Allowance 117,933 6,640
Valuation Allowance (117,933) (6,640)
---------------- ----------------
Net Deferred Tax Asset $ - $ -
================ ================
At December 31, 2006, the Company had net operating loss carryforwards
of $456.7 million related to U.S. federal, state and foreign jurisdictions. Of
this total, $423.0 million originated from the merger with Shurgard on August
22, 2006 ($14.4 million of U.S. federal, $11.1 million of state and $397.5
million of foreign loss carryforwards). Utilization of net operating losses to
offset future taxable income may be subject to certain limitations under
Sections 382 and 1502 of the Internal Revenue Code, and other limitations under
state and foreign tax laws. If these net operating losses are not utilized, they
expire at various times beginning in 2007. As of December 31, 2006 and 2005, we
had provided a full valuation allowance against the value of the net deferred
tax asset, because sufficient uncertainty exists at this time regarding the
future realization of these tax benefits within individual tax jurisdictions.
The net increase in the valuation allowance for 2006 was $111.0 million.
19. Supplementary quarterly financial data (unaudited)
Three Months Ended
--------------------------------------------------------------
March 31, June 30, September 30, December 31,
2006 2006 2006 2006
-------------- -------------- ---------------- ---------------
(Amounts in thousands, except per share data)
Revenues (a)..................... $ 278,518 $ 297,861 $ 371,359 $ 433,917
============== ============== ================ ===============
Cost of operations (a)........... $ 102,978 $ 106,544 $ 128,038 $ 163,000
============== ============== ================ ===============
Income (loss) from continuing
operations....................... $ 113,482 $ 128,752 $ 78,926 $ (9,321)
============== ============== ================ ===============
Net income (loss)................ $ 114,216 $ 128,862 $ 81,181 $ (10,233)
============== ============== ================ ===============
Per Common Share (Note 2):
Net income (loss) - Basic.... $ 0.48 $ 0.55 $ (0.04) $ (0.48)
============== ============== ================ ===============
Net income (loss) - Diluted.. $ 0.49 $ 0.55 $ (0.04) $ (0.48)
============== ============== ================ ===============
Three Months Ended
--------------------------------------------------------------
March 31, June 30, September 30, December 31,
2005 2005 2005 2005
-------------- -------------- ---------------- ---------------
(Amounts in thousands, except per share data)
Revenues (a)..................... $ 250,779 $ 262,609 $ 273,246 $ 273,413
============== ============== ================ ===============
Cost of operations (a)........... $ 95,899 $ 94,835 $ 96,592 $ 90,975
============== ============== ================ ===============
Income from continuing operations $ 95,189 $ 108,071 $ 122,960 $ 123,377
============== ============== ================ ===============
Net income....................... $ 96,411 $ 108,266 $ 128,344 $ 123,372
============== ============== ================ ===============
Per Common Share (Note 2):
Net income - Basic............ $ 0.38 $ 0.47 $ 0.62 $ 0.51
============== ============== ================ ===============
Net income - Diluted.......... $ 0.38 $ 0.47 $ 0.62 $ 0.51
============== ============== ================ ===============
F-46
PUBLIC STORAGE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
(a) Revenues and cost of operations as presented in this table differ
from the revenue and cost of operations as presented in our quarterly reports
due primarily to reclassification of our truck rental, merchandise sales, and
property management operations which are now included, along with our tenant
reinsurance operations, under "Ancillary Operations" on our income statement. In
previous presentations, the net income from our truck rental, merchandise sales,
and property management operations were reflected as a component of "interest
and other income." This reclassification increased revenues and cost of
operations a total of $7,416,000, $8,597,000, and $8,557,000 in each of the
first three quarters of 2005, respectively. Revenues and cost of operations also
differ due to the impact of discontinued operations accounting as described in
Note 4.
20. Subsequent Events
-----------------
As noted above, in December 2006, we called for redemption all of the
outstanding shares of our (i) 7.625% Cumulative Preferred Stock, Series T (total
liquidation value of $152,150,000), at $25 per share, plus accrued dividends and
(ii) 7.625% Cumulative Preferred Stock, Series U (total liquidation value of
$150,000,000), at $25 per share, plus accrued dividends. The Series T shares
were subsequently redeemed on January 18, 2007 and the Series U shares were
subsequently redeemed on February 20, 2007.
On January 9, 2007, we issued 20,000,000 depositary shares, with each
depositary share representing 1/1,000 of a share of our 6.625% Cumulative
Preferred Stock, Series M (carrying amount totaling $500,000,000).
On January 2, 2007, we repaid the (euro)325 million collateralized
notes ($429 million at December 31, 2006) at our European operations that were
otherwise payable in 2011. We also terminated the related European currency and
interest rate hedges.
On January 9, 2007, we repaid the remaining amounts outstanding under
our bank credit facilities. Subsequently, concurrent with our redemption of our
Series U shares noted above, we borrowed approximately $80,000,000 on our bank
credit facilities.
F-47
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
Self-storage Facilities - United States
1/1/81 Newport News / Jefferson Avenue - 108 1,071 687 -
1/1/81 Virginia Beach / Diamond Springs - 186 1,094 792 -
8/1/81 San Jose / Snell - 312 1,815 407 -
10/1/81 Tampa / Lazy Lane - 282 1,899 713 -
6/1/82 San Jose / Tully - 645 1,579 10,845 -
6/1/82 San Carlos / Storage - 780 1,387 591 -
6/1/82 Mountain View - 1,180 1,182 320 -
6/1/82 Cupertino / Storage - 572 1,270 538 -
10/1/82 Sorrento Valley - 1,002 1,343 (814) -
10/1/82 Northwood - 1,034 1,522 364 -
12/1/82 Port/Halsey - 357 1,150 (399) 326
12/1/82 Sacto/Folsom - 396 329 719 323
1/1/83 Platte - 409 953 489 428
1/1/83 Semoran - 442 1,882 8,227 720
1/1/83 Raleigh/Yonkers - 203 914 625 425
3/1/83 Blackwood - 213 1,559 396 595
4/1/83 Vailsgate - 103 990 855 505
5/1/83 Delta Drive - 67 481 312 241
6/1/83 Ventura - 658 1,734 352 583
9/1/83 Southington - 124 1,233 292 546
9/1/83 Southhampton - 331 1,738 697 806
9/1/83 Webster/Keystone - 449 1,688 755 813
9/1/83 Dover - 107 1,462 677 627
9/1/83 Newcastle - 227 2,163 558 817
9/1/83 Newark - 208 2,031 443 746
9/1/83 Langhorne - 263 3,549 604 1,445
9/1/83 Hobart - 215 1,491 737 838
9/1/83 Ft. Wayne/W. Coliseum - 160 1,395 527 535
9/1/83 Ft. Wayne/Bluffton - 88 675 299 285
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date --------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------------
Self-storage Facilities - United States
1/1/81 Newport News / Jefferson Avenue 108 1,758 1,866 1,629
1/1/81 Virginia Beach / Diamond Springs 186 1,886 2,072 1,759
8/1/81 San Jose / Snell 312 2,222 2,534 2,231
10/1/81 Tampa / Lazy Lane 282 2,612 2,894 2,404
6/1/82 San Jose / Tully 2,989 10,080 13,069 3,734
6/1/82 San Carlos / Storage 780 1,978 2,758 1,912
6/1/82 Mountain View 1,046 1,636 2,682 1,445
6/1/82 Cupertino / Storage 572 1,808 2,380 1,642
10/1/82 Sorrento Valley 651 880 1,531 801
10/1/82 Northwood 1,034 1,886 2,920 1,706
12/1/82 Port/Halsey 357 1,077 1,434 821
12/1/82 Sacto/Folsom 396 1,371 1,767 1,031
1/1/83 Platte 409 1,870 2,279 1,461
1/1/83 Semoran 442 10,829 11,271 3,564
1/1/83 Raleigh/Yonkers 203 1,964 2,167 1,446
3/1/83 Blackwood 213 2,550 2,763 1,893
4/1/83 Vailsgate 103 2,350 2,453 1,682
5/1/83 Delta Drive 68 1,033 1,101 767
6/1/83 Ventura 658 2,669 3,327 1,980
9/1/83 Southington 123 2,072 2,195 1,474
9/1/83 Southhampton 331 3,241 3,572 2,444
9/1/83 Webster/Keystone 449 3,256 3,705 2,457
9/1/83 Dover 107 2,766 2,873 1,950
9/1/83 Newcastle 227 3,538 3,765 2,592
9/1/83 Newark 208 3,220 3,428 2,375
9/1/83 Langhorne 263 5,598 5,861 4,184
9/1/83 Hobart 215 3,066 3,281 2,290
9/1/83 Ft. Wayne/W. Coliseum 160 2,457 2,617 1,793
9/1/83 Ft. Wayne/Bluffton 88 1,259 1,347 914
F-48
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
10/1/83 Orlando J. Y. Parkway - 383 1,512 468 622
11/1/83 Aurora - 505 758 527 341
11/1/83 Campbell - 1,379 1,849 (377) 474
11/1/83 Col Springs/Ed - 471 1,640 218 554
11/1/83 Col Springs/Mv - 320 1,036 297 441
11/1/83 Thorton - 418 1,400 258 536
11/1/83 Oklahoma City - 454 1,030 1,036 620
11/1/83 Tucson - 343 778 671 420
11/1/83 Webster/Nasa - 1,570 2,457 1,652 1,372
12/1/83 Charlotte - 165 1,274 525 442
12/1/83 Greensboro/Market - 214 1,653 855 794
12/1/83 Greensboro/Electra - 112 869 389 382
12/1/83 Columbia - 171 1,318 534 492
12/1/83 Richmond - 176 1,360 650 468
12/1/83 Augusta - 97 747 449 324
12/1/83 Tacoma - 553 1,173 499 487
1/1/84 Fremont/Albrae - 636 1,659 533 532
1/1/84 Belton - 175 858 819 378
1/1/84 Gladstone - 275 1,799 731 640
1/1/84 Hickman/112 - 257 1,848 (353) 618
1/1/84 Holmes - 289 1,333 475 455
1/1/84 Independence - 221 1,848 737 609
1/1/84 Merriam - 255 1,469 612 480
1/1/84 Olathe - 107 992 387 361
1/1/84 Shawnee - 205 1,420 605 502
1/1/84 Topeka - 75 1,049 297 356
3/1/84 Marrietta/Cobb - 73 542 439 259
3/1/84 Manassas - 320 1,556 475 553
3/1/84 Pico Rivera - 743 807 368 321
4/1/84 Providence - 92 1,087 479 423
4/1/84 Milwaukie/Oregon - 289 584 343 311
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date --------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------------
10/1/83 Orlando J. Y. Parkway 383 2,602 2,985 1,944
11/1/83 Aurora 505 1,626 2,131 1,086
11/1/83 Campbell 1,379 1,946 3,325 1,436
11/1/83 Col Springs/Ed 470 2,413 2,883 1,816
11/1/83 Col Springs/Mv 320 1,774 2,094 1,329
11/1/83 Thorton 418 2,194 2,612 1,586
11/1/83 Oklahoma City 454 2,686 3,140 1,933
11/1/83 Tucson 343 1,869 2,212 1,358
11/1/83 Webster/Nasa 1,570 5,481 7,051 3,932
12/1/83 Charlotte 165 2,241 2,406 1,730
12/1/83 Greensboro/Market 214 3,302 3,516 2,563
12/1/83 Greensboro/Electra 112 1,640 1,752 1,288
12/1/83 Columbia 171 2,344 2,515 1,822
12/1/83 Richmond 176 2,478 2,654 1,886
12/1/83 Augusta 97 1,520 1,617 1,128
12/1/83 Tacoma 553 2,159 2,712 1,680
1/1/84 Fremont/Albrae 636 2,724 3,360 2,123
1/1/84 Belton 175 2,055 2,230 1,576
1/1/84 Gladstone 274 3,171 3,445 2,365
1/1/84 Hickman/112 158 2,212 2,370 1,347
1/1/84 Holmes 289 2,263 2,552 1,744
1/1/84 Independence 221 3,194 3,415 2,258
1/1/84 Merriam 255 2,561 2,816 1,882
1/1/84 Olathe 107 1,740 1,847 1,351
1/1/84 Shawnee 205 2,527 2,732 1,893
1/1/84 Topeka 75 1,702 1,777 1,317
3/1/84 Marrietta/Cobb 73 1,240 1,313 900
3/1/84 Manassas 320 2,584 2,904 1,981
3/1/84 Pico Rivera 743 1,496 2,239 1,170
4/1/84 Providence 92 1,989 2,081 1,542
4/1/84 Milwaukie/Oregon 289 1,238 1,527 927
F-49
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
5/1/84 Raleigh/Departure - 302 2,484 1,087 788
5/1/84 Virginia Beach - 509 2,121 1,140 776
5/1/84 Philadelphia/Grant - 1,041 3,262 818 971
5/1/84 Garland - 356 844 426 360
6/1/84 Lorton - 435 2,040 826 682
6/1/84 Baltimore - 382 1,793 1,020 634
6/1/84 Laurel - 501 2,349 941 824
6/1/84 Delran - 279 1,472 446 573
6/1/84 Orange Blossom - 226 924 263 398
6/1/84 Cincinnati - 402 1,573 900 672
6/1/84 Florence - 185 740 505 376
7/1/84 Trevose/Old Lincoln - 421 1,749 511 582
8/1/84 Medley - 584 1,016 666 464
8/1/84 Oklahoma City - 340 1,310 612 652
8/1/84 Newport News - 356 2,395 846 1,013
8/1/84 Kaplan/Walnut Hill - 971 2,359 1,095 1,041
8/1/84 Kaplan/Irving - 677 1,592 4,730 639
9/1/84 Cockrell Hill - 380 913 1,256 675
11/1/84 Omaha - 109 806 525 399
11/1/84 Hialeah - 886 1,784 415 672
12/1/84 Austin/Lamar - 643 947 704 443
12/1/84 Pompano - 399 1,386 718 698
12/1/84 Fort Worth - 122 928 75 303
12/1/84 Montgomeryville - 215 2,085 510 776
1/1/85 Cranston - 175 722 385 267
1/1/85 Bossier City - 184 1,542 701 656
2/1/85 Simi Valley - 737 1,389 370 520
2/1/85 Hurst - 231 1,220 252 480
3/1/85 Chattanooga - 202 1,573 873 683
3/1/85 Portland - 285 941 431 438
3/1/85 Fern Park - 144 1,107 255 432
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date ---------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-------------------------------------------------------------------------------------------------------------
5/1/84 Raleigh/Departure 302 4,359 4,661 3,025
5/1/84 Virginia Beach 499 4,047 4,546 2,866
5/1/84 Philadelphia/Grant 1,040 5,052 6,092 3,795
5/1/84 Garland 356 1,630 1,986 1,107
6/1/84 Lorton 435 3,548 3,983 2,645
6/1/84 Baltimore 382 3,447 3,829 2,591
6/1/84 Laurel 500 4,115 4,615 3,074
6/1/84 Delran 279 2,491 2,770 1,788
6/1/84 Orange Blossom 226 1,585 1,811 1,176
6/1/84 Cincinnati 402 3,145 3,547 2,223
6/1/84 Florence 185 1,621 1,806 1,199
7/1/84 Trevose/Old Lincoln 421 2,842 3,263 2,156
8/1/84 Medley 583 2,147 2,730 1,418
8/1/84 Oklahoma City 340 2,574 2,914 1,915
8/1/84 Newport News 356 4,254 4,610 3,099
8/1/84 Kaplan/Walnut Hill 971 4,495 5,466 3,225
8/1/84 Kaplan/Irving 677 6,961 7,638 2,947
9/1/84 Cockrell Hill 380 2,844 3,224 2,027
11/1/84 Omaha 109 1,730 1,839 1,278
11/1/84 Hialeah 886 2,871 3,757 2,097
12/1/84 Austin/Lamar 642 2,095 2,737 1,442
12/1/84 Pompano 399 2,802 3,201 2,024
12/1/84 Fort Worth 122 1,306 1,428 936
12/1/84 Montgomeryville 215 3,371 3,586 2,415
1/1/85 Cranston 175 1,374 1,549 1,017
1/1/85 Bossier City 184 2,899 3,083 2,076
2/1/85 Simi Valley 736 2,280 3,016 1,643
2/1/85 Hurst 231 1,952 2,183 1,410
3/1/85 Chattanooga 202 3,129 3,331 2,082
3/1/85 Portland 285 1,810 2,095 1,258
3/1/85 Fern Park 144 1,794 1,938 1,294
F-50
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
3/1/85 Fairfield - 338 1,187 531 527
3/1/85 Houston / Westheimer - 850 1,179 823 -
4/1/85 Austin/ S. First - 778 1,282 394 711
4/1/85 Cincinnati/ E. Kemper - 232 1,573 332 853
4/1/85 Cincinnati/ Colerain - 253 1,717 584 932
4/1/85 Florence/ Tanner Lane - 218 1,477 441 835
4/1/85 Laguna Hills - 1,224 3,303 494 1,213
5/1/85 Tacoma/ Phillips Rd. - 396 1,204 332 669
5/1/85 Milwaukie/ Mcloughlin - 458 742 422 620
5/1/85 Manchester/ S. Willow - 371 2,129 8 854
5/1/85 Longwood - 355 1,645 366 669
5/1/85 Columbus/Busch Blvd. - 202 1,559 634 592
5/1/85 Columbus/Kinnear Rd. - 241 1,865 732 771
5/1/85 Worthington - 221 1,824 660 709
5/1/85 Arlington - 201 1,497 657 618
6/1/85 N. Hollywood/ Raymer - 967 848 269 515
6/1/85 Grove City/ Marlane Drive - 150 1,157 554 471
6/1/85 Reynoldsburg - 204 1,568 791 598
7/1/85 San Diego/ Kearny Mesa Rd - 783 1,750 376 962
7/1/85 Scottsdale/ 70th St - 632 1,368 410 742
7/1/85 Concord/ Hwy 29 - 150 750 490 587
7/1/85 Columbus/Morse Rd. - 195 1,510 469 670
7/1/85 Columbus/Kenney Rd. - 199 1,531 716 598
7/1/85 Westerville - 199 1,517 910 620
7/1/85 Springfield - 90 699 481 332
7/1/85 Dayton/Needmore Road - 144 1,108 543 460
7/1/85 Dayton/Executive Blvd. - 160 1,207 489 569
7/1/85 Lilburn - 331 969 269 424
9/1/85 Madison/ Copps Ave. - 450 1,150 468 665
9/1/85 Columbus/ Sinclair - 307 893 403 519
9/1/85 Philadelphia/ Tacony St - 118 1,782 345 856
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date ---------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------
3/1/85 Fairfield 338 2,245 2,583 1,604
3/1/85 Houston / Westheimer 850 2,002 2,852 1,774
4/1/85 Austin/ S. First 778 2,387 3,165 1,615
4/1/85 Cincinnati/ E. Kemper 232 2,758 2,990 1,855
4/1/85 Cincinnati/ Colerain 253 3,233 3,486 2,078
4/1/85 Florence/ Tanner Lane 218 2,753 2,971 1,838
4/1/85 Laguna Hills 1,223 5,011 6,234 3,594
5/1/85 Tacoma/ Phillips Rd. 396 2,205 2,601 1,472
5/1/85 Milwaukie/ Mcloughlin 458 1,784 2,242 1,203
5/1/85 Manchester/ S. Willow 371 2,991 3,362 1,949
5/1/85 Longwood 355 2,680 3,035 1,922
5/1/85 Columbus/Busch Blvd. 202 2,785 2,987 1,913
5/1/85 Columbus/Kinnear Rd. 241 3,368 3,609 2,269
5/1/85 Worthington 221 3,193 3,414 2,196
5/1/85 Arlington 201 2,772 2,973 1,915
6/1/85 N. Hollywood/ Raymer 967 1,632 2,599 1,092
6/1/85 Grove City/ Marlane Drive 150 2,182 2,332 1,512
6/1/85 Reynoldsburg 204 2,957 3,161 2,009
7/1/85 San Diego/ Kearny Mesa Rd 783 3,088 3,871 2,072
7/1/85 Scottsdale/ 70th St 632 2,520 3,152 1,650
7/1/85 Concord/ Hwy 29 150 1,827 1,977 1,224
7/1/85 Columbus/Morse Rd. 195 2,649 2,844 1,896
7/1/85 Columbus/Kenney Rd. 199 2,845 3,044 1,915
7/1/85 Westerville 305 2,941 3,246 1,944
7/1/85 Springfield 90 1,512 1,602 1,036
7/1/85 Dayton/Needmore Road 144 2,111 2,255 1,466
7/1/85 Dayton/Executive Blvd. 159 2,266 2,425 1,625
7/1/85 Lilburn 330 1,663 1,993 1,176
9/1/85 Madison/ Copps Ave. 450 2,283 2,733 1,484
9/1/85 Columbus/ Sinclair 307 1,815 2,122 1,194
9/1/85 Philadelphia/ Tacony St 118 2,983 3,101 1,959
F-51
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
10/1/85 N. Hollywood/ Whitsett - 1,524 2,576 420 1,302
10/1/85 Portland/ SE 82nd St - 354 496 377 380
10/1/85 Columbus/ Ambleside - 124 1,526 251 644
10/1/85 Indianapolis/ Pike Place - 229 1,531 572 856
10/1/85 Indianapolis/ Beach Grove - 198 1,342 439 709
10/1/85 Hartford/ Roberts - 219 1,481 5,928 966
10/1/85 Wichita/ S. Rock Rd. - 501 1,478 339 657
10/1/85 Wichita/ E. Harry - 313 1,050 175 468
10/1/85 Wichita/ S. Woodlawn - 263 905 204 437
10/1/85 Wichita/ E. Kellogg - 185 658 4 261
10/1/85 Wichita/ S. Tyler - 294 1,004 142 530
10/1/85 Wichita/ W. Maple - 234 805 (26) 313
10/1/85 Wichita/ Carey Lane - 192 674 71 296
10/1/85 Wichita/ E. Macarthur - 220 775 (38) 323
10/1/85 Joplin/ S. Range Line - 264 904 215 465
10/1/85 San Antonio/ Wetmore Rd. - 306 1,079 560 638
10/1/85 San Antonio/ Callaghan - 288 1,016 453 543
10/1/85 San Antonio/ Zarzamora - 364 1,281 653 674
10/1/85 San Antonio/ Hackberry - 388 1,367 2,685 1,001
10/1/85 San Antonio/ Fredericksburg - 287 1,009 773 597
10/1/85 Dallas/ S. Westmoreland - 474 1,670 222 734
10/1/85 Dallas/ Alvin St. - 359 1,266 315 559
10/1/85 Fort Worth/ W. Beach St. - 356 1,252 303 531
10/1/85 Fort Worth/ E. Seminary - 382 1,346 272 552
10/1/85 Fort Worth/ Cockrell St. - 323 1,136 211 515
11/1/85 Everett/ Evergreen - 706 2,294 608 1,076
11/1/85 Seattle/ Empire Way - 1,652 5,348 871 2,198
12/1/85 Milpitas - 1,623 1,577 333 913
12/1/85 Pleasanton/ Santa Rita - 1,226 2,078 503 1,160
12/1/85 Amherst/ Niagra Falls - 132 701 303 400
12/1/85 West Sams Blvd. - 164 1,159 (240) 383
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date ---------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------
10/1/85 N. Hollywood/ Whitsett 1,524 4,298 5,822 2,849
10/1/85 Portland/ SE 82nd St 354 1,253 1,607 834
10/1/85 Columbus/ Ambleside 124 2,421 2,545 1,529
10/1/85 Indianapolis/ Pike Place 229 2,959 3,188 1,945
10/1/85 Indianapolis/ Beach Grove 198 2,490 2,688 1,559
10/1/85 Hartford/ Roberts 409 8,185 8,594 1,981
10/1/85 Wichita/ S. Rock Rd. 642 2,333 2,975 1,537
10/1/85 Wichita/ E. Harry 285 1,721 2,006 1,155
10/1/85 Wichita/ S. Woodlawn 263 1,546 1,809 1,027
10/1/85 Wichita/ E. Kellogg 185 923 1,108 611
10/1/85 Wichita/ S. Tyler 294 1,676 1,970 1,134
10/1/85 Wichita/ W. Maple 234 1,092 1,326 724
10/1/85 Wichita/ Carey Lane 192 1,041 1,233 690
10/1/85 Wichita/ E. Macarthur 220 1,060 1,280 687
10/1/85 Joplin/ S. Range Line 264 1,584 1,848 1,088
10/1/85 San Antonio/ Wetmore Rd. 306 2,277 2,583 1,575
10/1/85 San Antonio/ Callaghan 288 2,012 2,300 1,392
10/1/85 San Antonio/ Zarzamora 364 2,608 2,972 1,798
10/1/85 San Antonio/ Hackberry 388 5,053 5,441 2,235
10/1/85 San Antonio/ Fredericksburg 287 2,379 2,666 1,538
10/1/85 Dallas/ S. Westmoreland 474 2,626 3,100 1,829
10/1/85 Dallas/ Alvin St. 359 2,140 2,499 1,415
10/1/85 Fort Worth/ W. Beach St. 356 2,086 2,442 1,398
10/1/85 Fort Worth/ E. Seminary 382 2,170 2,552 1,489
10/1/85 Fort Worth/ Cockrell St. 323 1,862 2,185 1,300
11/1/85 Everett/ Evergreen 705 3,979 4,684 2,824
11/1/85 Seattle/ Empire Way 1,702 8,367 10,069 5,937
12/1/85 Milpitas 1,623 2,823 4,446 1,845
12/1/85 Pleasanton/ Santa Rita 1,225 3,742 4,967 2,412
12/1/85 Amherst/ Niagra Falls 132 1,404 1,536 974
12/1/85 West Sams Blvd. 164 1,302 1,466 916
F-52
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
12/1/85 MacArthur Rd. - 204 1,628 238 638
12/1/85 Brockton/ Main - 153 2,020 (137) 678
12/1/85 Eatontown/ Hwy 35 - 308 4,067 690 1,648
12/1/85 Denver/ Leetsdale - 603 847 284 408
1/1/86 Mapleshade/ Rudderow - 362 1,811 430 825
1/1/86 Bordentown/ Groveville - 196 981 183 471
1/1/86 Sun Valley/ Sheldon - 544 1,836 401 793
1/1/86 Las Vegas/ Highland - 432 848 311 420
2/1/86 Costa Mesa/ Pomona - 1,405 1,520 559 693
2/1/86 Brea/ Imperial Hwy - 1,069 2,165 422 954
2/1/86 Skokie/ McCormick - 638 1,912 503 779
2/1/86 Colorado Springs/ Sinton - 535 1,115 660 631
2/1/86 Oklahoma City/ Penn - 146 829 163 406
2/1/86 Oklahoma City/ 39th - 238 812 354 477
3/1/86 Jacksonville/ Wiley - 140 510 305 331
3/1/86 St. Louis/ Forder - 517 1,133 343 534
3/3/86 Tampa / 56th - 450 1,360 659 -
4/1/86 Reno/ Telegraph - 649 1,051 755 682
4/1/86 St. Louis/Kirkham - 199 1,001 411 401
4/1/86 St. Louis/Reavis - 192 958 268 384
4/1/86 Fort Worth/East Loop - 196 804 260 369
5/1/86 Westlake Village - 1,205 995 5,373 429
5/1/86 Sacramento/Franklin Blvd. - 872 978 3,325 389
6/1/86 Richland Hills - 543 857 475 404
6/1/86 West Valley/So. 3600 - 208 1,552 482 413
7/1/86 Colorado Springs/ Hollow Tree - 574 726 342 426
7/1/86 West LA/Purdue Ave. - 2,415 3,585 269 1,212
7/1/86 Capital Heights/Central Ave. - 649 3,851 494 1,277
7/1/86 Pontiac/Dixie Hwy. - 259 2,091 270 756
8/1/86 Laurel/Ft. Meade Rd. - 475 1,475 514 630
8/1/86 Hammond / Calumet - 97 751 838 366
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date ---------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------------------------------------------------
12/1/85 MacArthur Rd. 204 2,504 2,708 1,733
12/1/85 Brockton/ Main 153 2,561 2,714 1,771
12/1/85 Eatontown/ Hwy 35 308 6,405 6,713 4,409
12/1/85 Denver/ Leetsdale 603 1,539 2,142 1,060
1/1/86 Mapleshade/ Rudderow 362 3,066 3,428 2,103
1/1/86 Bordentown/ Groveville 196 1,635 1,831 1,129
1/1/86 Sun Valley/ Sheldon 544 3,030 3,574 2,100
1/1/86 Las Vegas/ Highland 432 1,579 2,011 1,092
2/1/86 Costa Mesa/ Pomona 1,404 2,773 4,177 1,834
2/1/86 Brea/ Imperial Hwy 1,069 3,541 4,610 2,454
2/1/86 Skokie/ McCormick 638 3,194 3,832 2,074
2/1/86 Colorado Springs/ Sinton 535 2,406 2,941 1,515
2/1/86 Oklahoma City/ Penn 146 1,398 1,544 966
2/1/86 Oklahoma City/ 39th 238 1,643 1,881 1,140
3/1/86 Jacksonville/ Wiley 140 1,146 1,286 790
3/1/86 St. Louis/ Forder 516 2,011 2,527 1,388
3/3/86 Tampa / 56th 450 2,019 2,469 1,604
4/1/86 Reno/ Telegraph 649 2,488 3,137 1,599
4/1/86 St. Louis/Kirkham 199 1,813 2,012 1,155
4/1/86 St. Louis/Reavis 192 1,610 1,802 1,110
4/1/86 Fort Worth/East Loop 196 1,433 1,629 1,008
5/1/86 Westlake Village 1,256 6,746 8,002 1,330
5/1/86 Sacramento/Franklin Blvd. 1,139 4,425 5,564 2,178
6/1/86 Richland Hills 543 1,736 2,279 1,213
6/1/86 West Valley/So. 3600 208 2,447 2,655 1,677
7/1/86 Colorado Springs/ Hollow Tree 574 1,494 2,068 1,008
7/1/86 West LA/Purdue Ave. 2,415 5,066 7,481 3,498
7/1/86 Capital Heights/Central Ave. 649 5,622 6,271 3,873
7/1/86 Pontiac/Dixie Hwy. 259 3,117 3,376 2,115
8/1/86 Laurel/Ft. Meade Rd. 475 2,619 3,094 1,703
8/1/86 Hammond / Calumet 97 1,955 2,052 1,190
F-53
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
9/1/86 Kansas City/S. 44th. - 509 1,906 660 737
9/1/86 Lakewood / Wadsworth - 6th - 1,070 3,155 751 1,027
10/1/86 Peralta/Fremont - 851 1,074 326 456
10/1/86 Birmingham/Highland - 89 786 288 398
10/1/86 Birmingham/Riverchase - 262 1,338 544 645
10/1/86 Birmingham/Eastwood - 166 1,184 448 612
10/1/86 Birmingham/Forestdale - 152 948 307 519
10/1/86 Birmingham/Centerpoint - 265 1,305 440 525
10/1/86 Birmingham/Roebuck Plaza - 101 399 367 425
10/1/86 Birmingham/Greensprings - 347 1,173 385 281
10/1/86 Birmingham/Hoover-Lorna - 372 1,128 446 431
10/1/86 Midfield/Bessemer - 170 355 457 112
10/1/86 Huntsville/Leeman Ferry Rd. - 158 992 367 558
10/1/86 Huntsville/Drake - 253 1,172 301 538
10/1/86 Anniston/Whiteside - 59 566 234 329
10/1/86 Houston/Glenvista - 595 1,043 700 494
10/1/86 Houston/I-45 - 704 1,146 1,134 604
10/1/86 Houston/Rogerdale - 1,631 2,792 720 1,232
10/1/86 Houston/Gessner - 1,032 1,693 1,167 746
10/1/86 Houston/Richmond-Fairdale - 1,502 2,506 1,457 1,160
10/1/86 Houston/Gulfton - 1,732 3,036 1,188 1,398
10/1/86 Houston/Westpark - 503 854 388 435
10/1/86 Jonesboro - 157 718 334 370
10/1/86 Houston / South Loop West - 1,299 3,491 1,481 1,366
10/1/86 Houston / Plainfield Road - 904 2,319 1,023 920
10/1/86 Houston / North Freeway - 719 1,987 364 609
10/1/86 Houston / Old Katy Road - 1,365 3,431 24 1,274
10/1/86 Houston / Long Point - 451 1,187 698 563
10/1/86 Austin / Research Blvd. - 1,390 1,710 594 672
11/1/86 Arleta / Osborne Street - 987 663 312 290
12/1/86 Lynnwood / 196th Street - 1,063 1,602 7,402 571
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date ---------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------------------------------------------------
9/1/86 Kansas City/S. 44th. 508 3,304 3,812 2,250
9/1/86 Lakewood / Wadsworth - 6th 1,070 4,933 6,003 3,592
10/1/86 Peralta/Fremont 851 1,856 2,707 1,272
10/1/86 Birmingham/Highland 149 1,412 1,561 960
10/1/86 Birmingham/Riverchase 278 2,511 2,789 1,710
10/1/86 Birmingham/Eastwood 232 2,178 2,410 1,466
10/1/86 Birmingham/Forestdale 190 1,736 1,926 1,197
10/1/86 Birmingham/Centerpoint 273 2,262 2,535 1,523
10/1/86 Birmingham/Roebuck Plaza 340 952 1,292 615
10/1/86 Birmingham/Greensprings 16 2,170 2,186 1,486
10/1/86 Birmingham/Hoover-Lorna 266 2,111 2,377 1,420
10/1/86 Midfield/Bessemer 95 999 1,094 621
10/1/86 Huntsville/Leeman Ferry Rd. 198 1,877 2,075 1,274
10/1/86 Huntsville/Drake 248 2,016 2,264 1,384
10/1/86 Anniston/Whiteside 107 1,081 1,188 748
10/1/86 Houston/Glenvista 594 2,238 2,832 1,557
10/1/86 Houston/I-45 703 2,885 3,588 1,920
10/1/86 Houston/Rogerdale 1,631 4,744 6,375 3,263
10/1/86 Houston/Gessner 1,032 3,606 4,638 2,500
10/1/86 Houston/Richmond-Fairdale 1,501 5,124 6,625 3,432
10/1/86 Houston/Gulfton 1,732 5,622 7,354 3,908
10/1/86 Houston/Westpark 502 1,678 2,180 1,047
10/1/86 Jonesboro 156 1,423 1,579 935
10/1/86 Houston / South Loop West 1,298 6,339 7,637 4,514
10/1/86 Houston / Plainfield Road 903 4,263 5,166 3,000
10/1/86 Houston / North Freeway 661 3,018 3,679 2,087
10/1/86 Houston / Old Katy Road 1,163 4,931 6,094 3,422
10/1/86 Houston / Long Point 451 2,448 2,899 1,793
10/1/86 Austin / Research Blvd. 1,390 2,976 4,366 2,171
11/1/86 Arleta / Osborne Street 986 1,266 2,252 891
12/1/86 Lynnwood / 196th Street 1,405 9,233 10,638 3,134
F-54
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
12/1/86 N. Auburn / Auburn Way N. - 606 1,144 449 533
12/1/86 Gresham / Burnside & 202nd - 351 1,056 498 482
12/1/86 Denver / Sheridan Boulevard - 1,033 2,792 1,117 1,007
12/1/86 Marietta / Cobb Parkway - 536 2,764 1,112 1,016
12/1/86 Hillsboro / T.V. Highway - 461 574 308 414
12/1/86 San Antonio / West Sunset Road - 1,206 1,594 775 649
12/31/86 Monrovia / Myrtle Avenue - 1,149 2,446 225 -
12/31/86 Chatsworth / Topanga - 1,447 1,243 3,786 -
12/31/86 Houston / Larkwood - 247 602 400 -
12/31/86 Northridge - 3,624 1,922 2,489 -
12/31/86 Santa Clara / Duane - 1,950 1,004 426 -
12/31/86 Oyster Point - 1,569 1,490 499 -
12/31/86 Walnut - 767 613 5,500 -
3/1/87 Annandale / Ravensworth - 679 1,621 349 596
4/1/87 City Of Industry / Amar - 748 2,052 523 702
5/1/87 Oklahoma City / W. Hefner - 459 941 414 417
7/1/87 Oakbrook Terrace - 912 2,688 1,741 399
8/1/87 San Antonio/Austin Hwy. - 400 850 (12) 164
10/1/87 Plantation/S. State Rd. - 924 1,801 (129) 298
10/1/87 Rockville/Fredrick Rd. - 1,695 3,305 (90) 519
2/1/88 Anaheim/Lakeview - 995 1,505 65 256
6/7/88 Mesquite / Sorrento Drive - 928 1,011 3,554 -
7/1/88 Fort Wayne - 101 1,524 235 663
1/1/92 Costa Mesa - 533 980 792 -
3/1/92 Dallas / Walnut St. - 537 1,008 408 -
5/1/92 Camp Creek - 576 1,075 492 -
9/1/92 Orlando/W. Colonial - 368 713 227 -
9/1/92 Jacksonville/Arlington - 554 1,065 282 -
10/1/92 Stockton/Mariners - 381 730 229 -
11/18/92 Virginia Beach/General Booth Blvd - 599 1,119 477 -
1/1/93 Redwood City/Storage - 907 1,684 262 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date ---------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
------------------------------------------------------------------------------------------------------------
12/1/86 N. Auburn / Auburn Way N. 606 2,126 2,732 1,565
12/1/86 Gresham / Burnside & 202nd 351 2,036 2,387 1,412
12/1/86 Denver / Sheridan Boulevard 1,033 4,916 5,949 3,484
12/1/86 Marietta / Cobb Parkway 535 4,893 5,428 3,383
12/1/86 Hillsboro / T.V. Highway 461 1,296 1,757 987
12/1/86 San Antonio / West Sunset Road 1,207 3,017 4,224 2,015
12/31/86 Monrovia / Myrtle Avenue 1,149 2,671 3,820 2,069
12/31/86 Chatsworth / Topanga 1,448 5,028 6,476 1,622
12/31/86 Houston / Larkwood 246 1,003 1,249 748
12/31/86 Northridge 3,623 4,412 8,035 2,408
12/31/86 Santa Clara / Duane 1,949 1,431 3,380 1,092
12/31/86 Oyster Point 1,569 1,989 3,558 1,493
12/31/86 Walnut 768 6,112 6,880 1,688
3/1/87 Annandale / Ravensworth 679 2,566 3,245 1,805
4/1/87 City Of Industry / Amar 748 3,277 4,025 1,635
5/1/87 Oklahoma City / W. Hefner 459 1,772 2,231 1,210
7/1/87 Oakbrook Terrace 1,580 4,160 5,740 3,081
8/1/87 San Antonio/Austin Hwy. 400 1,002 1,402 920
10/1/87 Plantation/S. State Rd. 924 1,970 2,894 1,697
10/1/87 Rockville/Fredrick Rd. 1,694 3,735 5,429 3,335
2/1/88 Anaheim/Lakeview 995 1,826 2,821 1,587
6/7/88 Mesquite / Sorrento Drive 1,045 4,448 5,493 2,090
7/1/88 Fort Wayne 101 2,422 2,523 1,375
1/1/92 Costa Mesa 535 1,770 2,305 1,462
3/1/92 Dallas / Walnut St. 537 1,416 1,953 1,312
5/1/92 Camp Creek 575 1,568 2,143 946
9/1/92 Orlando/W. Colonial 367 941 1,308 614
9/1/92 Jacksonville/Arlington 554 1,347 1,901 858
10/1/92 Stockton/Mariners 380 960 1,340 616
11/18/92 Virginia Beach/General Booth Blvd 599 1,596 2,195 997
1/1/93 Redwood City/Storage 907 1,946 2,853 1,163
F-55
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
1/1/93 City Of Industry - 1,611 2,991 896 -
1/1/93 San Jose/Felipe - 1,124 2,088 574 -
1/1/93 Baldwin Park/Garvey Ave - 840 1,561 438 -
3/19/93 Westminister / W. 80th - 840 1,586 337 -
4/26/93 Costa Mesa / Newport 851 2,141 3,989 5,421 -
5/13/93 Austin /N. Lamar - 919 1,695 8,580 -
5/28/93 Jacksonville/Phillips Hwy. - 406 771 227 -
5/28/93 Tampa/Nebraska Avenue - 550 1,043 239 -
6/9/93 Calabasas / Ventura Blvd. - 1,762 3,269 312 -
6/9/93 Carmichael / Fair Oaks - 573 1,052 272 -
6/9/93 Santa Clara / Duane - 454 834 146 -
6/10/93 Citrus Heights / Sylvan Road - 438 822 230 -
6/25/93 Trenton / Allen Road - 623 1,166 292 -
6/30/93 Los Angeles/W.Jefferson Blvd - 1,085 2,017 236 -
7/16/93 Austin / So. Congress Ave - 777 1,445 380 -
8/1/93 Gaithersburg / E. Diamond - 602 1,139 234 -
8/11/93 Atlanta / Northside - 1,150 2,149 374 -
8/11/93 Smyrna/ Rosswill Rd - 446 842 255 -
8/13/93 So. Brunswick/Highway - 1,076 2,033 426 -
10/1/93 Denver / Federal Blvd - 875 1,633 301 -
10/1/93 Citrus Heights - 527 987 216 -
10/1/93 Lakewood / 6th Ave - 798 1,489 58 -
10/27/93 Houston / S Shaver St - 481 896 248 -
11/3/93 Upland/S. Euclid Ave. - 431 807 550 -
11/16/93 Norcross / Jimmy Carter - 627 1,167 233 -
11/16/93 Seattle / 13th - 1,085 2,015 687 -
12/9/93 Salt Lake City - 765 1,422 37 -
12/16/93 West Valley City - 683 1,276 255 -
12/21/93 Pinellas Park / 34th St. W - 607 1,134 277 -
12/28/93 New Orleans / S. Carrollton Ave - 1,575 2,941 213 -
12/29/93 Orange / Main - 1,238 2,317 1,735 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date ---------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-----------------------------------------------------------------------------------------------------------
1/1/93 City Of Industry 1,610 3,888 5,498 2,436
1/1/93 San Jose/Felipe 1,124 2,662 3,786 1,553
1/1/93 Baldwin Park/Garvey Ave 840 1,999 2,839 1,256
3/19/93 Westminister / W. 80th 840 1,923 2,763 1,161
4/26/93 Costa Mesa / Newport 3,732 7,819 11,551 3,063
5/13/93 Austin /N. Lamar 1,421 9,773 11,194 2,946
5/28/93 Jacksonville/Phillips Hwy. 406 998 1,404 630
5/28/93 Tampa/Nebraska Avenue 550 1,282 1,832 746
6/9/93 Calabasas / Ventura Blvd. 1,761 3,582 5,343 2,009
6/9/93 Carmichael / Fair Oaks 572 1,325 1,897 824
6/9/93 Santa Clara / Duane 453 981 1,434 567
6/10/93 Citrus Heights / Sylvan Road 437 1,053 1,490 644
6/25/93 Trenton / Allen Road 623 1,458 2,081 847
6/30/93 Los Angeles/W.Jefferson Blvd 1,085 2,253 3,338 1,299
7/16/93 Austin / So. Congress Ave 777 1,825 2,602 1,134
8/1/93 Gaithersburg / E. Diamond 602 1,373 1,975 761
8/11/93 Atlanta / Northside 1,150 2,523 3,673 1,509
8/11/93 Smyrna/ Rosswill Rd 446 1,097 1,543 684
8/13/93 So. Brunswick/Highway 1,076 2,459 3,535 1,431
10/1/93 Denver / Federal Blvd 875 1,934 2,809 1,092
10/1/93 Citrus Heights 527 1,203 1,730 652
10/1/93 Lakewood / 6th Ave 685 1,660 2,345 929
10/27/93 Houston / S Shaver St 481 1,144 1,625 674
11/3/93 Upland/S. Euclid Ave. 508 1,280 1,788 688
11/16/93 Norcross / Jimmy Carter 626 1,401 2,027 807
11/16/93 Seattle / 13th 1,085 2,702 3,787 1,659
12/9/93 Salt Lake City 633 1,591 2,224 535
12/16/93 West Valley City 682 1,532 2,214 885
12/21/93 Pinellas Park / 34th St. W 607 1,411 2,018 830
12/28/93 New Orleans / S. Carrollton Ave 1,575 3,154 4,729 2,000
12/29/93 Orange / Main 1,593 3,697 5,290 1,867
F-56
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
12/29/93 Sunnyvale / Wedell - 554 1,037 783 -
12/29/93 El Cajon / Magnolia - 421 791 614 -
12/29/93 Orlando / S. Semoran Blvd. - 462 872 648 -
12/29/93 Tampa / W. Hillsborough Ave - 352 665 473 -
12/29/93 Irving / West Loop 12 - 341 643 233 -
12/29/93 Fullerton / W. Commonwealth - 904 1,687 1,282 -
12/29/93 N. Lauderdale / Mcnab Rd - 628 1,182 751 -
12/29/93 Los Alimitos / Cerritos - 695 1,299 718 -
12/29/93 Frederick / Prospect Blvd. - 573 1,082 640 -
12/29/93 Indianapolis / E. Washington - 403 775 669 -
12/29/93 Gardena / Western Ave. - 552 1,035 613 -
12/29/93 Palm Bay / Bobcock Street - 409 775 591 -
1/10/94 Hialeah / W. 20Th Ave. - 1,855 3,497 326 -
1/12/94 Sunnyvale / N. Fair Oaks Ave - 689 1,285 334 -
1/12/94 Honolulu / Iwaena - - 3,382 1,003 -
1/12/94 Miami / Golden Glades - 579 1,081 590 -
1/21/94 Herndon / Centreville Road - 1,584 2,981 540 -
2/8/94 Las Vegas/S. MLK Blvd. - 1,383 2,592 1,144 -
2/28/94 Arlingtn/Old Jeffersn Davishwy - 735 1,399 630 -
3/8/94 Beaverton / Sw Barnes Road - 942 1,810 212 -
3/21/94 Austin / Arboretum - 473 897 2,777 -
3/25/94 Tinton Falls / Shrewsbury Ave - 1,074 2,033 313 -
3/25/94 East Brunswick / Milltown Road - 1,282 2,411 460 -
3/25/94 Mercerville / Quakerbridge Road - 1,109 2,111 348 -
3/31/94 Hypoluxo - 735 1,404 2,008 -
4/26/94 No. Highlands / Roseville Road - 980 1,835 510 -
5/12/94 Fort Pierce/Okeechobee Road - 438 842 164 -
5/24/94 Hempstead/Peninsula Blvd. - 2,053 3,832 352 -
5/24/94 La/Huntington - 483 905 205 -
6/9/94 Chattanooga / Brainerd Road - 613 1,170 275 -
6/9/94 Chattanooga / Ringgold Road - 761 1,433 501 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
12/29/93 Sunnyvale / Wedell 725 1,649 2,374 928
12/29/93 El Cajon / Magnolia 541 1,285 1,826 701
12/29/93 Orlando / S. Semoran Blvd. 601 1,381 1,982 806
12/29/93 Tampa / W. Hillsborough Ave 436 1,054 1,490 587
12/29/93 Irving / West Loop 12 354 863 1,217 505
12/29/93 Fullerton / W. Commonwealth 1,159 2,714 3,873 1,408
12/29/93 N. Lauderdale / Mcnab Rd 798 1,763 2,561 951
12/29/93 Los Alimitos / Cerritos 874 1,838 2,712 977
12/29/93 Frederick / Prospect Blvd. 692 1,603 2,295 899
12/29/93 Indianapolis / E. Washington 505 1,342 1,847 696
12/29/93 Gardena / Western Ave. 694 1,506 2,200 807
12/29/93 Palm Bay / Bobcock Street 525 1,250 1,775 705
1/10/94 Hialeah / W. 20Th Ave. 1,590 4,088 5,678 2,113
1/12/94 Sunnyvale / N. Fair Oaks Ave 657 1,651 2,308 891
1/12/94 Honolulu / Iwaena - 4,385 4,385 2,221
1/12/94 Miami / Golden Glades 557 1,693 2,250 909
1/21/94 Herndon / Centreville Road 1,358 3,747 5,105 1,951
2/8/94 Las Vegas/S. MLK Blvd. 1,435 3,684 5,119 1,976
2/28/94 Arlingtn/Old Jeffersn Davishwy 630 2,134 2,764 1,218
3/8/94 Beaverton / Sw Barnes Road 807 2,157 2,964 1,286
3/21/94 Austin / Arboretum 1,553 2,594 4,147 1,116
3/25/94 Tinton Falls / Shrewsbury Ave 920 2,500 3,420 1,391
3/25/94 East Brunswick / Milltown Road 1,099 3,054 4,153 1,732
3/25/94 Mercerville / Quakerbridge Road 950 2,618 3,568 1,475
3/31/94 Hypoluxo 630 3,517 4,147 2,710
4/26/94 No. Highlands / Roseville Road 840 2,485 3,325 1,392
5/12/94 Fort Pierce/Okeechobee Road 375 1,069 1,444 762
5/24/94 Hempstead/Peninsula Blvd. 1,762 4,475 6,237 2,417
5/24/94 La/Huntington 414 1,179 1,593 668
6/9/94 Chattanooga / Brainerd Road 525 1,533 2,058 892
6/9/94 Chattanooga / Ringgold Road 652 2,043 2,695 1,221
F-57
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
6/18/94 Las Vegas / S. Valley View Blvd - 837 1,571 337 -
6/23/94 Las Vegas / Tropicana - 750 1,408 305 -
6/23/94 Henderson / Green Valley Pkwy - 1,047 1,960 314 -
6/24/94 Las Vegas / N. Lamb Blvd. - 869 1,629 104 -
6/30/94 Birmingham / W. Oxmoor Road - 532 1,004 504 -
7/20/94 Milpitas / Dempsey Road - 1,260 2,358 243 -
8/17/94 Beaverton / S.W. Denny Road - 663 1,245 153 -
8/17/94 Irwindale / Central Ave. - 674 1,263 132 -
8/17/94 Suitland / St. Barnabas Rd - 1,530 2,913 433 -
8/17/94 North Brunswick / How Lane - 1,238 2,323 156 -
8/17/94 Lombard / 64th - 847 1,583 376 -
8/17/94 Alsip / 27th - 406 765 161 -
9/15/94 Huntsville / Old Monrovia Road - 613 1,157 259 -
9/27/94 West Haven / Bull Hill Lane - 455 873 5,369 -
9/30/94 San Francisco / Marin St. - 1,227 2,339 1,341 -
9/30/94 Baltimore / Hillen Street - 580 1,095 438 -
9/30/94 San Francisco /10th & Howard - 1,423 2,668 316 -
9/30/94 Montebello / E. Whittier - 383 732 213 -
9/30/94 Arlington / Collins - 228 435 285 -
9/30/94 Miami / S.W. 119th Ave - 656 1,221 123 -
9/30/94 Blackwood / Erial Road - 774 1,437 147 -
9/30/94 Concord / Monument - 1,092 2,027 430 -
9/30/94 Rochester / Lee Road - 469 871 335 -
9/30/94 Houston / Bellaire - 623 1,157 333 -
9/30/94 Austin / Lamar Blvd - 781 1,452 169 -
9/30/94 Milwaukee / Lovers Lane Rd - 469 871 269 -
9/30/94 Monterey / Del Rey Oaks - 1,093 1,897 127 -
9/30/94 St. Petersburg / 66Th St. - 427 793 216 -
9/30/94 Dayton Bch / N. Nova Road - 396 735 226 -
9/30/94 Maple Shade / Route 38 - 994 1,846 260 -
9/30/94 Marlton / Route 73 N. - 938 1,742 159 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
6/18/94 Las Vegas / S. Valley View Blvd 718 2,027 2,745 1,058
6/23/94 Las Vegas / Tropicana 643 1,820 2,463 1,016
6/23/94 Henderson / Green Valley Pkwy 897 2,424 3,321 1,288
6/24/94 Las Vegas / N. Lamb Blvd. 669 1,933 2,602 834
6/30/94 Birmingham / W. Oxmoor Road 456 1,584 2,040 994
7/20/94 Milpitas / Dempsey Road 1,080 2,781 3,861 1,502
8/17/94 Beaverton / S.W. Denny Road 568 1,493 2,061 795
8/17/94 Irwindale / Central Ave. 578 1,491 2,069 786
8/17/94 Suitland / St. Barnabas Rd 1,311 3,565 4,876 1,925
8/17/94 North Brunswick / How Lane 1,061 2,656 3,717 1,385
8/17/94 Lombard / 64th 726 2,080 2,806 1,024
8/17/94 Alsip / 27th 348 984 1,332 536
9/15/94 Huntsville / Old Monrovia Road 525 1,504 2,029 866
9/27/94 West Haven / Bull Hill Lane 1,963 4,734 6,697 1,656
9/30/94 San Francisco / Marin St. 1,371 3,536 4,907 1,794
9/30/94 Baltimore / Hillen Street 497 1,616 2,113 864
9/30/94 San Francisco /10th & Howard 1,221 3,186 4,407 1,702
9/30/94 Montebello / E. Whittier 329 999 1,328 559
9/30/94 Arlington / Collins 195 753 948 495
9/30/94 Miami / S.W. 119th Ave 562 1,438 2,000 718
9/30/94 Blackwood / Erial Road 663 1,695 2,358 891
9/30/94 Concord / Monument 935 2,614 3,549 1,464
9/30/94 Rochester / Lee Road 402 1,273 1,675 745
9/30/94 Houston / Bellaire 534 1,579 2,113 868
9/30/94 Austin / Lamar Blvd 668 1,734 2,402 928
9/30/94 Milwaukee / Lovers Lane Rd 402 1,207 1,609 652
9/30/94 Monterey / Del Rey Oaks 903 2,214 3,117 1,199
9/30/94 St. Petersburg / 66Th St. 366 1,070 1,436 608
9/30/94 Dayton Bch / N. Nova Road 339 1,018 1,357 541
9/30/94 Maple Shade / Route 38 852 2,248 3,100 1,206
9/30/94 Marlton / Route 73 N. 805 2,034 2,839 1,045
F-58
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
9/30/94 Naperville / E. Ogden Ave - 683 1,268 241 -
9/30/94 Long Beach / South Street - 1,778 3,307 470 -
9/30/94 Aloha / S.W. Shaw - 805 1,495 139 -
9/30/94 Alexandria / S. Pickett - 1,550 2,879 337 -
9/30/94 Houston / Highway 6 North - 1,120 2,083 264 -
9/30/94 San Antonio/Nacogdoches Rd - 571 1,060 253 -
9/30/94 San Ramon/San Ramon Valley - 1,530 2,840 596 -
9/30/94 San Rafael / Merrydale Rd - 1,705 3,165 223 -
9/30/94 San Antonio / Austin Hwy - 592 1,098 242 -
9/30/94 Sharonville / E. Kemper - 574 1,070 426 -
10/13/94 Davie / State Road 84 - 744 1,467 1,127 -
10/13/94 Carrollton / Marsh Lane - 770 1,437 1,423 -
10/31/94 Sherman Oaks / Van Nuys Blvd - 1,278 2,461 980 -
12/19/94 Salt Lake City/West North Temple - 490 917 (53) -
12/28/94 Milpitas / Watson - 1,575 2,925 312 -
12/28/94 Las Vegas / Jones Blvd - 1,208 2,243 200 -
12/28/94 Venice / Guthrie - 578 1,073 148 -
12/30/94 Apple Valley / Foliage Ave - 910 1,695 274 -
1/4/95 Chula Vista / Main Street - 735 1,802 203 -
1/5/95 Pantego / West Park - 315 735 167 -
1/12/95 Roswell / Alpharetta - 423 993 433 -
1/23/95 North Bergen / Tonne - 1,564 3,772 409 -
1/23/95 San Leandro / Hesperian - 734 1,726 145 -
1/24/95 Nashville / Elm Hill - 338 791 471 -
2/3/95 Reno / S. Mccarron Blvd - 1,080 2,537 208 -
2/15/95 Schiller Park - 1,688 3,939 448 -
2/15/95 Lansing - 1,514 3,534 551 -
2/15/95 Pleasanton - 1,257 2,932 129 -
2/15/95 LA/Sepulveda - 1,453 3,390 141 -
2/28/95 Decatur / Flat Shoal - 970 2,288 765 -
2/28/95 Smyrna / S. Cobb - 663 1,559 448 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
9/30/94 Naperville / E. Ogden Ave 585 1,607 2,192 817
9/30/94 Long Beach / South Street 1,524 4,031 5,555 2,112
9/30/94 Aloha / S.W. Shaw 690 1,749 2,439 931
9/30/94 Alexandria / S. Pickett 1,329 3,437 4,766 1,800
9/30/94 Houston / Highway 6 North 960 2,507 3,467 1,356
9/30/94 San Antonio/Nacogdoches Rd 489 1,395 1,884 791
9/30/94 San Ramon/San Ramon Valley 1,311 3,655 4,966 1,917
9/30/94 San Rafael / Merrydale Rd 1,461 3,632 5,093 1,903
9/30/94 San Antonio / Austin Hwy 507 1,425 1,932 776
9/30/94 Sharonville / E. Kemper 492 1,578 2,070 830
10/13/94 Davie / State Road 84 637 2,701 3,338 1,324
10/13/94 Carrollton / Marsh Lane 1,021 2,609 3,630 1,316
10/31/94 Sherman Oaks / Van Nuys Blvd 1,423 3,296 4,719 1,722
12/19/94 Salt Lake City/West North Temple 385 969 1,354 335
12/28/94 Milpitas / Watson 1,350 3,462 4,812 1,801
12/28/94 Las Vegas / Jones Blvd 1,035 2,616 3,651 1,341
12/28/94 Venice / Guthrie 495 1,304 1,799 686
12/30/94 Apple Valley / Foliage Ave 780 2,099 2,879 1,121
1/4/95 Chula Vista / Main Street 735 2,005 2,740 1,106
1/5/95 Pantego / West Park 315 902 1,217 505
1/12/95 Roswell / Alpharetta 423 1,426 1,849 848
1/23/95 North Bergen / Tonne 1,551 4,194 5,745 2,156
1/23/95 San Leandro / Hesperian 733 1,872 2,605 951
1/24/95 Nashville / Elm Hill 337 1,263 1,600 780
2/3/95 Reno / S. Mccarron Blvd 1,080 2,745 3,825 1,401
2/15/95 Schiller Park 1,688 4,387 6,075 2,013
2/15/95 Lansing 1,514 4,085 5,599 1,705
2/15/95 Pleasanton 1,256 3,062 4,318 1,349
2/15/95 LA/Sepulveda 1,453 3,531 4,984 1,552
2/28/95 Decatur / Flat Shoal 970 3,053 4,023 1,624
2/28/95 Smyrna / S. Cobb 662 2,008 2,670 1,030
F-59
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
2/28/95 Downey / Bellflower - 916 2,158 201 -
2/28/95 Vallejo / Lincoln - 445 1,052 316 -
2/28/95 Lynnwood / 180th St - 516 1,205 252 -
2/28/95 Kent / Pacific Hwy - 728 1,711 159 -
2/28/95 Kirkland - 1,254 2,932 507 -
2/28/95 Federal Way/Pacific - 785 1,832 311 -
2/28/95 Tampa / S. Dale - 791 1,852 300 -
2/28/95 Burlingame/Adrian Rd - 2,280 5,349 460 -
2/28/95 Miami / Cloverleaf - 606 1,426 358 -
2/28/95 Pinole / San Pablo - 639 1,502 335 -
2/28/95 South Gate / Firesto - 1,442 3,449 447 -
2/28/95 San Jose / Mabury - 892 2,088 180 -
2/28/95 La Puente / Valley Blvd - 591 1,390 258 -
2/28/95 San Jose / Capitol E - 1,215 2,852 155 -
2/28/95 Milwaukie / 40th Street - 576 1,388 122 -
2/28/95 Portland / N. Lombard - 812 1,900 228 -
2/28/95 Miami / Biscayne - 1,313 3,076 387 -
2/28/95 Chicago / Clark Street - 442 1,031 379 -
2/28/95 Palatine / Dundee - 698 1,643 572 -
2/28/95 Williamsville/Transit - 284 670 313 -
2/28/95 Amherst / Sheridan - 484 1,151 218 -
3/2/95 Everett / Highway 99 - 859 2,022 286 -
3/2/95 Burien / 1St Ave South - 763 1,783 528 -
3/2/95 Kent / South 238th Street - 763 1,783 275 -
3/31/95 Cheverly / Central Ave - 911 2,164 443 -
5/1/95 Sandy / S. State Street - 1,043 2,442 (204) -
5/3/95 Largo / Ulmerton Roa - 263 654 146 -
5/8/95 Fairfield/Western Street - 439 1,030 103 -
5/8/95 Dallas / W. Mockingbird - 1,440 3,371 202 -
5/8/95 East Point / Lakewood - 884 2,071 376 -
5/25/95 Falls Church / Gallows Rd - 350 835 9,348 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
2/28/95 Downey / Bellflower 916 2,359 3,275 1,197
2/28/95 Vallejo / Lincoln 445 1,368 1,813 723
2/28/95 Lynnwood / 180th St 516 1,457 1,973 810
2/28/95 Kent / Pacific Hwy 728 1,870 2,598 969
2/28/95 Kirkland 1,253 3,440 4,693 1,692
2/28/95 Federal Way/Pacific 785 2,143 2,928 1,152
2/28/95 Tampa / S. Dale 791 2,152 2,943 1,156
2/28/95 Burlingame/Adrian Rd 2,280 5,809 8,089 2,920
2/28/95 Miami / Cloverleaf 606 1,784 2,390 965
2/28/95 Pinole / San Pablo 639 1,837 2,476 977
2/28/95 South Gate / Firesto 1,442 3,896 5,338 2,093
2/28/95 San Jose / Mabury 892 2,268 3,160 1,148
2/28/95 La Puente / Valley Blvd 591 1,648 2,239 909
2/28/95 San Jose / Capitol E 1,215 3,007 4,222 1,516
2/28/95 Milwaukie / 40th Street 579 1,507 2,086 795
2/28/95 Portland / N. Lombard 812 2,128 2,940 1,121
2/28/95 Miami / Biscayne 1,313 3,463 4,776 1,629
2/28/95 Chicago / Clark Street 442 1,410 1,852 834
2/28/95 Palatine / Dundee 698 2,215 2,913 1,167
2/28/95 Williamsville/Transit 283 984 1,267 549
2/28/95 Amherst / Sheridan 483 1,370 1,853 739
3/2/95 Everett / Highway 99 858 2,309 3,167 1,214
3/2/95 Burien / 1St Ave South 763 2,311 3,074 1,180
3/2/95 Kent / South 238th Street 763 2,058 2,821 1,117
3/31/95 Cheverly / Central Ave 910 2,608 3,518 1,248
5/1/95 Sandy / S. State Street 923 2,358 3,281 796
5/3/95 Largo / Ulmerton Roa 262 801 1,063 463
5/8/95 Fairfield/Western Street 439 1,133 1,572 568
5/8/95 Dallas / W. Mockingbird 1,440 3,573 5,013 1,757
5/8/95 East Point / Lakewood 884 2,447 3,331 1,323
5/25/95 Falls Church / Gallows Rd 3,607 6,926 10,533 903
F-60
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
6/12/95 Baltimore / Old Waterloo - 769 1,850 222 -
6/12/95 Pleasant Hill / Hookston - 766 1,848 151 -
6/12/95 Mountain View/Old Middlefield - 2,095 4,913 187 -
6/30/95 San Jose / Blossom Hill - 1,467 3,444 229 -
6/30/95 Fairfield / Kings Highway - 1,811 4,273 310 -
6/30/95 Pacoima / Paxton Street 464 840 1,976 210 -
6/30/95 Portland / Prescott - 647 1,509 223 -
6/30/95 St. Petersburg - 352 827 298 -
6/30/95 Dallas / Audelia Road - 1,166 2,725 975 -
6/30/95 Miami Gardens - 823 1,929 281 -
6/30/95 Grand Prairie / 19th - 566 1,329 161 -
6/30/95 Joliet / Jefferson Street - 501 1,181 213 -
6/30/95 Bridgeton / Pennridge - 283 661 201 -
6/30/95 Portland / S.E.92nd - 638 1,497 224 -
6/30/95 Houston / S.W. Freeway - 537 1,254 6,873 -
6/30/95 Milwaukee / Brown - 358 849 279 -
6/30/95 Orlando / W. Oak Ridge - 698 1,642 325 -
6/30/95 Lauderhill / State Road - 644 1,508 328 -
6/30/95 Orange Park /Blanding Blvd - 394 918 231 -
6/30/95 St. Petersburg /Joe'S Creek - 704 1,642 235 -
6/30/95 St. Louis / Page Service Drive - 531 1,241 198 -
6/30/95 Independence /E. 42nd - 438 1,023 229 -
6/30/95 Cherry Hill / Dobbs Lane - 716 1,676 227 -
6/30/95 Edgewater Park / Route 130 - 683 1,593 170 -
6/30/95 Beaverton / S.W. 110 - 572 1,342 220 -
6/30/95 Markham / W. 159Th Place - 230 539 222 -
6/30/95 Houston / N.W. Freeway - 447 1,066 158 -
6/30/95 Portland / Gantenbein - 537 1,262 239 -
6/30/95 Upper Chichester/Market St. - 569 1,329 165 -
6/30/95 Fort Worth / Hwy 80 - 379 891 168 -
6/30/95 Greenfield/ S. 108th - 728 1,707 493 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
6/12/95 Baltimore / Old Waterloo 769 2,072 2,841 1,034
6/12/95 Pleasant Hill / Hookston 742 2,023 2,765 1,017
6/12/95 Mountain View/Old Middlefield 2,094 5,101 7,195 2,441
6/30/95 San Jose / Blossom Hill 1,467 3,673 5,140 1,810
6/30/95 Fairfield / Kings Highway 1,810 4,584 6,394 2,250
6/30/95 Pacoima / Paxton Street 840 2,186 3,026 1,093
6/30/95 Portland / Prescott 647 1,732 2,379 892
6/30/95 St. Petersburg 352 1,125 1,477 609
6/30/95 Dallas / Audelia Road 1,166 3,700 4,866 2,061
6/30/95 Miami Gardens 823 2,210 3,033 1,098
6/30/95 Grand Prairie / 19th 566 1,490 2,056 765
6/30/95 Joliet / Jefferson Street 501 1,394 1,895 739
6/30/95 Bridgeton / Pennridge 283 862 1,145 492
6/30/95 Portland / S.E.92nd 638 1,721 2,359 891
6/30/95 Houston / S.W. Freeway 1,140 7,524 8,664 1,843
6/30/95 Milwaukee / Brown 358 1,128 1,486 610
6/30/95 Orlando / W. Oak Ridge 697 1,968 2,665 1,004
6/30/95 Lauderhill / State Road 644 1,836 2,480 882
6/30/95 Orange Park /Blanding Blvd 394 1,149 1,543 639
6/30/95 St. Petersburg /Joe'S Creek 703 1,878 2,581 953
6/30/95 St. Louis / Page Service Drive 531 1,439 1,970 754
6/30/95 Independence /E. 42nd 438 1,252 1,690 649
6/30/95 Cherry Hill / Dobbs Lane 715 1,904 2,619 949
6/30/95 Edgewater Park / Route 130 683 1,763 2,446 859
6/30/95 Beaverton / S.W. 110 572 1,562 2,134 798
6/30/95 Markham / W. 159Th Place 229 762 991 406
6/30/95 Houston / N.W. Freeway 447 1,224 1,671 641
6/30/95 Portland / Gantenbein 537 1,501 2,038 787
6/30/95 Upper Chichester/Market St. 569 1,494 2,063 747
6/30/95 Fort Worth / Hwy 80 379 1,059 1,438 545
6/30/95 Greenfield/ S. 108th 727 2,201 2,928 1,068
F-61
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
6/30/95 Altamonte Springs - 566 1,326 266 -
6/30/95 Seattle / Delridge Way - 760 1,779 269 -
6/30/95 Elmhurst / Lake Frontage Rd - 748 1,758 257 -
6/30/95 Los Angeles / Beverly Blvd - 787 1,886 631 -
6/30/95 Lawrenceville / Brunswick - 841 1,961 189 -
6/30/95 Richmond / Carlson - 865 2,025 325 -
6/30/95 Liverpool / Oswego Road - 545 1,279 343 -
6/30/95 Rochester / East Ave - 578 1,375 516 -
6/30/95 Pasadena / E. Beltway - 757 1,767 178 -
7/13/95 Tarzana / Burbank Blvd - 2,895 6,823 567 -
7/31/95 Orlando / Lakehurst - 450 1,063 171 -
7/31/95 Livermore / Portola - 921 2,157 217 -
7/31/95 San Jose / Tully - 912 2,137 508 -
7/31/95 Mission Bay - 1,617 3,785 569 -
7/31/95 Las Vegas / Decatur - 1,147 2,697 395 -
7/31/95 Pleasanton / Stanley - 1,624 3,811 316 -
7/31/95 Castro Valley / Grove - 757 1,772 105 -
7/31/95 Honolulu / Kaneohe - 1,215 2,846 2,231 -
7/31/95 Chicago / Wabash Ave - 645 1,535 729 -
7/31/95 Springfield / Parker - 765 1,834 267 -
7/31/95 Huntington Bch/Gotham - 765 1,808 226 -
7/31/95 Tucker / Lawrenceville - 630 1,480 224 -
7/31/95 Marietta / Canton Road - 600 1,423 306 -
7/31/95 Wheeling / Hintz - 450 1,054 173 -
8/1/95 Gresham / Division - 607 1,428 106 -
8/1/95 Tucker / Lawrenceville - 600 1,405 359 -
8/1/95 Decatur / Covington - 720 1,694 277 -
8/11/95 Studio City/Ventura - 1,285 3,015 363 -
8/12/95 Smyrna / Hargrove Road - 1,020 3,038 503 -
9/1/95 Hayward / Mission Blvd - 1,020 2,383 295 -
9/1/95 Park City / Belvider - 600 1,405 137 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
6/30/95 Altamonte Springs 566 1,592 2,158 771
6/30/95 Seattle / Delridge Way 760 2,048 2,808 1,044
6/30/95 Elmhurst / Lake Frontage Rd 748 2,015 2,763 1,000
6/30/95 Los Angeles / Beverly Blvd 787 2,517 3,304 1,290
6/30/95 Lawrenceville / Brunswick 840 2,151 2,991 1,048
6/30/95 Richmond / Carlson 864 2,351 3,215 1,242
6/30/95 Liverpool / Oswego Road 545 1,622 2,167 869
6/30/95 Rochester / East Ave 578 1,891 2,469 937
6/30/95 Pasadena / E. Beltway 757 1,945 2,702 966
7/13/95 Tarzana / Burbank Blvd 2,894 7,391 10,285 3,610
7/31/95 Orlando / Lakehurst 450 1,234 1,684 638
7/31/95 Livermore / Portola 921 2,374 3,295 1,187
7/31/95 San Jose / Tully 912 2,645 3,557 1,327
7/31/95 Mission Bay 1,617 4,354 5,971 2,244
7/31/95 Las Vegas / Decatur 1,147 3,092 4,239 1,577
7/31/95 Pleasanton / Stanley 1,624 4,127 5,751 1,997
7/31/95 Castro Valley / Grove 756 1,878 2,634 911
7/31/95 Honolulu / Kaneohe 2,133 4,159 6,292 1,836
7/31/95 Chicago / Wabash Ave 645 2,264 2,909 1,389
7/31/95 Springfield / Parker 765 2,101 2,866 1,025
7/31/95 Huntington Bch/Gotham 765 2,034 2,799 1,014
7/31/95 Tucker / Lawrenceville 630 1,704 2,334 882
7/31/95 Marietta / Canton Road 600 1,729 2,329 921
7/31/95 Wheeling / Hintz 450 1,227 1,677 629
8/1/95 Gresham / Division 607 1,534 2,141 763
8/1/95 Tucker / Lawrenceville 600 1,764 2,364 944
8/1/95 Decatur / Covington 720 1,971 2,691 1,011
8/11/95 Studio City/Ventura 1,285 3,378 4,663 1,609
8/12/95 Smyrna / Hargrove Road 1,020 3,541 4,561 1,689
9/1/95 Hayward / Mission Blvd 1,020 2,678 3,698 1,283
9/1/95 Park City / Belvider 600 1,542 2,142 756
F-62
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
9/1/95 New Castle/Dupont Parkway - 990 2,369 233 -
9/1/95 Las Vegas / Rainbow - 1,050 2,459 121 -
9/1/95 Mountain View / Reng - 945 2,216 161 -
9/1/95 Venice / Cadillac - 930 2,182 384 -
9/1/95 Simi Valley /Los Angeles - 1,590 3,724 314 -
9/1/95 Spring Valley/Foreman - 1,095 2,572 408 -
9/6/95 Darien / Frontage Road - 975 2,321 233 -
9/30/95 Whittier - 215 384 202 781
9/30/95 Van Nuys/Balboa - 295 657 62 1,148
9/30/95 Huntington Beach - 176 321 132 738
9/30/95 Monterey Park - 124 346 (25) 782
9/30/95 Downey - 191 317 120 825
9/30/95 Del Amo - 474 742 419 922
9/30/95 Carson - 375 735 400 428
9/30/95 Van Nuys/Balboa Blvd - 1,920 4,504 635 -
10/31/95 San Lorenzo /Hesperian - 1,590 3,716 401 -
10/31/95 Chicago / W. 47th Street - 300 708 277 -
10/31/95 Los Angeles / Eastern - 455 1,070 181 -
11/15/95 Costa Mesa - 522 1,218 162 -
11/15/95 Plano / E. 14th - 705 1,646 105 -
11/15/95 Citrus Heights/Sunrise - 520 1,213 147 -
11/15/95 Modesto/Briggsmore Ave - 470 1,097 151 -
11/15/95 So San Francisco/Spruce - 1,905 4,444 509 -
11/15/95 Pacheco/Buchanan Circle - 1,681 3,951 511 -
11/16/95 Palm Beach Gardens - 657 1,540 184 -
11/16/95 Delray Beach - 600 1,407 220 -
1/1/96 Bensenville/York Rd - 667 1,602 286 895
1/1/96 Louisville/Preston - 211 1,060 129 594
1/1/96 San Jose/Aborn Road - 615 1,342 103 759
1/1/96 Englewood/Federal - 481 1,395 153 777
1/1/96 W. Hollywood/Santa Monica - 3,415 4,577 425 2,552
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
9/1/95 New Castle/Dupont Parkway 990 2,602 3,592 1,262
9/1/95 Las Vegas / Rainbow 1,050 2,580 3,630 1,240
9/1/95 Mountain View / Reng 945 2,377 3,322 1,158
9/1/95 Venice / Cadillac 930 2,566 3,496 1,245
9/1/95 Simi Valley /Los Angeles 1,590 4,038 5,628 1,949
9/1/95 Spring Valley/Foreman 1,095 2,980 4,075 1,388
9/6/95 Darien / Frontage Road 975 2,554 3,529 1,197
9/30/95 Whittier 215 1,367 1,582 742
9/30/95 Van Nuys/Balboa 295 1,867 2,162 1,027
9/30/95 Huntington Beach 176 1,191 1,367 646
9/30/95 Monterey Park 124 1,103 1,227 655
9/30/95 Downey 191 1,262 1,453 690
9/30/95 Del Amo 474 2,083 2,557 1,156
9/30/95 Carson 375 1,563 1,938 714
9/30/95 Van Nuys/Balboa Blvd 1,920 5,139 7,059 2,200
10/31/95 San Lorenzo /Hesperian 1,590 4,117 5,707 1,829
10/31/95 Chicago / W. 47th Street 300 985 1,285 502
10/31/95 Los Angeles / Eastern 454 1,252 1,706 572
11/15/95 Costa Mesa 522 1,380 1,902 610
11/15/95 Plano / E. 14th 705 1,751 2,456 805
11/15/95 Citrus Heights/Sunrise 520 1,360 1,880 662
11/15/95 Modesto/Briggsmore Ave 470 1,248 1,718 589
11/15/95 So San Francisco/Spruce 1,904 4,954 6,858 2,280
11/15/95 Pacheco/Buchanan Circle 1,680 4,463 6,143 2,026
11/16/95 Palm Beach Gardens 657 1,724 2,381 823
11/16/95 Delray Beach 600 1,627 2,227 785
1/1/96 Bensenville/York Rd 667 2,783 3,450 1,149
1/1/96 Louisville/Preston 211 1,783 1,994 690
1/1/96 San Jose/Aborn Road 615 2,204 2,819 895
1/1/96 Englewood/Federal 481 2,325 2,806 974
1/1/96 W. Hollywood/Santa Monica 3,414 7,555 10,969 2,947
F-63
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
1/1/96 Orland Hills/W. 159th - 917 2,392 352 1,342
1/1/96 Merrionette Park - 818 2,020 183 1,122
1/1/96 Denver/S Quebec - 1,849 1,941 461 1,086
1/1/96 Tigard/S.W. Pacific - 633 1,206 211 705
1/1/96 Coram/Middle Count - 507 1,421 174 792
1/1/96 Houston/FM 1960 - 635 1,294 244 783
1/1/96 Kent/Military Trail - 409 1,670 303 956
1/1/96 Turnersville/Black - 165 1,360 167 758
1/1/96 Sewell/Rts. 553 - 323 1,138 141 658
1/1/96 Maple Shade/Fellowship - 331 1,421 166 803
1/1/96 Hyattsville/Kenilworth - 509 1,757 207 1,000
1/1/96 Waterbury/Captain - 434 2,089 210 1,162
1/1/96 Bedford Hts/Miles - 835 1,577 312 929
1/1/96 Livonia/Newburgh - 635 1,407 173 783
1/1/96 Sunland/Sunland Blvd. - 631 1,965 132 1,090
1/1/96 Des Moines - 448 1,350 129 768
1/1/96 Oxonhill/Indianhead - 772 2,017 383 1,141
1/1/96 Sacramento/N. 16th - 582 2,610 191 1,466
1/1/96 Houston/Westheimer - 1,508 2,274 301 1,304
1/1/96 San Pablo/San Pablo - 565 1,232 168 713
1/1/96 Bowie/Woodcliff - 718 2,336 259 1,292
1/1/96 Milwaukee/S. 84th - 444 1,868 343 1,091
1/1/96 Clinton/Malcolm Road - 593 2,123 261 1,187
1/3/96 San Gabriel - 1,005 2,345 417 -
1/5/96 San Francisco, Second St. - 2,880 6,814 210 -
1/12/96 San Antonio, TX - 912 2,170 93 -
2/29/96 Naples, FL/Old US 41 - 849 2,016 255 -
2/29/96 Lake Worth, FL/S. Military Tr. - 1,782 4,723 124 -
2/29/96 Brandon, FL/W Brandon Blvd. - 1,928 4,523 1,010 -
2/29/96 Coral Springs FL/W Sample Rd. - 3,480 8,148 26 -
2/29/96 Delray Beach FL/S Military Tr. - 941 2,222 193 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
1/1/96 Orland Hills/W. 159th 917 4,086 5,003 1,697
1/1/96 Merrionette Park 818 3,325 4,143 1,317
1/1/96 Denver/S Quebec 1,849 3,488 5,337 1,320
1/1/96 Tigard/S.W. Pacific 633 2,122 2,755 835
1/1/96 Coram/Middle Count 507 2,387 2,894 925
1/1/96 Houston/FM 1960 635 2,321 2,956 968
1/1/96 Kent/Military Trail 409 2,929 3,338 1,130
1/1/96 Turnersville/Black 165 2,285 2,450 908
1/1/96 Sewell/Rts. 553 323 1,937 2,260 776
1/1/96 Maple Shade/Fellowship 331 2,390 2,721 924
1/1/96 Hyattsville/Kenilworth 508 2,965 3,473 1,142
1/1/96 Waterbury/Captain 434 3,461 3,895 1,216
1/1/96 Bedford Hts/Miles 835 2,818 3,653 1,174
1/1/96 Livonia/Newburgh 635 2,363 2,998 901
1/1/96 Sunland/Sunland Blvd. 631 3,187 3,818 1,197
1/1/96 Des Moines 447 2,248 2,695 891
1/1/96 Oxonhill/Indianhead 772 3,541 4,313 1,387
1/1/96 Sacramento/N. 16th 581 4,268 4,849 1,387
1/1/96 Houston/Westheimer 1,508 3,879 5,387 1,564
1/1/96 San Pablo/San Pablo 565 2,113 2,678 818
1/1/96 Bowie/Woodcliff 718 3,887 4,605 1,413
1/1/96 Milwaukee/S. 84th 444 3,302 3,746 1,274
1/1/96 Clinton/Malcolm Road 592 3,572 4,164 1,332
1/3/96 San Gabriel 1,005 2,762 3,767 1,281
1/5/96 San Francisco, Second St. 2,879 7,025 9,904 3,216
1/12/96 San Antonio, TX 912 2,263 3,175 1,037
2/29/96 Naples, FL/Old US 41 849 2,271 3,120 1,067
2/29/96 Lake Worth, FL/S. Military Tr. 1,781 4,848 6,629 2,173
2/29/96 Brandon, FL/W Brandon Blvd. 1,928 5,533 7,461 2,922
2/29/96 Coral Springs FL/W Sample Rd. 3,479 8,175 11,654 3,662
2/29/96 Delray Beach FL/S Military Tr. 940 2,416 3,356 1,142
F-64
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
2/29/96 Jupiter FL/Military Trail - 2,280 5,347 347 -
2/29/96 Lakeworth FL/Lake Worth Rd - 737 1,742 185 -
2/29/96 New Port Richey/State Rd 54 - 857 2,025 270 -
2/29/96 Sanford FL/S Orlando Dr - 734 1,749 2,050 -
3/8/96 Atlanta/Roswell - 898 3,649 129 -
3/31/96 Oakland - 1,065 2,764 455 -
3/31/96 Saratoga - 2,339 6,081 229 -
3/31/96 Randallstown - 1,359 3,527 434 -
3/31/96 Plano - 650 1,682 129 -
3/31/96 Houston - 543 1,402 141 -
3/31/96 Irvine - 1,920 4,975 1,086 -
3/31/96 Milwaukee - 542 1,402 159 -
3/31/96 Carrollton - 578 1,495 108 -
3/31/96 Torrance - 1,415 3,675 183 -
3/31/96 Jacksonville - 713 1,845 222 -
3/31/96 Dallas - 315 810 1,757 -
3/31/96 Houston - 669 1,724 583 -
3/31/96 Baltimore - 842 2,180 286 -
3/31/96 New Haven - 740 1,907 (155) -
4/1/96 Chicago/Pulaski - 764 1,869 300 -
4/1/96 Las Vegas/Desert Inn - 1,115 2,729 176 -
4/1/96 Torrance/Crenshaw - 916 2,243 142 -
4/1/96 Weymouth - 485 1,187 336 -
4/1/96 St. Louis/Barrett Station Road - 630 1,542 143 -
4/1/96 Rockville/Randolph - 1,153 2,823 280 -
4/1/96 Simi Valley/East Street - 970 2,374 76 -
4/1/96 Houston/Westheimer - 1,390 3,402 6,250 -
4/3/96 Naples - 1,187 2,809 295 -
6/26/96 Boca Raton - 3,180 7,468 519 -
6/28/96 Venice - 669 1,575 188 -
6/30/96 Las Vegas - 921 2,155 352 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
2/29/96 Jupiter FL/Military Trail 2,279 5,695 7,974 2,594
2/29/96 Lakeworth FL/Lake Worth Rd 736 1,928 2,664 905
2/29/96 New Port Richey/State Rd 54 856 2,296 3,152 1,078
2/29/96 Sanford FL/S Orlando Dr 974 3,559 4,533 1,637
3/8/96 Atlanta/Roswell 898 3,778 4,676 1,688
3/31/96 Oakland 1,065 3,219 4,284 1,485
3/31/96 Saratoga 2,339 6,310 8,649 2,789
3/31/96 Randallstown 1,359 3,961 5,320 1,798
3/31/96 Plano 649 1,812 2,461 846
3/31/96 Houston 543 1,543 2,086 723
3/31/96 Irvine 1,920 6,061 7,981 2,619
3/31/96 Milwaukee 542 1,561 2,103 732
3/31/96 Carrollton 578 1,603 2,181 746
3/31/96 Torrance 1,415 3,858 5,273 1,750
3/31/96 Jacksonville 712 2,068 2,780 1,001
3/31/96 Dallas 315 2,567 2,882 823
3/31/96 Houston 669 2,307 2,976 1,174
3/31/96 Baltimore 842 2,466 3,308 1,153
3/31/96 New Haven 667 1,825 2,492 881
4/1/96 Chicago/Pulaski 763 2,170 2,933 893
4/1/96 Las Vegas/Desert Inn 1,115 2,905 4,020 1,251
4/1/96 Torrance/Crenshaw 916 2,385 3,301 1,003
4/1/96 Weymouth 485 1,523 2,008 583
4/1/96 St. Louis/Barrett Station Road 630 1,685 2,315 696
4/1/96 Rockville/Randolph 1,153 3,103 4,256 1,291
4/1/96 Simi Valley/East Street 970 2,450 3,420 1,014
4/1/96 Houston/Westheimer 1,389 9,653 11,042 3,440
4/3/96 Naples 1,186 3,105 4,291 1,452
6/26/96 Boca Raton 3,179 7,988 11,167 3,689
6/28/96 Venice 669 1,763 2,432 828
6/30/96 Las Vegas 921 2,507 3,428 1,175
F-65
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
6/30/96 Bedford Park - 606 1,419 261 -
6/30/96 Los Angeles - 692 1,616 142 -
6/30/96 Silver Spring - 1,513 3,535 308 -
6/30/96 Newark - 1,051 2,458 135 -
6/30/96 Brooklyn - 783 1,830 975 -
7/2/96 Glen Burnie/Furnace Br Rd - 1,755 4,150 758 -
7/22/96 Lakewood/W Hampton - 717 2,092 93 -
8/13/96 Norcross/Holcomb Bridge Rd - 955 3,117 176 -
9/5/96 Spring Valley/S Pascack rd - 1,260 2,966 620 -
9/16/96 Dallas/Royal Lane - 1,008 2,426 234 -
9/16/96 Colorado Springs/Tomah Drive - 731 1,759 141 -
9/16/96 Lewisville/S. Stemmons - 603 1,451 165 -
9/16/96 Las Vegas/Boulder Hwy. - 947 2,279 403 -
9/16/96 Sarasota/S. Tamiami Trail - 584 1,407 1,455 -
9/16/96 Willow Grove/Maryland Road - 673 1,620 161 -
9/16/96 Houston/W. Montgomery Rd. - 524 1,261 210 -
9/16/96 Denver/W. Hampden - 1,084 2,609 227 -
9/16/96 Littleton/Southpark Way - 922 2,221 375 -
9/16/96 Petaluma/Baywood Drive - 861 2,074 174 -
9/16/96 Canoga Park/Sherman Way - 1,543 3,716 605 -
9/16/96 Jacksonville/South Lane Ave. - 554 1,334 288 -
9/16/96 Newport News/Warwick Blvd. - 575 1,385 191 -
9/16/96 Greenbrook/Route 22 - 1,227 2,954 626 -
9/16/96 Monsey/Route 59 - 1,068 2,572 203 -
9/16/96 Santa Rosa/Santa Rosa Ave. - 575 1,385 129 -
9/16/96 Fort Worth/Brentwood - 823 2,016 168 -
9/16/96 Glendale/San Fernando Road - 2,500 6,124 239 -
9/16/96 Houston/Harwin - 549 1,344 186 -
9/16/96 Irvine/Cowan Street - 1,890 4,631 361 -
9/16/96 Fairfield/Dixie Highway - 427 1,046 149 -
9/16/96 Mesa/Country Club Drive - 701 1,718 499 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
6/30/96 Bedford Park 606 1,680 2,286 815
6/30/96 Los Angeles 691 1,759 2,450 794
6/30/96 Silver Spring 1,513 3,843 5,356 1,759
6/30/96 Newark 1,051 2,593 3,644 1,153
6/30/96 Brooklyn 783 2,805 3,588 1,271
7/2/96 Glen Burnie/Furnace Br Rd 1,755 4,908 6,663 1,995
7/22/96 Lakewood/W Hampton 716 2,186 2,902 937
8/13/96 Norcross/Holcomb Bridge Rd 954 3,294 4,248 1,435
9/5/96 Spring Valley/S Pascack rd 1,260 3,586 4,846 1,659
9/16/96 Dallas/Royal Lane 1,007 2,661 3,668 1,192
9/16/96 Colorado Springs/Tomah Drive 730 1,901 2,631 826
9/16/96 Lewisville/S. Stemmons 603 1,616 2,219 724
9/16/96 Las Vegas/Boulder Hwy. 946 2,683 3,629 1,259
9/16/96 Sarasota/S. Tamiami Trail 584 2,862 3,446 850
9/16/96 Willow Grove/Maryland Road 673 1,781 2,454 764
9/16/96 Houston/W. Montgomery Rd. 523 1,472 1,995 696
9/16/96 Denver/W. Hampden 1,083 2,837 3,920 1,240
9/16/96 Littleton/Southpark Way 922 2,596 3,518 1,199
9/16/96 Petaluma/Baywood Drive 861 2,248 3,109 999
9/16/96 Canoga Park/Sherman Way 1,543 4,321 5,864 2,037
9/16/96 Jacksonville/South Lane Ave. 554 1,622 2,176 752
9/16/96 Newport News/Warwick Blvd. 575 1,576 2,151 727
9/16/96 Greenbrook/Route 22 1,226 3,581 4,807 1,526
9/16/96 Monsey/Route 59 1,068 2,775 3,843 1,192
9/16/96 Santa Rosa/Santa Rosa Ave. 575 1,514 2,089 670
9/16/96 Fort Worth/Brentwood 823 2,184 3,007 959
9/16/96 Glendale/San Fernando Road 2,499 6,364 8,863 2,676
9/16/96 Houston/Harwin 549 1,530 2,079 697
9/16/96 Irvine/Cowan Street 1,890 4,992 6,882 2,141
9/16/96 Fairfield/Dixie Highway 427 1,195 1,622 533
9/16/96 Mesa/Country Club Drive 701 2,217 2,918 951
F-66
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
9/16/96 San Francisco/Geary Blvd. - 2,957 7,244 463 -
9/16/96 Houston/Gulf Freeway - 701 1,718 4,984 -
9/16/96 Las Vegas/S. Decatur Blvd. - 1,037 2,539 259 -
9/16/96 Tempe/McKellips Road - 823 1,972 412 -
9/16/96 Richland Hills/Airport Fwy. - 473 1,158 209 -
10/11/96 Hampton/Pembroke Road - 1,080 2,346 (169) -
10/11/96 Norfolk/Widgeon Road - 1,110 2,405 (293) -
10/11/96 Richmond/Bloom Lane - 1,188 2,512 (116) -
10/11/96 Virginia Beach/Southern Blvd - 282 610 272 -
10/11/96 Chesapeake/Military Hwy - 912 1,974 457 -
10/11/96 Richmond/Midlothian Park - 762 1,588 540 -
10/11/96 Roanoke/Peters Creek Road - 819 1,776 312 -
10/11/96 Orlando/E Oakridge Rd - 927 2,020 312 -
10/11/96 Orlando/South Hwy 17-92 - 1,170 2,549 211 -
10/25/96 Austin/Renelli - 1,710 3,990 315 -
10/25/96 Austin/Santiago - 900 2,100 218 -
10/25/96 Dallas/East N.W. Highway - 698 1,628 236 -
10/25/96 Dallas/Denton Drive - 900 2,100 226 -
10/25/96 Houston/Hempstead - 518 1,207 445 -
10/25/96 Pasadena/So. Shaver - 420 980 457 -
10/31/96 Houston/Joel Wheaton Rd - 465 1,085 231 -
10/31/96 Mt Holly/541 Bypass - 360 840 312 -
11/13/96 Town East/Mesquite - 330 770 209 -
11/14/96 Bossier City LA - 633 1,488 (91) -
12/5/96 Lake Forest/Bake Parkway - 971 2,173 576 -
12/16/96 Cherry Hill/Old Cuthbert - 645 1,505 656 -
12/16/96 Oklahoma City/SW 74th - 375 875 120 -
12/16/96 Oklahoma City/S Santa Fe - 360 840 167 -
12/16/96 Oklahoma City/S. May - 360 840 143 -
12/16/96 Arlington/S. Watson Rd. - 930 2,170 710 -
12/16/96 Richardson/E. Arapaho - 1,290 3,010 478 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
9/16/96 San Francisco/Geary Blvd. 2,957 7,707 10,664 3,287
9/16/96 Houston/Gulf Freeway 701 6,702 7,403 1,698
9/16/96 Las Vegas/S. Decatur Blvd. 1,036 2,799 3,835 1,208
9/16/96 Tempe/McKellips Road 823 2,384 3,207 1,023
9/16/96 Richland Hills/Airport Fwy. 472 1,368 1,840 648
10/11/96 Hampton/Pembroke Road 914 2,343 3,257 822
10/11/96 Norfolk/Widgeon Road 908 2,314 3,222 809
10/11/96 Richmond/Bloom Lane 994 2,590 3,584 932
10/11/96 Virginia Beach/Southern Blvd 282 882 1,164 480
10/11/96 Chesapeake/Military Hwy 912 2,431 3,343 1,193
10/11/96 Richmond/Midlothian Park 762 2,128 2,890 1,136
10/11/96 Roanoke/Peters Creek Road 819 2,088 2,907 972
10/11/96 Orlando/E Oakridge Rd 927 2,332 3,259 1,051
10/11/96 Orlando/South Hwy 17-92 1,170 2,760 3,930 1,227
10/25/96 Austin/Renelli 1,710 4,305 6,015 1,884
10/25/96 Austin/Santiago 900 2,318 3,218 1,061
10/25/96 Dallas/East N.W. Highway 697 1,865 2,562 841
10/25/96 Dallas/Denton Drive 900 2,326 3,226 998
10/25/96 Houston/Hempstead 517 1,653 2,170 804
10/25/96 Pasadena/So. Shaver 420 1,437 1,857 687
10/31/96 Houston/Joel Wheaton Rd 465 1,316 1,781 612
10/31/96 Mt Holly/541 Bypass 360 1,152 1,512 570
11/13/96 Town East/Mesquite 330 979 1,309 445
11/14/96 Bossier City LA 557 1,473 2,030 529
12/5/96 Lake Forest/Bake Parkway 972 2,748 3,720 1,049
12/16/96 Cherry Hill/Old Cuthbert 645 2,161 2,806 1,089
12/16/96 Oklahoma City/SW 74th 375 995 1,370 452
12/16/96 Oklahoma City/S Santa Fe 360 1,007 1,367 486
12/16/96 Oklahoma City/S. May 360 983 1,343 470
12/16/96 Arlington/S. Watson Rd. 930 2,880 3,810 1,305
12/16/96 Richardson/E. Arapaho 1,290 3,488 4,778 1,518
F-67
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
12/23/96 Eagle Rock/Colorado - 330 813 425 -
12/23/96 Upper Darby/Lansdowne - 899 2,272 266 -
12/23/96 Plymouth Meeting /Chemical - 1,109 2,802 227 -
12/23/96 Philadelphia/Byberry - 1,019 2,575 306 -
12/23/96 Ft. Lauderdale/State Road - 1,199 3,030 300 -
12/23/96 Englewood/Costilla - 1,739 4,393 179 -
12/23/96 Lilburn/Beaver Ruin Road - 600 1,515 182 -
12/23/96 Carmichael/Fair Oaks - 809 2,045 231 -
12/23/96 Portland/Division Street - 989 2,499 177 -
12/23/96 Napa/Industrial - 660 1,666 161 -
12/23/96 Wheatridge/W. 44th Avenue - 1,439 3,636 207 -
12/23/96 Las Vegas/Charleston - 1,049 2,651 189 -
12/23/96 Las Vegas/South Arvill - 929 2,348 229 -
12/23/96 Los Angeles/Santa Monica - 3,328 8,407 438 -
12/23/96 Warren/Schoenherr Rd. - 749 1,894 208 -
12/23/96 Portland/N.E. 71st Avenue - 869 2,196 288 -
12/23/96 Broadview/S. 25th Avenue - 1,289 3,257 369 -
12/23/96 Winter Springs/W. St. Rte 434 - 689 1,742 154 -
12/23/96 Tampa/15th Street - 420 1,060 352 -
12/23/96 Pompano Beach/S. Dixie Hwy. - 930 2,292 395 -
12/23/96 Overland Park/Mastin - 990 2,440 3,272 -
12/23/96 Auburn/R Street - 690 1,700 215 -
12/23/96 Federal Heights/W. 48th Ave. - 720 1,774 196 -
12/23/96 Decatur/Covington - 930 2,292 275 -
12/23/96 Forest Park/Jonesboro Rd. - 540 1,331 281 -
12/23/96 Mangonia Park/Australian Ave. - 840 2,070 182 -
12/23/96 Whittier/Colima - 540 1,331 121 -
12/23/96 Kent/Pacific Hwy South - 930 2,292 201 -
12/23/96 Topeka/8th Street - 150 370 456 -
12/23/96 Denver East Evans - 1,740 4,288 276 -
12/23/96 Pittsburgh/California Ave. - 630 1,552 122 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
12/23/96 Eagle Rock/Colorado 444 1,124 1,568 370
12/23/96 Upper Darby/Lansdowne 899 2,538 3,437 1,137
12/23/96 Plymouth Meeting /Chemical 1,109 3,029 4,138 935
12/23/96 Philadelphia/Byberry 1,019 2,881 3,900 1,220
12/23/96 Ft. Lauderdale/State Road 1,199 3,330 4,529 1,448
12/23/96 Englewood/Costilla 1,738 4,573 6,311 1,923
12/23/96 Lilburn/Beaver Ruin Road 599 1,698 2,297 772
12/23/96 Carmichael/Fair Oaks 809 2,276 3,085 1,019
12/23/96 Portland/Division Street 989 2,676 3,665 1,153
12/23/96 Napa/Industrial 659 1,828 2,487 814
12/23/96 Wheatridge/W. 44th Avenue 1,439 3,843 5,282 1,635
12/23/96 Las Vegas/Charleston 1,049 2,840 3,889 1,217
12/23/96 Las Vegas/South Arvill 929 2,577 3,506 1,094
12/23/96 Los Angeles/Santa Monica 3,327 8,846 12,173 3,673
12/23/96 Warren/Schoenherr Rd. 749 2,102 2,851 933
12/23/96 Portland/N.E. 71st Avenue 869 2,484 3,353 1,120
12/23/96 Broadview/S. 25th Avenue 1,289 3,626 4,915 1,597
12/23/96 Winter Springs/W. St. Rte 434 689 1,896 2,585 824
12/23/96 Tampa/15th Street 420 1,412 1,832 690
12/23/96 Pompano Beach/S. Dixie Hwy. 930 2,687 3,617 1,251
12/23/96 Overland Park/Mastin 1,306 5,396 6,702 1,710
12/23/96 Auburn/R Street 690 1,915 2,605 879
12/23/96 Federal Heights/W. 48th Ave. 720 1,970 2,690 843
12/23/96 Decatur/Covington 930 2,567 3,497 1,137
12/23/96 Forest Park/Jonesboro Rd. 540 1,612 2,152 700
12/23/96 Mangonia Park/Australian Ave. 840 2,252 3,092 972
12/23/96 Whittier/Colima 540 1,452 1,992 628
12/23/96 Kent/Pacific Hwy South 930 2,493 3,423 1,091
12/23/96 Topeka/8th Street 150 826 976 297
12/23/96 Denver East Evans 1,740 4,564 6,304 1,929
12/23/96 Pittsburgh/California Ave. 630 1,674 2,304 737
F-68
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
12/23/96 Ft. Lauderdale/Powerline - 660 1,626 363 -
12/23/96 Philadelphia/Oxford - 900 2,218 216 -
12/23/96 Dallas/Lemmon Ave. - 1,710 4,214 184 -
12/23/96 Alsip/115th Street - 750 1,848 4,611 -
12/23/96 Green Acres/Jog Road - 600 1,479 120 -
12/23/96 Pompano Beach/Sample Road - 1,320 3,253 150 -
12/23/96 Wyndmoor/Ivy Hill - 2,160 5,323 286 -
12/23/96 W. Palm Beach/Belvedere - 960 2,366 230 -
12/23/96 Renton 174th St. - 960 2,366 313 -
12/23/96 Sacramento/Northgate - 1,021 2,647 184 -
12/23/96 Phoenix/19th Avenue - 991 2,569 244 -
12/23/96 Bedford Park/Cicero - 1,321 3,426 419 -
12/23/96 Lake Worth/Lk Worth - 1,111 2,880 278 -
12/23/96 Arlington/Algonquin - 991 2,569 875 -
12/23/96 Seattle/15th Avenue - 781 2,024 278 -
12/23/96 Southington/Spring - 811 2,102 320 -
12/23/96 Clifton/Broad Street - 1,411 3,659 237 -
12/23/96 Hillside/Glenwood - 563 4,051 419 -
12/23/96 Nashville/Dickerson Pike - 990 2,440 235 -
12/23/96 Madison/Gallatin Road - 780 1,922 307 -
12/30/96 Concorde/Treat - 1,396 3,258 319 -
12/30/96 Virginia Beach - 535 1,248 166 -
12/30/96 San Mateo - 2,408 5,619 225 -
1/22/97 Austin, 1033 E. 41 Street - 257 3,633 100 -
4/12/97 Annandale / Backlick - 955 2,229 379 -
4/12/97 Ft. Worth / West Freeway - 667 1,556 275 -
4/12/97 Campbell / S. Curtner - 2,550 5,950 724 -
4/12/97 Aurora / S. Idalia - 1,002 2,338 611 -
4/12/97 Santa Cruz / Capitola - 1,037 2,420 337 -
4/12/97 Indianapolis / Lafayette Road - 682 1,590 480 -
4/12/97 Indianapolis / Route 31 - 619 1,444 408 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
12/23/96 Ft. Lauderdale/Powerline 660 1,989 2,649 960
12/23/96 Philadelphia/Oxford 900 2,434 3,334 1,063
12/23/96 Dallas/Lemmon Ave. 1,710 4,398 6,108 1,859
12/23/96 Alsip/115th Street 750 6,459 7,209 1,505
12/23/96 Green Acres/Jog Road 600 1,599 2,199 704
12/23/96 Pompano Beach/Sample Road 1,320 3,403 4,723 1,441
12/23/96 Wyndmoor/Ivy Hill 2,159 5,610 7,769 2,390
12/23/96 W. Palm Beach/Belvedere 960 2,596 3,556 1,146
12/23/96 Renton 174th St. 960 2,679 3,639 1,189
12/23/96 Sacramento/Northgate 1,021 2,831 3,852 1,214
12/23/96 Phoenix/19th Avenue 991 2,813 3,804 1,244
12/23/96 Bedford Park/Cicero 1,321 3,845 5,166 1,670
12/23/96 Lake Worth/Lk Worth 1,111 3,158 4,269 1,373
12/23/96 Arlington/Algonquin 991 3,444 4,435 1,514
12/23/96 Seattle/15th Avenue 780 2,303 3,083 998
12/23/96 Southington/Spring 810 2,423 3,233 1,053
12/23/96 Clifton/Broad Street 1,411 3,896 5,307 1,648
12/23/96 Hillside/Glenwood 563 4,470 5,033 1,978
12/23/96 Nashville/Dickerson Pike 990 2,675 3,665 1,170
12/23/96 Madison/Gallatin Road 780 2,229 3,009 1,011
12/30/96 Concorde/Treat 1,396 3,577 4,973 1,481
12/30/96 Virginia Beach 535 1,414 1,949 633
12/30/96 San Mateo 2,408 5,844 8,252 2,433
1/22/97 Austin, 1033 E. 41 Street 257 3,733 3,990 1,508
4/12/97 Annandale / Backlick 955 2,608 3,563 1,094
4/12/97 Ft. Worth / West Freeway 667 1,831 2,498 760
4/12/97 Campbell / S. Curtner 2,549 6,675 9,224 2,680
4/12/97 Aurora / S. Idalia 1,002 2,949 3,951 1,253
4/12/97 Santa Cruz / Capitola 1,037 2,757 3,794 1,124
4/12/97 Indianapolis / Lafayette Road 681 2,071 2,752 826
4/12/97 Indianapolis / Route 31 619 1,852 2,471 789
F-69
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
4/12/97 Farmingdale / Broad Hollow Rd. - 1,568 3,658 866 -
4/12/97 Tyson's Corner / Springhill Rd. - 3,861 9,010 1,479 -
4/12/97 Fountain Valley / Newhope - 1,137 2,653 347 -
4/12/97 Dallas / Winsted - 1,375 3,209 513 -
4/12/97 Columbia / Broad River Rd. - 121 282 162 -
4/12/97 Livermore / S. Front Road - 876 2,044 196 -
4/12/97 Garland / Plano - 889 2,073 244 -
4/12/97 San Jose / Story Road - 1,352 3,156 451 -
4/12/97 Aurora / Abilene - 1,406 3,280 467 -
4/12/97 Antioch / Sunset Drive - 1,035 2,416 266 -
4/12/97 Rancho Cordova / Sunrise - 1,048 2,445 415 -
4/12/97 Berlin / Wilbur Cross - 756 1,764 303 -
4/12/97 Whittier / Whittier Blvd. - 648 1,513 190 -
4/12/97 Peabody / Newbury Street - 1,159 2,704 592 -
4/12/97 Denver / Blake - 602 1,405 214 -
4/12/97 Evansville / Green River Road - 470 1,096 198 -
4/12/97 Burien / First Ave. So. - 792 1,847 253 -
4/12/97 Rancho Cordova / Mather Field - 494 1,153 386 -
4/12/97 Sugar Land / Eldridge - 705 1,644 234 -
4/12/97 Columbus / Eastland Drive - 602 1,405 334 -
4/12/97 Slickerville / Black Horse Pike - 539 1,258 235 -
4/12/97 Seattle / Aurora - 1,145 2,671 316 -
4/12/97 Gaithersburg / Christopher Ave. - 972 2,268 436 -
4/12/97 Manchester / Tolland Turnpike - 807 1,883 271 -
6/25/97 L.A./Venice Blvd. - 523 1,221 1,797 -
6/25/97 Kirkland-Totem - 2,131 4,972 255 -
6/25/97 Idianapolis - 471 1,098 239 -
6/25/97 Dallas - 699 1,631 87 -
6/25/97 Atlanta - 1,183 2,761 159 -
6/25/97 Bensalem - 1,159 2,705 121 -
6/25/97 Evansville - 429 1,000 60 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
4/12/97 Farmingdale / Broad Hollow Rd. 1,567 4,525 6,092 1,823
4/12/97 Tyson's Corner / Springhill Rd. 3,860 10,490 14,350 4,284
4/12/97 Fountain Valley / Newhope 1,137 3,000 4,137 1,209
4/12/97 Dallas / Winsted 1,375 3,722 5,097 1,528
4/12/97 Columbia / Broad River Rd. 121 444 565 242
4/12/97 Livermore / S. Front Road 876 2,240 3,116 915
4/12/97 Garland / Plano 888 2,318 3,206 967
4/12/97 San Jose / Story Road 1,352 3,607 4,959 1,480
4/12/97 Aurora / Abilene 1,405 3,748 5,153 1,562
4/12/97 Antioch / Sunset Drive 1,035 2,682 3,717 1,080
4/12/97 Rancho Cordova / Sunrise 1,048 2,860 3,908 1,241
4/12/97 Berlin / Wilbur Cross 756 2,067 2,823 888
4/12/97 Whittier / Whittier Blvd. 648 1,703 2,351 694
4/12/97 Peabody / Newbury Street 1,159 3,296 4,455 1,434
4/12/97 Denver / Blake 602 1,619 2,221 686
4/12/97 Evansville / Green River Road 470 1,294 1,764 553
4/12/97 Burien / First Ave. So. 791 2,101 2,892 899
4/12/97 Rancho Cordova / Mather Field 494 1,539 2,033 593
4/12/97 Sugar Land / Eldridge 705 1,878 2,583 801
4/12/97 Columbus / Eastland Drive 602 1,739 2,341 761
4/12/97 Slickerville / Black Horse Pike 539 1,493 2,032 667
4/12/97 Seattle / Aurora 1,144 2,988 4,132 1,234
4/12/97 Gaithersburg / Christopher Ave. 972 2,704 3,676 1,085
4/12/97 Manchester / Tolland Turnpike 807 2,154 2,961 887
6/25/97 L.A./Venice Blvd. 1,044 2,497 3,541 806
6/25/97 Kirkland-Totem 2,130 5,228 7,358 2,173
6/25/97 Idianapolis 471 1,337 1,808 543
6/25/97 Dallas 699 1,718 2,417 709
6/25/97 Atlanta 1,183 2,920 4,103 1,203
6/25/97 Bensalem 1,159 2,826 3,985 1,154
6/25/97 Evansville 401 1,088 1,489 466
F-70
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
6/25/97 Austin - 813 1,897 88 -
6/25/97 Harbor City - 1,244 2,904 274 -
6/25/97 Birmingham - 539 1,258 133 -
6/25/97 Sacramento - 489 1,396 (137) -
6/25/97 Carrollton - 441 1,029 45 -
6/25/97 La Habra - 822 1,918 167 -
6/25/97 Lombard - 1,527 3,564 1,766 -
6/25/97 Fairfield - 740 1,727 88 -
6/25/97 Seattle - 1,498 3,494 9,847 -
6/25/97 Bellevue - 1,653 3,858 222 -
6/25/97 Citrus Heights - 642 1,244 566 -
6/25/97 San Jose - 1,273 2,971 23 -
6/25/97 Stanton - 948 2,212 70 -
6/25/97 Garland - 486 1,135 102 -
6/25/97 Westford - 857 1,999 377 -
6/25/97 Dallas - 1,627 3,797 702 -
6/25/97 Wheat Ridge - 1,054 2,459 416 -
6/25/97 Berlin - 825 1,925 316 -
6/25/97 Gretna - 1,069 2,494 495 -
6/25/97 Spring - 461 1,077 217 -
6/25/97 Sacramento - 592 1,380 1,024 -
6/25/97 Houston/South Dairyashford - 856 1,997 392 -
6/25/97 Naperville - 1,108 2,585 494 -
6/25/97 Carrollton - 1,158 2,702 566 -
6/25/97 Waipahu - 1,620 3,780 786 -
6/25/97 Davis - 628 1,465 232 -
6/25/97 Decatur - 951 2,220 419 -
6/25/97 Jacksonville - 653 1,525 297 -
6/25/97 Chicoppe - 663 1,546 422 -
6/25/97 Alexandria - 1,533 3,576 546 -
6/25/97 Houston/Veterans Memorial Dr. - 458 1,070 228 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
6/25/97 Austin 813 1,985 2,798 816
6/25/97 Harbor City 1,244 3,178 4,422 1,387
6/25/97 Birmingham 539 1,391 1,930 595
6/25/97 Sacramento 489 1,259 1,748 506
6/25/97 Carrollton 441 1,074 1,515 440
6/25/97 La Habra 822 2,085 2,907 830
6/25/97 Lombard 2,046 4,811 6,857 1,848
6/25/97 Fairfield 740 1,815 2,555 740
6/25/97 Seattle 1,447 13,392 14,839 1,876
6/25/97 Bellevue 1,653 4,080 5,733 1,632
6/25/97 Citrus Heights 642 1,810 2,452 845
6/25/97 San Jose 1,273 2,994 4,267 1,198
6/25/97 Stanton 948 2,282 3,230 931
6/25/97 Garland 486 1,237 1,723 502
6/25/97 Westford 857 2,376 3,233 922
6/25/97 Dallas 1,627 4,499 6,126 1,878
6/25/97 Wheat Ridge 1,054 2,875 3,929 1,151
6/25/97 Berlin 825 2,241 3,066 905
6/25/97 Gretna 1,069 2,989 4,058 1,343
6/25/97 Spring 461 1,294 1,755 543
6/25/97 Sacramento 720 2,276 2,996 858
6/25/97 Houston/South Dairyashford 856 2,389 3,245 959
6/25/97 Naperville 1,108 3,079 4,187 1,217
6/25/97 Carrollton 1,158 3,268 4,426 1,343
6/25/97 Waipahu 1,620 4,566 6,186 1,797
6/25/97 Davis 628 1,697 2,325 692
6/25/97 Decatur 951 2,639 3,590 1,108
6/25/97 Jacksonville 653 1,822 2,475 776
6/25/97 Chicoppe 662 1,969 2,631 826
6/25/97 Alexandria 1,532 4,123 5,655 1,650
6/25/97 Houston/Veterans Memorial Dr. 458 1,298 1,756 522
F-71
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
6/25/97 Los Angeles/Olympic - 4,392 10,247 1,272 -
6/25/97 Littleton - 1,340 3,126 627 -
6/25/97 Metairie - 1,229 2,868 240 -
6/25/97 Louisville - 717 1,672 334 -
6/25/97 East Hazel Crest - 753 1,757 2,202 -
6/25/97 Edmonds - 1,187 2,770 433 -
6/25/97 Foster City - 1,064 2,483 370 -
6/25/97 Chicago - 1,160 2,708 542 -
6/25/97 Philadelphia - 924 2,155 409 -
6/25/97 Dallas/Vilbig Rd. - 508 1,184 271 -
6/25/97 Staten Island - 1,676 3,910 602 -
6/25/97 Pelham Manor - 1,209 2,820 790 -
6/25/97 Irving - 469 1,093 209 -
6/25/97 Elk Grove - 642 1,497 307 -
6/25/97 LAX - 1,312 3,062 558 -
6/25/97 Denver - 1,316 3,071 738 -
6/25/97 Plano - 1,369 3,193 553 -
6/25/97 Lynnwood - 839 1,959 372 -
6/25/97 Lilburn - 507 1,182 394 -
6/25/97 Parma - 881 2,055 699 -
6/25/97 Davie - 1,086 2,533 640 -
6/25/97 Allen Park - 953 2,223 572 -
6/25/97 Aurora - 808 1,886 462 -
6/25/97 San Diego/16th Street - 932 2,175 632 -
6/25/97 Sterling Heights - 766 1,787 605 -
6/25/97 East L.A./Boyle Heights - 957 2,232 517 -
6/25/97 Springfield/Alban Station - 1,317 3,074 854 -
6/25/97 Littleton - 868 2,026 507 -
6/25/97 Sacramento/57th Street - 869 2,029 499 -
6/25/97 Miami - 1,762 4,111 1,030 -
8/13/97 Santa Monica / Wilshire Blvd. - 2,040 4,760 329 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
6/25/97 Los Angeles/Olympic 4,391 11,520 15,911 4,525
6/25/97 Littleton 1,339 3,754 5,093 1,530
6/25/97 Metairie 1,229 3,108 4,337 1,337
6/25/97 Louisville 716 2,007 2,723 825
6/25/97 East Hazel Crest 1,213 3,499 4,712 1,629
6/25/97 Edmonds 1,187 3,203 4,390 1,294
6/25/97 Foster City 1,064 2,853 3,917 1,118
6/25/97 Chicago 1,160 3,250 4,410 1,343
6/25/97 Philadelphia 923 2,565 3,488 1,046
6/25/97 Dallas/Vilbig Rd. 507 1,456 1,963 592
6/25/97 Staten Island 1,675 4,513 6,188 1,815
6/25/97 Pelham Manor 1,208 3,611 4,819 1,543
6/25/97 Irving 468 1,303 1,771 547
6/25/97 Elk Grove 642 1,804 2,446 740
6/25/97 LAX 1,312 3,620 4,932 1,497
6/25/97 Denver 1,316 3,809 5,125 1,515
6/25/97 Plano 1,368 3,747 5,115 1,467
6/25/97 Lynnwood 839 2,331 3,170 969
6/25/97 Lilburn 506 1,577 2,083 667
6/25/97 Parma 880 2,755 3,635 1,088
6/25/97 Davie 1,085 3,174 4,259 1,307
6/25/97 Allen Park 953 2,795 3,748 1,138
6/25/97 Aurora 808 2,348 3,156 948
6/25/97 San Diego/16th Street 932 2,807 3,739 1,204
6/25/97 Sterling Heights 766 2,392 3,158 948
6/25/97 East L.A./Boyle Heights 956 2,750 3,706 1,106
6/25/97 Springfield/Alban Station 1,317 3,928 5,245 1,515
6/25/97 Littleton 868 2,533 3,401 1,030
6/25/97 Sacramento/57th Street 869 2,528 3,397 1,037
6/25/97 Miami 1,762 5,141 6,903 2,039
8/13/97 Santa Monica / Wilshire Blvd. 2,040 5,089 7,129 2,085
F-72
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
10/1/97 Marietta /Austell Rd - 398 1,326 330 681
10/1/97 Denver / Leetsdale - 1,407 1,682 311 952
10/1/97 Baltimore / York Road - 1,538 1,952 759 1,125
10/1/97 Bolingbrook - 737 1,776 267 927
10/1/97 Kent / Central - 483 1,321 195 687
10/1/97 Geneva / Roosevelt - 355 1,302 218 665
10/1/97 Denver / Sheridan - 429 1,105 314 587
10/1/97 Mountlake Terrace - 1,017 1,783 242 950
10/1/97 Carol Stream/ St.Charles - 185 1,187 227 591
10/1/97 Marietta / Cobb Park - 420 1,131 317 619
10/1/97 Venice / Rose - 5,468 5,478 852 3,117
10/1/97 Ventura / Ventura Blvd - 911 2,227 415 1,146
10/1/97 Studio City/ Ventura - 2,421 1,610 192 995
10/1/97 Madison Heights - 428 1,686 2,596 1,014
10/1/97 Lax / Imperial - 1,662 2,079 206 1,159
10/1/97 Justice / Industrial - 233 1,181 176 589
10/1/97 Burbank / San Fernando - 1,825 2,210 292 1,223
10/1/97 Pinole / Appian Way - 728 1,827 230 935
10/1/97 Denver / Tamarac Park - 2,545 1,692 452 1,127
10/1/97 Gresham / Powell - 322 1,298 216 646
10/1/97 Warren / Mound Road - 268 1,025 210 528
10/1/97 Woodside/Brooklyn - 5,016 3,950 920 3,195
10/1/97 Enfield / Elm Street - 399 1,900 318 945
10/1/97 Roselle / Lake Street - 312 1,411 216 710
10/1/97 Milwaukee / Appleton - 324 1,385 274 706
10/1/97 Emeryville / Bay St - 1,602 1,830 252 1,091
10/1/97 Monterey / Del Rey - 257 1,048 229 563
10/1/97 San Leandro / Washington - 660 1,142 173 653
10/1/97 Boca Raton / N.W. 20 - 1,140 2,256 455 1,198
10/1/97 Washington Dc/So Capital - 1,437 4,489 473 2,274
10/1/97 Lynn / Lynnway - 463 3,059 471 1,513
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
10/1/97 Marietta /Austell Rd 440 2,295 2,735 891
10/1/97 Denver / Leetsdale 1,554 2,798 4,352 1,118
10/1/97 Baltimore / York Road 1,700 3,674 5,374 1,429
10/1/97 Bolingbrook 814 2,893 3,707 1,138
10/1/97 Kent / Central 533 2,153 2,686 850
10/1/97 Geneva / Roosevelt 392 2,148 2,540 862
10/1/97 Denver / Sheridan 474 1,961 2,435 755
10/1/97 Mountlake Terrace 1,123 2,869 3,992 1,086
10/1/97 Carol Stream/ St.Charles 205 1,985 2,190 768
10/1/97 Marietta / Cobb Park 464 2,023 2,487 804
10/1/97 Venice / Rose 6,041 8,874 14,915 3,141
10/1/97 Ventura / Ventura Blvd 1,006 3,693 4,699 1,385
10/1/97 Studio City/ Ventura 2,675 2,543 5,218 972
10/1/97 Madison Heights 473 5,251 5,724 995
10/1/97 Lax / Imperial 1,836 3,270 5,106 1,291
10/1/97 Justice / Industrial 258 1,921 2,179 752
10/1/97 Burbank / San Fernando 2,016 3,534 5,550 1,338
10/1/97 Pinole / Appian Way 804 2,916 3,720 1,126
10/1/97 Denver / Tamarac Park 2,812 3,004 5,816 1,266
10/1/97 Gresham / Powell 356 2,126 2,482 790
10/1/97 Warren / Mound Road 296 1,735 2,031 649
10/1/97 Woodside/Brooklyn 5,541 7,540 13,081 2,369
10/1/97 Enfield / Elm Street 441 3,121 3,562 1,125
10/1/97 Roselle / Lake Street 344 2,305 2,649 884
10/1/97 Milwaukee / Appleton 357 2,332 2,689 874
10/1/97 Emeryville / Bay St 1,770 3,005 4,775 1,130
10/1/97 Monterey / Del Rey 284 1,813 2,097 634
10/1/97 San Leandro / Washington 729 1,899 2,628 708
10/1/97 Boca Raton / N.W. 20 1,259 3,790 5,049 1,325
10/1/97 Washington Dc/So Capital 1,588 7,085 8,673 2,326
10/1/97 Lynn / Lynnway 511 4,995 5,506 1,810
F-73
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
10/1/97 Pompano Beach - 1,077 1,527 737 869
10/1/97 Lake Oswego/ N.State - 465 1,956 283 972
10/1/97 Daly City / Mission - 389 2,921 251 1,389
10/1/97 Odenton / Route 175 - 456 2,104 416 1,053
10/1/97 Novato / Landing - 2,416 3,496 282 1,706
10/1/97 St. Louis / Lindberg - 584 1,508 347 711
10/1/97 Oakland/International - 358 1,568 258 700
10/1/97 Stockton / March Lane - 663 1,398 217 657
10/1/97 Des Plaines / Golf Rd - 1,363 3,093 261 1,118
10/1/97 Morton Grove / Wauke - 2,658 3,232 6,285 822
10/1/97 Los Angeles / Jefferson - 1,090 1,580 261 820
10/1/97 Los Angeles / Martin - 869 1,152 119 717
10/1/97 San Leandro / E. 14th - 627 1,289 114 608
10/1/97 Tucson / Tanque Verde - 345 1,709 322 709
10/1/97 Randolph / Warren St - 2,330 1,914 531 1,332
10/1/97 Forrestville / Penn. - 1,056 2,347 355 1,114
10/1/97 Bridgeport - 4,877 2,739 715 1,651
10/1/97 North Hollywood/Vine - 906 2,379 234 1,211
10/1/97 Santa Cruz / Portola - 535 1,526 186 761
10/1/97 Hyde Park / River St - 626 1,748 419 665
10/1/97 Dublin / San Ramon Rd - 942 1,999 189 803
10/1/97 Vallejo / Humboldt - 473 1,651 196 757
10/1/97 Fremont/Warm Springs - 848 2,885 277 1,105
10/1/97 Seattle / Stone Way - 829 2,180 357 1,080
10/1/97 W. Olympia - 149 1,096 295 452
10/1/97 Mercer/Parkside Ave - 359 1,763 286 962
10/1/97 Bridge Water / Main - 445 2,054 319 811
10/1/97 Norwalk / Hoyt Street - 2,369 3,049 593 1,391
11/2/97 Lansing - 758 1,768 (79) -
11/7/97 Phoenix - 1,197 2,793 254 -
11/13/97 Tinley Park - 1,422 3,319 106 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
10/1/97 Pompano Beach 1,190 3,020 4,210 945
10/1/97 Lake Oswego/ N.State 514 3,162 3,676 1,101
10/1/97 Daly City / Mission 430 4,520 4,950 1,614
10/1/97 Odenton / Route 175 504 3,525 4,029 1,141
10/1/97 Novato / Landing 2,904 4,996 7,900 1,937
10/1/97 St. Louis / Lindberg 728 2,422 3,150 960
10/1/97 Oakland/International 475 2,409 2,884 909
10/1/97 Stockton / March Lane 811 2,124 2,935 793
10/1/97 Des Plaines / Golf Rd 1,630 4,205 5,835 1,646
10/1/97 Morton Grove / Wauke 3,110 9,887 12,997 2,493
10/1/97 Los Angeles / Jefferson 1,322 2,429 3,751 883
10/1/97 Los Angeles / Martin 1,066 1,791 2,857 638
10/1/97 San Leandro / E. 14th 774 1,864 2,638 694
10/1/97 Tucson / Tanque Verde 469 2,616 3,085 959
10/1/97 Randolph / Warren St 2,718 3,389 6,107 1,099
10/1/97 Forrestville / Penn. 1,312 3,560 4,872 1,354
10/1/97 Bridgeport 5,612 4,370 9,982 1,664
10/1/97 North Hollywood/Vine 1,166 3,564 4,730 1,251
10/1/97 Santa Cruz / Portola 689 2,319 3,008 835
10/1/97 Hyde Park / River St 759 2,699 3,458 964
10/1/97 Dublin / San Ramon Rd 1,119 2,814 3,933 1,059
10/1/97 Vallejo / Humboldt 620 2,457 3,077 891
10/1/97 Fremont/Warm Springs 1,072 4,043 5,115 1,474
10/1/97 Seattle / Stone Way 1,078 3,368 4,446 1,150
10/1/97 W. Olympia 209 1,783 1,992 618
10/1/97 Mercer/Parkside Ave 503 2,867 3,370 971
10/1/97 Bridge Water / Main 576 3,053 3,629 1,061
10/1/97 Norwalk / Hoyt Street 2,793 4,609 7,402 1,740
11/2/97 Lansing 730 1,717 2,447 709
11/7/97 Phoenix 1,197 3,047 4,244 1,188
11/13/97 Tinley Park 1,422 3,425 4,847 1,272
F-74
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
3/17/98 Houston/De Soto Dr. - 659 1,537 163 -
3/17/98 Houston / East Freeway - 593 1,384 278 -
3/17/98 Austin/Ben White - 692 1,614 90 -
3/17/98 Arlington/E.Pioneer - 922 2,152 271 -
3/17/98 Las Vegas/Tropicana - 1,285 2,998 170 -
3/17/98 Branford / Summit Place - 728 1,698 209 -
3/17/98 Las Vegas / Charleston - 791 1,845 127 -
3/17/98 So. San Francisco - 1,550 3,617 233 -
3/17/98 Pasadena / Arroyo Prkwy - 3,005 7,012 253 -
3/17/98 Tempe / E. Broadway - 633 1,476 337 -
3/17/98 Phoenix / N. 43rd Ave - 443 1,033 228 -
3/17/98 Phoenix/No. 43rd - 380 886 485 -
3/17/98 Phoenix / Black Canyon - 380 886 157 -
3/17/98 Phoenix/Black Canyon - 136 317 197 -
3/17/98 Nesconset / Southern - 1,423 3,321 240 -
4/1/98 St. Louis / Hwy. 141 - 659 1,628 4,530 -
4/1/98 Island Park / Austin - 2,313 3,015 (633) -
4/1/98 Akron / Brittain Rd. - 275 2,248 (186) -
4/1/98 Patchogue/W.Sunrise - 936 2,184 207 -
4/1/98 Havertown/West Chester - 1,254 2,926 137 -
4/1/98 Schiller Park/River - 568 1,390 115 -
4/1/98 Chicago / Cuyler - 1,400 2,695 221 -
4/1/98 Chicago Heights/West - 468 1,804 172 -
4/1/98 Arlington Hts/University - 670 3,004 143 -
4/1/98 Cicero / Ogden - 1,678 2,266 340 -
4/1/98 Chicago/W. Howard St. - 974 2,875 344 -
4/1/98 Chicago/N. Western Ave - 1,453 3,205 279 -
4/1/98 Chicago/Northwest Hwy - 925 2,412 89 -
4/1/98 Chicago/N. Wells St. - 1,446 2,828 152 -
4/1/98 Chicago / Pulaski Rd. - 1,276 2,858 180 -
4/1/98 Artesia / Artesia - 625 1,419 97 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
3/17/98 Houston/De Soto Dr. 659 1,700 2,359 665
3/17/98 Houston / East Freeway 593 1,662 2,255 657
3/17/98 Austin/Ben White 682 1,714 2,396 645
3/17/98 Arlington/E.Pioneer 922 2,423 3,345 961
3/17/98 Las Vegas/Tropicana 1,285 3,168 4,453 1,206
3/17/98 Branford / Summit Place 727 1,908 2,635 737
3/17/98 Las Vegas / Charleston 791 1,972 2,763 754
3/17/98 So. San Francisco 1,550 3,850 5,400 1,378
3/17/98 Pasadena / Arroyo Prkwy 3,004 7,266 10,270 2,671
3/17/98 Tempe / E. Broadway 632 1,814 2,446 694
3/17/98 Phoenix / N. 43rd Ave 443 1,261 1,704 517
3/17/98 Phoenix/No. 43rd 379 1,372 1,751 578
3/17/98 Phoenix / Black Canyon 379 1,044 1,423 449
3/17/98 Phoenix/Black Canyon 136 514 650 294
3/17/98 Nesconset / Southern 1,423 3,561 4,984 1,294
4/1/98 St. Louis / Hwy. 141 1,344 5,473 6,817 1,598
4/1/98 Island Park / Austin 1,373 3,322 4,695 1,219
4/1/98 Akron / Brittain Rd. 669 1,668 2,337 564
4/1/98 Patchogue/W.Sunrise 936 2,391 3,327 922
4/1/98 Havertown/West Chester 1,249 3,068 4,317 1,164
4/1/98 Schiller Park/River 568 1,505 2,073 595
4/1/98 Chicago / Cuyler 1,400 2,916 4,316 1,150
4/1/98 Chicago Heights/West 468 1,976 2,444 793
4/1/98 Arlington Hts/University 670 3,147 3,817 1,203
4/1/98 Cicero / Ogden 1,677 2,607 4,284 1,141
4/1/98 Chicago/W. Howard St. 974 3,219 4,193 1,245
4/1/98 Chicago/N. Western Ave 1,453 3,484 4,937 1,339
4/1/98 Chicago/Northwest Hwy 925 2,501 3,426 962
4/1/98 Chicago/N. Wells St. 1,446 2,980 4,426 1,141
4/1/98 Chicago / Pulaski Rd. 1,276 3,038 4,314 1,130
4/1/98 Artesia / Artesia 625 1,516 2,141 690
F-75
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
4/1/98 Arcadia / Lower Azusa - 821 1,369 274 -
4/1/98 Manassas / Centreville - 405 2,137 319 -
4/1/98 La Downtwn/10 Fwy - 1,608 3,358 261 -
4/1/98 Bellevue / Northup - 1,232 3,306 567 -
4/1/98 Hollywood/Cole & Wilshire - 1,590 1,785 127 -
4/1/98 Atlanta/John Wesley - 1,233 1,665 230 -
4/1/98 Montebello/S. Maple - 1,274 2,299 134 -
4/1/98 Lake City/Forest Park - 248 1,445 127 -
4/1/98 Baltimore / W. Patap - 403 2,650 183 -
4/1/98 Fraser/Groesbeck Hwy - 368 1,796 95 -
4/1/98 Vallejo / Mini Drive - 560 1,803 93 -
4/1/98 San Diego/54th & Euclid - 952 2,550 305 -
4/1/98 Miami / 5th Street - 2,327 3,234 260 -
4/1/98 Silver Spring/Hill - 922 2,080 200 -
4/1/98 Chicago/E. 95th St. - 397 2,357 177 -
4/1/98 Chicago / S. Harlem - 791 1,424 115 -
4/1/98 St. Charles /Highway - 623 1,501 204 -
4/1/98 Chicago/Burr Ridge Rd. - 421 2,165 245 -
4/1/98 Yonkers / Route 9a - 1,722 3,823 309 -
4/1/98 Silverlake/Glendale - 2,314 5,481 296 -
4/1/98 Chicago/Harlem Ave - 1,430 3,038 163 -
4/1/98 Bethesda / Butler Rd - 1,146 2,509 91 -
4/1/98 Dundalk / Wise Ave - 447 2,005 181 -
4/1/98 St. Louis / Hwy. 141 - 659 1,628 71 -
4/1/98 Island Park / Austin - 2,313 3,015 205 -
4/1/98 Dallas / Kingsly - 1,095 1,712 133 -
5/1/98 Berkeley / 2nd St. - 1,914 4,466 23 -
5/8/98 Cleveland / W. 117th - 930 2,277 309 -
5/8/98 La /Venice Blvd - 1,470 3,599 135 -
5/8/98 Aurora / Farnsworth - 960 2,350 106 -
5/8/98 Santa Rosa / Hopper - 1,020 2,497 131 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
---------------------------------------------------------------------------------------------------------
4/1/98 Arcadia / Lower Azusa 821 1,643 2,464 745
4/1/98 Manassas / Centreville 405 2,456 2,861 1,142
4/1/98 La Downtwn/10 Fwy 1,607 3,620 5,227 1,631
4/1/98 Bellevue / Northup 1,231 3,874 5,105 1,696
4/1/98 Hollywood/Cole & Wilshire 1,590 1,912 3,502 855
4/1/98 Atlanta/John Wesley 1,233 1,895 3,128 930
4/1/98 Montebello/S. Maple 1,273 2,434 3,707 1,090
4/1/98 Lake City/Forest Park 248 1,572 1,820 715
4/1/98 Baltimore / W. Patap 402 2,834 3,236 1,262
4/1/98 Fraser/Groesbeck Hwy 368 1,891 2,259 837
4/1/98 Vallejo / Mini Drive 560 1,896 2,456 848
4/1/98 San Diego/54th & Euclid 952 2,855 3,807 1,310
4/1/98 Miami / 5th Street 2,327 3,494 5,821 1,601
4/1/98 Silver Spring/Hill 921 2,281 3,202 1,097
4/1/98 Chicago/E. 95th St. 397 2,534 2,931 1,230
4/1/98 Chicago / S. Harlem 791 1,539 2,330 746
4/1/98 St. Charles /Highway 623 1,705 2,328 825
4/1/98 Chicago/Burr Ridge Rd. 421 2,410 2,831 1,098
4/1/98 Yonkers / Route 9a 1,722 4,132 5,854 1,940
4/1/98 Silverlake/Glendale 2,313 5,778 8,091 2,673
4/1/98 Chicago/Harlem Ave 1,430 3,201 4,631 1,502
4/1/98 Bethesda / Butler Rd 1,146 2,600 3,746 1,186
4/1/98 Dundalk / Wise Ave 447 2,186 2,633 985
4/1/98 St. Louis / Hwy. 141 659 1,699 2,358 863
4/1/98 Island Park / Austin 2,313 3,220 5,533 1,607
4/1/98 Dallas / Kingsly 1,095 1,845 2,940 835
5/1/98 Berkeley / 2nd St. 1,837 4,566 6,403 1,685
5/8/98 Cleveland / W. 117th 930 2,586 3,516 979
5/8/98 La /Venice Blvd 1,470 3,734 5,204 1,339
5/8/98 Aurora / Farnsworth 960 2,456 3,416 888
5/8/98 Santa Rosa / Hopper 1,020 2,628 3,648 955
F-76
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
5/8/98 Golden Valley / Winn - 630 1,542 163 -
5/8/98 St. Louis / Benham - 810 1,983 201 -
5/8/98 Chicago / S. Chicago - 840 2,057 191 -
10/1/98 El Segundo / Sepulveda - 6,586 5,795 225 -
10/1/98 Atlanta / Memorial Dr. - 414 2,239 297 -
10/1/98 Chicago / W. 79th St - 861 2,789 328 -
10/1/98 Chicago / N. Broadway - 1,918 3,824 298 -
10/1/98 Dallas / Greenville - 1,933 2,892 139 -
10/1/98 Tacoma / Orchard - 358 1,987 146 -
10/1/98 St. Louis / Gravois - 312 2,327 321 -
10/1/98 White Bear Lake - 578 2,079 207 -
10/1/98 Santa Cruz / Soquel - 832 2,385 122 -
10/1/98 Coon Rapids / Hwy 10 - 330 1,646 124 -
10/1/98 Oxnard / Hueneme Rd - 923 3,925 231 -
10/1/98 Vancouver/ Millplain - 343 2,000 92 -
10/1/98 Tigard / Mc Ewan - 597 1,652 83 -
10/1/98 Griffith / Cline - 299 2,118 89 -
10/1/98 Miami / Sunset Drive - 1,656 2,321 1,878 -
10/1/98 Farmington / 9 Mile - 580 2,526 239 -
10/1/98 Los Gatos / University - 2,234 3,890 206 -
10/1/98 N. Hollywood - 1,484 3,143 93 -
10/1/98 Petaluma / Transport - 460 1,840 4,932 -
10/1/98 Chicago / 111th - 341 2,898 2,294 -
10/1/98 Upper Darby / Market - 808 5,011 244 -
10/1/98 San Jose / Santa - 966 3,870 103 -
10/1/98 San Diego / Morena - 3,173 5,469 196 -
10/1/98 Brooklyn /Rockaway Ave - 6,272 9,691 556 -
10/1/98 Revere / Charger St - 1,997 3,727 477 -
10/1/98 Las Vegas / E. Charles - 602 2,545 275 -
10/1/98 Laurel / Baltimore Ave - 1,899 4,498 204 -
10/1/98 East La/Figueroa & 4th - 1,213 2,689 70 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
5/8/98 Golden Valley / Winn 630 1,705 2,335 640
5/8/98 St. Louis / Benham 810 2,184 2,994 820
5/8/98 Chicago / S. Chicago 840 2,248 3,088 781
10/1/98 El Segundo / Sepulveda 6,584 6,022 12,606 2,151
10/1/98 Atlanta / Memorial Dr. 414 2,536 2,950 954
10/1/98 Chicago / W. 79th St 861 3,117 3,978 1,211
10/1/98 Chicago / N. Broadway 1,917 4,123 6,040 1,493
10/1/98 Dallas / Greenville 1,933 3,031 4,964 1,088
10/1/98 Tacoma / Orchard 358 2,133 2,491 780
10/1/98 St. Louis / Gravois 312 2,648 2,960 936
10/1/98 White Bear Lake 578 2,286 2,864 843
10/1/98 Santa Cruz / Soquel 832 2,507 3,339 915
10/1/98 Coon Rapids / Hwy 10 330 1,770 2,100 652
10/1/98 Oxnard / Hueneme Rd 923 4,156 5,079 1,488
10/1/98 Vancouver/ Millplain 342 2,093 2,435 762
10/1/98 Tigard / Mc Ewan 597 1,735 2,332 640
10/1/98 Griffith / Cline 299 2,207 2,506 782
10/1/98 Miami / Sunset Drive 2,266 3,589 5,855 1,117
10/1/98 Farmington / 9 Mile 580 2,765 3,345 971
10/1/98 Los Gatos / University 2,234 4,096 6,330 1,447
10/1/98 N. Hollywood 1,484 3,236 4,720 1,139
10/1/98 Petaluma / Transport 857 6,375 7,232 1,598
10/1/98 Chicago / 111th 431 5,102 5,533 1,437
10/1/98 Upper Darby / Market 807 5,256 6,063 1,871
10/1/98 San Jose / Santa 966 3,973 4,939 1,415
10/1/98 San Diego / Morena 3,173 5,665 8,838 1,994
10/1/98 Brooklyn /Rockaway Ave 6,271 10,248 16,519 3,722
10/1/98 Revere / Charger St 1,996 4,205 6,201 1,522
10/1/98 Las Vegas / E. Charles 602 2,820 3,422 1,065
10/1/98 Laurel / Baltimore Ave 1,899 4,702 6,601 1,699
10/1/98 East La/Figueroa & 4th 1,213 2,759 3,972 975
F-77
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
10/1/98 Oldsmar / Tampa Road - 760 2,154 2,770 -
10/1/98 Ft. Lauderdale /S.W. - 1,046 2,928 203 -
10/1/98 Miami / Nw 73rd St - 1,050 3,064 156 -
12/9/98 Miami / Nw 115th Ave - 1,095 2,349 4,920 -
1/1/99 New Orleans/St.Charles - 1,463 2,634 (428) -
1/6/99 Brandon / E. Brandon Blvd - 1,560 3,695 71 -
3/12/99 St. Louis / N. Lindbergh Blvd. - 1,688 3,939 357 -
3/12/99 St. Louis /Vandeventer Midtown - 699 1,631 267 -
3/12/99 St. Ann / Maryland Heights - 1,035 2,414 304 -
3/12/99 Florissant / N. Hwy 67 - 971 2,265 276 -
3/12/99 Ferguson Area-W.Florissant - 1,194 2,732 492 -
3/12/99 Florissant / New Halls Ferry Rd - 1,144 2,670 511 -
3/12/99 St. Louis / Airport - 785 1,833 255 -
3/12/99 St. Louis/ S.Third St - 1,096 2,557 120 -
3/12/99 Kansas City / E. 47th St. - 610 1,424 179 -
3/12/99 Kansas City /E. 67th Terrace - 1,136 2,643 238 -
3/12/99 Kansas City / James A. Reed Rd - 749 1,748 128 -
3/12/99 Independence / 291 - 871 2,032 157 -
3/12/99 Raytown / Woodson Rd - 915 2,134 130 -
3/12/99 Kansas City / 34th Main Street - 114 2,599 679 -
3/12/99 Columbia / River Dr - 671 1,566 285 -
3/12/99 Columbia / Buckner Rd - 714 1,665 354 -
3/12/99 Columbia / Decker Park Rd - 605 1,412 119 -
3/12/99 Columbia / Rosewood Dr - 777 1,814 102 -
3/12/99 W. Columbia / Orchard Dr. - 272 634 225 -
3/12/99 W. Columbia / Airport Blvd - 493 1,151 228 -
3/12/99 Greenville / Whitehorse Rd - 882 2,058 141 -
3/12/99 Greenville / Woods Lake Rd - 364 849 136 -
3/12/99 Mauldin / N. Main Street - 571 1,333 142 -
3/12/99 Simpsonville / Grand View Dr - 582 1,358 129 -
3/12/99 Taylors / Wade Hampton Blvd - 650 1,517 134 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date --------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-----------------------------------------------------------------------------------------------------------
10/1/98 Oldsmar / Tampa Road 1,049 4,635 5,684 1,385
10/1/98 Ft. Lauderdale /S.W. 1,046 3,131 4,177 1,108
10/1/98 Miami / Nw 73rd St 1,049 3,221 4,270 1,137
12/9/98 Miami / Nw 115th Ave 1,185 7,179 8,364 1,068
1/1/99 New Orleans/St.Charles 1,039 2,630 3,669 937
1/6/99 Brandon / E. Brandon Blvd 1,560 3,766 5,326 1,126
3/12/99 St. Louis / N. Lindbergh Blvd. 1,688 4,296 5,984 1,506
3/12/99 St. Louis /Vandeventer Midtown 699 1,898 2,597 634
3/12/99 St. Ann / Maryland Heights 1,034 2,719 3,753 941
3/12/99 Florissant / N. Hwy 67 971 2,541 3,512 904
3/12/99 Ferguson Area-W.Florissant 1,178 3,240 4,418 1,188
3/12/99 Florissant / New Halls Ferry Rd 1,144 3,181 4,325 1,131
3/12/99 St. Louis / Airport 785 2,088 2,873 734
3/12/99 St. Louis/ S.Third St 1,096 2,677 3,773 887
3/12/99 Kansas City / E. 47th St. 610 1,603 2,213 577
3/12/99 Kansas City /E. 67th Terrace 1,134 2,883 4,017 931
3/12/99 Kansas City / James A. Reed Rd 749 1,876 2,625 628
3/12/99 Independence / 291 871 2,189 3,060 748
3/12/99 Raytown / Woodson Rd 914 2,265 3,179 760
3/12/99 Kansas City / 34th Main Street 114 3,278 3,392 1,255
3/12/99 Columbia / River Dr 671 1,851 2,522 664
3/12/99 Columbia / Buckner Rd 713 2,020 2,733 806
3/12/99 Columbia / Decker Park Rd 605 1,531 2,136 551
3/12/99 Columbia / Rosewood Dr 777 1,916 2,693 661
3/12/99 W. Columbia / Orchard Dr. 272 859 1,131 329
3/12/99 W. Columbia / Airport Blvd 493 1,379 1,872 465
3/12/99 Greenville / Whitehorse Rd 882 2,199 3,081 745
3/12/99 Greenville / Woods Lake Rd 364 985 1,349 367
3/12/99 Mauldin / N. Main Street 571 1,475 2,046 542
3/12/99 Simpsonville / Grand View Dr 574 1,495 2,069 538
3/12/99 Taylors / Wade Hampton Blvd 650 1,651 2,301 582
F-78
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
3/12/99 Charleston/Ashley Phosphate - 839 1,950 229 -
3/12/99 N. Charleston / Dorchester Rd - 380 886 148 -
3/12/99 N. Charleston / Dorchester - 487 1,137 174 -
3/12/99 Charleston / Sam Rittenberg Blvd - 555 1,296 138 -
3/12/99 Hilton Head / Office Park Rd - 1,279 2,985 188 -
3/12/99 Columbia / Plumbers Rd - 368 858 179 -
3/12/99 Greenville / Pineknoll Rd - 927 2,163 230 -
3/12/99 Hilton Head / Yacht Cove Dr - 1,182 2,753 254 -
3/12/99 Spartanburg / Chesnee Hwy - 533 1,244 506 -
3/12/99 Charleston / Ashley River Rd - 1,114 2,581 211 -
3/12/99 Columbia / Broad River - 1,463 3,413 336 -
3/12/99 Charlotte / East Wt Harris Blvd - 736 1,718 149 -
3/12/99 Charlotte / North Tryon St. - 708 1,653 604 -
3/12/99 Charlotte / South Blvd - 641 1,496 196 -
3/12/99 Kannapolis / Oregon St - 463 1,081 170 -
3/12/99 Durham / E. Club Blvd - 947 2,209 176 -
3/12/99 Durham / N. Duke St. - 769 1,794 172 -
3/12/99 Raleigh / Maitland Dr - 679 1,585 233 -
3/12/99 Greensboro / O'henry Blvd - 577 1,345 390 -
3/12/99 Gastonia / S. York Rd - 467 1,089 220 -
3/12/99 Durham / Kangaroo Dr. - 1,102 2,572 469 -
3/12/99 Pensacola / Brent Lane - 402 938 (86) -
3/12/99 Pensacola / Creighton Road - 454 1,060 122 -
3/12/99 Jacksonville / Park Avenue - 905 2,113 185 -
3/12/99 Jacksonville / Phillips Hwy - 665 1,545 258 -
3/12/99 Clearwater / Highland Ave - 724 1,690 263 -
3/12/99 Tarpon Springs / Us Highway 19 - 892 2,081 205 -
3/12/99 Orlando/S. Orange Blossom Trail - 1,229 2,867 240 -
3/12/99 Casselberry Ii - 1,160 2,708 174 -
3/12/99 Miami/NW 14th Street - 1,739 4,058 221 -
3/12/99 Tarpon Springs/Highway 19 - 1,179 2,751 408 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
3/12/99 Charleston/Ashley Phosphate 823 2,195 3,018 791
3/12/99 N. Charleston / Dorchester Rd 379 1,035 1,414 377
3/12/99 N. Charleston / Dorchester 487 1,311 1,798 489
3/12/99 Charleston / Sam Rittenberg Blvd 555 1,434 1,989 503
3/12/99 Hilton Head / Office Park Rd 1,279 3,173 4,452 1,051
3/12/99 Columbia / Plumbers Rd 368 1,037 1,405 381
3/12/99 Greenville / Pineknoll Rd 927 2,393 3,320 848
3/12/99 Hilton Head / Yacht Cove Dr 1,180 3,009 4,189 1,031
3/12/99 Spartanburg / Chesnee Hwy 533 1,750 2,283 655
3/12/99 Charleston / Ashley River Rd 1,108 2,798 3,906 953
3/12/99 Columbia / Broad River 1,463 3,749 5,212 1,302
3/12/99 Charlotte / East Wt Harris Blvd 736 1,867 2,603 640
3/12/99 Charlotte / North Tryon St. 708 2,257 2,965 770
3/12/99 Charlotte / South Blvd 641 1,692 2,333 592
3/12/99 Kannapolis / Oregon St 463 1,251 1,714 432
3/12/99 Durham / E. Club Blvd 946 2,386 3,332 810
3/12/99 Durham / N. Duke St. 769 1,966 2,735 674
3/12/99 Raleigh / Maitland Dr 679 1,818 2,497 622
3/12/99 Greensboro / O'henry Blvd 576 1,736 2,312 621
3/12/99 Gastonia / S. York Rd 466 1,310 1,776 463
3/12/99 Durham / Kangaroo Dr. 1,102 3,041 4,143 1,082
3/12/99 Pensacola / Brent Lane 228 1,026 1,254 357
3/12/99 Pensacola / Creighton Road 454 1,182 1,636 462
3/12/99 Jacksonville / Park Avenue 905 2,298 3,203 790
3/12/99 Jacksonville / Phillips Hwy 663 1,805 2,468 662
3/12/99 Clearwater / Highland Ave 724 1,953 2,677 686
3/12/99 Tarpon Springs / Us Highway 19 892 2,286 3,178 812
3/12/99 Orlando/S. Orange Blossom Trail 1,228 3,108 4,336 1,056
3/12/99 Casselberry Ii 1,160 2,882 4,042 981
3/12/99 Miami/NW 14th Street 1,739 4,279 6,018 1,409
3/12/99 Tarpon Springs/Highway 19 1,179 3,159 4,338 1,065
F-79
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
3/12/99 Ft. Myers / Tamiami Trail South - 834 1,945 (244) -
3/12/99 Jacksonville / Ft. Caroline Rd. - 1,037 2,420 238 -
3/12/99 Orlando / South Semoran - 565 1,319 46 -
3/12/99 Jacksonville / Southside Blvd. - 1,278 2,982 323 -
3/12/99 Miami / Nw 7th Ave - 783 1,827 162 -
3/12/99 Vero Beach / Us Hwy 1 - 678 1,583 149 -
3/12/99 Ponte Vedra / Palm Valley Rd. - 745 2,749 713 -
3/12/99 Miami Lakes / Nw 153rd St. - 425 992 72 -
3/12/99 Deerfield Beach / Sw 10th St. - 1,844 4,302 90 -
3/12/99 Apopka / S. Orange Blossom - 307 717 225 -
3/12/99 Davie / University - 313 4,379 311 -
3/12/99 Arlington / Division - 998 2,328 90 -
3/12/99 Duncanville/S.Cedar Ridge - 1,477 3,447 272 -
3/12/99 Carrollton / Trinity Mills West - 530 1,237 99 -
3/12/99 Houston / Wallisville Rd. - 744 1,736 104 -
3/12/99 Houston / Fondren South - 647 1,510 127 -
3/12/99 Houston / Addicks Satsuma - 409 954 144 -
3/12/99 Addison / Inwood Road - 1,204 2,808 62 -
3/12/99 Garland / Jackson Drive - 755 1,761 103 -
3/12/99 Garland / Buckingham Road - 492 1,149 117 -
3/12/99 Houston / South Main - 1,461 3,409 214 -
3/12/99 Plano / Parker Road-Avenue K - 1,517 3,539 164 -
3/12/99 Houston / Bingle Road - 576 1,345 135 -
3/12/99 Houston / Mangum Road - 737 1,719 263 -
3/12/99 Houston / Hayes Road - 916 2,138 120 -
3/12/99 Katy / Dominion Drive - 995 2,321 62 -
3/12/99 Houston / Fm 1960 West - 513 1,198 157 -
3/12/99 Webster / Fm 528 Road - 756 1,764 85 -
3/12/99 Houston / Loch Katrine Lane - 580 1,352 146 -
3/12/99 Houston / Milwee St. - 779 1,815 177 -
3/12/99 Lewisville / Highway 121 - 688 1,605 181 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
3/12/99 Ft. Myers / Tamiami Trail South 834 1,701 2,535 542
3/12/99 Jacksonville / Ft. Caroline Rd. 1,037 2,658 3,695 926
3/12/99 Orlando / South Semoran 565 1,365 1,930 457
3/12/99 Jacksonville / Southside Blvd. 1,278 3,305 4,583 1,151
3/12/99 Miami / Nw 7th Ave 783 1,989 2,772 715
3/12/99 Vero Beach / Us Hwy 1 678 1,732 2,410 575
3/12/99 Ponte Vedra / Palm Valley Rd. 745 3,462 4,207 1,163
3/12/99 Miami Lakes / Nw 153rd St. 425 1,064 1,489 369
3/12/99 Deerfield Beach / Sw 10th St. 1,843 4,393 6,236 1,427
3/12/99 Apopka / S. Orange Blossom 307 942 1,249 336
3/12/99 Davie / University 313 4,690 5,003 1,477
3/12/99 Arlington / Division 997 2,419 3,416 793
3/12/99 Duncanville/S.Cedar Ridge 1,477 3,719 5,196 1,274
3/12/99 Carrollton / Trinity Mills West 530 1,336 1,866 468
3/12/99 Houston / Wallisville Rd. 744 1,840 2,584 612
3/12/99 Houston / Fondren South 647 1,637 2,284 560
3/12/99 Houston / Addicks Satsuma 409 1,098 1,507 396
3/12/99 Addison / Inwood Road 1,203 2,871 4,074 934
3/12/99 Garland / Jackson Drive 755 1,864 2,619 614
3/12/99 Garland / Buckingham Road 492 1,266 1,758 464
3/12/99 Houston / South Main 1,461 3,623 5,084 1,185
3/12/99 Plano / Parker Road-Avenue K 1,516 3,704 5,220 1,244
3/12/99 Houston / Bingle Road 576 1,480 2,056 531
3/12/99 Houston / Mangum Road 737 1,982 2,719 706
3/12/99 Houston / Hayes Road 916 2,258 3,174 765
3/12/99 Katy / Dominion Drive 994 2,384 3,378 774
3/12/99 Houston / Fm 1960 West 513 1,355 1,868 482
3/12/99 Webster / Fm 528 Road 756 1,849 2,605 625
3/12/99 Houston / Loch Katrine Lane 579 1,499 2,078 506
3/12/99 Houston / Milwee St. 778 1,993 2,771 710
3/12/99 Lewisville / Highway 121 688 1,786 2,474 590
F-80
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
3/12/99 Richardson / Central Expressway - 465 1,085 100 -
3/12/99 Houston / Hwy 6 South - 569 1,328 83 -
3/12/99 Houston / Westheimer West - 1,075 2,508 53 -
3/12/99 Ft. Worth / Granbury Road - 763 1,781 103 -
3/12/99 Houston / New Castle - 2,346 5,473 1,291 -
3/12/99 Dallas / Inwood Road - 1,478 3,448 123 -
3/12/99 Fort Worth / Loop 820 North - 729 1,702 195 -
3/12/99 Arlington / Cooper St - 779 1,818 116 -
3/12/99 Webster / Highway 3 - 677 1,580 73 -
3/12/99 Augusta / Peach Orchard Rd - 860 2,007 301 -
3/12/99 Martinez / Old Petersburg Rd - 407 950 228 -
3/12/99 Jonesboro / Tara Blvd - 785 1,827 285 -
3/12/99 Atlanta / Briarcliff Rd - 2,171 5,066 270 -
3/12/99 Decatur / N Decatur Rd - 933 2,177 295 -
3/12/99 Douglasville / Westmoreland - 453 1,056 225 -
3/12/99 Doraville / Mcelroy Rd - 827 1,931 253 -
3/12/99 Roswell / Alpharetta - 1,772 4,135 200 -
3/12/99 Douglasville / Duralee Lane - 533 1,244 164 -
3/12/99 Douglasville / Highway 5 - 804 1,875 521 -
3/12/99 Forest Park / Jonesboro - 659 1,537 200 -
3/12/99 Marietta / Whitlock - 1,016 2,370 203 -
3/12/99 Marietta / Cobb - 727 1,696 489 -
3/12/99 Norcross / Jones Mill Rd - 1,142 2,670 194 -
3/12/99 Norcross / Dawson Blvd - 1,232 2,874 402 -
3/12/99 Forest Park / Old Dixie Hwy - 895 2,070 465 -
3/12/99 Decatur / Covington - 1,764 4,116 232 -
3/12/99 Alpharetta / Maxwell Rd - 1,075 2,509 139 -
3/12/99 Alpharetta / N. Main St - 1,240 2,893 111 -
3/12/99 Atlanta / Bolton Rd - 866 2,019 181 -
3/12/99 Riverdale / Georgia Hwy 85 - 1,075 2,508 177 -
3/12/99 Kennesaw / Rutledge Road - 803 1,874 416 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
3/12/99 Richardson / Central Expressway 465 1,185 1,650 427
3/12/99 Houston / Hwy 6 South 569 1,411 1,980 467
3/12/99 Houston / Westheimer West 1,074 2,562 3,636 829
3/12/99 Ft. Worth / Granbury Road 763 1,884 2,647 611
3/12/99 Houston / New Castle 2,345 6,765 9,110 2,062
3/12/99 Dallas / Inwood Road 1,477 3,572 5,049 1,159
3/12/99 Fort Worth / Loop 820 North 729 1,897 2,626 630
3/12/99 Arlington / Cooper St 779 1,934 2,713 631
3/12/99 Webster / Highway 3 677 1,653 2,330 560
3/12/99 Augusta / Peach Orchard Rd 860 2,308 3,168 907
3/12/99 Martinez / Old Petersburg Rd 407 1,178 1,585 425
3/12/99 Jonesboro / Tara Blvd 784 2,113 2,897 798
3/12/99 Atlanta / Briarcliff Rd 2,171 5,336 7,507 1,805
3/12/99 Decatur / N Decatur Rd 933 2,472 3,405 851
3/12/99 Douglasville / Westmoreland 452 1,282 1,734 516
3/12/99 Doraville / Mcelroy Rd 827 2,184 3,011 823
3/12/99 Roswell / Alpharetta 1,772 4,335 6,107 1,445
3/12/99 Douglasville / Duralee Lane 533 1,408 1,941 509
3/12/99 Douglasville / Highway 5 803 2,397 3,200 1,006
3/12/99 Forest Park / Jonesboro 658 1,738 2,396 650
3/12/99 Marietta / Whitlock 1,016 2,573 3,589 893
3/12/99 Marietta / Cobb 727 2,185 2,912 797
3/12/99 Norcross / Jones Mill Rd 1,142 2,864 4,006 995
3/12/99 Norcross / Dawson Blvd 1,231 3,277 4,508 1,157
3/12/99 Forest Park / Old Dixie Hwy 889 2,541 3,430 915
3/12/99 Decatur / Covington 1,763 4,349 6,112 1,419
3/12/99 Alpharetta / Maxwell Rd 1,075 2,648 3,723 881
3/12/99 Alpharetta / N. Main St 1,240 3,004 4,244 988
3/12/99 Atlanta / Bolton Rd 865 2,201 3,066 776
3/12/99 Riverdale / Georgia Hwy 85 1,074 2,686 3,760 902
3/12/99 Kennesaw / Rutledge Road 803 2,290 3,093 806
F-81
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
3/12/99 Lawrenceville / Buford Dr. - 256 597 91 -
3/12/99 Hanover Park / W. Lake Street - 1,320 3,081 183 -
3/12/99 Chicago / W. Jarvis Ave - 313 731 82 -
3/12/99 Chicago / N. Broadway St - 535 1,249 287 -
3/12/99 Carol Stream / Phillips Court - 829 1,780 103 -
3/12/99 Winfield / Roosevelt Road - 1,109 2,587 311 -
3/12/99 Schaumburg / S. Roselle Road - 659 1,537 102 -
3/12/99 Tinley Park / Brennan Hwy - 771 1,799 185 -
3/12/99 Schaumburg / Palmer Drive - 1,333 3,111 396 -
3/12/99 Mobile / Hillcrest Road - 554 1,293 171 -
3/12/99 Mobile / Azalea Road - 517 1,206 231 -
3/12/99 Mobile / Moffat Road - 537 1,254 197 -
3/12/99 Mobile / Grelot Road - 804 1,877 200 -
3/12/99 Mobile / Government Blvd - 407 950 165 -
3/12/99 New Orleans / Tchoupitoulas - 1,092 2,548 352 -
3/12/99 Louisville / Breckenridge Lane - 581 1,356 103 -
3/12/99 Louisville - 554 1,292 154 -
3/12/99 Louisville / Poplar Level - 463 1,080 150 -
3/12/99 Chesapeake / Western Branch - 1,274 2,973 219 -
3/12/99 Centreville / Lee Hwy - 1,650 3,851 196 -
3/12/99 Sterling / S. Sterling Blvd - 1,282 2,992 203 -
3/12/99 Manassas / Sudley Road - 776 1,810 217 -
3/12/99 Longmont / Wedgewood Ave - 717 1,673 95 -
3/12/99 Fort Collins / So.College Ave - 745 1,739 153 -
3/12/99 Colo Sprngs / Parkmoor Village - 620 1,446 255 -
3/12/99 Colo Sprngs / Van Teylingen - 1,216 2,837 189 -
3/12/99 Denver / So. Clinton St. - 462 1,609 93 -
3/12/99 Denver / Washington St. - 795 1,846 438 -
3/12/99 Colo Sprngs / Centennial Blvd - 1,352 3,155 96 -
3/12/99 Colo Sprngs / Astrozon Court - 810 1,889 276 -
3/12/99 Arvada / 64th Ave - 671 1,566 106 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
3/12/99 Lawrenceville / Buford Dr. 256 688 944 258
3/12/99 Hanover Park / W. Lake Street 1,320 3,264 4,584 1,094
3/12/99 Chicago / W. Jarvis Ave 313 813 1,126 302
3/12/99 Chicago / N. Broadway St 535 1,536 2,071 605
3/12/99 Carol Stream / Phillips Court 782 1,930 2,712 624
3/12/99 Winfield / Roosevelt Road 1,108 2,899 4,007 919
3/12/99 Schaumburg / S. Roselle Road 659 1,639 2,298 566
3/12/99 Tinley Park / Brennan Hwy 771 1,984 2,755 704
3/12/99 Schaumburg / Palmer Drive 1,333 3,507 4,840 1,104
3/12/99 Mobile / Hillcrest Road 554 1,464 2,018 535
3/12/99 Mobile / Azalea Road 517 1,437 1,954 522
3/12/99 Mobile / Moffat Road 537 1,451 1,988 510
3/12/99 Mobile / Grelot Road 804 2,077 2,881 718
3/12/99 Mobile / Government Blvd 407 1,115 1,522 396
3/12/99 New Orleans / Tchoupitoulas 1,092 2,900 3,992 1,022
3/12/99 Louisville / Breckenridge Lane 581 1,459 2,040 503
3/12/99 Louisville 554 1,446 2,000 521
3/12/99 Louisville / Poplar Level 463 1,230 1,693 471
3/12/99 Chesapeake / Western Branch 1,274 3,192 4,466 1,083
3/12/99 Centreville / Lee Hwy 1,635 4,062 5,697 1,365
3/12/99 Sterling / S. Sterling Blvd 1,282 3,195 4,477 1,084
3/12/99 Manassas / Sudley Road 776 2,027 2,803 729
3/12/99 Longmont / Wedgewood Ave 717 1,768 2,485 590
3/12/99 Fort Collins / So.College Ave 745 1,892 2,637 658
3/12/99 Colo Sprngs / Parkmoor Village 620 1,701 2,321 574
3/12/99 Colo Sprngs / Van Teylingen 1,215 3,027 4,242 1,034
3/12/99 Denver / So. Clinton St. 462 1,702 2,164 566
3/12/99 Denver / Washington St. 792 2,287 3,079 780
3/12/99 Colo Sprngs / Centennial Blvd 1,352 3,251 4,603 1,059
3/12/99 Colo Sprngs / Astrozon Court 809 2,166 2,975 728
3/12/99 Arvada / 64th Ave 671 1,672 2,343 572
F-82
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
3/12/99 Golden / Simms Street - 918 2,143 366 -
3/12/99 Lawrence / Haskell Ave - 636 1,484 171 -
3/12/99 Overland Park / Hemlock St - 1,168 2,725 153 -
3/12/99 Lenexa / Long St. - 720 1,644 63 -
3/12/99 Shawnee / Hedge Lane Terrace - 570 1,331 148 -
3/12/99 Mission / Foxridge Dr - 1,657 3,864 181 -
3/12/99 Milwaukee / W. Dean Road - 1,362 3,163 546 -
3/12/99 Columbus / Morse Road - 1,415 3,302 995 -
3/12/99 Milford / Branch Hill - 527 1,229 2,414 -
3/12/99 Fairfield / Dixie - 519 1,211 112 -
3/12/99 Cincinnati / Western Hills - 758 1,769 226 -
3/12/99 Austin / N. Mopac Expressway - 865 2,791 82 -
3/12/99 Atlanta / Dunwoody Place - 1,410 3,296 309 -
3/12/99 Kennedale/Bowman Sprgs - 425 991 95 -
3/12/99 Colo Sprngs/N.Powers - 1,124 2,622 292 -
3/12/99 St. Louis/S. Third St - 206 480 22 -
3/12/99 Orlando / L.B. Mcleod Road - 521 1,217 159 -
3/12/99 Jacksonville / Roosevelt Blvd. - 851 1,986 308 -
3/12/99 Miami-Kendall / Sw 84th Street - 935 2,180 201 -
3/12/99 North Miami Beach / 69th St - 1,594 3,720 222 -
3/12/99 Miami Beach / Dade Blvd - 962 2,245 307 -
3/12/99 Chicago / N. Natchez Ave - 1,684 3,930 270 -
3/12/99 Chicago / W. Cermak Road - 1,294 3,019 662 -
3/12/99 Kansas City / State Ave - 645 1,505 240 -
3/12/99 Lenexa / Santa Fe Trail Road - 713 1,663 189 -
3/12/99 Waukesha / Foster Court - 765 1,785 166 -
3/12/99 River Grove / N. 5th Ave. - 1,094 2,552 35 -
3/12/99 St. Charles / E. Main St. - 951 2,220 (280) -
3/12/99 Chicago / West 47th St. - 705 1,645 99 -
3/12/99 Carol Stream / S. Main Place - 1,320 3,079 316 -
3/12/99 Carpentersville /N. Western Ave - 911 2,120 145 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
3/12/99 Golden / Simms Street 918 2,509 3,427 924
3/12/99 Lawrence / Haskell Ave 636 1,655 2,291 578
3/12/99 Overland Park / Hemlock St 1,168 2,878 4,046 954
3/12/99 Lenexa / Long St. 709 1,718 2,427 554
3/12/99 Shawnee / Hedge Lane Terrace 570 1,479 2,049 524
3/12/99 Mission / Foxridge Dr 1,656 4,046 5,702 1,356
3/12/99 Milwaukee / W. Dean Road 1,357 3,714 5,071 1,391
3/12/99 Columbus / Morse Road 1,415 4,297 5,712 1,447
3/12/99 Milford / Branch Hill 527 3,643 4,170 967
3/12/99 Fairfield / Dixie 519 1,323 1,842 459
3/12/99 Cincinnati / Western Hills 758 1,995 2,753 731
3/12/99 Austin / N. Mopac Expressway 865 2,873 3,738 876
3/12/99 Atlanta / Dunwoody Place 1,390 3,625 5,015 1,211
3/12/99 Kennedale/Bowman Sprgs 425 1,086 1,511 371
3/12/99 Colo Sprngs/N.Powers 1,123 2,915 4,038 1,003
3/12/99 St. Louis/S. Third St 206 502 708 161
3/12/99 Orlando / L.B. Mcleod Road 521 1,376 1,897 441
3/12/99 Jacksonville / Roosevelt Blvd. 851 2,294 3,145 904
3/12/99 Miami-Kendall / Sw 84th Street 934 2,382 3,316 830
3/12/99 North Miami Beach / 69th St 1,594 3,942 5,536 1,338
3/12/99 Miami Beach / Dade Blvd 962 2,552 3,514 936
3/12/99 Chicago / N. Natchez Ave 1,684 4,200 5,884 1,408
3/12/99 Chicago / W. Cermak Road 1,294 3,681 4,975 1,447
3/12/99 Kansas City / State Ave 645 1,745 2,390 644
3/12/99 Lenexa / Santa Fe Trail Road 712 1,853 2,565 650
3/12/99 Waukesha / Foster Court 765 1,951 2,716 676
3/12/99 River Grove / N. 5th Ave. 1,034 2,647 3,681 1,112
3/12/99 St. Charles / E. Main St. 802 2,089 2,891 933
3/12/99 Chicago / West 47th St. 705 1,744 2,449 572
3/12/99 Carol Stream / S. Main Place 1,319 3,396 4,715 1,157
3/12/99 Carpentersville /N. Western Ave 909 2,267 3,176 783
F-83
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
3/12/99 Elgin / E. Chicago St. - 570 2,163 107 -
3/12/99 Elgin / Big Timber Road - 1,347 3,253 289 -
3/12/99 Chicago / S. Pulaski Road - 458 2,118 317 -
3/12/99 Aurora / Business 30 - 900 2,097 198 -
3/12/99 Streamwood / Old Church Road - 855 1,991 81 -
3/12/99 Mt. Prospect / Central Road - 802 1,847 516 -
3/12/99 Geneva / Gary Ave - 1,072 2,501 126 -
3/12/99 Naperville / Lasalle Ave - 1,501 3,502 123 -
3/31/99 Forest Park - 270 3,378 4,279 -
4/1/99 Fresno - 44 206 (236) 804
5/1/99 Stockton - 151 402 (217) 2,017
6/30/99 Winter Park/N. Semor - 342 638 380 728
6/30/99 N. Richland Hills - 455 769 314 832
6/30/99 Rolling Meadows/Lois - 441 849 392 898
6/30/99 Gresham/Burnside - 354 544 210 627
6/30/99 Jacksonville/University - 211 741 253 700
6/30/99 Irving/W. Airport - 419 960 248 857
6/30/99 Houston/Highway 6 So. - 751 1,006 1,004 1,057
6/30/99 Concord/Arnold - 827 1,553 496 1,874
6/30/99 Rockville/Gude Drive - 602 768 398 880
6/30/99 Bradenton/Cortez Road - 476 885 434 906
6/30/99 San Antonio/Nw Loop - 511 786 212 855
6/30/99 Anaheim / La Palma - 1,378 851 221 1,221
6/30/99 Spring Valley/Sweetwater - 271 380 5,055 416
6/30/99 Ft. Myers/Tamiami - 948 962 363 1,208
6/30/99 Littleton/Centennial - 421 804 320 812
6/30/99 Newark/Cedar Blvd - 729 971 441 1,067
6/30/99 Falls Church/Columbia - 901 975 331 1,141
6/30/99 Fairfax / Lee Highway - 586 1,078 345 1,106
6/30/99 Wheat Ridge / W. 44th - 480 789 293 831
6/30/99 Huntington Bch/Gotham - 952 890 345 1,130
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
3/12/99 Elgin / E. Chicago St. 570 2,270 2,840 735
3/12/99 Elgin / Big Timber Road 1,347 3,542 4,889 1,253
3/12/99 Chicago / S. Pulaski Road 458 2,435 2,893 771
3/12/99 Aurora / Business 30 899 2,296 3,195 788
3/12/99 Streamwood / Old Church Road 853 2,074 2,927 680
3/12/99 Mt. Prospect / Central Road 795 2,370 3,165 777
3/12/99 Geneva / Gary Ave 1,072 2,627 3,699 858
3/12/99 Naperville / Lasalle Ave 1,501 3,625 5,126 1,201
3/31/99 Forest Park 270 7,657 7,927 2,630
4/1/99 Fresno 193 625 818 216
5/1/99 Stockton 590 1,763 2,353 574
6/30/99 Winter Park/N. Semor 427 1,661 2,088 469
6/30/99 N. Richland Hills 569 1,801 2,370 594
6/30/99 Rolling Meadows/Lois 551 2,029 2,580 682
6/30/99 Gresham/Burnside 441 1,294 1,735 415
6/30/99 Jacksonville/University 263 1,642 1,905 548
6/30/99 Irving/W. Airport 524 1,960 2,484 603
6/30/99 Houston/Highway 6 So. 936 2,882 3,818 984
6/30/99 Concord/Arnold 1,031 3,719 4,750 1,314
6/30/99 Rockville/Gude Drive 751 1,897 2,648 635
6/30/99 Bradenton/Cortez Road 588 2,113 2,701 712
6/30/99 San Antonio/Nw Loop 638 1,726 2,364 535
6/30/99 Anaheim / La Palma 1,720 1,951 3,671 573
6/30/99 Spring Valley/Sweetwater 356 5,766 6,122 744
6/30/99 Ft. Myers/Tamiami 1,184 2,297 3,481 703
6/30/99 Littleton/Centennial 526 1,831 2,357 609
6/30/99 Newark/Cedar Blvd 910 2,298 3,208 701
6/30/99 Falls Church/Columbia 1,126 2,222 3,348 719
6/30/99 Fairfax / Lee Highway 732 2,383 3,115 790
6/30/99 Wheat Ridge / W. 44th 599 1,794 2,393 604
6/30/99 Huntington Bch/Gotham 1,189 2,128 3,317 694
F-84
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
6/30/99 Fort Worth/McCart - 372 942 219 703
6/30/99 San Diego/Clairemont - 1,601 2,035 435 2,034
6/30/99 Houston/Millridge N. - 1,160 1,983 309 2,433
6/30/99 Woodbridge/Jefferson - 840 1,689 321 1,446
6/30/99 Mountainside - 1,260 1,237 2,618 1,523
6/30/99 Woodbridge / Davis - 1,796 1,623 659 1,996
6/30/99 Huntington Beach - 1,026 1,437 148 1,450
6/30/99 Edison / Old Post Rd - 498 1,267 336 1,175
6/30/99 Northridge/Parthenia - 1,848 1,486 195 1,839
6/30/99 Brick Township/Brick - 590 1,431 312 1,364
6/30/99 Stone Mountain/Rock - 1,233 288 345 852
6/30/99 Hyattsville - 768 2,186 301 1,919
6/30/99 Union City / Alvarado - 992 1,776 230 1,690
6/30/99 Oak Park / Greenfield - 621 1,735 267 1,490
6/30/99 Tujunga/Foothill Blvd - 1,746 2,383 247 2,370
7/1/99 Pantego/W. Pioneer Pkwy - 432 1,228 66 -
7/1/99 Nashville/Lafayette St - 486 1,135 233 -
7/1/99 Nashville/Metroplex Dr - 380 886 203 -
7/1/99 Madison / Myatt Dr - 441 1,028 115 -
7/1/99 Hixson / Highway 153 - 488 1,138 267 -
7/1/99 Hixson / Gadd Rd - 207 484 347 -
7/1/99 Red Bank / Harding Rd - 452 1,056 305 -
7/1/99 Nashville/Welshwood Dr - 934 2,179 232 -
7/1/99 Madison/Williams Ave - 1,318 3,076 838 -
7/1/99 Nashville/Mcnally Dr - 884 2,062 514 -
7/1/99 Hermitage/Central Ct - 646 1,508 173 -
7/1/99 Antioch/Cane Ridge Rd - 353 823 191 -
9/1/99 Charlotte / Ashley Road - 664 1,551 150 -
9/1/99 Raleigh / Capital Blvd - 927 2,166 294 -
9/1/99 Charlotte / South Blvd. - 734 1,715 38 -
9/1/99 Greensboro/W.Market St. - 603 1,409 51 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
6/30/99 Fort Worth/McCart 464 1,772 2,236 415
6/30/99 San Diego/Clairemont 1,999 4,106 6,105 1,271
6/30/99 Houston/Millridge N. 1,449 4,436 5,885 1,358
6/30/99 Woodbridge/Jefferson 1,048 3,248 4,296 814
6/30/99 Mountainside 1,594 5,044 6,638 865
6/30/99 Woodbridge / Davis 2,243 3,831 6,074 1,233
6/30/99 Huntington Beach 1,282 2,779 4,061 834
6/30/99 Edison / Old Post Rd 621 2,655 3,276 847
6/30/99 Northridge/Parthenia 2,307 3,061 5,368 874
6/30/99 Brick Township/Brick 736 2,961 3,697 867
6/30/99 Stone Mountain/Rock 1,540 1,178 2,718 340
6/30/99 Hyattsville 959 4,215 5,174 1,246
6/30/99 Union City / Alvarado 1,239 3,449 4,688 1,003
6/30/99 Oak Park / Greenfield 774 3,339 4,113 995
6/30/99 Tujunga/Foothill Blvd 2,180 4,566 6,746 1,252
7/1/99 Pantego/W. Pioneer Pkwy 432 1,294 1,726 279
7/1/99 Nashville/Lafayette St 486 1,368 1,854 518
7/1/99 Nashville/Metroplex Dr 379 1,090 1,469 409
7/1/99 Madison / Myatt Dr 441 1,143 1,584 410
7/1/99 Hixson / Highway 153 487 1,406 1,893 545
7/1/99 Hixson / Gadd Rd 207 831 1,038 411
7/1/99 Red Bank / Harding Rd 452 1,361 1,813 504
7/1/99 Nashville/Welshwood Dr 934 2,411 3,345 857
7/1/99 Madison/Williams Ave 1,318 3,914 5,232 1,310
7/1/99 Nashville/Mcnally Dr 884 2,576 3,460 1,030
7/1/99 Hermitage/Central Ct 646 1,681 2,327 616
7/1/99 Antioch/Cane Ridge Rd 352 1,015 1,367 399
9/1/99 Charlotte / Ashley Road 651 1,714 2,365 545
9/1/99 Raleigh / Capital Blvd 908 2,479 3,387 789
9/1/99 Charlotte / South Blvd. 719 1,768 2,487 600
9/1/99 Greensboro/W.Market St. 590 1,473 2,063 501
F-85
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
10/8/99 Belmont / O'neill Ave - 869 4,659 168 -
10/11/99 Matthews - 937 3,165 278 1,665
11/15/99 Poplar, Memphis - 1,631 3,093 316 2,201
12/17/99 Dallas / Swiss Ave - 1,862 4,344 160 -
12/30/99 Oak Park/Greenfield Rd - 1,184 3,685 (73) -
12/30/99 Santa Anna - 2,657 3,293 463 3,083
1/21/00 Hanover Park - 262 3,104 68 -
1/25/00 Memphis / N.Germantwn Pkwy - 884 3,024 193 1,237
1/31/00 Rowland Heights/Walnut - 681 1,589 115 -
2/8/00 Lewisville / Justin Rd - 529 2,919 2,680 1,585
2/28/00 Plano / Avenue K - 2,064 10,407 1,786 -
4/1/00 Hyattsville/Edmonson - 1,036 2,657 91 -
4/29/00 St.Louis/Ellisville Twn Centre - 765 4,377 293 1,621
5/2/00 Mill Valley - 1,412 3,294 (344) -
5/2/00 Culver City - 2,439 5,689 (654) -
5/26/00 Phoenix/N. 35th Ave - 868 2,967 55 -
6/5/00 Mount Sinai / Route 25a - 950 3,338 287 1,923
6/15/00 Pinellas Park - 526 2,247 275 1,100
6/30/00 San Antonio/Broadway St - 1,131 4,558 1,265 -
7/13/00 Lincolnwood - 1,598 3,727 343 -
7/17/00 La Palco/New Orleans - 1,023 3,204 167 1,709
7/29/00 Tracy/1615& 1650 W.11th S - 1,745 4,530 316 -
8/1/00 Pineville - 2,197 3,417 357 2,262
8/23/00 Morris Plains - 1,501 4,300 645 3,596
8/31/00 Florissant/New Halls Fry - 800 4,225 93 -
8/31/00 Orange, CA - 661 1,542 53 -
9/1/00 Bayshore, NY - 1,277 2,980 1,681 -
9/1/00 Los Angeles, CA - 590 1,376 520 -
9/13/00 Merrillville - 343 2,474 211 1,449
9/15/00 Gardena / W. El Segundo - 1,532 3,424 123 -
9/15/00 Chicago / Ashland Avenue - 850 4,880 808 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
10/8/99 Belmont / O'neill Ave 878 4,818 5,696 1,542
10/11/99 Matthews 1,499 4,546 6,045 1,000
11/15/99 Poplar, Memphis 2,377 4,864 7,241 1,019
12/17/99 Dallas / Swiss Ave 1,877 4,489 6,366 1,451
12/30/99 Oak Park/Greenfield Rd 1,196 3,600 4,796 1,079
12/30/99 Santa Anna 3,704 5,792 9,496 1,121
1/21/00 Hanover Park 256 3,178 3,434 848
1/25/00 Memphis / N.Germantwn Pkwy 1,301 4,037 5,338 937
1/31/00 Rowland Heights/Walnut 687 1,698 2,385 538
2/8/00 Lewisville / Justin Rd 1,679 6,034 7,713 1,047
2/28/00 Plano / Avenue K 1,220 13,037 14,257 6,010
4/1/00 Hyattsville/Edmonson 1,036 2,748 3,784 786
4/29/00 St.Louis/Ellisville Twn Centre 1,311 5,745 7,056 1,295
5/2/00 Mill Valley 1,283 3,079 4,362 912
5/2/00 Culver City 2,216 5,258 7,474 1,547
5/26/00 Phoenix/N. 35th Ave 867 3,023 3,890 622
6/5/00 Mount Sinai / Route 25a 1,599 4,899 6,498 1,013
6/15/00 Pinellas Park 887 3,261 4,148 606
6/30/00 San Antonio/Broadway St 1,130 5,824 6,954 1,461
7/13/00 Lincolnwood 1,612 4,056 5,668 1,280
7/17/00 La Palco/New Orleans 1,609 4,494 6,103 792
7/29/00 Tracy/1615& 1650 W.11th S 1,761 4,830 6,591 1,393
8/1/00 Pineville 2,965 5,268 8,233 1,073
8/23/00 Morris Plains 2,719 7,323 10,042 1,285
8/31/00 Florissant/New Halls Fry 807 4,311 5,118 1,238
8/31/00 Orange, CA 667 1,589 2,256 459
9/1/00 Bayshore, NY 1,533 4,405 5,938 1,220
9/1/00 Los Angeles, CA 708 1,778 2,486 576
9/13/00 Merrillville 832 3,645 4,477 713
9/15/00 Gardena / W. El Segundo 1,532 3,547 5,079 875
9/15/00 Chicago / Ashland Avenue 849 5,689 6,538 1,393
F-86
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
9/15/00 Oakland / Macarthur - 678 2,751 165 -
9/15/00 Alexandria / Pickett Ii - 2,743 6,198 394 -
9/15/00 Royal Oak / Coolidge Highway - 1,062 2,576 170 -
9/15/00 Hawthorne / Crenshaw Blvd. - 1,079 2,913 150 -
9/15/00 Rockaway / U.S. Route 46 - 2,424 4,945 279 -
9/15/00 Evanston / Greenbay - 846 4,436 188 -
9/15/00 Los Angeles / Coliseum - 3,109 4,013 171 -
9/15/00 Bethpage / Hempstead Turnpike - 2,899 5,457 946 -
9/15/00 Northport / Fort Salonga Road - 2,999 5,698 530 -
9/15/00 Brooklyn / St. Johns Place - 3,492 6,026 423 -
9/15/00 Lake Ronkonkoma / Portion Rd. - 937 4,199 183 -
9/15/00 Tampa/Gunn Hwy - 1,843 4,300 94 -
9/18/00 Tampa/N. Del Mabry - 2,204 2,447 9,974 -
9/30/00 Marietta/Kennestone& Hwy5 - 622 3,388 1,418 -
9/30/00 Lilburn/Indian Trail - 1,695 5,170 1,653 -
11/15/00 Largo/Missouri - 1,092 4,270 290 2,215
11/21/00 St. Louis/Wilson - 1,608 3,913 1,931 -
12/21/00 Houston/7715 Katy Frwy - 2,274 5,307 (1,709) -
12/21/00 Houston/10801 Katy Frwy - 1,664 3,884 (36) -
12/21/00 Houston/Main St - 1,681 3,924 103 -
12/21/00 Houston/W. Loop/S. Frwy - 2,036 4,749 121 -
12/29/00 Chicago - 1,946 6,002 34 -
12/30/00 Raleigh/Glenwood - 1,545 3,628 121 -
12/30/00 Frazier - 800 3,324 42 -
1/5/01 Troy/E. Big Beaver Rd - 2,195 4,221 277 1,846
1/11/01 Ft Lauderdale - 954 3,972 397 2,183
1/16/01 No Hollywood/Sherman Way - 2,173 5,442 3,571 -
1/18/01 Tuscon/E. Speedway - 735 2,895 174 1,066
1/25/01 Lombard/Finley - 851 3,806 425 2,112
3/15/01 Los Angeles/West Pico - 8,579 8,630 2,568 -
4/1/01 Lakewood/Cedar Dr. - 1,329 9,356 4,052 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
9/15/00 Oakland / Macarthur 678 2,916 3,594 732
9/15/00 Alexandria / Pickett Ii 2,743 6,592 9,335 1,593
9/15/00 Royal Oak / Coolidge Highway 1,062 2,746 3,808 688
9/15/00 Hawthorne / Crenshaw Blvd. 1,079 3,063 4,142 761
9/15/00 Rockaway / U.S. Route 46 2,423 5,225 7,648 1,291
9/15/00 Evanston / Greenbay 846 4,624 5,470 1,123
9/15/00 Los Angeles / Coliseum 3,108 4,185 7,293 989
9/15/00 Bethpage / Hempstead Turnpike 2,898 6,404 9,302 1,502
9/15/00 Northport / Fort Salonga Road 2,998 6,229 9,227 1,469
9/15/00 Brooklyn / St. Johns Place 3,491 6,450 9,941 1,469
9/15/00 Lake Ronkonkoma / Portion Rd. 937 4,382 5,319 1,036
9/15/00 Tampa/Gunn Hwy 1,842 4,395 6,237 1,152
9/18/00 Tampa/N. Del Mabry 2,238 12,387 14,625 4,054
9/30/00 Marietta/Kennestone& Hwy5 628 4,800 5,428 1,203
9/30/00 Lilburn/Indian Trail 1,711 6,807 8,518 1,624
11/15/00 Largo/Missouri 1,838 6,029 7,867 1,188
11/21/00 St. Louis/Wilson 1,627 5,825 7,452 1,394
12/21/00 Houston/7715 Katy Frwy 1,500 4,372 5,872 709
12/21/00 Houston/10801 Katy Frwy 1,618 3,894 5,512 862
12/21/00 Houston/Main St 1,683 4,025 5,708 899
12/21/00 Houston/W. Loop/S. Frwy 2,037 4,869 6,906 1,085
12/29/00 Chicago 1,949 6,033 7,982 1,456
12/30/00 Raleigh/Glenwood 1,560 3,734 5,294 996
12/30/00 Frazier 800 3,366 4,166 707
1/5/01 Troy/E. Big Beaver Rd 2,820 5,719 8,539 1,096
1/11/01 Ft Lauderdale 1,745 5,761 7,506 1,083
1/16/01 No Hollywood/Sherman Way 2,200 8,986 11,186 1,439
1/18/01 Tuscon/E. Speedway 1,095 3,775 4,870 770
1/25/01 Lombard/Finley 1,564 5,630 7,194 1,067
3/15/01 Los Angeles/West Pico 8,608 11,169 19,777 2,566
4/1/01 Lakewood/Cedar Dr. 1,331 13,406 14,737 2,836
F-87
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
4/7/01 Farmingdale/Rte 110 - 2,364 5,807 1,955 -
4/17/01 Philadelphia/Aramingo - 968 4,539 35 -
4/18/01 Largo/Walsingham Road - 1,000 3,545 (240) -
6/17/01 Port Washington/Seaview &W.Sh - 2,381 4,608 1,811 -
6/18/01 Silver Springs/Prosperity - 1,065 5,391 2,013 -
6/19/01 Tampa/W. Waters Ave & Wilsky - 953 3,785 27 -
6/26/01 Middletown - 1,535 4,258 461 2,258
7/29/01 Miami/Sw 85th Ave - 2,755 4,951 4 -
8/28/01 Hoover/John Hawkins Pkwy - 1,050 2,453 43 -
9/30/01 Syosset - 2,461 5,312 225 1,855
12/27/01 Los Angeles/W.Jefferson - 8,285 9,429 906 -
12/27/01 Howell/Hgwy 9 - 941 4,070 269 1,260
12/29/01 Catonsville/Kent - 1,378 5,289 2,628 -
12/29/01 Old Bridge/Rte 9 - 1,244 4,960 (3) -
12/29/01 Sacremento/Roseville - 876 5,344 1,939 -
12/31/01 Santa Ana/E.Mcfadden - 7,587 8,612 1,022 -
1/1/02 Concord - 650 1,332 68 -
1/1/02 Tustin - 962 1,465 (1) -
1/1/02 Pasadena/Sierra Madre - 706 872 51 -
1/1/02 Azusa - 933 1,659 7,542 -
1/1/02 Redlands - 423 1,202 171 -
1/1/02 Airport I - 346 861 83 -
1/1/02 Miami / Marlin Road - 562 1,345 228 -
1/1/02 Riverside - 95 1,106 3 -
1/1/02 Oakland / San Leandro - 330 1,116 65 -
1/1/02 Richmond / Jacuzzi - 419 1,224 1 -
1/1/02 Santa Clara / Laurel - 1,178 1,789 71 -
1/1/02 Pembroke Park - 475 1,259 25 -
1/1/02 Ft. Lauderdale / Sun - 452 1,254 40 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
4/7/01 Farmingdale/Rte 110 1,779 8,347 10,126 1,439
4/17/01 Philadelphia/Aramingo 968 4,574 5,542 1,045
4/18/01 Largo/Walsingham Road 799 3,506 4,305 810
6/17/01 Port Washington/Seaview &W.Sh 2,359 6,441 8,800 1,162
6/18/01 Silver Springs/Prosperity 1,065 7,404 8,469 1,346
6/19/01 Tampa/W. Waters Ave & Wilsky 954 3,811 4,765 850
6/26/01 Middletown 2,295 6,217 8,512 1,072
7/29/01 Miami/Sw 85th Ave 2,730 4,980 7,710 1,096
8/28/01 Hoover/John Hawkins Pkwy 1,050 2,496 3,546 559
9/30/01 Syosset 3,089 6,764 9,853 1,186
12/27/01 Los Angeles/W.Jefferson 8,299 10,321 18,620 2,117
12/27/01 Howell/Hgwy 9 1,365 5,175 6,540 927
12/29/01 Catonsville/Kent 1,377 7,918 9,295 1,410
12/29/01 Old Bridge/Rte 9 1,249 4,952 6,201 1,002
12/29/01 Sacremento/Roseville 526 7,633 8,159 1,441
12/31/01 Santa Ana/E.Mcfadden 7,600 9,621 17,221 2,002
1/1/02 Concord 649 1,401 2,050 377
1/1/02 Tustin 962 1,464 2,426 412
1/1/02 Pasadena/Sierra Madre 706 923 1,629 254
1/1/02 Azusa 932 9,202 10,134 1,112
1/1/02 Redlands 422 1,374 1,796 386
1/1/02 Airport I 346 944 1,290 252
1/1/02 Miami / Marlin Road 562 1,573 2,135 382
1/1/02 Riverside 94 1,110 1,204 316
1/1/02 Oakland / San Leandro 330 1,181 1,511 335
1/1/02 Richmond / Jacuzzi 419 1,225 1,644 339
1/1/02 Santa Clara / Laurel 1,179 1,859 3,038 565
1/1/02 Pembroke Park 475 1,284 1,759 349
1/1/02 Ft. Lauderdale / Sun 452 1,294 1,746 350
F-88
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
1/1/02 San Carlos / Shorewa - 737 1,360 (32) -
1/1/02 Ft. Lauderdale / Sun - 532 1,444 70 -
1/1/02 Sacramento / Howe - 361 1,181 4 -
1/1/02 Sacramento / Capitol - 186 1,284 169 -
1/1/02 Miami / Airport - 517 915 65 -
1/1/02 Marietta / Cobb Park - 419 1,571 270 -
1/1/02 Sacramento / Florin - 624 1,710 238 -
1/1/02 Belmont / Dairy Lane - 915 1,252 105 -
1/1/02 So. San Francisco - 1,018 2,464 182 -
1/1/02 Palmdale / P Street - 218 1,287 39 -
1/1/02 Tucker / Montreal Rd - 760 1,485 86 -
1/1/02 Pasadena / S Fair Oaks - 1,313 1,905 86 -
1/1/02 Carmichael/Fair Oaks - 584 1,431 25 -
1/1/02 Carson / Carson St - 507 877 93 -
1/1/02 San Jose / Felipe Ave - 517 1,482 48 -
1/1/02 Miami / 27th Ave - 272 1,572 97 -
1/1/02 San Jose / Capitol - 400 1,183 16 -
1/1/02 Tucker / Mountain - 519 1,385 62 -
1/3/02 St Charles/Veterans Memorial - 687 1,602 161 -
1/7/02 Bothell/ N. Bothell Way - 1,063 4,995 146 -
1/15/02 Houston / N.Loop - 2,045 6,178 2,020 -
1/16/02 Orlando / S. Kirkman - 889 3,180 45 -
1/16/02 Austin / Us Hwy 183 - 608 3,856 29 -
1/16/02 Rochelle Park / 168 - 744 4,430 38 -
1/16/02 Honolulu / Waialae - 10,631 10,783 173 -
1/16/02 Sunny Isles Bch - 931 2,845 92 -
1/16/02 San Ramon / San Ramo - 1,522 3,510 45 -
1/16/02 Austin / W. 6th St - 2,399 4,493 284 -
1/16/02 Schaumburg / W. Wise - 1,158 2,598 55 -
1/16/02 Laguna Hills / Moulton - 2,319 5,200 162 -
1/16/02 Annapolis / West St - 955 3,669 43 -
1/16/02 Birmingham / Commons - 1,125 3,938 116 -
1/16/02 Crestwood / Watson Rd - 1,232 3,093 (51) -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
1/1/02 San Carlos / Shorewa 737 1,328 2,065 373
1/1/02 Ft. Lauderdale / Sun 533 1,513 2,046 421
1/1/02 Sacramento / Howe 361 1,185 1,546 319
1/1/02 Sacramento / Capitol 186 1,453 1,639 347
1/1/02 Miami / Airport 517 980 1,497 292
1/1/02 Marietta / Cobb Park 420 1,840 2,260 515
1/1/02 Sacramento / Florin 623 1,949 2,572 573
1/1/02 Belmont / Dairy Lane 914 1,358 2,272 403
1/1/02 So. San Francisco 1,018 2,646 3,664 809
1/1/02 Palmdale / P Street 218 1,326 1,544 398
1/1/02 Tucker / Montreal Rd 758 1,573 2,331 478
1/1/02 Pasadena / S Fair Oaks 1,312 1,992 3,304 600
1/1/02 Carmichael/Fair Oaks 584 1,456 2,040 426
1/1/02 Carson / Carson St 506 971 1,477 300
1/1/02 San Jose / Felipe Ave 516 1,531 2,047 505
1/1/02 Miami / 27th Ave 271 1,670 1,941 523
1/1/02 San Jose / Capitol 401 1,198 1,599 365
1/1/02 Tucker / Mountain 520 1,446 1,966 464
1/3/02 St Charles/Veterans Memorial 687 1,763 2,450 427
1/7/02 Bothell/ N. Bothell Way 1,062 5,142 6,204 1,026
1/15/02 Houston / N.Loop 2,045 8,198 10,243 1,323
1/16/02 Orlando / S. Kirkman 889 3,225 4,114 708
1/16/02 Austin / Us Hwy 183 608 3,885 4,493 848
1/16/02 Rochelle Park / 168 744 4,468 5,212 948
1/16/02 Honolulu / Waialae 10,629 10,958 21,587 2,349
1/16/02 Sunny Isles Bch 931 2,937 3,868 625
1/16/02 San Ramon / San Ramo 1,521 3,556 5,077 754
1/16/02 Austin / W. 6th St 2,399 4,777 7,176 1,121
1/16/02 Schaumburg / W. Wise 1,157 2,654 3,811 567
1/16/02 Laguna Hills / Moulton 2,318 5,363 7,681 1,215
1/16/02 Annapolis / West St 955 3,712 4,667 801
1/16/02 Birmingham / Commons 1,125 4,054 5,179 877
1/16/02 Crestwood / Watson Rd 1,176 3,098 4,274 657
F-89
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
1/16/02 Northglenn /Huron St - 688 2,075 28 -
1/16/02 Skokie / Skokie Blvd - 716 5,285 37 -
1/16/02 Garden City / Stewart - 1,489 4,039 199 -
1/16/02 Millersville / Veterans - 1,036 4,229 35 -
1/16/02 W. Babylon / Sunrise - 1,609 3,959 35 -
1/16/02 Memphis / Summer Ave - 1,103 2,772 27 -
1/16/02 Santa Clara/Lafayette - 1,393 4,626 12 -
1/16/02 Naperville / Washington - 2,712 2,225 495 -
1/16/02 Phoenix/W Union Hills - 1,071 2,934 26 -
1/16/02 Woodlawn / Whitehead - 2,682 3,355 63 -
1/16/02 Issaquah / Pickering - 1,138 3,704 25 -
1/16/02 West La /W Olympic - 6,532 5,975 49 -
1/16/02 New Orleans/I-10 - 1,286 3,380 (1,934) -
1/16/02 Pasadena / E. Colorado - 1,125 5,160 49 -
1/16/02 Memphis / Covington - 620 3,076 14 -
1/16/02 Hiawassee / N.Hiawassee - 1,622 1,892 70 -
1/16/02 Longwood / State Rd - 2,123 3,083 122 -
1/16/02 Casselberry / State - 1,628 3,308 20 -
1/16/02 Honolulu/Kahala - 3,722 8,525 63 -
1/16/02 Waukegan / Greenbay - 933 3,826 50 -
1/16/02 Southfield / Telegraph - 2,869 5,507 135 -
1/16/02 San Mateo / S. Delaware - 1,921 4,602 40 -
1/16/02 Scottsdale/N.Hayden - 2,111 3,564 20 -
1/16/02 Gilbert/W Park Ave - 497 3,534 2 -
1/16/02 W.Palm Beach/Okeechobee - 2,149 4,650 (368) -
1/16/02 Indianapolis / W.86th - 812 2,421 26 -
1/16/02 Indianapolis / Madison - 716 2,655 21 -
1/16/02 Indianapolis / Rockville - 704 2,704 26 -
1/16/02 Santa Cruz / River - 2,148 6,584 70 -
1/16/02 Novato / Rush Landing - 1,858 2,574 8 -
1/16/02 Martinez / Arnold Dr - 847 5,422 15 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
1/16/02 Northglenn /Huron St 688 2,103 2,791 460
1/16/02 Skokie / Skokie Blvd 716 5,322 6,038 1,149
1/16/02 Garden City / Stewart 1,489 4,238 5,727 881
1/16/02 Millersville / Veterans 1,035 4,265 5,300 947
1/16/02 W. Babylon / Sunrise 1,608 3,995 5,603 854
1/16/02 Memphis / Summer Ave 1,103 2,799 3,902 590
1/16/02 Santa Clara/Lafayette 1,393 4,638 6,031 959
1/16/02 Naperville / Washington 2,712 2,720 5,432 543
1/16/02 Phoenix/W Union Hills 1,065 2,966 4,031 643
1/16/02 Woodlawn / Whitehead 2,681 3,419 6,100 757
1/16/02 Issaquah / Pickering 1,137 3,730 4,867 793
1/16/02 West La /W Olympic 6,531 6,025 12,556 1,277
1/16/02 New Orleans/I-10 1,292 1,440 2,732 508
1/16/02 Pasadena / E. Colorado 1,124 5,210 6,334 1,085
1/16/02 Memphis / Covington 620 3,090 3,710 650
1/16/02 Hiawassee / N.Hiawassee 1,621 1,963 3,584 435
1/16/02 Longwood / State Rd 2,123 3,205 5,328 751
1/16/02 Casselberry / State 1,628 3,328 4,956 702
1/16/02 Honolulu/Kahala 3,721 8,589 12,310 1,788
1/16/02 Waukegan / Greenbay 933 3,876 4,809 807
1/16/02 Southfield / Telegraph 2,869 5,642 8,511 1,174
1/16/02 San Mateo / S. Delaware 1,921 4,642 6,563 959
1/16/02 Scottsdale/N.Hayden 2,112 3,583 5,695 759
1/16/02 Gilbert/W Park Ave 497 3,536 4,033 741
1/16/02 W.Palm Beach/Okeechobee 2,148 4,283 6,431 823
1/16/02 Indianapolis / W.86th 812 2,447 3,259 508
1/16/02 Indianapolis / Madison 716 2,676 3,392 560
1/16/02 Indianapolis / Rockville 704 2,730 3,434 567
1/16/02 Santa Cruz / River 2,147 6,655 8,802 1,355
1/16/02 Novato / Rush Landing 1,858 2,582 4,440 541
1/16/02 Martinez / Arnold Dr 847 5,437 6,284 1,095
F-90
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
1/16/02 Charlotte/Cambridge - 836 3,908 27 -
1/16/02 Rancho Cucamonga - 579 3,222 3,606 -
1/16/02 Renton / Kent - 768 4,078 37 -
1/16/02 Hawthorne / Goffle Rd - 2,414 4,918 39 -
2/2/02 Nashua / Southwood Dr - 2,493 4,326 166 -
2/15/02 Houston/Fm 1960 East - 859 2,004 60 -
3/7/02 Baltimore / Russell Street - 1,763 5,821 187 -
3/11/02 Weymouth / Main St - 1,440 4,433 154 -
3/28/02 Clinton / Branch Ave & Schultz - 1,257 4,108 451 3,253
4/17/02 La Mirada/Alondra - 1,749 5,044 341 2,443
5/1/02 N.Richlnd Hls/Rufe Snow Dr - 632 6,337 2,287 -
5/2/02 Parkville/E.Joppa - 898 4,306 129 -
6/17/02 Waltham / Lexington St - 3,183 5,733 291 -
6/30/02 Nashville / Charlotte - 876 2,004 85 -
7/2/02 Mt Juliet / Lebonan Rd - 516 1,203 70 -
7/14/02 Yorktown / George Washington - 707 1,684 45 -
7/22/02 Brea/E. Lambert & Clifwood Pk - 2,114 3,555 154 -
8/1/02 Bricktown/Route 70 - 1,292 3,690 174 -
8/1/02 Danvers / Newbury St. - 1,311 4,140 604 -
8/15/02 Montclair / Holt Blvd. - 889 2,074 222 -
8/21/02 Rockville Centre/Merrick Rd - 3,693 6,990 365 -
9/13/02 Lacey / Martin Way - 1,379 3,217 62 -
9/13/02 Lakewood / Bridgeport - 1,286 3,000 86 -
9/13/02 Kent / Pacific Highway - 1,839 4,291 127 -
11/4/02 Scotch Plains /Route 22 - 2,124 5,072 51 -
12/23/02 Snta Clarita/Viaprincssa - 2,508 3,008 3,560 -
2/13/03 Pasadena / Ritchie Hwy - 2,253 4,218 7 -
2/13/03 Malden / Eastern Ave - 3,212 2,739 64 -
2/24/03 Miami / SW 137th Ave - 1,600 4,684 (285) -
3/3/03 Chantilly / Dulles South Court - 2,190 4,314 130 -
3/6/03 Medford / Mystic Ave - 3,886 4,982 16 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
1/16/02 Charlotte/Cambridge 836 3,935 4,771 825
1/16/02 Rancho Cucamonga 1,130 6,277 7,407 831
1/16/02 Renton / Kent 768 4,115 4,883 868
1/16/02 Hawthorne / Goffle Rd 2,413 4,958 7,371 1,012
2/2/02 Nashua / Southwood Dr 2,493 4,492 6,985 885
2/15/02 Houston/Fm 1960 East 859 2,064 2,923 425
3/7/02 Baltimore / Russell Street 1,763 6,008 7,771 1,169
3/11/02 Weymouth / Main St 1,439 4,588 6,027 893
3/28/02 Clinton / Branch Ave & Schultz 2,357 6,712 9,069 988
4/17/02 La Mirada/Alondra 2,574 7,003 9,577 1,090
5/1/02 N.Richlnd Hls/Rufe Snow Dr 631 8,625 9,256 1,465
5/2/02 Parkville/E.Joppa 898 4,435 5,333 832
6/17/02 Waltham / Lexington St 3,203 6,004 9,207 1,085
6/30/02 Nashville / Charlotte 875 2,090 2,965 417
7/2/02 Mt Juliet / Lebonan Rd 516 1,273 1,789 262
7/14/02 Yorktown / George Washington 707 1,729 2,436 343
7/22/02 Brea/E. Lambert & Clifwood Pk 2,113 3,710 5,823 670
8/1/02 Bricktown/Route 70 1,292 3,864 5,156 693
8/1/02 Danvers / Newbury St. 1,326 4,729 6,055 801
8/15/02 Montclair / Holt Blvd. 889 2,296 3,185 509
8/21/02 Rockville Centre/Merrick Rd 3,692 7,356 11,048 1,293
9/13/02 Lacey / Martin Way 1,379 3,279 4,658 422
9/13/02 Lakewood / Bridgeport 1,285 3,087 4,372 412
9/13/02 Kent / Pacific Highway 1,839 4,418 6,257 593
11/4/02 Scotch Plains /Route 22 2,126 5,121 7,247 908
12/23/02 Snta Clarita/Viaprincssa 2,508 6,568 9,076 912
2/13/03 Pasadena / Ritchie Hwy 2,252 4,226 6,478 664
2/13/03 Malden / Eastern Ave 3,212 2,803 6,015 427
2/24/03 Miami / SW 137th Ave 1,600 4,399 5,999 686
3/3/03 Chantilly / Dulles South Court 2,190 4,444 6,634 650
3/6/03 Medford / Mystic Ave 3,885 4,999 8,884 739
F-91
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
5/27/03 Castro Valley / Grove Way - 2,247 5,881 924 -
8/2/03 Sacramento / E.Stockton Blvd - 554 4,175 36 -
8/13/03 Timonium / W. Padonia Road - 1,932 3,681 41 -
8/21/03 Van Nuys / Sepulveda - 1,698 3,886 2,401 -
9/9/03 Westwood / East St - 3,267 5,013 290 -
10/21/03 San Diego / Miramar Road - 2,244 6,653 651 -
11/3/03 El Sobrante/San Pablo - 1,255 4,990 676 -
11/6/03 Pearl City / Kamehameha Hwy - 4,428 4,839 479 -
12/23/03 Boston / Southampton Street - 5,334 7,511 794 -
1/9/04 Farmingville / Horseblock Road - 1,919 4,420 (116) -
2/27/04 Salem / Goodhue St. - 1,544 6,160 53 -
3/18/04 Seven Corners / Arlington Blvd. - 6,087 7,553 (280) -
6/30/04 Marlton / Route 73 - 1,103 5,195 12 -
7/1/04 Long Island City/Northern Blvd. - 4,876 7,610 (238) -
7/9/04 West Valley Cty/Redwood 2,377 876 2,067 288 -
7/12/04 Hicksville/E. Old Country Rd. - 1,693 3,910 142 -
7/15/04 Harwood/Ronald - 1,619 3,778 185 -
9/24/04 E. Hanover/State Rt - 3,895 4,943 230 -
10/14/04 Apple Valley/148th St 838 591 1,375 79 -
10/14/04 Blaine / Hwy 65 NE 1,156 789 1,833 198 -
10/14/04 Brooklyn Park / Lakeland Ave - 1,411 3,278 166 -
10/14/04 Brooklyn Park / Xylon Ave 1,654 1,120 2,601 316 -
10/14/04 St Paul(Eagan)/Sibley Mem'l Hwy 846 615 1,431 18 -
10/14/04 Maple Grove / Zachary Lane 1,847 1,337 3,105 64 -
10/14/04 Minneapolis / Hiawatha Ave 2,079 1,480 3,437 156 -
10/14/04 New Hope / 36th Ave 1,850 1,332 3,094 87 -
10/14/04 Rosemount / Chippendale Ave 1,198 864 2,008 52 -
10/14/04 St Cloud/Franklin 796 575 1,338 30 -
10/14/04 Savage / W 128th St 2,122 1,522 3,535 120 -
10/14/04 Spring Lake Park/Hwy 65 NE 2,166 1,534 3,562 188 -
10/14/04 St Paul / Terrace Court 1,579 1,122 2,606 126 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
5/27/03 Castro Valley / Grove Way 2,307 6,745 9,052 967
8/2/03 Sacramento / E.Stockton Blvd 554 4,211 4,765 630
8/13/03 Timonium / W. Padonia Road 1,931 3,723 5,654 524
8/21/03 Van Nuys / Sepulveda 1,698 6,287 7,985 522
9/9/03 Westwood / East St 3,287 5,283 8,570 742
10/21/03 San Diego / Miramar Road 2,243 7,305 9,548 975
11/3/03 El Sobrante/San Pablo 1,257 5,664 6,921 742
11/6/03 Pearl City / Kamehameha Hwy 4,430 5,316 9,746 694
12/23/03 Boston / Southampton Street 5,344 8,295 13,639 1,008
1/9/04 Farmingville / Horseblock Road 1,918 4,305 6,223 524
2/27/04 Salem / Goodhue St. 1,544 6,213 7,757 708
3/18/04 Seven Corners / Arlington Blvd. 6,085 7,275 13,360 798
6/30/04 Marlton / Route 73 1,103 5,207 6,310 532
7/1/04 Long Island City/Northern Blvd. 4,876 7,372 12,248 765
7/9/04 West Valley Cty/Redwood 883 2,348 3,231 234
7/12/04 Hicksville/E. Old Country Rd. 1,692 4,053 5,745 393
7/15/04 Harwood/Ronald 1,619 3,963 5,582 393
9/24/04 E. Hanover/State Rt 3,894 5,174 9,068 468
10/14/04 Apple Valley/148th St 592 1,453 2,045 132
10/14/04 Blaine / Hwy 65 NE 790 2,030 2,820 176
10/14/04 Brooklyn Park / Lakeland Ave 1,413 3,442 4,855 307
10/14/04 Brooklyn Park / Xylon Ave 1,121 2,916 4,037 268
10/14/04 St Paul(Eagan)/Sibley Mem'l Hwy 616 1,448 2,064 127
10/14/04 Maple Grove / Zachary Lane 1,338 3,168 4,506 278
10/14/04 Minneapolis / Hiawatha Ave 1,481 3,592 5,073 317
10/14/04 New Hope / 36th Ave 1,333 3,180 4,513 281
10/14/04 Rosemount / Chippendale Ave 865 2,059 2,924 185
10/14/04 St Cloud/Franklin 576 1,367 1,943 123
10/14/04 Savage / W 128th St 1,523 3,654 5,177 325
10/14/04 Spring Lake Park/Hwy 65 NE 1,535 3,749 5,284 329
10/14/04 St Paul / Terrace Court 1,123 2,731 3,854 245
F-92
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
10/14/04 St Paul / Eaton St - 1,161 2,698 119 -
10/14/04 St Paul-Hartzell / Wabash Ave - 1,207 2,816 133 -
10/14/04 West St Paul / Marie Ave 1,572 1,447 3,361 322 -
10/14/04 Stillwater / Memorial Ave 2,303 1,669 3,876 74 -
10/14/04 St Paul / VadnaisHts 1,312 928 2,157 116 -
10/14/04 Woodbury / Hudson Road 690 1,863 4,327 64 -
10/14/04 Brown Deer / N Green Bay Rd 1,493 1,059 2,461 122 -
10/14/04 Germantown / Spaten Court 845 607 1,411 44 -
10/14/04 Milwaukee/ N 77th St 1,744 1,241 2,882 132 -
10/14/04 Milwaukee/ S 13th St 2,065 1,484 3,446 108 -
10/14/04 Oak Creek / S 27th St 1,059 751 1,746 87 -
10/14/04 Waukesha / Arcadian Ave 2,368 1,665 3,868 246 -
10/14/04 West Allis / W Lincoln Ave 1,935 1,390 3,227 105 -
10/14/04 Garland / O'Banion Rd 1,518 606 1,414 41 -
10/14/04 Grand Prairie/ Hwy360 2,334 942 2,198 32 -
10/14/04 Duncanville/N Duncnvill 3,886 1,524 3,556 199 -
10/14/04 Lancaster/ W Pleasant 2,465 993 2,317 39 -
10/14/04 Mesquite / Oates Dr 2,328 937 2,186 40 -
10/14/04 Dallas / E NW Hwy 2,342 942 2,198 43 -
11/24/04 Pompano Beach/E. Sample 4,631 1,608 3,754 145 -
11/24/04 Davie / SW 41st St. 5,977 2,467 5,758 167 -
11/24/04 North Bay Village/Kennedy 6,493 3,275 7,644 126 -
11/24/04 Miami / Biscayne Blvd 6,436 3,538 8,258 12 -
11/24/04 Miami Gardens/NW 57th St 6,482 2,706 6,316 71 -
11/24/04 Tamarac/ N University Dr 6,326 2,580 6,022 68 -
11/24/04 Miami / SW 31st Ave 13,814 11,574 27,009 199 -
11/24/04 Hialeah / W 20th Ave 5,502 2,224 5,192 63 -
11/24/04 Miami / SW 42nd St 7,288 2,955 6,897 62 -
11/24/04 Miami / SW 40th St 7,218 2,933 6,844 53 -
11/25/04 Carlsbad/CorteDelAbeto - 2,861 6,676 1,459 -
1/19/05 Cheektowaga / William St - 965 2,262 38 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
10/14/04 St Paul / Eaton St 1,162 2,816 3,978 254
10/14/04 St Paul-Hartzell / Wabash Ave 1,206 2,950 4,156 271
10/14/04 West St Paul / Marie Ave 1,449 3,681 5,130 317
10/14/04 Stillwater / Memorial Ave 1,671 3,948 5,619 349
10/14/04 St Paul / VadnaisHts 929 2,272 3,201 200
10/14/04 Woodbury / Hudson Road 1,865 4,389 6,254 389
10/14/04 Brown Deer / N Green Bay Rd 1,060 2,582 3,642 229
10/14/04 Germantown / Spaten Court 608 1,454 2,062 130
10/14/04 Milwaukee/ N 77th St 1,242 3,013 4,255 267
10/14/04 Milwaukee/ S 13th St 1,485 3,553 5,038 313
10/14/04 Oak Creek / S 27th St 752 1,832 2,584 160
10/14/04 Waukesha / Arcadian Ave 1,667 4,112 5,779 361
10/14/04 West Allis / W Lincoln Ave 1,391 3,331 4,722 293
10/14/04 Garland / O'Banion Rd 608 1,453 2,061 122
10/14/04 Grand Prairie/ Hwy360 944 2,228 3,172 183
10/14/04 Duncanville/N Duncnvill 1,525 3,754 5,279 310
10/14/04 Lancaster/ W Pleasant 995 2,354 3,349 195
10/14/04 Mesquite / Oates Dr 939 2,224 3,163 184
10/14/04 Dallas / E NW Hwy 944 2,239 3,183 186
11/24/04 Pompano Beach/E. Sample 1,621 3,886 5,507 335
11/24/04 Davie / SW 41st St. 2,466 5,926 8,392 516
11/24/04 North Bay Village/Kennedy 3,274 7,771 11,045 667
11/24/04 Miami / Biscayne Blvd 3,537 8,271 11,808 710
11/24/04 Miami Gardens/NW 57th St 2,706 6,387 9,093 548
11/24/04 Tamarac/ N University Dr 2,580 6,090 8,670 523
11/24/04 Miami / SW 31st Ave 11,571 27,211 38,782 2,297
11/24/04 Hialeah / W 20th Ave 2,224 5,255 7,479 449
11/24/04 Miami / SW 42nd St 2,954 6,960 9,914 597
11/24/04 Miami / SW 40th St 2,932 6,898 9,830 592
11/25/04 Carlsbad/CorteDelAbeto 2,861 8,135 10,996 670
1/19/05 Cheektowaga / William St 964 2,301 3,265 186
F-93
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
1/19/05 Amherst / Millersport Hwy - 1,431 3,350 20 -
1/19/05 Lancaster / Walden Ave - 528 1,244 24 -
1/19/05 Tonawanda/Hospitality Centre - 1,205 2,823 26 -
1/19/05 Wheatfield / Niagara Falls Blv - 1,130 2,649 29 -
1/20/05 Oak Lawn / Southwest Hwy - 1,850 4,330 107 -
2/25/05 Owings Mills / Reisterstown Rd - 887 3,865 10 -
4/26/05 Hoboken / 8th St - 3,963 9,290 65 -
5/3/05 Bayville / 939 Route 9 - 1,928 4,519 52 -
5/3/05 Bricktown / Burnt Tavern Rd - 3,522 8,239 37 -
5/3/05 JacksonTwnshp/N.County Line - 1,555 3,647 44 -
5/16/05 Methuen / Pleasant Valley St - 2,263 4,540 131 -
5/19/05 Libertyville / Kelley Crt - 2,042 4,783 52 -
5/19/05 Joliet / Essington - 1,434 3,367 61 -
6/15/05 Atlanta/Howell Mill Rd NW - 1,864 4,363 49 -
6/15/05 Smyrna / Herodian Way SE - 1,294 3,032 40 -
7/7/05 Lithonia / Minola Dr - 1,273 2,985 62 -
7/14/05 Kennesaw / Bells Ferry Rd NW - 1,264 2,976 773 -
7/28/05 Atlanta / Monroe Dr NE - 2,914 6,829 845 -
8/11/05 Suwanee / Old Peachtree Rd NE - 1,914 4,497 131 -
9/8/05 Brandon / Providence Rd - 2,592 6,067 83 -
9/15/05 Woodstock / Hwy 92 - 1,251 2,935 57 -
9/22/05 Charlotte / W. Arrowood Rd - 1,426 3,335 (234) -
10/5/05 Jacksonville Beach / Beach Blvd - 2,552 5,981 81 -
10/5/05 Bronx / Brush Ave - 4,517 10,581 45 -
10/11/05 Austin / E. Ben White Blvd - 213 3,461 12 -
10/13/05 Deerfield Beach/S. Powerline - 3,365 7,874 122 -
10/14/05 Cooper City / Sheridan St - 3,035 7,092 84 -
10/20/05 Staten Island / Veterans Rd - 3,599 8,430 58 -
10/20/05 Pittsburg / Loveridge Center - 3,602 8,448 42 -
10/21/05 Norristown / W. Main St - 1,465 4,818 271 -
11/2/05 Miller Place / Route 25A - 2,757 6,459 33 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
1/19/05 Amherst / Millersport Hwy 1,431 3,370 4,801 268
1/19/05 Lancaster / Walden Ave 528 1,268 1,796 103
1/19/05 Tonawanda/Hospitality Centre 1,205 2,849 4,054 228
1/19/05 Wheatfield / Niagara Falls Blv 1,130 2,678 3,808 215
1/20/05 Oak Lawn / Southwest Hwy 1,850 4,437 6,287 359
2/25/05 Owings Mills / Reisterstown Rd 887 3,875 4,762 290
4/26/05 Hoboken / 8th St 3,962 9,356 13,318 639
5/3/05 Bayville / 939 Route 9 1,927 4,572 6,499 311
5/3/05 Bricktown / Burnt Tavern Rd 3,521 8,277 11,798 559
5/3/05 JacksonTwnshp/N.County Line 1,554 3,692 5,246 252
5/16/05 Methuen / Pleasant Valley St 2,263 4,671 6,934 303
5/19/05 Libertyville / Kelley Crt 2,042 4,835 6,877 324
5/19/05 Joliet / Essington 1,434 3,428 4,862 234
6/15/05 Atlanta/Howell Mill Rd NW 1,863 4,413 6,276 280
6/15/05 Smyrna / Herodian Way SE 1,293 3,073 4,366 197
7/7/05 Lithonia / Minola Dr 1,272 3,048 4,320 190
7/14/05 Kennesaw / Bells Ferry Rd NW 1,264 3,749 5,013 189
7/28/05 Atlanta / Monroe Dr NE 2,913 7,675 10,588 405
8/11/05 Suwanee / Old Peachtree Rd NE 1,914 4,628 6,542 258
9/8/05 Brandon / Providence Rd 2,591 6,151 8,742 328
9/15/05 Woodstock / Hwy 92 1,250 2,993 4,243 155
9/22/05 Charlotte / W. Arrowood Rd 1,153 3,374 4,527 173
10/5/05 Jacksonville Beach / Beach Blvd 2,552 6,062 8,614 304
10/5/05 Bronx / Brush Ave 4,516 10,627 15,143 531
10/11/05 Austin / E. Ben White Blvd 213 3,473 3,686 396
10/13/05 Deerfield Beach/S. Powerline 3,364 7,997 11,361 396
10/14/05 Cooper City / Sheridan St 3,034 7,177 10,211 351
10/20/05 Staten Island / Veterans Rd 3,598 8,489 12,087 413
10/20/05 Pittsburg / Loveridge Center 3,601 8,491 12,092 412
10/21/05 Norristown / W. Main St 1,465 5,089 6,554 244
11/2/05 Miller Place / Route 25A 2,757 6,492 9,249 570
F-94
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
11/18/05 Miami / Biscayne Blvd - 7,434 17,268 98 -
12/1/05 Manchester / Taylor St - 1,305 3,029 27 -
12/7/05 Buffalo Grove/E. Aptakisic Rd - 1,986 4,635 66 -
12/13/05 Lorton / Pohick Rd & I95 - 1,167 4,582 368 -
12/16/05 Pico Rivera / Washington Blvd - 4,719 11,012 50 -
12/27/05 Queens Village / Jamaica Ave - 3,409 5,494 183 -
1/1/06 Costa Mesa / Placentia-A - 275 754 - -
1/1/06 Van Nuys / Sepulveda-A - 497 886 3 -
1/1/06 Pico Rivera / Beverly - 303 865 - -
1/1/06 San Dimas - 222 1,505 66 -
1/1/06 Long Beach / Cherry Ave - 801 1,723 2,700 -
1/1/06 E.LA / Valley Blvd - 670 1,845 1 -
1/1/06 Glendale / Eagle Rock Blvd - 1,240 1,831 172 -
1/1/06 N. Pasadena / Lincoln Ave - 357 535 7 -
1/1/06 Crossroads Parkway - 146 773 6 -
1/1/06 Fremont / Enterprise - 122 727 3 -
1/1/06 Milpitas/Montague - 212 607 70 -
1/1/06 Wilmington - 890 1,345 16 -
1/1/06 Sun Valley / Glenoaks - 359 616 12 -
1/1/06 Corona - 169 722 4 -
1/1/06 Norco - 106 410 - -
1/1/06 N. Hollywood / Vanowen - 343 567 1 -
1/5/06 Norfolk/Widgeon Rd. - 1,328 3,125 2 -
1/11/06 Goleta/Hollister&Stork 4,498 2,873 6,788 19 -
2/15/06 Rockville Ctr/Sunrise - 1,813 4,264 1,713 -
3/16/06 Deerfield/S. Pfingsten Rd. - 1,953 4,569 56 -
3/28/06 Pembroke Pines/S. Douglas Rd. - 3,008 7,018 37 -
3/30/06 Miami/SW 24th Ave. - 4,272 9,969 97 -
3/31/06 San Diego/Mira Mesa - 2,492 7,127 - -
5/1/06 Wilmington/Kirkwood Hwy - 1,572 3,672 10 -
5/1/06 Jupiter/5100 Military Trail - 4,397 10,266 20 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
11/18/05 Miami / Biscayne Blvd 7,432 17,368 24,800 782
12/1/05 Manchester / Taylor St 1,305 3,056 4,361 134
12/7/05 Buffalo Grove/E. Aptakisic Rd 1,986 4,701 6,687 204
12/13/05 Lorton / Pohick Rd & I95 1,184 4,933 6,117 212
12/16/05 Pico Rivera / Washington Blvd 4,718 11,063 15,781 467
12/27/05 Queens Village / Jamaica Ave 3,409 5,677 9,086 229
1/1/06 Costa Mesa / Placentia-A 275 754 1,029 52
1/1/06 Van Nuys / Sepulveda-A 497 889 1,386 65
1/1/06 Pico Rivera / Beverly 303 865 1,168 33
1/1/06 San Dimas 222 1,571 1,793 114
1/1/06 Long Beach / Cherry Ave 801 4,423 5,224 (21)
1/1/06 E.LA / Valley Blvd 670 1,846 2,516 216
1/1/06 Glendale / Eagle Rock Blvd 1,240 2,003 3,243 32
1/1/06 N. Pasadena / Lincoln Ave 357 542 899 59
1/1/06 Crossroads Parkway 146 779 925 69
1/1/06 Fremont / Enterprise 122 730 852 58
1/1/06 Milpitas/Montague 212 677 889 1
1/1/06 Wilmington 890 1,361 2,251 100
1/1/06 Sun Valley / Glenoaks 359 628 987 54
1/1/06 Corona 169 726 895 12
1/1/06 Norco 106 410 516 (22)
1/1/06 N. Hollywood / Vanowen 343 568 911 23
1/5/06 Norfolk/Widgeon Rd. 1,328 3,127 4,455 114
1/11/06 Goleta/Hollister&Stork 2,873 6,807 9,680 249
2/15/06 Rockville Ctr/Sunrise 1,813 5,977 7,790 143
3/16/06 Deerfield/S. Pfingsten Rd. 1,953 4,625 6,578 139
3/28/06 Pembroke Pines/S. Douglas Rd. 3,008 7,055 10,063 213
3/30/06 Miami/SW 24th Ave. 4,272 10,066 14,338 302
3/31/06 San Diego/Mira Mesa 2,492 7,127 9,619 207
5/1/06 Wilmington/Kirkwood Hwy 1,572 3,682 5,254 86
5/1/06 Jupiter/5100 Military Trail 4,397 10,286 14,683 241
F-95
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
5/1/06 Neptune/Neptune Blvd. - 3,240 7,564 9 -
5/15/06 Suwanee/Peachtree Pkwy - 2,483 5,799 26 -
6/6/06 Tampa/30th St - 2,283 5,337 16 -
6/22/06 Centennial/S. Parker Rd. - 1,786 4,173 3 -
5/26/06 Honolulu/Kapiolani - 9,329 20,400 - -
7/1/06 Brooklyn/Knapp St - 6,701 5,088 2 -
8/22/06 Scottsdale North - 5,037 14,000 28 -
8/22/06 Dobson Ranch - 1,896 5,065 28 -
8/22/06 Scottsdale Air Park - 1,560 7,060 28 -
8/22/06 Shea - 2,271 6,402 28 -
8/22/06 Collonade Mall - - 3,569 33 -
8/22/06 Union Hills - 2,618 5,357 28 -
8/22/06 Speedway - 1,921 6,105 28 -
8/22/06 Mill Avenue - 621 2,447 28 -
8/22/06 Cooper Road - 2,378 3,970 28 -
8/22/06 Desert Sky - 1,603 4,667 34 -
8/22/06 Tanque Verde Road - 1,636 3,714 28 -
8/22/06 Oro Valley - 1,729 6,158 28 -
8/22/06 Sunnyvale - 5,647 16,555 28 -
8/22/06 El Cerito - 2,002 8,710 28 -
8/22/06 Westwood - 7,826 13,848 28 -
8/22/06 El Cajon - 7,490 13,341 34 -
8/22/06 Santa Ana - 12,432 10,961 32 -
8/22/06 Culver City / Jefferson - 3,689 14,555 28 -
8/22/06 Solana Beach - - 11,163 28 -
8/22/06 Huntington Beach - 3,914 11,064 31 -
8/22/06 Ontario - 2,904 5,762 28 -
8/22/06 Orange - 2,421 9,184 28 -
8/22/06 Daly City - 4,034 13,280 28 -
8/22/06 Castro Valley - 3,682 5,986 28 -
8/22/06 Newark - 3,550 6,512 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
5/1/06 Neptune/Neptune Blvd. 3,240 7,573 10,813 177
5/15/06 Suwanee/Peachtree Pkwy 2,483 5,825 8,308 136
6/6/06 Tampa/30th St 2,283 5,353 7,636 108
6/22/06 Centennial/S. Parker Rd. 1,786 4,176 5,962 84
5/26/06 Honolulu/Kapiolani 9,329 20,400 29,729 442
7/1/06 Brooklyn/Knapp St 6,701 5,090 11,791 92
8/22/06 Scottsdale North 5,037 14,028 19,065 270
8/22/06 Dobson Ranch 1,896 5,093 6,989 93
8/22/06 Scottsdale Air Park 1,560 7,088 8,648 130
8/22/06 Shea 2,271 6,430 8,701 118
8/22/06 Collonade Mall - 3,602 3,602 66
8/22/06 Union Hills 2,618 5,385 8,003 98
8/22/06 Speedway 1,921 6,133 8,054 112
8/22/06 Mill Avenue 621 2,475 3,096 46
8/22/06 Cooper Road 2,378 3,998 6,376 73
8/22/06 Desert Sky 1,603 4,701 6,304 86
8/22/06 Tanque Verde Road 1,636 3,742 5,378 69
8/22/06 Oro Valley 1,729 6,186 7,915 114
8/22/06 Sunnyvale 5,647 16,583 22,230 304
8/22/06 El Cerito 2,002 8,738 10,740 160
8/22/06 Westwood 7,826 13,876 21,702 254
8/22/06 El Cajon 7,490 13,375 20,865 245
8/22/06 Santa Ana 12,432 10,993 23,425 202
8/22/06 Culver City / Jefferson 3,689 14,583 18,272 267
8/22/06 Solana Beach - 11,191 11,191 206
8/22/06 Huntington Beach 3,914 11,095 15,009 203
8/22/06 Ontario 2,904 5,790 8,694 106
8/22/06 Orange 2,421 9,212 11,633 169
8/22/06 Daly City 4,034 13,308 17,342 244
8/22/06 Castro Valley 3,682 6,014 9,696 110
8/22/06 Newark 3,550 6,540 10,090 120
F-96
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Sacramento - 1,864 4,399 28 -
8/22/06 San Leandro - 2,979 4,776 28 -
8/22/06 San Lorenzo - 1,842 4,387 32 -
8/22/06 Tracy - 959 3,791 28 -
8/22/06 Aliso Viejo - 6,640 11,486 30 -
8/22/06 Alicia Parkway - 5,669 12,680 33 -
8/22/06 Capitol Expressway - - 3,970 28 -
8/22/06 Vista Park-Land Lease - - - 28 -
8/22/06 Oakley - 2,419 5,452 28 -
8/22/06 Livermore - 2,972 6,816 28 -
8/22/06 Sand City/Monterey - 2,563 8,291 28 -
8/22/06 Tracy II - 1,762 4,487 28 -
8/22/06 SF-Evans - 3,966 7,487 30 -
8/22/06 Natomas - 1,302 5,063 28 -
8/22/06 Presidio - - - 424 -
8/22/06 Golden / 6th & Simms - 853 2,817 28 -
8/22/06 Littleton / Hampden - 1,040 2,261 28 -
8/22/06 Margate - 3,482 5,742 28 -
8/22/06 Delray Beach - 3,546 7,076 28 -
8/22/06 Lauderhill - 2,807 6,668 28 -
8/22/06 Roswell - 908 3,308 28 -
8/22/06 Morgan Falls - 3,229 7,844 31 -
8/22/06 Norcross - 724 2,197 28 -
8/22/06 Stone Mountain - 500 2,055 28 -
8/22/06 Tucker - 731 2,664 29 -
8/22/06 Forest Park - 502 1,731 28 -
8/22/06 Clairmont Road - 804 2,345 31 -
8/22/06 Gwinnett Place - 1,728 3,982 28 -
8/22/06 Perimeter Center - 3,414 8,283 28 -
8/22/06 Peachtree Industrial Blvd. - 2,443 6,682 28 -
8/22/06 Satellite Blvd - 1,940 3,907 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Sacramento 1,864 4,427 6,291 82
8/22/06 San Leandro 2,979 4,804 7,783 88
8/22/06 San Lorenzo 1,842 4,419 6,261 80
8/22/06 Tracy 959 3,819 4,778 70
8/22/06 Aliso Viejo 6,640 11,516 18,156 211
8/22/06 Alicia Parkway 5,669 12,713 18,382 234
8/22/06 Capitol Expressway - 3,998 3,998 73
8/22/06 Vista Park-Land Lease - 28 28 -
8/22/06 Oakley 2,419 5,480 7,899 101
8/22/06 Livermore 2,972 6,844 9,816 125
8/22/06 Sand City/Monterey 2,563 8,319 10,882 152
8/22/06 Tracy II 1,762 4,515 6,277 83
8/22/06 SF-Evans 3,966 7,517 11,483 138
8/22/06 Natomas 1,302 5,091 6,393 93
8/22/06 Presidio - 424 424 8
8/22/06 Golden / 6th & Simms 853 2,845 3,698 52
8/22/06 Littleton / Hampden 1,040 2,289 3,329 42
8/22/06 Margate 3,482 5,770 9,252 106
8/22/06 Delray Beach 3,546 7,104 10,650 130
8/22/06 Lauderhill 2,807 6,696 9,503 123
8/22/06 Roswell 908 3,336 4,244 61
8/22/06 Morgan Falls 3,229 7,875 11,104 144
8/22/06 Norcross 724 2,225 2,949 41
8/22/06 Stone Mountain 500 2,083 2,583 38
8/22/06 Tucker 731 2,693 3,424 50
8/22/06 Forest Park 502 1,759 2,261 32
8/22/06 Clairmont Road 804 2,376 3,180 43
8/22/06 Gwinnett Place 1,728 4,010 5,738 74
8/22/06 Perimeter Center 3,414 8,311 11,725 152
8/22/06 Peachtree Industrial Blvd. 2,443 6,710 9,153 123
8/22/06 Satellite Blvd 1,940 3,935 5,875 72
F-97
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Hillside - 1,949 3,611 29 -
8/22/06 Orland Park - 2,977 5,443 88 -
8/22/06 Bolingbrook / Brook Ct - 1,342 2,133 28 -
8/22/06 Wheaton - 1,531 5,584 32 -
8/22/06 Lincolnwood / Touhy - 700 3,307 28 -
8/22/06 Niles - 826 1,473 28 -
8/22/06 Berwyn - 728 5,310 36 -
8/22/06 Chicago Hts / N Western - 1,367 3,359 28 -
8/22/06 River West - 296 2,443 30 -
8/22/06 Fullerton - 1,369 6,500 29 -
8/22/06 Glenview West - 1,283 2,621 28 -
8/22/06 Glendale / Keystone Ave. - 1,733 3,958 28 -
8/22/06 College Park / W. 86th St. - 1,381 2,669 32 -
8/22/06 Carmel / N. Range Line Rd. - 2,580 5,025 29 -
8/22/06 Geogetown / Georgetown Rd. - 1,263 4,224 28 -
8/22/06 Fishers / Allisonville Rd. - 2,106 3,629 31 -
8/22/06 Castleton / Corporate Dr. - 914 2,465 28 -
8/22/06 Geist / Fitness Lane - 2,133 3,718 28 -
8/22/06 Indianapolis / E. 6nd St. - 444 2,141 28 -
8/22/06 Suitland - 2,337 5,799 30 -
8/22/06 Gaithersburg - 4,239 8,516 47 -
8/22/06 Germantown - 2,057 4,510 37 -
8/22/06 Briggs Chaney - 2,073 2,802 28 -
8/22/06 Oxon Hill - 1,557 3,971 44 -
8/22/06 Frederick/Thomas Johnson Dr - 1,811 2,695 28 -
8/22/06 Clinton - 2,728 5,363 28 -
8/22/06 Reisterstown - 833 2,035 28 -
8/22/06 Plymouth - 2,018 4,415 28 -
8/22/06 Madison Heights - 2,354 4,391 28 -
8/22/06 Ann Arbor - 1,921 4,068 28 -
8/22/06 Canton - 710 4,287 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Hillside 1,949 3,640 5,589 66
8/22/06 Orland Park 2,977 5,531 8,508 101
8/22/06 Bolingbrook / Brook Ct 1,342 2,161 3,503 40
8/22/06 Wheaton 1,531 5,616 7,147 103
8/22/06 Lincolnwood / Touhy 700 3,335 4,035 61
8/22/06 Niles 826 1,501 2,327 28
8/22/06 Berwyn 728 5,346 6,074 98
8/22/06 Chicago Hts / N Western 1,367 3,387 4,754 63
8/22/06 River West 296 2,473 2,769 46
8/22/06 Fullerton 1,369 6,529 7,898 120
8/22/06 Glenview West 1,283 2,649 3,932 49
8/22/06 Glendale / Keystone Ave. 1,733 3,986 5,719 73
8/22/06 College Park / W. 86th St. 1,381 2,701 4,082 50
8/22/06 Carmel / N. Range Line Rd. 2,580 5,054 7,634 93
8/22/06 Geogetown / Georgetown Rd. 1,263 4,252 5,515 78
8/22/06 Fishers / Allisonville Rd. 2,106 3,660 5,766 68
8/22/06 Castleton / Corporate Dr. 914 2,493 3,407 46
8/22/06 Geist / Fitness Lane 2,133 3,746 5,879 69
8/22/06 Indianapolis / E. 6nd St. 444 2,169 2,613 40
8/22/06 Suitland 2,337 5,829 8,166 107
8/22/06 Gaithersburg 4,239 8,563 12,802 157
8/22/06 Germantown 2,057 4,547 6,604 83
8/22/06 Briggs Chaney 2,073 2,830 4,903 52
8/22/06 Oxon Hill 1,557 4,015 5,572 74
8/22/06 Frederick/Thomas Johnson Dr 1,811 2,723 4,534 50
8/22/06 Clinton 2,728 5,391 8,119 98
8/22/06 Reisterstown 833 2,063 2,896 38
8/22/06 Plymouth 2,018 4,443 6,461 82
8/22/06 Madison Heights 2,354 4,419 6,773 80
8/22/06 Ann Arbor 1,921 4,096 6,017 75
8/22/06 Canton 710 4,315 5,025 79
F-98
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Fraser - 2,026 5,393 28 -
8/22/06 Livonia - 1,849 3,860 28 -
8/22/06 Sterling Heights - 2,996 5,358 28 -
8/22/06 Warren - 3,345 7,004 28 -
8/22/06 Rochester - 1,876 3,032 33 -
8/22/06 Taylor - 1,635 4,808 28 -
8/22/06 Jackson - 442 1,756 28 -
8/22/06 Troy - 1,237 2,093 28 -
8/22/06 Rochester Hills - 1,780 4,559 28 -
8/22/06 Auburn Hills - 1,888 3,017 28 -
8/22/06 Flint South - 543 3,068 28 -
8/22/06 Troy - Maple - 2,570 5,775 28 -
8/22/06 Matawan - 4,282 7,813 28 -
8/22/06 Marlboro - 2,214 5,868 28 -
8/22/06 Voorhees - 2,705 5,486 28 -
8/22/06 Dover/Rockaway - 3,395 5,327 28 -
8/22/06 Marlton - 1,635 2,273 39 -
8/22/06 West Paterson - 701 5,689 28 -
8/22/06 Yonkers - 4,473 9,925 32 -
8/22/06 Van Dam Street - 3,527 6,935 37 -
8/22/06 Northern Blvd - 5,373 9,970 35 -
8/22/06 Gold Street - 6,747 16,544 332 -
8/22/06 Utica Avenue - 7,746 13,063 28 -
8/22/06 Melville - 4,659 6,572 29 -
8/22/06 Westgate - 697 1,211 28 -
8/22/06 Capital Boulevard - 757 1,681 28 -
8/22/06 Cary - 1,145 5,104 28 -
8/22/06 Garner - 529 1,211 30 -
8/22/06 Morrisville - 703 1,880 28 -
8/22/06 Atlantic Avenue - 1,693 6,293 28 -
8/22/06 Friendly Avenue - 1,169 3,043 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Fraser 2,026 5,421 7,447 100
8/22/06 Livonia 1,849 3,888 5,737 72
8/22/06 Sterling Heights 2,996 5,386 8,382 98
8/22/06 Warren 3,345 7,032 10,377 129
8/22/06 Rochester 1,876 3,065 4,941 56
8/22/06 Taylor 1,635 4,836 6,471 88
8/22/06 Jackson 442 1,784 2,226 33
8/22/06 Troy 1,237 2,121 3,358 38
8/22/06 Rochester Hills 1,780 4,587 6,367 84
8/22/06 Auburn Hills 1,888 3,045 4,933 56
8/22/06 Flint South 543 3,096 3,639 56
8/22/06 Troy - Maple 2,570 5,803 8,373 106
8/22/06 Matawan 4,282 7,841 12,123 144
8/22/06 Marlboro 2,214 5,896 8,110 109
8/22/06 Voorhees 2,705 5,514 8,219 101
8/22/06 Dover/Rockaway 3,395 5,355 8,750 98
8/22/06 Marlton 1,635 2,312 3,947 42
8/22/06 West Paterson 701 5,717 6,418 105
8/22/06 Yonkers 4,473 9,957 14,430 183
8/22/06 Van Dam Street 3,527 6,972 10,499 128
8/22/06 Northern Blvd 5,373 10,005 15,378 184
8/22/06 Gold Street 6,747 16,876 23,623 309
8/22/06 Utica Avenue 7,746 13,091 20,837 240
8/22/06 Melville 4,659 6,601 11,260 121
8/22/06 Westgate 697 1,239 1,936 23
8/22/06 Capital Boulevard 757 1,709 2,466 32
8/22/06 Cary 1,145 5,132 6,277 95
8/22/06 Garner 529 1,241 1,770 23
8/22/06 Morrisville 703 1,908 2,611 34
8/22/06 Atlantic Avenue 1,693 6,321 8,014 116
8/22/06 Friendly Avenue 1,169 3,071 4,240 56
F-99
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Glenwood Avenue - 1,689 4,948 28 -
8/22/06 Poole Road - 1,271 2,919 28 -
8/22/06 South Raleigh - 800 2,219 28 -
8/22/06 Wendover - 2,891 7,656 41 -
8/22/06 Beaverton/Allen Blvd - 2,130 3,908 28 -
8/22/06 Gresham / Hogan Rd - 1,957 4,438 30 -
8/22/06 Hillsboro/30th St - 3,095 8,504 28 -
8/22/06 Westchester - - 5,735 28 -
8/22/06 Airport - 4,597 8,728 33 -
8/22/06 Oxford Valley - 2,430 5,365 32 -
8/22/06 Valley Forge - - - 28 -
8/22/06 Jenkintown - - - 30 -
8/22/06 Burke - 2,522 4,019 28 -
8/22/06 Midlothian Turnpike - 1,978 3,244 28 -
8/22/06 South Military Highway - 1,611 2,903 33 -
8/22/06 Newport News North - 2,073 4,067 30 -
8/22/06 Virginia Beach Blvd. - 2,743 4,786 32 -
8/22/06 Bayside - 1,570 2,708 28 -
8/22/06 Chesapeake - 1,507 4,296 31 -
8/22/06 Leesburg - 1,935 2,485 30 -
8/22/06 Dale City - 1,885 3,335 28 -
8/22/06 Gainesville - 1,377 2,046 31 -
8/22/06 Charlottesville - 1,481 2,397 28 -
8/22/06 Laskin Road - 1,448 2,634 28 -
8/22/06 Holland Road - 1,565 2,227 28 -
8/22/06 Princess Anne Road - 1,479 2,766 28 -
8/22/06 Cedar Road - 1,138 2,083 28 -
8/22/06 Crater Road - 1,497 2,266 31 -
8/22/06 Temple - 993 2,231 32 -
8/22/06 Jefferson Davis Hwy - 954 2,156 33 -
8/22/06 McLean - - 8,815 30 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Glenwood Avenue 1,689 4,976 6,665 91
8/22/06 Poole Road 1,271 2,947 4,218 54
8/22/06 South Raleigh 800 2,247 3,047 41
8/22/06 Wendover 2,891 7,697 10,588 141
8/22/06 Beaverton/Allen Blvd 2,130 3,936 6,066 73
8/22/06 Gresham / Hogan Rd 1,957 4,468 6,425 82
8/22/06 Hillsboro/30th St 3,095 8,532 11,627 156
8/22/06 Westchester - 5,763 5,763 106
8/22/06 Airport 4,597 8,761 13,358 161
8/22/06 Oxford Valley 2,430 5,397 7,827 98
8/22/06 Valley Forge - 28 28 -
8/22/06 Jenkintown - 30 30 -
8/22/06 Burke 2,522 4,047 6,569 74
8/22/06 Midlothian Turnpike 1,978 3,272 5,250 60
8/22/06 South Military Highway 1,611 2,936 4,547 54
8/22/06 Newport News North 2,073 4,097 6,170 75
8/22/06 Virginia Beach Blvd. 2,743 4,818 7,561 88
8/22/06 Bayside 1,570 2,736 4,306 50
8/22/06 Chesapeake 1,507 4,327 5,834 79
8/22/06 Leesburg 1,935 2,515 4,450 46
8/22/06 Dale City 1,885 3,363 5,248 61
8/22/06 Gainesville 1,377 2,077 3,454 38
8/22/06 Charlottesville 1,481 2,425 3,906 45
8/22/06 Laskin Road 1,448 2,662 4,110 49
8/22/06 Holland Road 1,565 2,255 3,820 41
8/22/06 Princess Anne Road 1,479 2,794 4,273 51
8/22/06 Cedar Road 1,138 2,111 3,249 38
8/22/06 Crater Road 1,497 2,297 3,794 42
8/22/06 Temple 993 2,263 3,256 41
8/22/06 Jefferson Davis Hwy 954 2,189 3,143 40
8/22/06 McLean - 8,845 8,845 162
F-100
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Burke Centre - 4,756 8,705 28 -
8/22/06 Fordson - 3,063 5,235 28 -
8/22/06 Fullerton - 4,199 8,867 28 -
8/22/06 Telegraph - 2,183 4,467 28 -
8/22/06 Mt Vernon - 4,876 11,544 28 -
8/22/06 Bellingham - 2,160 4,340 36 -
8/22/06 Everett Central - 2,137 4,342 28 -
8/22/06 Tacoma / Highland Hills - 2,647 5,533 28 -
8/22/06 Edmonds - 5,883 10,514 38 -
8/22/06 Kirkland 124th - 2,827 5,031 28 -
8/22/06 Woodinville - 2,603 5,723 32 -
8/22/06 Burien / Des Moines - 3,063 5,952 28 -
8/22/06 SeaTac - 2,439 4,623 30 -
8/22/06 Southcenter - 2,054 3,665 28 -
8/22/06 Puyallup / Canyon Rd - 1,123 1,940 28 -
8/22/06 Puyallup / South Hill - 1,567 2,610 28 -
8/22/06 Queen Anne/Magnolia - 3,191 11,723 28 -
8/22/06 Kennydale - 3,424 7,799 31 -
8/22/06 Bellefield - 3,019 5,541 28 -
8/22/06 Factoria Square - 3,431 8,891 33 -
8/22/06 Auburn / 16th Ave - 2,491 4,716 28 -
8/22/06 East Bremerton - 1,945 5,203 28 -
8/22/06 Port Orchard - 1,144 2,885 28 -
8/22/06 West Seattle - 3,573 8,711 28 -
8/22/06 Vancouver / Salmon Creek - 2,667 5,597 28 -
8/22/06 West Bremerton - 1,778 3,067 30 -
8/22/06 Kent / 132nd - 1,806 3,880 28 -
8/22/06 Lacey/Martin Way - 1,211 2,162 28 -
8/22/06 Lynwood/189th St SW - 2,172 3,518 34 -
8/22/06 W Olympia/Black Lake Blvd II - 1,295 2,300 28 -
8/22/06 Parkland / A St - 1,855 3,819 30 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Burke Centre 4,756 8,733 13,489 160
8/22/06 Fordson 3,063 5,263 8,326 97
8/22/06 Fullerton 4,199 8,895 13,094 164
8/22/06 Telegraph 2,183 4,495 6,678 83
8/22/06 Mt Vernon 4,876 11,572 16,448 212
8/22/06 Bellingham 2,160 4,376 6,536 80
8/22/06 Everett Central 2,137 4,370 6,507 80
8/22/06 Tacoma / Highland Hills 2,647 5,561 8,208 102
8/22/06 Edmonds 5,883 10,552 16,435 193
8/22/06 Kirkland 124th 2,827 5,059 7,886 93
8/22/06 Woodinville 2,603 5,755 8,358 106
8/22/06 Burien / Des Moines 3,063 5,980 9,043 110
8/22/06 SeaTac 2,439 4,653 7,092 86
8/22/06 Southcenter 2,054 3,693 5,747 68
8/22/06 Puyallup / Canyon Rd 1,123 1,968 3,091 36
8/22/06 Puyallup / South Hill 1,567 2,638 4,205 49
8/22/06 Queen Anne/Magnolia 3,191 11,751 14,942 216
8/22/06 Kennydale 3,424 7,830 11,254 143
8/22/06 Bellefield 3,019 5,569 8,588 102
8/22/06 Factoria Square 3,431 8,924 12,355 164
8/22/06 Auburn / 16th Ave 2,491 4,744 7,235 87
8/22/06 East Bremerton 1,945 5,231 7,176 96
8/22/06 Port Orchard 1,144 2,913 4,057 54
8/22/06 West Seattle 3,573 8,739 12,312 160
8/22/06 Vancouver / Salmon Creek 2,667 5,625 8,292 103
8/22/06 West Bremerton 1,778 3,097 4,875 56
8/22/06 Kent / 132nd 1,806 3,908 5,714 72
8/22/06 Lacey/Martin Way 1,211 2,190 3,401 40
8/22/06 Lynwood/189th St SW 2,172 3,552 5,724 65
8/22/06 W Olympia/Black Lake Blvd II 1,295 2,328 3,623 42
8/22/06 Parkland / A St 1,855 3,849 5,704 70
F-101
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Lake Union - 7,586 11,024 28 -
8/22/06 Bellevue / 122nd - 9,552 21,891 32 -
8/22/06 Gig Harbor/Olympic - 1,762 3,196 28 -
8/22/06 Seattle/Ballinger Way - - 7,098 28 -
8/22/06 Scottsdale South - 2,377 3,524 28 -
8/22/06 Phoenix - 2,516 5,638 28 -
8/22/06 Chandler - 2,910 5,460 28 -
8/22/06 Phoenix East - 1,524 5,151 28 -
8/22/06 Mesa - 1,604 4,434 28 -
8/22/06 Union City - 1,905 3,091 28 -
8/22/06 La Habra - 5,439 10,239 28 -
8/22/06 Palo Alto - 4,259 6,362 28 -
8/22/06 Kearney - Balboa - 4,565 11,584 28 -
8/22/06 South San Francisco - 1,593 4,995 28 -
8/22/06 Mountain View - 1,505 3,839 28 -
8/22/06 Denver / Tamarac II - 666 1,109 33 -
8/22/06 Littleton / Windermere I - 2,214 4,186 33 -
8/22/06 Thornton / Quivas - 547 1,439 28 -
8/22/06 Northglenn / Irma Dr. - 1,579 3,716 28 -
8/22/06 Oakland Park - 8,821 20,512 41 -
8/22/06 Seminole - 1,821 3,817 28 -
8/22/06 Military Trail - 6,514 10,965 28 -
8/22/06 Blue Heron - 8,121 11,641 28 -
8/22/06 Alsip / 127th St - 1,891 3,414 28 -
8/22/06 Dolton - 1,784 4,508 28 -
8/22/06 Lombard / 330 W North Ave - 1,506 2,596 28 -
8/22/06 Rolling Meadows / Rohlwing - 1,839 3,620 28 -
8/22/06 Schaumburg / Hillcrest Blvd - 1,732 4,026 30 -
8/22/06 Bridgeview - 1,396 3,651 28 -
8/22/06 Willowbrook - 1,730 3,355 32 -
8/22/06 Lisle - 1,967 3,525 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Lake Union 7,586 11,052 18,638 203
8/22/06 Bellevue / 122nd 9,552 21,923 31,475 402
8/22/06 Gig Harbor/Olympic 1,762 3,224 4,986 59
8/22/06 Seattle/Ballinger Way - 7,126 7,126 130
8/22/06 Scottsdale South 2,377 3,552 5,929 65
8/22/06 Phoenix 2,516 5,666 8,182 103
8/22/06 Chandler 2,910 5,488 8,398 101
8/22/06 Phoenix East 1,524 5,179 6,703 95
8/22/06 Mesa 1,604 4,462 6,066 82
8/22/06 Union City 1,905 3,119 5,024 57
8/22/06 La Habra 5,439 10,267 15,706 188
8/22/06 Palo Alto 4,259 6,390 10,649 118
8/22/06 Kearney - Balboa 4,565 11,612 16,177 213
8/22/06 South San Francisco 1,593 5,023 6,616 92
8/22/06 Mountain View 1,505 3,867 5,372 72
8/22/06 Denver / Tamarac II 666 1,142 1,808 20
8/22/06 Littleton / Windermere I 2,214 4,219 6,433 78
8/22/06 Thornton / Quivas 547 1,467 2,014 27
8/22/06 Northglenn / Irma Dr. 1,579 3,744 5,323 69
8/22/06 Oakland Park 8,821 20,553 29,374 377
8/22/06 Seminole 1,821 3,845 5,666 70
8/22/06 Military Trail 6,514 10,993 17,507 202
8/22/06 Blue Heron 8,121 11,669 19,790 215
8/22/06 Alsip / 127th St 1,891 3,442 5,333 63
8/22/06 Dolton 1,784 4,536 6,320 83
8/22/06 Lombard / 330 W North Ave 1,506 2,624 4,130 49
8/22/06 Rolling Meadows / Rohlwing 1,839 3,648 5,487 66
8/22/06 Schaumburg / Hillcrest Blvd 1,732 4,056 5,788 74
8/22/06 Bridgeview 1,396 3,679 5,075 68
8/22/06 Willowbrook 1,730 3,387 5,117 63
8/22/06 Lisle 1,967 3,553 5,520 65
F-102
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Laurel - 1,323 2,577 28 -
8/22/06 Crofton - 1,373 3,377 28 -
8/22/06 Lansing - 114 1,126 28 -
8/22/06 Southfield - 4,181 6,338 30 -
8/22/06 23006 Troy - Oakland Mall - 2,281 4,953 28 -
8/22/06 Walled Lake - 2,788 4,784 28 -
8/22/06 Salem / Lancaster - 2,036 4,827 28 -
8/22/06 Tigard / King City - 1,959 7,189 28 -
8/22/06 Portland / SE 82nd Ave - 1,519 4,390 32 -
8/22/06 Beaverton/HWY 217 - 3,294 7,186 28 -
8/22/06 Beaverton / Cornell Rd - 1,869 3,814 29 -
8/22/06 Fairfax - 6,895 10,006 30 -
8/22/06 Falls Church - 2,488 15,341 31 -
8/22/06 Manassas West - 912 2,826 28 -
8/22/06 Herndon - 2,625 3,105 31 -
8/22/06 Newport News South - 2,190 5,264 28 -
8/22/06 North Richmond - 1,606 2,411 32 -
8/22/06 Kempsville - 1,165 1,951 28 -
8/22/06 Manassas East - 1,297 2,843 34 -
8/22/06 Vancouver / Vancouver Mall - 1,751 3,251 29 -
8/22/06 White Center/West Seattle - 2,091 4,530 28 -
8/22/06 Factoria - 2,770 5,429 29 -
8/22/06 Federal Way/Pac Hwy - 4,027 8,554 28 -
8/22/06 Renton - 2,752 6,378 28 -
8/22/06 Issaquah - 3,739 5,624 28 -
8/22/06 East Lynnwood - 2,250 4,790 31 -
8/22/06 Tacoma / 96th St & 32nd Ave - 1,604 2,394 28 -
8/22/06 Smokey Point - 607 1,723 32 -
8/22/06 Shoreline / 145th - 2,926 4,910 3,463 -
8/22/06 23038 Mt. Clemens 1,947 1,247 3,590 30 -
8/22/06 Ramsey - 552 2,155 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Laurel 1,323 2,605 3,928 47
8/22/06 Crofton 1,373 3,405 4,778 63
8/22/06 Lansing 114 1,154 1,268 22
8/22/06 Southfield 4,181 6,368 10,549 116
8/22/06 23006 Troy - Oakland Mall 2,281 4,981 7,262 92
8/22/06 Walled Lake 2,788 4,812 7,600 88
8/22/06 Salem / Lancaster 2,036 4,855 6,891 89
8/22/06 Tigard / King City 1,959 7,217 9,176 133
8/22/06 Portland / SE 82nd Ave 1,519 4,422 5,941 80
8/22/06 Beaverton/HWY 217 3,294 7,214 10,508 133
8/22/06 Beaverton / Cornell Rd 1,869 3,843 5,712 70
8/22/06 Fairfax 6,895 10,036 16,931 184
8/22/06 Falls Church 2,488 15,372 17,860 282
8/22/06 Manassas West 912 2,854 3,766 52
8/22/06 Herndon 2,625 3,136 5,761 57
8/22/06 Newport News South 2,190 5,292 7,482 97
8/22/06 North Richmond 1,606 2,443 4,049 45
8/22/06 Kempsville 1,165 1,979 3,144 36
8/22/06 Manassas East 1,297 2,877 4,174 52
8/22/06 Vancouver / Vancouver Mall 1,751 3,280 5,031 60
8/22/06 White Center/West Seattle 2,091 4,558 6,649 83
8/22/06 Factoria 2,770 5,458 8,228 100
8/22/06 Federal Way/Pac Hwy 4,027 8,582 12,609 157
8/22/06 Renton 2,752 6,406 9,158 118
8/22/06 Issaquah 3,739 5,652 9,391 103
8/22/06 East Lynnwood 2,250 4,821 7,071 88
8/22/06 Tacoma / 96th St & 32nd Ave 1,604 2,422 4,026 45
8/22/06 Smokey Point 607 1,755 2,362 32
8/22/06 Shoreline / 145th 2,926 8,373 11,299 153
8/22/06 23038 Mt. Clemens 1,247 3,620 4,867 66
8/22/06 Ramsey 552 2,183 2,735 40
F-103
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Apple Valley / 155th St - 1,203 3,136 28 -
8/22/06 Brooklyn Park / 73rd Ave - 1,953 3,902 28 -
8/22/06 Burnsville Parkway - 1,561 4,359 30 -
8/22/06 Chanhassen - 3,292 6,220 28 -
8/22/06 Coon Rapids / Robinson Dr - 1,991 4,975 28 -
8/22/06 Eden Prairie East - 3,516 5,682 28 -
8/22/06 Eden Prairie West - 3,713 7,177 29 -
8/22/06 Edina - 4,422 8,190 28 -
8/22/06 Hopkins - 1,460 2,510 28 -
8/22/06 Little Canada - 3,490 7,062 28 -
8/22/06 Maple Grove / Lakeland Dr - 1,513 3,272 816 -
8/22/06 Minnetonka - 1,318 2,087 28 -
8/22/06 Plymouth 169 - 684 1,323 28 -
8/22/06 Plymouth 494 - 2,000 4,260 28 -
8/22/06 Plymouth West - 1,973 6,638 28 -
8/22/06 Richfield - 1,641 5,688 28 -
8/22/06 Shorewood - 2,805 7,244 30 -
8/22/06 Woodbury / Wooddale Dr - 2,220 5,307 29 -
8/22/06 Central Parkway - 2,545 4,637 28 -
8/22/06 Kirkman East - 2,479 3,717 28 -
8/22/06 Pinole - 1,703 3,047 28 -
8/22/06 Martinez - 3,277 7,126 28 -
8/22/06 Portland / 16th & Sandy Blvd - 1,053 3,802 28 -
8/22/06 Houghton - 2,694 4,132 28 -
8/22/06 Antioch - 1,853 6,475 28 -
8/22/06 Walnut Creek - - - 28 -
8/22/06 Holcomb Bridge - 1,906 4,303 28 -
8/22/06 Palatine / Rand Rd - 1,215 1,895 28 -
8/22/06 Washington Square - 523 1,073 28 -
8/22/06 Indianapolis/N.Illinois - 182 2,795 28 -
8/22/06 Canton South - 769 3,316 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Apple Valley / 155th St 1,203 3,164 4,367 57
8/22/06 Brooklyn Park / 73rd Ave 1,953 3,930 5,883 72
8/22/06 Burnsville Parkway 1,561 4,389 5,950 80
8/22/06 Chanhassen 3,292 6,248 9,540 115
8/22/06 Coon Rapids / Robinson Dr 1,991 5,003 6,994 92
8/22/06 Eden Prairie East 3,516 5,710 9,226 105
8/22/06 Eden Prairie West 3,713 7,206 10,919 132
8/22/06 Edina 4,422 8,218 12,640 151
8/22/06 Hopkins 1,460 2,538 3,998 46
8/22/06 Little Canada 3,490 7,090 10,580 130
8/22/06 Maple Grove / Lakeland Dr 1,513 4,088 5,601 75
8/22/06 Minnetonka 1,318 2,115 3,433 38
8/22/06 Plymouth 169 684 1,351 2,035 24
8/22/06 Plymouth 494 2,000 4,288 6,288 79
8/22/06 Plymouth West 1,973 6,666 8,639 123
8/22/06 Richfield 1,641 5,716 7,357 105
8/22/06 Shorewood 2,805 7,274 10,079 133
8/22/06 Woodbury / Wooddale Dr 2,220 5,336 7,556 98
8/22/06 Central Parkway 2,545 4,665 7,210 86
8/22/06 Kirkman East 2,479 3,745 6,224 69
8/22/06 Pinole 1,703 3,075 4,778 56
8/22/06 Martinez 3,277 7,154 10,431 132
8/22/06 Portland / 16th & Sandy Blvd 1,053 3,830 4,883 70
8/22/06 Houghton 2,694 4,160 6,854 77
8/22/06 Antioch 1,853 6,503 8,356 119
8/22/06 Walnut Creek - 28 28 -
8/22/06 Holcomb Bridge 1,906 4,331 6,237 79
8/22/06 Palatine / Rand Rd 1,215 1,923 3,138 36
8/22/06 Washington Square 523 1,101 1,624 20
8/22/06 Indianapolis/N.Illinois 182 2,823 3,005 52
8/22/06 Canton South 769 3,344 4,113 61
F-104
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Bricktown - 2,881 5,834 28 -
8/22/06 Commack - 2,688 6,376 28 -
8/22/06 Nesconset / Nesconset Hwy - 1,374 3,151 28 -
8/22/06 Great Neck - 1,229 3,299 28 -
8/22/06 Hempstead / S. Franklin St. - 509 3,042 28 -
8/22/06 Bethpage / Stuart Ave - 2,387 7,104 29 -
8/22/06 Helotes - 1,833 3,557 28 -
8/22/06 Medical Center San Antonio - 1,571 4,217 28 -
8/22/06 Oak Hills - - 7,449 28 -
8/22/06 Olympia - 2,382 4,182 28 -
8/22/06 Las Colinas - 676 3,338 28 -
8/22/06 Old Towne - 2,756 13,080 28 -
8/22/06 Juanita - 2,318 7,554 28 -
8/22/06 Ansley Park - 3,132 11,926 30 -
8/22/06 Brookhaven - 2,740 8,333 30 -
8/22/06 Decatur - 2,556 10,146 30 -
8/22/06 Oregon City - 1,582 3,539 28 -
8/22/06 Portland/Barbur Bl - 2,328 9,134 30 -
8/22/06 Salem / Liberty Road - 1,994 5,304 32 -
8/22/06 Edgemont - 3,585 7,704 28 -
8/22/06 Bedford - 2,042 4,176 28 -
8/22/06 Kingwood - 1,625 2,926 28 -
8/22/06 Hillcroft - - 3,994 28 -
8/22/06 T.C. Jester - 2,047 4,819 30 -
8/22/06 Windcrest - 764 2,601 28 -
8/22/06 Mission Bend - 1,381 3,141 28 -
8/22/06 Parker Road/Independence - 2,593 5,464 28 -
8/22/06 Park Cities East - 4,205 6,259 28 -
8/22/06 MaCarthur Crossing - 2,635 5,698 28 -
8/22/06 Arlington/S.Cooper - 2,305 4,308 28 -
8/22/06 Woodforest - 1,534 3,545 955 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Bricktown 2,881 5,862 8,743 107
8/22/06 Commack 2,688 6,404 9,092 118
8/22/06 Nesconset / Nesconset Hwy 1,374 3,179 4,553 59
8/22/06 Great Neck 1,229 3,327 4,556 61
8/22/06 Hempstead / S. Franklin St. 509 3,070 3,579 56
8/22/06 Bethpage / Stuart Ave 2,387 7,133 9,520 130
8/22/06 Helotes 1,833 3,585 5,418 65
8/22/06 Medical Center San Antonio 1,571 4,245 5,816 78
8/22/06 Oak Hills - 7,477 7,477 137
8/22/06 Olympia 2,382 4,210 6,592 77
8/22/06 Las Colinas 676 3,366 4,042 61
8/22/06 Old Towne 2,756 13,108 15,864 240
8/22/06 Juanita 2,318 7,582 9,900 139
8/22/06 Ansley Park 3,132 11,956 15,088 220
8/22/06 Brookhaven 2,740 8,363 11,103 153
8/22/06 Decatur 2,556 10,176 12,732 187
8/22/06 Oregon City 1,582 3,567 5,149 65
8/22/06 Portland/Barbur Bl 2,328 9,164 11,492 169
8/22/06 Salem / Liberty Road 1,994 5,336 7,330 98
8/22/06 Edgemont 3,585 7,732 11,317 142
8/22/06 Bedford 2,042 4,204 6,246 77
8/22/06 Kingwood 1,625 2,954 4,579 54
8/22/06 Hillcroft - 4,022 4,022 74
8/22/06 T.C. Jester 2,047 4,849 6,896 89
8/22/06 Windcrest 764 2,629 3,393 49
8/22/06 Mission Bend 1,381 3,169 4,550 57
8/22/06 Parker Road/Independence 2,593 5,492 8,085 101
8/22/06 Park Cities East 4,205 6,287 10,492 115
8/22/06 MaCarthur Crossing 2,635 5,726 8,361 105
8/22/06 Arlington/S.Cooper 2,305 4,336 6,641 79
8/22/06 Woodforest 1,534 4,500 6,034 83
F-105
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Preston Road - 1,931 3,246 28 -
8/22/06 East Lamar - 1,581 2,878 30 -
8/22/06 Lewisville/Interstate 35 - 2,696 4,311 28 -
8/22/06 Round Rock - 1,256 2,153 28 -
8/22/06 Slaughter Lane - 1,881 3,326 28 -
8/22/06 Valley Ranch - 1,927 5,390 28 -
8/22/06 Nacogdoches - 1,422 2,655 28 -
8/22/06 Thousand Oaks - 1,815 3,814 28 -
8/22/06 Highway 78 - 1,344 2,288 28 -
8/22/06 The Quarry - 1,841 8,765 28 -
8/22/06 Cinco Ranch - 939 2,085 28 -
8/22/06 North Carrollton - 2,408 4,204 28 -
8/22/06 First Colony - 1,181 2,930 28 -
8/22/06 North Park - 1,444 3,253 28 -
8/22/06 South Main - TX - 521 723 28 -
8/22/06 Westchase - 903 3,748 28 -
8/22/06 Lakeline - 1,289 3,762 28 -
8/22/06 Highway 26 - 1,353 3,147 28 -
8/22/06 Shavano Park - 972 4,973 28 -
8/22/06 Oltorf - 880 3,693 30 -
8/22/06 Irving - 686 1,367 28 -
8/22/06 Hill Country Village - 988 3,524 28 -
8/22/06 San Antonio NE - 253 664 31 -
8/22/06 East Pioneer II - 786 1,784 28 -
8/22/06 Westheimer - 594 2,316 32 -
8/22/06 San Antonio/Jones-Maltsberger - 1,102 2,637 28 -
8/22/06 Beltline - 1,291 2,336 31 -
8/22/06 MacArthur - 1,590 2,265 28 -
8/22/06 Hurst / S. Pipeline Rd - 661 1,317 28 -
8/22/06 Balcones Hts/Fredericksburg Rd - 2,372 4,718 28 -
8/22/06 Blanco Road - 1,742 4,813 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Preston Road 1,931 3,274 5,205 60
8/22/06 East Lamar 1,581 2,908 4,489 54
8/22/06 Lewisville/Interstate 35 2,696 4,339 7,035 79
8/22/06 Round Rock 1,256 2,181 3,437 40
8/22/06 Slaughter Lane 1,881 3,354 5,235 61
8/22/06 Valley Ranch 1,927 5,418 7,345 100
8/22/06 Nacogdoches 1,422 2,683 4,105 50
8/22/06 Thousand Oaks 1,815 3,842 5,657 70
8/22/06 Highway 78 1,344 2,316 3,660 42
8/22/06 The Quarry 1,841 8,793 10,634 161
8/22/06 Cinco Ranch 939 2,113 3,052 38
8/22/06 North Carrollton 2,408 4,232 6,640 78
8/22/06 First Colony 1,181 2,958 4,139 54
8/22/06 North Park 1,444 3,281 4,725 60
8/22/06 South Main - TX 521 751 1,272 14
8/22/06 Westchase 903 3,776 4,679 69
8/22/06 Lakeline 1,289 3,790 5,079 69
8/22/06 Highway 26 1,353 3,175 4,528 59
8/22/06 Shavano Park 972 5,001 5,973 92
8/22/06 Oltorf 880 3,723 4,603 68
8/22/06 Irving 686 1,395 2,081 26
8/22/06 Hill Country Village 988 3,552 4,540 65
8/22/06 San Antonio NE 253 695 948 13
8/22/06 East Pioneer II 786 1,812 2,598 33
8/22/06 Westheimer 594 2,348 2,942 43
8/22/06 San Antonio/Jones-Maltsberger 1,102 2,665 3,767 49
8/22/06 Beltline 1,291 2,367 3,658 43
8/22/06 MacArthur 1,590 2,293 3,883 42
8/22/06 Hurst / S. Pipeline Rd 661 1,345 2,006 24
8/22/06 Balcones Hts/Fredericksburg Rd 2,372 4,746 7,118 87
8/22/06 Blanco Road 1,742 4,841 6,583 88
F-106
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Leon Valley/Bandera Road - 501 1,044 2,466 -
8/22/06 Imperial Valley - 1,166 2,756 28 -
8/22/06 Sugarland - 1,714 3,407 28 -
8/22/06 Woodlands - 1,353 3,131 28 -
8/22/06 Federal Road - 1,021 3,086 28 -
8/22/06 West University - 1,940 8,121 30 -
8/22/06 Medical Center/Braeswood II - 1,121 4,678 28 -
8/22/06 Richardson/Audelia - 1,034 2,703 28 -
8/22/06 North Austin - 2,143 3,674 28 -
8/22/06 Warner - 1,603 3,998 31 -
8/22/06 Universal City - 777 3,194 28 -
8/22/06 Seattle / Lake City Way - 3,406 7,789 33 -
8/22/06 Arrowhead - 2,372 5,818 28 -
8/22/06 Ahwatukee - 3,017 5,975 28 -
8/22/06 Blossom Valley - 2,721 8,418 28 -
8/22/06 Jones Bridge - 3,065 6,015 30 -
8/22/06 Lawrenceville - 2,076 5,188 30 -
8/22/06 Fox Valley - 1,880 3,622 28 -
8/22/06 Eagle Creek / Shore Terrace - 880 2,878 31 -
8/22/06 N. Greenwood/E. County Line - - 3,954 28 -
8/22/06 Annapolis - - 7,439 28 -
8/22/06 Creedmoor - 3,579 7,366 28 -
8/22/06 Painters Crossing - 1,582 4,527 28 -
8/22/06 Greenville Ave & Meadow - 2,066 6,969 28 -
8/22/06 Potomac Mills - 2,806 7,347 51 -
8/22/06 Sterling / Cascades - 3,435 7,713 28 -
8/22/06 Redmond / Plateau - 2,872 7,603 28 -
8/22/06 Val Vista - 3,686 6,223 28 -
8/22/06 Van Ness - 11,120 13,555 28 -
8/22/06 Sandy Plains - 2,452 4,669 28 -
8/22/06 Country Club Hills - 2,783 5,438 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Leon Valley/Bandera Road 501 3,510 4,011 64
8/22/06 Imperial Valley 1,166 2,784 3,950 51
8/22/06 Sugarland 1,714 3,435 5,149 63
8/22/06 Woodlands 1,353 3,159 4,512 57
8/22/06 Federal Road 1,021 3,114 4,135 57
8/22/06 West University 1,940 8,151 10,091 149
8/22/06 Medical Center/Braeswood II 1,121 4,706 5,827 87
8/22/06 Richardson/Audelia 1,034 2,731 3,765 50
8/22/06 North Austin 2,143 3,702 5,845 68
8/22/06 Warner 1,603 4,029 5,632 74
8/22/06 Universal City 777 3,222 3,999 59
8/22/06 Seattle / Lake City Way 3,406 7,822 11,228 143
8/22/06 Arrowhead 2,372 5,846 8,218 107
8/22/06 Ahwatukee 3,017 6,003 9,020 110
8/22/06 Blossom Valley 2,721 8,446 11,167 155
8/22/06 Jones Bridge 3,065 6,045 9,110 111
8/22/06 Lawrenceville 2,076 5,218 7,294 96
8/22/06 Fox Valley 1,880 3,650 5,530 66
8/22/06 Eagle Creek / Shore Terrace 880 2,909 3,789 54
8/22/06 N. Greenwood/E. County Line - 3,982 3,982 73
8/22/06 Annapolis - 7,467 7,467 137
8/22/06 Creedmoor 3,579 7,394 10,973 135
8/22/06 Painters Crossing 1,582 4,555 6,137 83
8/22/06 Greenville Ave & Meadow 2,066 6,997 9,063 128
8/22/06 Potomac Mills 2,806 7,398 10,204 135
8/22/06 Sterling / Cascades 3,435 7,741 11,176 142
8/22/06 Redmond / Plateau 2,872 7,631 10,503 141
8/22/06 Val Vista 3,686 6,251 9,937 115
8/22/06 Van Ness 11,120 13,583 24,703 249
8/22/06 Sandy Plains 2,452 4,697 7,149 86
8/22/06 Country Club Hills 2,783 5,466 8,249 100
F-107
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Schaumburg / Irving Park Rd - 2,695 4,781 32 -
8/22/06 Clinton Township - 1,917 4,143 28 -
8/22/06 Champions - 1,061 3,207 28 -
8/22/06 Southlake - 2,794 4,760 28 -
8/22/06 City Place - 2,045 5,776 28 -
8/22/06 Bee Cave Road - 3,546 10,341 28 -
8/22/06 Oak Farms - 2,307 8,481 28 -
8/22/06 Henderson Street - 542 5,001 28 -
8/22/06 Merrifield - 5,061 10,949 30 -
8/22/06 Mill Creek - 2,917 7,252 28 -
8/22/06 Pier 57 - 2,042 8,719 28 -
8/22/06 Redmond / 90th - 3,717 7,011 29 -
8/22/06 Seattle / Capital Hill - 12th - 3,811 11,104 283 -
8/22/06 Costa Mesa 2,921 3,622 6,030 86 -
8/22/06 West Park 7,469 11,715 12,915 274 -
8/22/06 Cabot Road 4,355 5,168 9,253 98 -
8/22/06 San Juan Creek 4,701 4,755 10,749 100 -
8/22/06 Rancho San Diego 3,766 4,226 7,652 72 -
8/22/06 Palms 4,697 2,491 11,404 97 -
8/22/06 West Covina 3,759 3,595 7,360 92 -
8/22/06 Woodland Hills 4,767 4,376 11,898 119 -
8/22/06 Long Beach - 3,130 11,211 114 -
8/22/06 Northridge - 4,674 11,164 95 -
8/22/06 Rancho Mirage - 2,614 4,744 88 -
8/22/06 Palm Desert - 1,910 5,462 97 -
8/22/06 Davie - 4,842 9,388 28 -
8/22/06 Portland / I-205 & Division - 2,026 4,299 31 -
8/22/06 Milwaukie/Hwy224 - 2,867 5,926 28 -
8/22/06 River Oaks - 2,625 8,930 28 -
8/22/06 Tacoma / South Sprague Ave - 2,189 4,776 28 -
8/22/06 Vancouver / Hazel Dell - 2,299 4,313 31 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Schaumburg / Irving Park Rd 2,695 4,813 7,508 88
8/22/06 Clinton Township 1,917 4,171 6,088 77
8/22/06 Champions 1,061 3,235 4,296 59
8/22/06 Southlake 2,794 4,788 7,582 88
8/22/06 City Place 2,045 5,804 7,849 106
8/22/06 Bee Cave Road 3,546 10,369 13,915 190
8/22/06 Oak Farms 2,307 8,509 10,816 156
8/22/06 Henderson Street 542 5,029 5,571 92
8/22/06 Merrifield 5,061 10,979 16,040 202
8/22/06 Mill Creek 2,917 7,280 10,197 134
8/22/06 Pier 57 2,042 8,747 10,789 161
8/22/06 Redmond / 90th 3,717 7,040 10,757 129
8/22/06 Seattle / Capital Hill - 12th 3,811 11,387 15,198 208
8/22/06 Costa Mesa 3,622 6,116 9,738 112
8/22/06 West Park 11,715 13,189 24,904 241
8/22/06 Cabot Road 5,168 9,351 14,519 171
8/22/06 San Juan Creek 4,755 10,849 15,604 199
8/22/06 Rancho San Diego 4,226 7,724 11,950 142
8/22/06 Palms 2,491 11,501 13,992 211
8/22/06 West Covina 3,595 7,452 11,047 137
8/22/06 Woodland Hills 4,376 12,017 16,393 221
8/22/06 Long Beach 3,130 11,325 14,455 208
8/22/06 Northridge 4,674 11,259 15,933 207
8/22/06 Rancho Mirage 2,614 4,832 7,446 88
8/22/06 Palm Desert 1,910 5,559 7,469 102
8/22/06 Davie 4,842 9,416 14,258 172
8/22/06 Portland / I-205 & Division 2,026 4,330 6,356 79
8/22/06 Milwaukie/Hwy224 2,867 5,954 8,821 109
8/22/06 River Oaks 2,625 8,958 11,583 165
8/22/06 Tacoma / South Sprague Ave 2,189 4,804 6,993 88
8/22/06 Vancouver / Hazel Dell 2,299 4,344 6,643 79
F-108
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Canyon Park - 3,628 7,327 176 -
8/22/06 South Boulevard 4,269 3,090 6,041 30 1,463
8/22/06 Weddington 3,012 2,172 4,263 31 1,030
8/22/06 Gastonia 2,094 644 2,808 28 507
8/22/06 Amity Ct 1,961 610 1,378 28 313
8/22/06 Pavilion 1,601 1,490 3,114 28 732
8/22/06 Randleman 2,098 1,639 2,707 30 712
8/22/06 Matthews - 1,733 6,457 28 1,220
8/22/06 Eastland 1,736 949 2,159 28 488
8/22/06 Albermarle 3,281 1,557 4,636 28 945
8/22/06 COTT 1,202 429 1,732 28 320
8/22/06 Ashley River - 1,907 4,065 28 947
8/22/06 Clayton - 1,071 2,869 28 608
8/22/06 Dave Lyle - 604 2,111 28 407
8/22/06 English Rd - 437 1,215 28 254
8/22/06 Sunset - 659 1,461 30 334
8/22/06 Cone Blvd 1,057 1,253 2,462 28 595
8/22/06 Wake Forest 704 1,098 2,553 28 573
8/22/06 Silas Creek - 1,304 2,738 28 642
8/22/06 Winston 2,249 1,625 3,368 28 794
8/22/06 Hickory 2,392 1,091 4,271 28 795
8/22/06 Wilkinson 2,069 1,366 3,235 28 720
8/22/06 Lexington 1,212 874 1,806 28 426
8/22/06 Florence 2,889 952 5,557 28 932
8/22/06 Sumter 1,150 560 2,002 28 384
8/22/06 Garners Ferry 2,515 1,418 2,516 28 638
8/22/06 Greenville 1,930 1,816 4,732 28 1,014
8/22/06 Spartanburg 509 799 1,550 28 377
8/22/06 Rockingham 834 376 1,352 32 258
8/22/06 Monroe 2,287 1,578 2,996 28 735
8/22/06 Salisbury 3,434 40 5,488 28 724
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Canyon Park 3,628 7,503 11,131 138
8/22/06 South Boulevard 3,766 6,858 10,624 125
8/22/06 Weddington 2,647 4,849 7,496 89
8/22/06 Gastonia 785 3,202 3,987 59
8/22/06 Amity Ct 743 1,586 2,329 29
8/22/06 Pavilion 1,816 3,548 5,364 65
8/22/06 Randleman 1,998 3,090 5,088 56
8/22/06 Matthews 2,112 7,326 9,438 134
8/22/06 Eastland 1,156 2,468 3,624 45
8/22/06 Albermarle 1,898 5,268 7,166 97
8/22/06 COTT 523 1,986 2,509 37
8/22/06 Ashley River 2,324 4,623 6,947 84
8/22/06 Clayton 1,305 3,271 4,576 60
8/22/06 Dave Lyle 736 2,414 3,150 45
8/22/06 English Rd 533 1,401 1,934 26
8/22/06 Sunset 803 1,681 2,484 31
8/22/06 Cone Blvd 1,527 2,811 4,338 51
8/22/06 Wake Forest 1,338 2,914 4,252 54
8/22/06 Silas Creek 1,589 3,123 4,712 57
8/22/06 Winston 1,980 3,835 5,815 70
8/22/06 Hickory 1,330 4,855 6,185 89
8/22/06 Wilkinson 1,665 3,684 5,349 68
8/22/06 Lexington 1,065 2,069 3,134 38
8/22/06 Florence 1,160 6,309 7,469 116
8/22/06 Sumter 683 2,291 2,974 42
8/22/06 Garners Ferry 1,728 2,872 4,600 52
8/22/06 Greenville 2,213 5,377 7,590 98
8/22/06 Spartanburg 974 1,780 2,754 33
8/22/06 Rockingham 458 1,560 2,018 28
8/22/06 Monroe 1,923 3,414 5,337 63
8/22/06 Salisbury 49 6,231 6,280 114
F-109
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 N. Tryon 2,123 1,271 2,330 31 582
8/22/06 Pineville 4,362 2,609 6,829 33 1,461
8/22/06 Park Rd 4,575 2,667 7,243 29 1,527
8/22/06 Ballantyne - 1,758 3,720 30 869
8/22/06 Stallings 2,454 1,348 2,882 28 671
8/22/06 Concord 2,009 1,147 2,308 28 552
8/22/06 Woodruff 1,623 1,154 1,616 28 463
8/22/06 Shriners 1,796 758 2,347 30 472
8/22/06 Charleston 1,853 604 3,313 36 564
8/22/06 Rock Hill 2,135 993 2,222 33 506
8/22/06 Arrowood 2,798 2,014 4,214 37 989
8/22/06 Country Club - 935 3,439 32 652
8/22/06 Rosewood - 352 2,141 28 356
8/22/06 James Island/Folly Road - 2,061 3,708 28 934
8/22/06 Battleground - 1,995 3,757 28 925
8/22/06 Greenwood Village / DTC Blvd - 684 2,925 99 -
8/22/06 Highlands Ranch/ Colorado Blvd - 793 2,000 110 -
8/22/06 Medical Center 1,727 1,051 3,509 144 -
8/22/06 Seneca Commons - 2,672 5,354 28 1,283
8/22/06 Hermitage 2,245 1,183 3,226 248 -
8/22/06 Capital Blvd South - 3,002 6,273 28 1,474
8/22/06 Franklin 2,876 1,837 4,294 94 -
8/22/06 Rivergate 2,123 1,055 3,384 157 -
8/22/06 Hickory Hollow 1,614 637 2,635 129 -
8/22/06 Southhaven 1,852 1,286 3,578 124 -
8/22/06 Wolfchase 1,465 987 2,816 142 -
8/22/06 Winchester 1,889 676 1,500 158 -
8/22/06 Sycamore View 1,161 705 1,936 166 -
8/22/06 Stones River 2,168 1,090 3,378 110 -
8/22/06 South Main 585 70 186 76 -
8/22/06 Southfield at Telegraph - 1,757 8,341 28 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 N. Tryon 1,549 2,665 4,214 49
8/22/06 Pineville 3,180 7,752 10,932 142
8/22/06 Park Rd 3,250 8,216 11,466 151
8/22/06 Ballantyne 2,142 4,235 6,377 78
8/22/06 Stallings 1,643 3,286 4,929 60
8/22/06 Concord 1,398 2,637 4,035 49
8/22/06 Woodruff 1,406 1,855 3,261 34
8/22/06 Shriners 924 2,683 3,607 50
8/22/06 Charleston 736 3,781 4,517 69
8/22/06 Rock Hill 1,210 2,544 3,754 47
8/22/06 Arrowood 2,454 4,800 7,254 88
8/22/06 Country Club 1,139 3,919 5,058 72
8/22/06 Rosewood 429 2,448 2,877 45
8/22/06 James Island/Folly Road 2,512 4,219 6,731 78
8/22/06 Battleground 2,431 4,274 6,705 78
8/22/06 Greenwood Village / DTC Blvd 684 3,024 3,708 55
8/22/06 Highlands Ranch/ Colorado Blvd 793 2,110 2,903 38
8/22/06 Medical Center 1,051 3,653 4,704 66
8/22/06 Seneca Commons 3,257 6,080 9,337 111
8/22/06 Hermitage 1,183 3,474 4,657 64
8/22/06 Capital Blvd South 3,659 7,118 10,777 130
8/22/06 Franklin 1,837 4,388 6,225 80
8/22/06 Rivergate 1,055 3,541 4,596 65
8/22/06 Hickory Hollow 637 2,764 3,401 51
8/22/06 Southhaven 1,286 3,702 4,988 68
8/22/06 Wolfchase 987 2,958 3,945 54
8/22/06 Winchester 676 1,658 2,334 31
8/22/06 Sycamore View 705 2,102 2,807 38
8/22/06 Stones River 1,090 3,488 4,578 64
8/22/06 South Main 70 262 332 5
8/22/06 Southfield at Telegraph 1,757 8,369 10,126 153
F-110
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Westland - 1,572 3,687 28 -
8/22/06 Dearborn - 1,030 4,847 28 -
8/22/06 Roseville - 1,319 5,210 28 -
8/22/06 Farmington Hills - 982 2,878 28 -
8/22/06 Hunt Club - 2,527 5,483 29 729
8/22/06 Speedway/N. High School Rd - 2,091 3,566 28 -
8/22/06 Alafaya/University Blvd. - 2,817 4,549 28 689
8/22/06 McCoy/528 - 2,656 5,206 35 -
8/22/06 S. Orange Blossom Trail/417 2,990 2,810 6,849 28 870
8/22/06 Alafaya/Mitchell Hammock Road 2,706 2,363 5,092 28 679
8/22/06 Maitland / Lake Ave 4,364 5,146 10,670 29 1,445
8/22/06 S. Semoran / Hoffner Road 2,663 2,633 6,601 30 829
8/22/06 Red Bug / Dodd Road 2,703 2,552 5,959 28 769
8/22/06 Altmonte Springs 2,303 1,703 5,125 29 604
8/22/06 Brandon 2,964 2,810 4,584 28 691
8/22/06 Granada / U.S. 1 2,878 2,682 4,751 40 689
8/22/06 Daytona/Beville 2,867 2,616 6,085 28 786
8/22/06 Eau Gallie 2,576 1,962 4,677 28 599
8/22/06 Hyde Park 2,872 2,719 7,145 28 883
8/22/06 Carrollwood 1,465 2,050 6,221 28 731
8/22/06 Conroy / I-4 1,874 2,091 3,517 28 523
8/22/06 West Waters - 2,190 5,186 28 666
8/22/06 Oldsmar 2,246 2,276 5,253 35 682
8/22/06 Mills North of Colonial 4,566 1,995 5,914 31 701
8/22/06 Alafaya / Colonial 2,828 2,836 4,680 28 701
8/22/06 Fairbanks / I-4 - 2,846 6,612 28 855
8/22/06 Maguire / Colonial - 479 7,521 151 839
10/20/06 Burbank-Rich R. - 3,793 9,103 - -
10/24/06 Stonegate - 651 4,278 - -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Westland 1,572 3,715 5,287 68
8/22/06 Dearborn 1,030 4,875 5,905 89
8/22/06 Roseville 1,319 5,238 6,557 96
8/22/06 Farmington Hills 982 2,906 3,888 54
8/22/06 Hunt Club 2,823 5,945 8,768 109
8/22/06 Speedway/N. High School Rd 2,091 3,594 5,685 66
8/22/06 Alafaya/University Blvd. 3,147 4,936 8,083 91
8/22/06 McCoy/528 2,656 5,241 7,897 96
8/22/06 S. Orange Blossom Trail/417 3,139 7,418 10,557 135
8/22/06 Alafaya/Mitchell Hammock Road 2,640 5,522 8,162 101
8/22/06 Maitland / Lake Ave 5,749 11,541 17,290 212
8/22/06 S. Semoran / Hoffner Road 2,941 7,152 10,093 132
8/22/06 Red Bug / Dodd Road 2,851 6,457 9,308 119
8/22/06 Altmonte Springs 1,903 5,558 7,461 102
8/22/06 Brandon 3,139 4,974 8,113 91
8/22/06 Granada / U.S. 1 2,996 5,166 8,162 95
8/22/06 Daytona/Beville 2,922 6,593 9,515 121
8/22/06 Eau Gallie 2,192 5,074 7,266 93
8/22/06 Hyde Park 3,038 7,737 10,775 142
8/22/06 Carrollwood 2,290 6,740 9,030 124
8/22/06 Conroy / I-4 2,336 3,823 6,159 70
8/22/06 West Waters 2,447 5,623 8,070 103
8/22/06 Oldsmar 2,543 5,703 8,246 105
8/22/06 Mills North of Colonial 2,229 6,412 8,641 118
8/22/06 Alafaya / Colonial 3,168 5,077 8,245 93
8/22/06 Fairbanks / I-4 3,179 7,162 10,341 132
8/22/06 Maguire / Colonial 815 8,175 8,990 149
10/20/06 Burbank-Rich R. 3,793 9,103 12,896 61
10/24/06 Stonegate 651 4,278 4,929 29
F-111
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
Self-storage Facilities - Europe
8/22/06 Wokingham 6,843 3,243 9,492 53 -
8/22/06 Diemen 4,756 1,755 6,901 39 -
8/22/06 Surbiton - 805 2,774 16 -
8/22/06 Veldhoven 4,165 1,347 5,636 32 -
8/22/06 Wuppertal Friedrich-Engels-Alle 4,273 221 2,470 15 -
8/22/06 Mulheim Dusseldorfer Strasse 3,387 567 3,989 23 -
8/22/06 Koln Melatengurtel 5,191 624 5,534 31 -
8/22/06 Dordrecht Ampere 3,648 409 4,786 27 -
8/22/06 Dusseldorf Erkrather Strasse 4,700 1,143 4,052 22 -
8/22/06 Delft 4,369 1,149 6,926 39 -
8/22/06 Marseille Bonneveine 3,918 1,156 6,891 39 -
8/22/06 Utrecht Cartesius 4,344 774 6,092 36 -
8/22/06 Forest 6,314 11 4,815 28 -
8/22/06 Molenbeek 2,211 197 1,974 12 -
8/22/06 Waterloo 6,307 49 8,941 52 -
8/22/06 Aartselaar 3,738 1,847 6,950 38 -
8/22/06 Overijse 2,569 870 4,121 23 -
8/22/06 Leuven 3,629 843 4,804 27 -
8/22/06 Kortrijk 3,000 520 3,319 19 -
8/22/06 Brugge 2,536 659 3,024 16 -
8/22/06 Antwerpen Bredabaan 3,402 1,759 3,822 20 -
8/22/06 Luik 2,330 571 4,101 23 -
8/22/06 Linkeroever 2,319 551 2,884 17 -
8/22/06 Borgerhout 3,215 17 2,001 12 -
8/22/06 Zaventem 4,451 3,361 6,931 38 -
8/22/06 Machelen 2,813 1,696 4,871 28 -
8/22/06 Ghent 4,292 897 7,778 (2,091) -
8/22/06 Sint Pieters Leeuw 2,619 729 3,924 23 -
8/22/06 Jette 4,749 1,643 6,733 (89) -
8/22/06 Wavre 2,458 610 4,031 22 -
8/22/06 Den Haag 5,485 166 11,472 66 -
8/22/06 Rotterdam 3,341 29 9,644 56 -
8/22/06 Utrecht Nieuwegein 4,310 2,563 9,799 55 -
8/22/06 Amsterdam 3,059 7 9,047 53 -
8/22/06 Zaandam 4,031 398 5,887 35 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date --------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Wokingham 3,241 9,547 12,788 137
8/22/06 Diemen 1,754 6,941 8,695 100
8/22/06 Surbiton 804 2,791 3,595 40
8/22/06 Veldhoven 1,346 5,669 7,015 81
8/22/06 Wuppertal Friedrich-Engels-Alle 221 2,485 2,706 35
8/22/06 Mulheim Dusseldorfer Strasse 567 4,012 4,579 57
8/22/06 Koln Melatengurtel 623 5,566 6,189 80
8/22/06 Dordrecht Ampere 409 4,813 5,222 69
8/22/06 Dusseldorf Erkrather Strasse 1,142 4,075 5,217 58
8/22/06 Delft 1,148 6,966 8,114 101
8/22/06 Marseille Bonneveine 1,155 6,931 8,086 101
8/22/06 Utrecht Cartesius 774 6,128 6,902 88
8/22/06 Forest 11 4,843 4,854 70
8/22/06 Molenbeek 197 1,986 2,183 28
8/22/06 Waterloo 49 8,993 9,042 130
8/22/06 Aartselaar 1,845 6,990 8,835 101
8/22/06 Overijse 869 4,145 5,014 60
8/22/06 Leuven 842 4,832 5,674 70
8/22/06 Kortrijk 520 3,338 3,858 48
8/22/06 Brugge 658 3,041 3,699 44
8/22/06 Antwerpen Bredabaan 1,757 3,844 5,601 55
8/22/06 Luik 570 4,125 4,695 59
8/22/06 Linkeroever 551 2,901 3,452 41
8/22/06 Borgerhout 17 2,013 2,030 28
8/22/06 Zaventem 3,359 6,971 10,330 101
8/22/06 Machelen 1,695 4,900 6,595 71
8/22/06 Ghent 896 5,688 6,584 113
8/22/06 Sint Pieters Leeuw 729 3,947 4,676 57
8/22/06 Jette 1,642 6,645 8,287 97
8/22/06 Wavre 609 4,054 4,663 58
8/22/06 Den Haag 166 11,538 11,704 166
8/22/06 Rotterdam 29 9,700 9,729 141
8/22/06 Utrecht Nieuwegein 2,561 9,856 12,417 143
8/22/06 Amsterdam 7 9,100 9,107 132
8/22/06 Zaandam 398 5,922 6,320 85
F-112
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Amersfoort 8,568 17 7,473 44 -
8/22/06 Apeldoorn 3,638 999 6,091 34 -
8/22/06 Breda 4,442 824 6,985 40 -
8/22/06 Spaanse Polder 2,459 - 5,690 33 -
8/22/06 Kerkrade - Heerlen 3,486 381 5,097 28 -
8/22/06 Heemstede 9,292 18 8,564 50 -
8/22/06 Rotterdam Stadionweg 3,304 419 5,842 33 -
8/22/06 Dordrecht II 4,524 815 5,524 32 -
8/22/06 Nijmegen 2,665 - 5,328 31 -
8/22/06 Ede 3,652 867 5,406 30 -
8/22/06 Rijswijk 3,643 949 5,956 35 -
8/22/06 Spijkenisse 3,765 633 6,573 38 -
8/22/06 Maastricht 3,405 923 4,874 28 -
8/22/06 Essen Martin Luther Strasse 5,078 1,875 5,771 32 -
8/22/06 KUNGENS KURVA 4,001 5,473 7,911 41 -
8/22/06 TABY 3,709 2,249 11,309 64 -
8/22/06 JAKOBSBERG 3,095 1,971 8,920 50 -
8/22/06 RISSNE 4,460 111 11,258 65 -
8/22/06 SOLNA 7,391 2,666 17,961 103 -
8/22/06 UPPSALA 3,766 1,413 9,818 56 -
8/22/06 HOGDALEN 4,197 1,192 9,475 55 -
8/22/06 HANDEN 4,081 1,548 11,019 63 -
8/22/06 MOLNDAL (GBG) 3,903 2,828 9,605 54 -
8/22/06 SODERMALM 1,487 15 2,729 16 -
8/22/06 UPPLANDS VASBY 4,328 1,196 8,090 46 -
8/22/06 SKONDAL 4,072 62 11,110 64 -
8/22/06 LUNDAVAGEN (MMO) 4,593 1,866 8,390 47 -
8/22/06 MORABERG (STHLM) 3,760 1,552 7,071 40 -
8/22/06 LUND (MMO) 3,236 1,485 5,766 33 -
8/22/06 YSTADSVAGEN (MMO) 3,495 908 7,632 44 -
8/22/06 MINELUND (GBG) 4,054 1,763 8,292 46 -
8/22/06 VASTRA FROLUNDA (GBG) 4,080 2,184 8,140 46 -
8/22/06 DANDERYD 4,699 2,571 9,366 52 -
8/22/06 ARSTABERG 4,281 69 9,846 57 -
8/22/06 Hvidovre 5,341 1,576 10,166 57 -
8/22/06 Ishoj 4,017 816 8,048 46 -
8/22/06 Roskilde 5,143 794 8,723 50 -
8/22/06 Horsholm 5,076 2,364 10,860 61 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date --------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-----------------------------------------------------------------------------------------------------------
8/22/06 Amersfoort 17 7,517 7,534 108
8/22/06 Apeldoorn 998 6,126 7,124 88
8/22/06 Breda 823 7,026 7,849 101
8/22/06 Spaanse Polder - 5,723 5,723 82
8/22/06 Kerkrade - Heerlen 380 5,126 5,506 74
8/22/06 Heemstede 18 8,614 8,632 124
8/22/06 Rotterdam Stadionweg 418 5,876 6,294 85
8/22/06 Dordrecht II 815 5,556 6,371 80
8/22/06 Nijmegen - 5,359 5,359 77
8/22/06 Ede 866 5,437 6,303 78
8/22/06 Rijswijk 949 5,991 6,940 86
8/22/06 Spijkenisse 633 6,611 7,244 95
8/22/06 Maastricht 922 4,903 5,825 70
8/22/06 Essen Martin Luther Strasse 1,874 5,804 7,678 83
8/22/06 KUNGENS KURVA 5,468 7,957 13,425 114
8/22/06 TABY 2,247 11,375 13,622 164
8/22/06 JAKOBSBERG 1,969 8,972 10,941 129
8/22/06 RISSNE 111 11,323 11,434 163
8/22/06 SOLNA 2,664 18,066 20,730 260
8/22/06 UPPSALA 1,412 9,875 11,287 142
8/22/06 HOGDALEN 1,191 9,531 10,722 136
8/22/06 HANDEN 1,547 11,083 12,630 159
8/22/06 MOLNDAL (GBG) 2,826 9,661 12,487 139
8/22/06 SODERMALM 15 2,745 2,760 39
8/22/06 UPPLANDS VASBY 1,195 8,137 9,332 116
8/22/06 SKONDAL 61 11,175 11,236 161
8/22/06 LUNDAVAGEN (MMO) 1,864 8,439 10,303 121
8/22/06 MORABERG (STHLM) 1,551 7,112 8,663 102
8/22/06 LUND (MMO) 1,484 5,800 7,284 83
8/22/06 YSTADSVAGEN (MMO) 908 7,676 8,584 110
8/22/06 MINELUND (GBG) 1,761 8,340 10,101 119
8/22/06 VASTRA FROLUNDA (GBG) 2,182 8,188 10,370 117
8/22/06 DANDERYD 2,569 9,420 11,989 134
8/22/06 ARSTABERG 69 9,903 9,972 142
8/22/06 Hvidovre 1,574 10,225 11,799 147
8/22/06 Ishoj 815 8,095 8,910 117
8/22/06 Roskilde 793 8,774 9,567 126
8/22/06 Horsholm 2,362 10,923 13,285 158
F-113
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Croydon 6,228 12,151 8,992 44 -
8/22/06 Streatham 5,100 6,351 6,134 30 -
8/22/06 Reading 7,416 6,955 8,859 47 -
8/22/06 Hayes 6,146 5,121 10,468 57 -
8/22/06 Hanworth 6,098 7,586 9,661 51 -
8/22/06 Ewell 6,251 5,351 14,127 79 -
8/22/06 Neasden 8,174 5,514 9,178 49 -
8/22/06 Putney 8,331 6,032 14,902 83 -
8/22/06 Greenford 9,600 8,747 11,122 59 -
8/22/06 Ruislip 5,036 - 14,975 87 -
8/22/06 Gypsy Corner 7,470 9,299 11,086 58 -
8/22/06 Montrouge 3,127 25 10,697 62 -
8/22/06 Varlin 310 - 1,348 8 -
8/22/06 Nice 4,134 2,379 7,015 39 -
8/22/06 Osny 3,240 820 6,050 34 -
8/22/06 Nanterre 5,687 3,668 15,878 90 -
8/22/06 Port-Marly 3,629 1,702 9,647 54 -
8/22/06 Fresnes 4,456 2,680 9,012 50 -
8/22/06 Ballainvilliers 4,036 1,643 7,711 42 -
8/22/06 Pontault Combault 3,339 908 7,096 41 -
8/22/06 Villejust 3,962 981 9,134 53 -
8/22/06 Asnieres 5,906 3,057 14,566 83 -
8/22/06 Rosny 4,144 1,619 9,876 56 -
8/22/06 Buchelay 3,986 950 5,152 30 -
8/22/06 Coignieres 3,720 1,142 7,511 42 -
8/22/06 Grigny 4,006 548 7,518 43 -
8/22/06 Marseille 4,685 365 6,148 35 -
8/22/06 Epinay 4,045 417 6,395 37 -
8/22/06 Thiais 5,739 2,602 7,221 40 -
8/22/06 Vitrolles 4,224 581 6,380 37 -
8/22/06 La Seyne 3,720 1,047 6,978 41 -
8/22/06 Sevran 4,224 933 8,155 47 -
8/22/06 Noisy 5,131 1,347 7,537 43 -
8/22/06 Lyon Gerland 4,455 991 4,578 25 -
8/22/06 Chambourcy 5,142 1,867 8,415 47 -
8/22/06 West London - 5,730 14,278 79 -
8/22/06 Monchengladbach Krefelder Strasse 4,448 1,510 4,425 24 -
8/22/06 Monchengladbach Waldnieler Strasse 4,601 1,846 4,416 24 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
---------------------------------------------------------------------------------------------------------
8/22/06 Croydon 12,142 9,045 21,187 129
8/22/06 Streatham 6,346 6,169 12,515 88
8/22/06 Reading 6,950 8,911 15,861 127
8/22/06 Hayes 5,117 10,529 15,646 151
8/22/06 Hanworth 7,580 9,718 17,298 139
8/22/06 Ewell 5,347 14,210 19,557 204
8/22/06 Neasden 5,510 9,231 14,741 130
8/22/06 Putney 6,028 14,989 21,017 215
8/22/06 Greenford 8,741 11,187 19,928 158
8/22/06 Ruislip - 15,062 15,062 216
8/22/06 Gypsy Corner 9,292 11,151 20,443 159
8/22/06 Montrouge 25 10,759 10,784 156
8/22/06 Varlin - 1,356 1,356 20
8/22/06 Nice 2,377 7,056 9,433 102
8/22/06 Osny 819 6,085 6,904 88
8/22/06 Nanterre 3,665 15,971 19,636 232
8/22/06 Port-Marly 1,700 9,703 11,403 141
8/22/06 Fresnes 2,678 9,064 11,742 131
8/22/06 Ballainvilliers 1,641 7,755 9,396 112
8/22/06 Pontault Combault 907 7,138 8,045 103
8/22/06 Villejust 981 9,187 10,168 133
8/22/06 Asnieres 3,055 14,651 17,706 213
8/22/06 Rosny 1,617 9,934 11,551 144
8/22/06 Buchelay 950 5,182 6,132 74
8/22/06 Coignieres 1,141 7,554 8,695 109
8/22/06 Grigny 547 7,562 8,109 109
8/22/06 Marseille 364 6,184 6,548 89
8/22/06 Epinay 417 6,432 6,849 93
8/22/06 Thiais 2,600 7,263 9,863 105
8/22/06 Vitrolles 581 6,417 6,998 92
8/22/06 La Seyne 1,047 7,019 8,066 101
8/22/06 Sevran 933 8,202 9,135 118
8/22/06 Noisy 1,346 7,581 8,927 109
8/22/06 Lyon Gerland 990 4,604 5,594 66
8/22/06 Chambourcy 1,865 8,464 10,329 122
8/22/06 West London 5,726 14,361 20,087 206
8/22/06 Monchengladbach Krefelder Strasse 1,509 4,450 5,959 64
8/22/06 Monchengladbach Waldnieler Strasse 1,844 4,442 6,286 64
F-114
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Dusseldorf Heerdter Landstrasse 4,161 1,125 4,708 27 -
8/22/06 Osterbro 5,237 2,345 8,334 46 -
8/22/06 Tarnby 5,202 1,731 6,210 34 -
8/22/06 Krefeld Diessemer Bruch 3,905 932 4,819 27 -
8/22/06 Herlev 4,823 2,149 5,500 30 -
8/22/06 Bonn Bornheimer Strasse 4,705 2,072 5,044 28 -
8/22/06 Amager 4,940 534 7,598 44 -
8/22/06 Koln Clevischer Ring 3,958 1,247 4,812 27 -
8/22/06 Edgeware 8,121 3,569 8,811 48 -
8/22/06 Forest Hill 7,659 3,443 9,126 51 -
8/22/06 Wallington 6,756 2,047 8,402 47 -
8/22/06 Helsingborg 3,633 652 4,920 27 -
8/22/06 Vallingby 4,710 2,288 6,933 38 -
8/22/06 Eragny 4,179 892 5,672 32 -
8/22/06 Utrecht Franciscus 4,951 2,882 4,757 26 -
8/22/06 Amsterdam Sneevliet 4,722 - 5,615 32 -
8/22/06 Sucy 4,914 3,743 4,227 21 -
8/22/06 Tilburg 3,883 1,265 4,629 26 -
8/22/06 Almere 4,440 1,294 5,654 32 -
8/22/06 Wattignies 3,605 712 4,930 28 -
8/22/06 Eindhoven Praxis 3,156 - 4,835 29 -
8/22/06 Pessac 4,354 1,443 5,531 31 -
8/22/06 Amstelveen 2,726 - 3,792 22 -
8/22/06 Lyon Vaise 4,432 2,084 4,486 25 -
8/22/06 Amsterdam Badhoeve 3,931 1,542 4,573 25 -
8/22/06 Wambrechies 3,246 1,615 3,136 17 -
8/22/06 Merignac 4,098 1,282 5,193 30 -
8/22/06 Pierrefitte 4,662 1,917 5,338 30 -
8/22/06 Avignon 3,773 1,456 4,738 25 -
8/22/06 Wasquehal 3,917 961 5,205 29 -
8/22/06 Lormont 4,076 956 5,792 32 -
8/22/06 Lyon Sarrazin 4,631 660 6,568 37 -
8/22/06 Hatch End 8,185 3,010 7,910 44 -
8/22/06 Nacka 5,148 1,072 6,507 37 -
8/22/06 Kgl Tennishallen 1,086 - 1,373 8 -
8/22/06 Den Haag 2, Lozerlaan 3,073 - 4,615 27 -
8/22/06 Zoetermeer 3,091 - 4,368 25 -
8/22/06 Aix La Pioline 5,121 1,661 5,945 35 -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date --------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
-----------------------------------------------------------------------------------------------------------
8/22/06 Dusseldorf Heerdter Landstrasse 1,124 4,736 5,860 68
8/22/06 Osterbro 2,343 8,382 10,725 121
8/22/06 Tarnby 1,729 6,246 7,975 90
8/22/06 Krefeld Diessemer Bruch 931 4,847 5,778 70
8/22/06 Herlev 2,147 5,532 7,679 80
8/22/06 Bonn Bornheimer Strasse 2,071 5,073 7,144 73
8/22/06 Amager 534 7,642 8,176 110
8/22/06 Koln Clevischer Ring 1,246 4,840 6,086 69
8/22/06 Edgeware 3,566 8,862 12,428 126
8/22/06 Forest Hill 3,441 9,179 12,620 131
8/22/06 Wallington 2,045 8,451 10,496 120
8/22/06 Helsingborg 651 4,948 5,599 70
8/22/06 Vallingby 2,286 6,973 9,259 99
8/22/06 Eragny 891 5,705 6,596 82
8/22/06 Utrecht Franciscus 2,880 4,785 7,665 69
8/22/06 Amsterdam Sneevliet - 5,647 5,647 81
8/22/06 Sucy 3,740 4,251 7,991 61
8/22/06 Tilburg 1,264 4,656 5,920 67
8/22/06 Almere 1,293 5,687 6,980 82
8/22/06 Wattignies 712 4,958 5,670 71
8/22/06 Eindhoven Praxis - 4,864 4,864 70
8/22/06 Pessac 1,442 5,563 7,005 80
8/22/06 Amstelveen - 3,814 3,814 55
8/22/06 Lyon Vaise 2,082 4,513 6,595 65
8/22/06 Amsterdam Badhoeve 1,541 4,599 6,140 66
8/22/06 Wambrechies 1,614 3,154 4,768 45
8/22/06 Merignac 1,281 5,224 6,505 75
8/22/06 Pierrefitte 1,916 5,369 7,285 77
8/22/06 Avignon 1,454 4,765 6,219 69
8/22/06 Wasquehal 960 5,235 6,195 75
8/22/06 Lormont 955 5,825 6,780 84
8/22/06 Lyon Sarrazin 659 6,606 7,265 95
8/22/06 Hatch End 3,008 7,956 10,964 113
8/22/06 Nacka 1,071 6,545 7,616 93
8/22/06 Kgl Tennishallen - 1,381 1,381 20
8/22/06 Den Haag 2, Lozerlaan - 4,642 4,642 67
8/22/06 Zoetermeer - 4,393 4,393 63
8/22/06 Aix La Pioline 1,661 5,980 7,641 86
F-115
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
8/22/06 Poissonniers 10,779 2,160 14,646 85 -
8/22/06 Marseille le cannet 2,920 925 2,844 16 -
8/22/06 Groot-Bijgaarden 4,690 2,321 4,749 28 -
8/22/06 Aubervilliers la Villette - - 544 4 -
8/22/06 Charenton - - 1,946 11 -
8/22/06 Lille Lezennes - - 13 - -
8/22/06 Nanterre - la Defense 8,805 3,908 8,718 48 -
8/22/06 Bezons - Pont 5,733 2,194 5,785 33 -
8/22/06 Clichy Republique 5,881 4,641 6,112 32 -
8/22/06 Creteil - RN6 7,401 1,754 7,311 40 -
8/22/06 Lyon - Jean Mace 3,183 419 3,012 18 -
11/16/06 Camberley 8,054 3,266 9,786 - -
12/1/06 Jean Jaures 6,188 3,016 8,034 - -
12/1/06 bezon 2,880 1,611 5,778 - -
12/19/06 Munkeback 2,203 1,193 3,920 - -
12/27/06 Evere 2,144 1,645 3,288 - -
12/27/06 Gent 2, Antwerpsestw 3,303 875 3,673 - -
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
8/22/06 Poissonniers 2,160 14,731 16,891 212
8/22/06 Marseille le cannet 925 2,860 3,785 41
8/22/06 Groot-Bijgaarden 2,321 4,777 7,098 69
8/22/06 Aubervilliers la Villette - 548 548 8
8/22/06 Charenton - 1,957 1,957 28
8/22/06 Lille Lezennes - 13 13 -
8/22/06 Nanterre - la Defense 3,905 8,769 12,674 126
8/22/06 Bezons - Pont 2,193 5,819 8,012 84
8/22/06 Clichy Republique 4,638 6,147 10,785 88
8/22/06 Creteil - RN6 1,752 7,353 9,105 106
8/22/06 Lyon - Jean Mace 419 3,030 3,449 43
11/16/06 Camberley 3,266 9,786 13,052 30
12/1/06 Jean Jaures 3,016 8,034 11,050 1
12/1/06 bezon 1,611 5,778 7,389 15
12/19/06 Munkeback 1,193 3,920 5,113 -
12/27/06 Evere 1,645 3,288 4,933 -
12/27/06 Gent 2, Antwerpsestw 875 3,673 4,548 -
F-116
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting
---------------------------- from the
2006 Costs Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition Interest
--------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------
Other properties
2/16/96 Glendale/Western Avenue - 1,622 3,771 15,867 -
8/22/06 Corporate - Belgium - 2 6,460 44 -
8/22/06 Seattle/Valley St. - 4,016 20,995 - -
12/13/99 Burlingame - 4,043 9,434 327 -
4/28/00 San Diego/Sorrento - 1,282 3,016 322 -
6/1/98 Renton / Sw 39th St. - 725 2,196 51 -
6/29/98 Pompano Bch/Center Port Circle - 795 2,312 23 -
12/30/99 Tamarac Parkway - 1,902 4,467 1,347 -
12/29/00 Gardena - 1,737 5,456 27 -
4/2/02 Long Beach - 887 6,251 15 -
8/22/06 Lakewood / 512 - 4,437 6,685 7 -
8/22/06 Olive Innerbelt - 787 3,023 - -
8/22/06 St. Peters (land) - 1,138 - - -
8/22/06 Monocacy (land) - 1,386 - - -
8/22/06 Dolfield (land) - 643 - - -
8/22/06 Village of Bee Caves (land) - 544 - - -
8/22/06 Fontana (land) - 99 - - -
Construction in Progress - - - 90,038 -
----------------------------------------------------------------------
$ 1,028,190 $ 2,900,564 $ 7,276,819 $ 805,495 $ 369,025
======================================================================
PUBLIC STORAGE, INC.
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Gross Carrying Amount
At December 31, 2006
Date -------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------
(Dollar amounts in thousands)
----------------------------------------------------------------------------------------------------------
Other properties
2/16/96 Glendale/Western Avenue 1,615 19,645 21,260 16,654
8/22/06 Corporate - Belgium 2 6,504 6,506 52
8/22/06 Seattle/Valley St. 4,016 20,995 25,011 301
12/13/99 Burlingame 4,042 9,762 13,804 2,811
4/28/00 San Diego/Sorrento 1,023 3,597 4,620 1,104
6/1/98 Renton / Sw 39th St. 725 2,247 2,972 851
6/29/98 Pompano Bch/Center Port Circle 795 2,335 3,130 823
12/30/99 Tamarac Parkway 1,890 5,826 7,716 1,001
12/29/00 Gardena 1,737 5,483 7,220 1,055
4/2/02 Long Beach 886 6,267 7,153 717
8/22/06 Lakewood / 512 4,437 6,692 11,129 96
8/22/06 Olive Innerbelt 787 3,023 3,810 43
8/22/06 St. Peters (land) 1,138 - 1,138 -
8/22/06 Monocacy (land) 1,386 - 1,386 -
8/22/06 Dolfield (land) 643 - 643 -
8/22/06 Village of Bee Caves (land) 544 - 544 -
8/22/06 Fontana (land) 99 - 99 -
Construction in Progress - 90,038 90,038 -
-------------------------------------------------------
$ 2,959,875 $ 8,392,028 $ 11,351,903 $ 1,754,362
=======================================================
F-117