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, 2007.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ---------- to -------------.
Commission File Number: 001-33519
PUBLIC STORAGE
(Exact name of Registrant as specified in its charter)
Maryland 95-3551121
------------------- ---------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
or organization) Identification Number)
701 Western Avenue, Glendale, California 91201-2349
---------------------------------------------------
(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
-------------------------------------------------------------------------------- -------------------------
Depositary Shares Each Representing 1/1,000 of a 7.500% Cumulative Preferred
Share, Series V $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.500% Cumulative Preferred
Share, Series W $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.450% Cumulative Preferred
Share, Series X $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.250% Cumulative Preferred
Share, Series Z $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.125% Cumulative Preferred
Share, Series A $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 7.125% Cumulative Preferred
Share, Series B $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.600% Cumulative Preferred
Share, Series C $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.180% Cumulative Preferred
Share, Series D $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.750% Cumulative Preferred
Share, Series E $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.450% Cumulative Preferred
Share, Series F $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 7.000% Cumulative Preferred
Share, Series G $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.950% Cumulative Preferred
Share, Series H $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 7.250% Cumulative Preferred
Share, Series I $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 7.250% Cumulative Preferred
Share, Series K $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.750% Cumulative Preferred
Share, Series L $.01 par value............................................. New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 6.625% Cumulative Preferred New York Stock Exchange
Share, Series M $.01 par value.............................................
Depositary Shares Each Representing 1/1,000 of a 7.000% Cumulative Preferred New York Stock Exchange
Share, Series N $.01 par value.............................................
Depositary Shares Each Representing 1/1,000 of an Equity Share, Series A, $.01 par
value...................................................................... New York Stock Exchange
Common Shares, $.10 par value................................................... New York Stock Exchange
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. [ ]
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, a non-accelerated filer or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer [X] Accelerated Filer [ ] Non-accelerated Filer [ ]
Smaller Reporting Company [ ]
The aggregate market value of the voting and non-voting common shares held by
non-affiliates of the Registrant as of June 30, 2007:
Common Shares, $0.10 Par Value - $9,489,916,000 (computed on the basis of $76.82
per share which was the reported closing sale price of the Company's Common
Shares on the New York Stock Exchange on June 30, 2007.
Depositary Shares Each Representing 1/1,000 of an Equity Share, Series A, $.01
Par Value - $193,447,000 (computed on the basis of $26.01 per share which was
the reported closing sale price of the Depositary Shares each Representing
1/1,000 of an Equity Share, Series A on the New York Stock Exchange on June 30,
2007.
As of February 27, 2008, the number of outstanding Common Shares, $.10 par
value, was 170,599,924 shares and the number of outstanding Depositary Shares
Each Representing 1/1,000 of an Equity Share, Series A, $.01 par value, was
8,744,193 (representing 8,744.193 Equity Shares, 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 2008 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
--------------------------
This Annual Report on Form 10-K contains forward-looking statements within
the meaning of the federal securities laws. 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,"
"plans," "would," "should," "may," "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. As
a result, you should not rely on any forward-looking statements in this report,
or which management may make orally or in writing from time to time, as
predictions of future events nor guarantees of future performance. We caution
you not to place undue reliance on forward-looking statements, which speak only
as the date of this report or as of the dates indicated in the statements. All
of our forward-looking statements, including those in this report, are qualified
in their entirely by this statement. We expressly 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. Accordingly, you should use caution in relying on past forward-looking
statements to anticipate future results.
Factors and risks that may impact our future results and performance
include, but are not limited to, those described in Item 1A, "Risk Factors" and
in our other filings with the Securities and Exchange Commission. ("SEC"). These
risks include, among others, the following:
o general risks associated with the ownership and operation of real
estate including changes in demand, potential liability for
environmental contamination, adverse changes in tax, real estate and
zoning laws and regulations, and the impact of natural disasters;
o risks associated with downturns in the national and local economies in
the markets in which we operate;
o the risk that Public Storage may for any reason be unable to finalize
negotiations and completion of a possible transaction involving
Shurgard Europe;
o the impact of competition from new and existing self-storage and
commercial facilities and other storage alternatives;
o difficulties in our ability to successfully evaluate, finance,
integrate into our existing operations and manage acquired and
developed properties;
o risks related to our participation in joint ventures;
o risks associated with international operations including, but not
limited to, unfavorable foreign currency rate fluctuations that could
adversely affect our earnings and cash flows;
o 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 ("REITs");
o risks associated with a possible failure by us to qualify as a REIT
under the Internal Revenue Code of 1986, as amended;
o disruptions or shutdowns of our automated processes and systems;
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o difficulties in raising capital at a reasonable cost;
o delays in the development process; and
o economic uncertainty due to the impact of war or terrorism.
The risks included here are not exhaustive as it is not possible for
management to predict all possible risk factors that may exist or emerge from
time to time. Investors should refer to our quarterly reports on Form 10-Q for
future periods and current reports on Form 8-K and other information filed from
time to time with the SEC Commission for additional information.
GENERAL
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Public Storage was organized in 1980. Effective June 1, 2007, following
approval by our shareholders, we reorganized Public Storage, Inc. into Public
Storage, a Maryland real estate investment trust (referred to herein as "the
Company", "the Trust", "we", "us", or "our"). We are a fully integrated,
self-administered and self-managed 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. We are the largest owner and operator of
self-storage facilities in the United States ("U.S."), and we have an interest
in what we believe is the largest owner and operator of self-storage facilities
in Europe. We significantly increased the scope and scale of our operations on
August 22, 2006, when we merged with Shurgard Storage Centers, Inc. ("Shurgard"
and the merger referred to as the "Shurgard Merger"), a REIT which had an
interest in 487 self-storage facilities located in the U.S. and an interest in
the self-storage business in seven Western European countries.
At December 31, 2007, we had direct and indirect equity interests in 2,012
self-storage facilities located in 38 states within the U.S. operating under the
"Public Storage" name containing approximately 126 million net rentable square
feet of space, and 174 self-storage facilities located in seven Western European
countries which operate under the "Shurgard Storage Centers" name containing
approximately nine million net rentable square feet of space. We also have
direct and indirect equity interests in approximately 21 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 brands.
We currently operate within three reportable segments: (i) Domestic
self-storage operations, (ii) European self-storage operations and (iii)
domestic ancillary operations. These segments are organized generally based upon
their operating characteristics. The Domestic self-storage segment comprises the
direct ownership, development, and operation of traditional self-storage
facilities in the U.S., and the ownership of equity interests in entities that
own self-storage properties in the U.S. The European self-storage segment
comprises the direct or indirect ownership, development, and operation of
self-storage facilities in Europe that we acquired in the Shurgard Merger. The
domestic ancillary operations segment includes 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 which own commercial
space. We have a 45% ownership interest in PSB, which, as of December 31, 2007,
owned and operated commercial properties containing approximately 19.6 million
net rentable square feet of commercial space. PSB is a publicly traded REIT
whose common stock trades on the American Stock Exchange under the symbol "PSB."
For all taxable years subsequent to 1980, we qualified and intend to
continue to qualify as a REIT, as defined in Section 856 of the Internal Revenue
Code. As a REIT, we do not incur federal or significant state taxes on that
portion of our taxable income which is distributed to our shareholders, provided
that we meet certain tests. 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.
4
We have reported annually to the 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 includes 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 Annual Report on Forms 10-K, quarterly reports on Form 10-Q,
and current reports on Form 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.
MANAGEMENT
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Ronald L. Havner, Jr. (50) has been Vice Chairman, Chief Executive Officer
and a trustee of the Company since November 7, 2002 and President since July 1,
2005. Mr. Havner joined Public Storage in 1986 and has held a variety of
positions, including Chairman of the Board of Directors for the Company's
affiliate, PSB.
B. Wayne Hughes (74) is Chairman of the Board of Trustees, a position he
has held since 1991. Mr. Hughes founded the Public Storage organization in 1972.
Our executive management team and their years of experience with the
Company are as follows: John Reyes (47), Senior Vice President - Chief Financial
Officer, 17 years; John S. Baumann (47), Senior Vice President - Chief Legal
Officer, four years; John E. Graul (56), Senior Vice President and President,
Self-Storage Operations, four years; Candace N. Krol (46), Senior Vice President
of Human Resources, two years and David F. Doll (49), Senior Vice President and
President, Real Estate Group, three years.
Our senior management has a significant ownership position in the Company
with executive officers, trustees and their families, including the Hughes
Family, owning approximately 43.5 million shares or 25.5% of the common shares
as of February 28, 2008.
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
-----------
Competition in the market areas in which we operate is significant and
affects the occupancy levels, rental rates, rental income 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
management team, 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.
The self-storage industry remains fragmented in the U.S. We believe that we
own approximately 8% of the aggregate self-storage square footage in the U.S.,
and that the five largest self-storage operators in the U.S. own only 17% of the
aggregate self-storage space in the U.S., with the remaining 83% owned by
numerous private regional and local operators. We believe that this market
fragmentation enhances the advantage of our economies of scale relative to our
other operators, and could result in potential growth in our platform through
5
acquisitions over the long term. We think that we are well positioned to
capitalize on this potential due to our demonstrated access to capital and
national presence.
The self-storage industry in Europe is relatively new as compared to the
U.S, with customer awareness of the product lower than in the U.S. We believe
there are approximately 1,090 self-storage facilities throughout Europe, as
compared to approximately 40,000 self-storage facilities throughout the U.S. See
also "Capitalize on the Potential for Growth in Europe" below. While competition
is increasing, we believe that we are the largest self-storage operator in
Western Europe at December 31, 2007.
BUSINESS ATTRIBUTES
-------------------
We believe that we possess several primary business attributes that permit
us to compete effectively:
CENTRALIZED INFORMATION NETWORKS: Our facilities in the U.S. and Europe are
part of comprehensive centralized reporting and information networks which
enable our U.S. and European management teams to identify changing market
conditions and operating trends as well as analyze customer data, and quickly
change our properties' pricing and promotional mix on an automated basis.
NATIONAL TELEPHONE RESERVATION CENTER: In the U.S., we operate a
centralized telephone reservation system, 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
centralized telephone reservation system enhances our ability to market storage
space in the United States relative to handling these calls at individual
properties, because it allows us to more effectively offer all spaces at all
facilities in the vicinity of a customer and we can provide higher-quality
selling efforts through dedicated sales specialists trained in a central
location. We also provide customers the opportunity to review space availability
and make reservations online through our website, www.publicstorage.com.
ECONOMIES OF SCALE: We are the largest provider of self-storage space in
the U.S. and Europe. As of December 31, 2007, we operated 2,186 storage
facilities in which we had an interest and managed 31 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, 2007, we had over
1,095,000 self-storage spaces rented. The size and scope of our operations have
enabled us to achieve high operating margins and a low level of administrative
costs relative to revenues, through the centralization of many functions with
specialists, such as facility maintenance, employee compensation and benefits
programs, pricing of our product, as well as the development and documentation
of standardized operating procedures. We also believe that our major market
concentration provides managerial efficiencies stemming from having a large
number of facilities in close proximity to each other.
BRAND NAME RECOGNITION: Our operations in the U.S. 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. Our facilities tend to be in highly visible and heavily populated
areas, improving the local awareness of our brand. Customer awareness of
self-storage in Europe is emerging. All of our facilities in Europe are
operating under the "Shurgard Storage Centers" brand name. We believe we are the
single largest self-storage operator in Western Europe as of December 31, 2007.
MAJOR MARKET CONCENTRATION IN THE U.S.: We focus our operations in the
major markets in the U.S., which we believe enhances our marketing efficiency.
We can economically purchase large, prominent, well-placed yellow page ads that
allow us to reach the consumer more effectively than smaller operators. We are
also able to purchase and bid aggressively for multiple-keyword advertising on
national Internet search engines. In addition, we are able to market efficiently
using television as a media source. We believe that our competitors cannot use
television advertising, because their limited concentration of facilities does
not provide a sufficient potential customer base to offset the high cost of
television advertising.
6
In addition, we believe that in recent years, zoning requirements in some
of the major metropolitan markets in which we operate in the U.S. have
increased, resulting in more barriers to new competition. While this has limited
our new development opportunities, it has minimized supply increases and
competition with certain of our properties.
RETAIL OPERATIONS: Through a taxable REIT subsidiary, we sell retail items
associated with the storage business and rent trucks at our self-storage
facilities in order to supplement and strengthen the existing self-storage
business by further meeting the needs of storage customers.
Each of our self-storage locations' rental offices sell locks, boxes, and
packing materials, while certain of the facilities in the U.S. also rent trucks
primarily to storage customers or operate as an agent of long-distance truck
rental companies. These rental offices which conduct these activities include,
in some cases, larger retail-oriented locations.
TENANT INSURANCE PROGRAM: Through taxable REIT subsidiaries, we reinsure
policies issued to our tenants against lost or damaged goods stored by tenants
in our storage facilities. These subsidiaries receive the premiums and bear the
risks associated with the re-insurance. We believe that our tenant insurance
operations further supplement and strengthen the existing self-storage business
and provide 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 properties that are
owned or operated by others in the U.S., (iii) expanding and repackaging
existing U.S. real estate facilities, (iv) participating in the growth of
commercial facilities owned primarily by PSB and (v) capitalizing on the
potential growth in the European market. 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 and media advertising programs will
continue to enhance our ability to meet these goals.
ACQUIRE PROPERTIES OWNED OR OPERATED BY OTHERS IN THE U.S.: We believe our
presence in and knowledge of substantially all of the major markets in the U.S.
enhances our ability to identify attractive acquisition opportunities and
capitalize on the overall fragmentation in the self-storage industry. Data on
the rental rates and occupancy levels of our existing facilities, which are
often located in proximity to potential acquisition candidates, provide us an
advantage in evaluating the potential of acquisition opportunities.
EXPAND AND REPACKAGE EXISTING REAL ESTATE FACILITIES: We have a substantial
number of facilities in the U.S. that were developed and constructed 20 or more
years ago based upon local competitive and demographic conditions in place at
that time. Population densities and other such conditions may have changed since
then, providing opportunities to expand and further invest into our existing
self-storage locations, either by improving the quality of the existing units by
adding amenities such as climate control, or by expanding these facilities at a
per square foot cost that is typically less than the cost incurred in developing
a new location. At December 31, 2007, we have identified 27 such projects to
expand or repackage our existing facilities in the U.S., for an aggregate cost
of approximately $106.9 million, which will add an aggregate of approximately
1,105,000 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.
In recent years, our rate of development of new self-storage facilities in
the U.S. has declined due to increases in construction cost, increases in
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competition with retail, condominium, and apartment operators for quality
self-storage sites in urban locations, and more difficult zoning and permitting
requirements. We will continue to seek favorable sites and markets for
development, based upon current market conditions. In the short-term we do not
expect any significant investment in new development locations in the U.S.
PARTICIPATE IN THE GROWTH OF COMMERCIAL FACILITIES PRIMARILY THROUGH OUR
OWNERSHIP IN PS BUSINESS PARKS, INC.: At December 31, 2007, we had a 45% common
equity interest in PSB and its operating partnership which, 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, 2007, PSB owned and operated approximately 19.6 million
net rentable square feet of commercial space located in the U.S. located in
eight states.
CAPITALIZE ON THE POTENTIAL FOR GROWTH IN EUROPE: Our European operations
are conducted through Shurgard Self-Storage SCA, a Belgian company referred to
hereinafter as "Shurgard Europe".
The self-storage market in Europe is relatively new, making it difficult to
obtain reliable statistics regarding competition throughout Europe. We track and
maintain information regarding customers and competitors in the markets in which
we operate, and in markets where we are considering expansion.
According to the most recent data provided by the Federation of European
Self-Storage Associations ("FEDESSA"), the self-storage market in Europe
(defined as Belgium, Czech Republic, Denmark, Finland, France, Germany, Italy,
The Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom)
consisted of approximately 1,090 stores as of March 2007, approximately 600 of
which are located in the United Kingdom. We believe, however, that because of
the number of new entrants into the market, FEDESSA may understate the total
number of stores in many markets even as of the date reported. Less fragmented
than the U.S. market, the European self-storage market is dominated by a handful
of larger players and a few midsized operators, with the remainder of the market
consisting of smaller operators. The top five operators of stores in Europe, of
which we believe we are the largest, collectively have approximately 45% of the
aggregate market share for self-storage space, based on net rentable square
footage, as of March 2007. Because of the number of new entrants into the market
and difficulties in collecting data, the information presented by FEDESSA at any
time may understate the total number of stores in many markets. However, we
believe the information presented by FEDESSA is the best available measure of
market size and competition.
Although many European consumers are not yet aware of the self-storage
concept, they tend to live in more densely populated areas in smaller living
spaces (as compared to the U.S.) that, we believe, should make self-storage an
attractive option as product knowledge and availability grows. Most Europeans
are familiar with the concept of storage only as an ancillary service provided
by moving companies. The service provided by moving companies is typically full
service, prevents direct access by customers and may involve security issues for
the users because they have less control over their goods in storage. In
addition, most of these moving companies require advance notice to retrieve
goods and charge handling fees and minimum monthly fees, making the cost of
smaller storage requirements costly.
As a result of this low density of self-storage in Europe relative to
population as compared to the U.S., we believe that there is significant growth
potential in Europe, even if the density of self-storage in Europe does not
ultimately approach the levels in the U.S. Capitalizing on this opportunity will
require a significant amount of capital to develop new self-storage facilities
in what could be a process extending through a few decades in time frame,
similar to the trajectory of the U.S. self-storage industry since its inception
in the mid 1960's.
Notwithstanding the potential of this opportunity, we believe that it is
not appropriate to invest significant amounts of our existing U.S. based capital
into Europe, because of a) the lack of tax efficiency of operating in various
tax jurisdictions, many of which subject these operations to income tax as well
as certain taxes upon repatriation of funds to the U.S., b) constraints on
ownership or operations required in order to satisfy the statutory requirements
of being a U.S. REIT, as well as c) the differing risk/return profile of such
investments in European self-storage operations relative to the expectations of
our existing investor base. Accordingly, we believe that separate sources of
capital obtained through a separate public European-based entity, best positions
our European operations for long-term growth. We attempted a share offering in
Europe in mid-2007 in order to establish such a public entity; however, the
offering was abandoned because market conditions were and continue to be
unfavorable.
8
In January 2008, we announced that we reached an agreement in principle for
a prospective investor to acquire a 51% ownership interest in Shurgard Europe in
a private transaction at a price generally consistent with the previously
disclosed proceeds we expected to receive for our equity interest in last year's
terminated European share offering. No binding agreement has been signed with
the prospective investor and there is no assurance that a binding agreement will
be signed or that a transaction will be completed. We estimate the completion of
the transaction at the end of the first quarter of 2008 assuming a binding
agreement is signed and the conditions related to the transaction are satisfied.
Concurrent with the completion of the proposed transaction, we will seek to
obtain a waiver from the lenders of the Second Shurgard credit facility for the
change in control acceleration clause contained in the credit facility. See Note
19 to our December 31, 2007 financial statements for further information
regarding the proposed transaction involving Shurgard Europe.
While we intend to reduce our exposure to Europe for the aforementioned
reasons, we intend to continue to hold a significant minority position in
Shurgard Europe in order to participate in this entity's growth.
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 and Shurgard
Europe 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 long-term investing activities.
o INVESTING IN THE SECURITIES OF OTHER ISSUERS FOR THE PURPOSE OF
EXERCISING CONTROL: While we have not engaged in this activity in the
last three years, 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. 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: Our
Board of Trustees has authorized the repurchase from time to time of
up to 25,000,000 of our common shares on the open market or in
privately negotiated transactions. Cumulatively through February 28,
2008, we repurchased a total of 23,721,916 of our common shares under
this authorization. Cumulatively through February 28, 2008, we have
called for redemption or repurchased $2.3 billion of our senior
preferred shares 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 shares 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 largely dependent upon the spread between market
dividend rates for the newly issued preferred securities and the
dividend rates of our existing preferred securities.
9
FINANCING OF THE COMPANY'S GROWTH STRATEGIES
--------------------------------------------
OVERVIEW OF FINANCING STRATEGY: Over the past three years we have funded
substantially all the cash portion of our acquisition and development activities
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 intention is to continue to finance substantially all
our growth with permanent capital.
BORROWINGS: We have in the past used our $300 million revolving line of
credit described below under "Borrowings" as temporary "bridge" financing, and
repaid those amounts with permanent capital. Our debt outstanding currently
represents debt that was assumed either in connection with property acquisitions
or in connection with the Shurgard Merger. When we have assumed such debt in the
past, we have generally prepaid such amounts except in cases where the nature of
the loan terms did not allow such prepayment, or where a prepayment penalty made
it not economically advantageous to prepay. 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.
At December 31, 2007, we had undrawn standby letters of credit, which
reduce our borrowing capacity with respect to our line of credit by the amount
of the standby letters of credit, totaling $20.4 million.
ISSUANCE OF SENIOR SECURITIES: We have in the last three years issued, and
expect to continue to issue, additional series of preferred shares that are
senior to our Common Shares and Equity Shares. At December 31, 2007, we had
approximately $3.5 billion (liquidation preference) of preferred shares
outstanding. The preferred shares, which were issued in series, have 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 our
common and preferred securities in exchange for real estate and other
investments in the last three years, most notably the issuance of 38,913,187
common shares in connection with the Shurgard Merger in 2006. Future issuances
will be dependent upon our financing needs and capital market conditions at the
time, including the market prices of our equity securities.
JOINT VENTURE FINANCING: We have historically formed and may form
additional joint ventures to facilitate the funding of future developments or
acquisitions. Through the Shurgard Merger in 2006, we acquired an interest in
two joint venture entities: First Shurgard SPRL ("First Shurgard") formed in
January 2003 and Second Shurgard SPRL ("Second Shurgard") formed in May 2004.
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 U.S. 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, 2007, the Acquisition Joint Venture owned
interests in a total of 12 self-storage facilities. See Note 8 to our
consolidated financial statements at December 31, 2007 for further discussion of
the accounting for the Acquisition Joint Venture. We do not expect the
Acquisition Joint Venture to acquire any additional facilities.
In addition, as previously disclosed, we reached an agreement in principle
for a prospective investor to acquire a 51% interest in Shurgard Europe in a
private transaction at a price generally consistent with the previously
10
disclosed proceeds Public Storage expected to receive for its equity interest in
last year's terminated European share offering. No binding agreement has been
signed with the prospective investor and there is no assurance that a binding
agreement will be signed or that the transaction will be completed. We estimate
completion of the transaction at the end of the first quarter of 2008 assuming a
binding agreement is signed and the conditions related to the transaction are
satisfied.
Concurrent with the completion of the proposed transaction, we will seek to
obtain a waiver from the lenders of the Second Shurgard credit facility for the
change in control acceleration clause contained in the credit facility. See Note
19 to our December 31, 2007 financial statements for further information
regarding the proposed transaction involving Shurgard Europe.
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 intend 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 our board of trustees
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 U.S.
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 and to a
lesser extent, storage facilities managed in Europe under the
"Shurgard Storage Centers" 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.
The following table outlines our ownership interest in self-storage
facilities in the U.S. at December 31, 2007:
Net Rentable Square
Footage of
Number of Self-Storage Self-Storage Space
Facilities (in thousands)
---------------------- -------------------
Consolidated self-storage facilities:
Wholly-owned by the Company............... 1,504 96,454
Owned by consolidated entities............ 480 28,374
------------ -----------
1,984 124,828
------------ -----------
Facilities owned by unconsolidated entities. 28 1,646
Total self-storage facilities in which the ------------ -----------
Company has an ownership interest......... 2,012 126,474
============ ===========
11
The following table outlines our ownership interest in self-storage
facilities in Europe at December 31, 2007:
Net Rentable Square
Footage of
Number of Self-Storage Self-Storage Space
Facilities (in thousands)
---------------------- -------------------
Consolidated self-storage facilities:
Wholly-owned by the Company............... 104 5,664
Owned by consolidated entities............ 70 3,451
Total self-storage facilities in which the ----------- -----------
Company has an ownership interest......... 174 9,115
=========== ===========
In addition to our interest in self-storage facilities noted above, we
consolidate 1,455,000 net rentable square feet of commercial space we have an
interest in which is primarily located adjacent to certain of our self-storage
facilities. We also have a 45% common interest in PSB, which at December 31,
2007 owned and operated approximately 19.6 million net rentable square feet of
commercial space.
FACILITIES OWNED BY CONSOLIDATED ENTITIES
-----------------------------------------
In addition to our direct ownership of 1,504 self-storage facilities in the
U.S. and 104 self-storage facilities in Europe at December 31, 2007, we
consolidate 45 entities that in aggregate own 480 self-storage facilities in the
U.S. and 70 self-storage facilities in Europe. Because of our controlling
interest in each of these entities, we consolidate the assets, liabilities, and
results of operations of these entities in our financial statements.
Through the Shurgard Merger in 2006, we acquired two joint venture
entities: First Shurgard and Second Shurgard. These joint ventures were expected
to develop or acquire up to approximately 75 self-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, and
that we are the primary beneficiary. Accordingly, First Shurgard and Second
Shurgard have been consolidated in our consolidated financial statements since
the acquisition of Shurgard. See Notes 2 and 10 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 our joint venture partner in both First
Shurgard and Second Shurgard of our intention to purchase its interest in both
First Shurgard and Second Shurgard, pursuant to an "exit procedure" that we
believe is provided for in the respective agreements. Our joint venture partner
currently contests whether we have the right to purchase its interest under this
procedure and, accordingly, it is uncertain as to whether we will acquire its
interest pursuant to these provisions. On January 17, 2007, we filed an
arbitration request to compel arbitration of the matter. The arbitration
proceedings are currently scheduled to begin on June 30, 2008.
FACILITIES OWNED BY UNCONSOLIDATED ENTITIES
-------------------------------------------
At December 31, 2007, we had ownership interests in PSB and certain limited
partnerships (collectively the "Unconsolidated Entities") owning an aggregate of
28 self-storage facilities. We do not have a controlling interest in these
entities, and as a result 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 SEC, has debt and
other obligations that are not included in our consolidated financial
statements. The limited partnerships owning the 28 self-storage facilities have
no significant amounts of debt or other obligations. See Note 5 to our
consolidated financial statements for the year ended December 31, 2007 for
further disclosure regarding the assets, liabilities and operating results of
the Unconsolidated Entities.
12
The following chart sets forth, as of December 31, 2007, the entities in
which we have a controlling interest and the entities in which we have a
minority interest:
--------------------------------------------------------------------------------
Subsidiaries (Consolidated 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. Shurgard-Freeman Franklin/Rivergate JV
Monterey Park Properties, Ltd. (2) Shurgard-Freeman Hermitage JV
PS Orangeco Partnerships, Inc. Shurgard-Freeman Hickory Hollow JV
PS Partners, Ltd. Shurgard-Freeman Medical Center JV
PS Partners VIII, Ltd. Shurgard-Freeman Stones River JV
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 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 SPRL
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.
(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.
13
(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.
PROHIBITED INVESTMENTS AND ACTIVITIES
-------------------------------------
Our Bylaws prohibit us from purchasing properties in which the Company's
officers or trustees have an interest, or from selling properties to such
persons, unless the transactions are approved by a majority of the independent
trustees 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 revolving credit agreement (the "Credit Agreement") with an
aggregate limit with respect to borrowings and letters of credit of $300
million, with a maturity date of March 27, 2012. Amounts drawn on the Credit
Agreement bear an annual interest rate ranging from the London Interbank Offered
Rate ("LIBOR") plus 0.35% to LIBOR plus 1.00% depending on our credit ratings
(LIBOR plus 0.35% at December 31, 2007). In addition, we are required to pay a
quarterly facility fee ranging from 0.10% per annum to 0.25% per annum depending
on our credit ratings (0.10% per annum at December 31, 2007). We had no
outstanding borrowings on our Credit Agreement at December 31, 2007 or at
February 28, 2008.
The Credit Agreement includes various covenants, the more significant of
which require us to (i) maintain a leverage ratio (as defined therein) of less
than 0.55 to 1.00, (ii) maintain certain fixed charge and interest coverage
ratios (as defined therein) of not less than 1.5 to 1.0 and 1.75 to 1.0,
respectively, and (iii) maintain a minimum total shareholders' equity (as
defined therein). We were in compliance with all covenants of the Credit
Agreement at December 31, 2007.
At December 31, 2007, we had (i) $410.9 million of domestic unsecured notes
payable, (ii) $236.9 million of domestic mortgage notes secured by facilities in
the U.S., (iii) $376.7 million of notes payable secured by facilities located in
Europe and (iv) capital lease liabilities totaling $7.3 million.
The $376.7 million in notes payable secured by facilities located in Europe
cannot be prepaid at this time because they are held by two joint ventures that
require our joint venture partner's (same partner in each joint venture) consent
to prepay. We are currently unwilling to prepay the other notes payable
outstanding because of significant prepayment penalties that would be required
at this time.
Approximately $189.1 million in debt owed by First Shurgard was originally
scheduled to mature in May 2008. However, in February 2008, under the terms of
the related credit agreement we have requested a one-year extension of the loan
until May 2009. Assuming we have met our loan covenants, which we believe we
have met, the lender is required to grant our request. Notwithstanding our
expectation of receiving the requested one-year extension, if the extension is
not granted, we and our joint venture partner are required to contribute our
pro-rata share of funds necessary to repay the debt. We believe that our joint
venture partner has the intention and ability to contribute their potential 80%
share towards repayment of this debt if it is necessary.
Concurrent with the completion of the proposed transaction for a
prospective investor to acquire a 51% interest in Shurgard Europe, we will seek
to obtain a waiver from the lenders of the Second Shurgard credit facility for
the change in control acceleration clause contained in the credit facility. See
Note 19 to our December 31, 2007 financial statements for further information
regarding the proposed transaction involving Shurgard Europe.
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.
14
LIMITATIONS ON DEBT
-------------------
The Bylaws provide that the Board of Trustees 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 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
Shares, 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, 2007, the Debt
Ratio was approximately 8.4%. "Debt" means the liabilities (other than "accrued
and other liabilities" and "minority interest") that should, in accordance with
U.S. generally accepted accounting principles, 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 at less than 55%
of gross asset value (as defined) and the prohibition of the payment of
dividends upon the occurrence of an event of default (as defined).
EMPLOYEES
---------
We have approximately 5,700 employees in the U.S. and Europe at December
31, 2007 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 amicable.
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 REIT taxable income (including gains from the sale of
securities and properties) that we distribute to our shareholders.
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."
Our taxable REIT subsidiaries will be taxed on their taxable income.
Additionally, our subsidiaries in Europe are subject to income tax in the
various jurisdictions in which they operate. In general, current taxable income
in Europe has been offset by net operating loss carryforwards.
15
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 are conducted by an entity wholly owned
by the Company, PS Insurance Company Hawaii, Ltd. ("PSIC-H").
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 $37 million. In addition, if losses exhaust the third-party
insurers' limit of coverage of $75 million for property coverage including
earthquake coverage ((euro)25 million for Europe) 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, 2007, we had
approximately 490,000 reinsured policies throughout our 2,000 self-storage
locations in the U.S. representing aggregate coverage of approximately $1.2
billion. Our exposure to tenant insurance losses are minimal with respect to our
European operations due to third-party insurance coverage.
ITEM 1A. RISK FACTORS
------------
In addition to the other information in our Annual Report on Form 10-K, you
should consider the risks described below that we believe may be material to
investors in evaluating the Company. This section contains forward-looking
statements, and in considering these statements, you should refer to the
qualifications and limitations on our forward-looking statements that are
described in Forward Looking Statements at the beginning of Item 1.
SINCE OUR BUSINESS CONSISTS PRIMARILY OF ACQUIRING AND OPERATING REAL ESTATE, WE
ARE SUBJECT TO THE RISKS RELATED TO THE OWNERSHIP AND OPERATION OF REAL ESTATE.
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 and floods;
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;
16
o changes in interest rates and availability of permanent mortgage funds
which may render the sale of a nonstrategic property difficult or
unattractive including the impact of the current turmoil in the credit
markets;
o increases in insurance premiums, property tax assessments and other
operating and maintenance expenses;
o adverse changes in tax, real estate and zoning laws and regulations;
and
o tenant and employment-related 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 16 under
"Insurance and Loss Exposure" to our consolidated financial statements at
December 31, 2007.
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, 2007. 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
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 environmental 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
operations.
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
17
liability for such claims. However, we can give 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. From January 1, 2003, through December 31, 2007, we have opened
34 newly developed self-storage facilities in the U.S. and, since August 22,
2006, 15 newly developed facilities in Europe. In addition, our development
"pipeline" in the United States and Europe at December 31, 2007 consist of 43
projects with total estimated costs of $251 million. We anticipate the
development of these 43 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 storage space 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
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.
WE INCUR LIABILITY FROM TENANT AND EMPLOYMENT-RELATED CLAIMS. From time to
time we must resolve tenant claims and employment-related claims by corporate
level and field personnel.
WE GROW OUR BUSINESS PRIMARILY THROUGH ACQUISITIONS OF EXISTING PROPERTIES AND
ARE SUBJECT TO RISKS RELATED TO ACQUISITIONS.
We grow our business in large part through the acquisition of existing
properties, including acquisitions of businesses owned by other storage
operators. In addition to the general risks related to real estate described
above which may also adversely impact operations at acquired properties, we are
also subject to the following risks in connection with property acquisitions and
the integration of acquired properties into our operations.
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.
ANY FAILURE TO SUCCESSFULLY INTEGRATE ACQUIRED OPERATIONS WITH OUR EXISTING
BUSINESS COULD NEGATIVELY IMPACT OUR FINANCIAL RESULTS. To fully realize any
anticipated benefits from an acquisition, we must successfully complete the
combination of the businesses of Public Storage and acquired properties in a
manner that permits cost savings to be realized. 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 anticipated benefits, particularly with
large acquisitions.
AS A RESULT OF OUR ACQUISITION OF THE INTERNATIONAL OPERATIONS OF SHURGARD
IN EUROPE, WE ARE EXPOSED TO ADDITIONAL RISKS RELATED TO INTERNATIONAL
BUSINESSES. 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;
18
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.
SOME ACQUIRED PROPERTIES ARE SUBJECT TO PROPERTY TAX REAPPRAISALS WHICH MAY
INCREASE OUR PROPERTY TAX EXPENSE. Some of the facilities we acquired in the
Shurgard Merger have been, and will continue to 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 further reassessment.
WE MAY BE UNABLE TO SUCCESSFULLY COMPLETE THE CONTEMPLATED INVESTMENT BY A THIRD
PARTY TO ACQUIRE A SIGNIFICANT PORTION OF SHURGARD EUROPE.
We have announced that we have entered into an agreement in principle for a
prospective investor to acquire a 51% interest in Shurgard Europe. However, no
binding agreement has been signed with the prospective investor and there is no
assurance that a binding agreement will be signed or that the transaction will
be completed. We may be unable for any reason to finalize negotiations and
completion of a possible transaction involving Shurgard Europe, and there can be
no guarantee that any transaction involving the acquisition by a prospective
purchaser of an interest in Shurgard Europe will occur.
WE ARE SUBJECT TO RISKS RELATED TO OUR OWNERSHIP OF ASSETS IN JOINT VENTURE
STRUCTURES.
In connection with our 2006 acquisition of Shurgard, we acquired interests
in several joint ventures that owned properties. Joint ventures have additional
risks, including without limitation, the following:
o Risks related to the financial strength, common business goals and
strategies and cooperation of the venture partner.
o The inability to take some actions with respect to the joint venture
activities that we may believe are favorable, if our joint venture
partner does not agree.
o The risk that we could lose our REIT status based upon actions of the
joint ventures if we are unable to effectively control these indirect
investments.
o The risk that we may not control the legal entity that has title to
the real estate.
o The risk that our investments in these entities may not be easily sold
or readily accepted as collateral by our lenders, or that lenders may
view joint ventured assets as less favorable as collateral.
o The risk that the joint ventures could take actions that we could not
prevent, which could result in negative rating agency impacts to our
preferred stock and debt.
o The risk that we may be constrained from certain activities of our own
that we would otherwise deem favorable, due to noncompete clauses in
our joint venture arrangements.
19
o The risk that we will be unable to resolve disputes with our joint
venture partners. We are currently engaged in legal proceedings
including arbitration and litigation with certain joint venture
partners in the United States and Europe.
THE HUGHES FAMILY COULD CONTROL US AND TAKE ACTIONS ADVERSE TO OTHER
SHAREHOLDERS.
At December 31, 2007, B. Wayne Hughes, Chairman of the Board of Trustees
and his family (the "Hughes Family") owned approximately 25.3% of our aggregate
outstanding common shares. Our declaration of trust permits the Hughes Family to
own up to 47.66% of our outstanding common shares. Consequently, the Hughes
family may or could control matters submitted to a vote of our shareholders,
including electing trustees, amending our organizational documents, dissolving
and approving other extraordinary transactions, such as a takeover attempt, even
though such actions may not be favorable to other shareholders.
CERTAIN PROVISIONS OF MARYLAND LAW AND IN OUR DECLARATION OF TRUST AND BYLAWS
MAY PREVENT CHANGES IN CONTROL OR OTHERWISE DISCOURAGE TAKEOVER ATTEMPTS
BENEFICIAL TO STOCKHOLDERS.
Maryland law limits certain business combinations and changes of control of
the Company unless the Board affirmatively elects not to be covered by the
statutory provisions. Currently, the Board has opted out of the statutory
limitations of both statutes. However, the Board may in the future elect to be
covered under the business combination provisions and the control share
acquisitions provisions of Maryland law. The business combination provisions of
Maryland law (in the event our Board opts to make them applicable to us), the
control share acquisition provisions of Maryland law (if the applicable
provision in our bylaws is rescinded), limitations on removal of trustees in our
declaration of trust, restrictions on the acquisition of our shares of
beneficial interest, the power to issue additional common shares, preferred
shares or equity shares and the advance notice provisions of our bylaws could
have the effect of delaying, deterring or preventing a transaction or a change
in control that might involve a premium price for holders of the common shares
or might otherwise be in their best interest. Certain provisions of Maryland law
permit our board of trustees, without shareholder approval and regardless of
what is provided in our declaration of trust or bylaws, to implement takeover
defenses that we may not yet have and to take, or refrain from taking, certain
other actions without those decisions being subject to any heightened standard
of conduct or standard of review as such decisions may be subject in certain
other jurisdictions.
To preserve our status as a REIT under the Code, our declaration of trust
contains limitations on the number and value of shares of beneficial interest
that any person may own. These ownership limitations generally limit the ability
of a person, other than the Hughes Family (as defined in our declaration of
trust) and other than "designated investment entities" (as defined in our
declaration of trust), to own more than 3% of our outstanding common shares or
9.9% of the outstanding shares of any class or series of preferred or equity
shares, in each case, in value or number of shares, whichever is more
restrictive, unless an exemption is granted by our board of trustees. These
limitations could discourage, delay or prevent a transaction involving a change
in control of our company not approved by our board of trustees.
IF WE FAILED TO QUALIFY AS A REIT, WE WOULD BE TAXED AS A CORPORATION, WHICH
WOULD SUBSTANTIALLY REDUCE FUNDS AVAILABLE FOR PAYMENT OF DIVIDENDS.
Investors are 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 (which may take into account certain
dividends paid in the subsequent year). Other restrictions apply to our income
and assets. Our REIT status is also dependent upon the ongoing qualification of
our affiliate, PSB, 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 Code, 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
20
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 have also assumed, based on public filings, that Shurgard qualified as a
REIT. 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).
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, foreign, state and local taxes on our income and
property. Since January 1, 2001, certain corporate subsidiaries of the Company
(including certain subsidiaries acquired in connection with the Shurgard merger)
have elected to be treated as "taxable REIT subsidiaries" of the Company for
federal income tax purposes. 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 or accrue certain
amounts and the underlying 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 in excess of
amounts deemed reasonable between unrelated parties. To the extent that the
Company or any taxable REIT subsidiary is required to pay federal, foreign,
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.
WE HAVE NO INTEREST IN CANADIAN SELF-STORAGE FACILITIES OWNED BY THE HUGHES
FAMILY.
The Hughes Family has ownership interests in, and operates, 48 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 U.S. 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 PS
Insurance Company, or PSICH. For the years ended December 31, 2007 and 2006,
PSICH received $906,000 and $989,000, respectively, in reinsurance premiums
attributable to the Canadian Facilities. Since PSICH's right to provide tenant
reinsurance to the Canadian Facilities may be qualified, there is no assurance
that these premiums will continue.
21
INCREASES IN INTEREST RATES MAY ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK.
One of the factors that influence the market price of our common shares 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 shares 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 U.S., the European Community, or their
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 U.S. economy could similarly have a
material adverse effect on our business and results of operations. Finally,
further terrorist acts could cause the U.S. to enter into a wider armed
conflict, which could further impact our business and operating results.
DEVELOPMENTS IN CALIFORNIA MAY HAVE AN ADVERSE IMPACT ON OUR BUSINESS.
We are headquartered in, and approximately one-fifth of our properties in
the U.S. 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.
22
ITEM 2. PROPERTIES
------- ----------
At December 31, 2007, we had direct and indirect ownership interests in
2,012 and 174 storage facilities located in 38 states within the U.S. and seven
Western European nations, respectively:
At December 31, 2007
------------------------------------------------
Number of Storage Net Rentable Square
Facilities (a) Feet (in thousands)
------------------- ------------------------
United States:
California:
Southern............... 202 13,897
Northern............... 170 9,867
Texas....................... 235 15,375
Florida..................... 191 12,470
Illinois.................... 123 7,800
Washington.................. 91 5,998
Georgia..................... 92 5,964
North Carolina.............. 69 4,775
Virginia.................... 78 4,407
New York.................... 62 3,967
Colorado.................... 60 3,810
New Jersey.................. 56 3,524
Maryland.................... 55 3,185
Minnesota................... 44 2,990
Michigan.................... 43 2,755
Arizona..................... 37 2,259
South Carolina.............. 40 2,155
Missouri.................... 38 2,144
Oregon...................... 39 2,006
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).... 86 4,713
------------------- ------------------------
Total - U.S............ 2,012 126,474
------------------- ------------------------
Europe:
France...................... 53 2,776
Netherlands................. 33 1,749
Sweden...................... 26 1,372
Belgium..................... 21 1,219
United Kingdom.............. 20 947
Germany..................... 11 550
Denmark..................... 10 502
------------------- ------------------------
Total - Europe......... 174 9,115
------------------- ------------------------
Grand Total............ 2,186 135,589
=================== ========================
(a) See Schedule III: Real Estate and Accumulated Depreciation in the Company's
2007 financials, for a complete list of properties consolidated by the
Company.
23
Our facilities are generally operated to maximize cash flow through the
regular review and adjustment of rents charged to our tenants. For the year
ended December 31, 2007, the weighted average occupancy level and the average
realized rent per occupied square foot for our self-storage facilities were
approximately 88% and $12.87, respectively in the U.S. and 84% and $25.77,
respectively in Europe. Included in the 2,186 storage facilities are 34 newly
developed facilities opened since January 1, 2003.
At December 31, 2007, 156 of our facilities were encumbered by an aggregate
of $614 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. Storage facility 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 U.S. are operated under the "Public Storage"
brand name, while our facilities in Europe are operated under the "Shurgard
Storage Centers" brand name.
Users of space in self-storage facilities include individuals from
virtually all demographic groups, as well as 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 eight 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 U.S. 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.
24
COMMERCIAL PROPERTIES: In addition to our interests in 2,186 self-storage
facilities, we have an interest in PSB, which, as of December 31, 2007, owns and
operates approximately 19.6 million net rentable square feet in eight states. At
December 31, 2007, our investment in PSB represents 2.6% of our total assets
based upon book value of $273.7 million. The market value of our investment in
PSB at December 31, 2007 of approximately $668.6 million represents 6.3% of the
book value of our total assets at December 31, 2007 of approximately $10.6
billion. We also directly own 1,455,000 net rentable square feet of commercial
space, primarily located at our existing self-storage locations, comprised of
small retail locations.
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. On November 26, 2007, the Court entered an order dismissing the matter
in its entirety without any liability to the Company.
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, whose liability Public Storage assumed following the
merger of Public Storage and Shurgard on August 22, 2006. In June 2007, the
Court certified a class of all Shurgard renters who rented a storage unit at a
Shurgard facility in California that was smaller than represented. On November
26, 2007, the Court entered an order dismissing the matter in its entirety
without any liability to the Company.
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 our Board
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.
25
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).
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. Subsequently, the
Company filed a motion for summary judgment seeking to dismiss the matter in its
entirety. On June 22, 2007, the Court granted the Company's summary judgment
motion as to the causes of action relating to the subclasses certified and
dismissed those claims. The only surviving claims are those relating to the
named plaintiff only. The plaintiff has filed an appeal to the Court's June 22,
2007 summary judgment ruling. An appeal to the Court's June 22, 2007 order
granting the Company's summary judgment motion is currently pending.
Simas v. Public Storage, Inc. (filed January 2006) (Superior Court of
---------------------------------------------------------------------------
California - Orange County)
---------------------------
The plaintiff brought this action against the Company on behalf of a
purported class who bought insurance coverage at the 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, the 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. A subsequent demurrer was filed and
sustained without leave to amend. The case was therefore dismissed. The
plaintiff has appealed the trial court's ruling and this appeal is currently
pending.
European Joint Venture Arbitration Proceeding
---------------------------------------------
The Company holds indirectly a 20% interest in each of two joint ventures
in Europe, First Shurgard and Second Shurgard, that collectively own 70
self-storage properties in Europe. On August 24, 2006, the Company, through its
affiliate, Shurgard Europe, served an exit notice on the European joint venture
partners informing them of its intention to purchase their interests in First
Shurgard and Second Shurgard pursuant to an early exit procedure that the
Company believes is provided for in the respective joint venture agreements. The
exit notice offered to pay the joint venture partners an amount for their
interests in accordance with the provisions of the joint venture agreements. The
joint ventures partners have contested both the valuation of their interests and
whether the Company has the right to purchase its interests under this early
exit procedure. Accordingly, it is uncertain as to whether the Company will
acquire such interests pursuant to the early exit notice served. On January 17,
2007, Shurgard Europe filed an arbitration request with the International
Chamber of Commerce to compel arbitration of the matter. The arbitration
proceedings are currently scheduled to begin on June 30, 2008.
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.
26
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, 2007.
27
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
------- ----------------------- -------------- -------------------------------
ISSUER PURCHASES OF EQUITY SECURITIES
---------------- -------------------
a. Market Price of the Registrant's Common Equity:
Our Common Shares (NYSE: PSA), including those of Public Storage, Inc.
prior to our reorganization in June 2007, have been listed on the New York
Stock Exchange since October 19, 1984. Our Depositary Shares each
representing 1/1,000 of an Equity Share, Series A (NYSE:PSAA) (see section
c. below), including those of Public Storage, Inc. prior to our
reorganization in June 2007 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 our
Common Shares on the New York Stock Exchange composite tapes for the
applicable periods.
Range
----------------------------------
Year Quarter High Low
------- -------- ---------- ------------
2006 1st $ 84.62 $ 67.72
2nd 81.40 70.26
3rd 89.25 75.44
4th 98.05 85.17
2007 1st 117.16 92.43
2nd 99.36 74.28
3rd 82.11 68.09
4th 85.58 70.29
The following table sets forth the high and low sales prices of our
Depositary Shares Each Representing 1/1,000 of an Equity Share, Series A on
the New York Stock Exchange composite tapes for the applicable periods.
Range
----------------------------------
Year Quarter High Low
------- -------- ---------- ------------
2006 1st $ 27.76 $ 26.20
2nd 27.25 25.60
3rd 28.08 26.35
4th 27.70 26.18
2007 1st 27.27 26.25
2nd 26.88 25.65
3rd 26.15 25.00
4th 26.29 24.32
As of February 15, 2008, there were approximately 20,282 holders of
record of Common Shares and approximately 9,744 holders of Depositary
Shares Each Representing 1/1,000 of an Equity Share, Series A.
b. Dividends
We have paid quarterly distributions to our shareholders since 1981,
our first full year of operations. Overall distributions on Common Shares
for 2007 amounted to $340.0 million or $2.00 per share.
Holders of Common Shares are entitled to receive distributions when
and if declared by our Board of Trustees out of any funds legally available
for that purpose. In order to maintain our REIT status for federal income
28
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.
For Federal income tax purposes, distributions to shareholders are
treated as ordinary income, capital gains, return of capital or a
combination thereof. For 2007, the dividends paid on common shares ($2.00
per share), on all the various classes of preferred shares, and on our
Equity Shares, Series A were classified as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
------------ ----------- ----------- -----------
Ordinary Income.......... 99.8756% 98.8310% 100.0000% 97.3267%
Long-term Capital Gain... 0.1244% 1.1690% 0.0000% 2.6733%
------------ ----------- ----------- -----------
Total.................... 100.0000% 100.0000% 100.0000% 100.0000%
============ =========== =========== ===========
A percentage of the ordinary income is "qualified dividend income" for
each quarter of 2007 as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
------------ ----------- ----------- -----------
Qualified dividend....... 0.0000% 0.0000% 0.0000% 3.9242%
============ =========== =========== ===========
For 2006, the dividends paid on common shares ($2.00 per share), on
all the various classes of preferred shares, and on our Equity Shares,
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%
============ =========== =========== ===========
c. Equity Stock
The Company is authorized to issue 100,000,000 Equity Shares. Our
declaration of trust provides that the Equity Shares may be issued from
time to time in one or more series and gives the board of trustees broad
authority to fix the dividend and distribution rights, conversion and
voting rights, redemption provisions and liquidation rights of each series
of Equity Shares.
At December 31, 2007, we had 8,744,193 depositary shares outstanding,
each representing 1/1,000 of an Equity Share, Series A. The Equity Shares,
Series A rank on a parity with our common shares and junior to the Senior
Preferred Shares 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 Shares 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 of
our common shares. The depositary shares are otherwise not convertible into
common shares. Holders of depositary shares vote as a single class with our
holders of common shares 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
Shares, Series AAA ("Equity Shares AAA") to a newly formed joint venture.
The Equity Shares AAA ranks on a parity with common shares and junior to
the Senior Preferred Shares with respect to general preference rights, and
has a 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.
29
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
For the year ended December 31,
-------------------------------------------------------------------------
2007 (1) 2006 (1) 2005 2004 2003
---------- ----------- ---------- --------- ----------
(Amounts in thousands, except per share data)
Revenues:
Rental income and ancillary operations........ $1,804,954 $1,349,212 $1,043,391 $952,766 $890,350
Interest and other income..................... 11,417 31,799 16,447 5,391 2,537
--------- --------- --------- ------- -------
1,816,371 1,381,011 1,059,838 958,157 892,887
--------- --------- --------- ------- -------
Expenses:
Cost of operations (excluding depreciation)... 659,865 498,438 378,258 361,944 340,871
Depreciation and amortization................. 622,410 437,568 196,153 182,890 183,863
General and administrative.................... 59,749 84,661 21,115 18,813 17,127
Interest expense.............................. 63,671 33,062 8,216 760 1,121
--------- --------- --------- ------- -------
1,405,695 1,053,729 603,742 564,407 542,982
--------- --------- --------- ------- -------
Income from continuing operations before equity
in earnings of real estate entities, gain on
disposition of real estate investments, casualty
loss, foreign currency exchange gain, income
from derivatives and minority interest
in income..................................... 410,676 327,282 456,096 393,750 349,905
Equity in earnings of real estate entities...... 12,738 11,895 24,883 22,564 24,966
Gain on disposition of real estate investments
and casualty gain or loss, net................ 5,212 2,177 1,182 67 1,007
Foreign currency exchange gain and income from
derivatives, net.............................. 58,444 4,262 - - -
Minority interest in income..................... (29,543) (31,883) (32,651) (49,913) (43,703)
-------- -------- ------- -------- --------
Income from continuing operations............... 457,527 313,733 449,510 366,468 332,175
Cumulative effect of change in accounting
principle .................................... - 578 - - -
Discontinued operations......................... 8 (285) 6,883 (255) 4,478
-------- -------- -------- -------- --------
Net income...................................... $457,535 $314,026 $456,393 $366,213 $336,653
======== ======== ======== ======== ========
PER COMMON SHARE:
-----------------
Distributions................................... $2.00 $2.00 $1.90 $1.80 $1.80
Net income - Basic.............................. $1.18 $0.33 $1.98 $1.39 $1.29
Net income - Diluted............................ $1.17 $0.33 $1.97 $1.38 $1.28
Weighted average common shares - Basic.......... 169,342 142,760 128,159 127,836 125,181
Weighted average common shares - Diluted........ 170,147 143,715 128,819 128,681 126,517
--------------------------------------------------- --------------- -------------- --------------- --------------- --------------
BALANCE SHEET DATA:
-------------------
Total assets.................................... $10,643,102 $11,198,473 $5,552,486 $5,204,790 $4,968,069
Total debt...................................... $1,069,928 $1,848,542 $149,647 $145,614 $76,030
Minority interest (other partnership interests). $181,688 $181,030 $28,970 $118,903 $141,137
Minority interest (preferred partnership
interests)...................................... $325,000 $325,000 $225,000 $310,000 $285,000
Shareholders' equity............................ $8,763,129 $8,208,045 $4,817,009 $4,429,967 $4,219,799
--------------------------------------------------- --------------- -------------- --------------- --------------- --------------
OTHER DATA:
-----------
Net cash provided by operating activities....... $1,013,204 $775,400 $673,871 $595,315 $547,918
Net cash used in investing activities........... $(247,475) $(495,890) $(453,146) $(157,638) $(205,133)
Net cash used in financing activities........... $(1,061,457) $(228,095) $(102,969) $(276,255) $(241,076)
(1) The significant increase in our revenues, cost of operations,
depreciation and amortization, and interest expense in 2006 and 2007,
and the significant increase in total assets, total debt and
shareholder' equity in 2006, is due to our acquisition of Shurgard
Storage Centers in August 2006. See Note 3 to our consolidated
financial statements for the year ended December 31, 2007 for further
information.
30
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: This Annual Report on Form 10-K contains
forward-looking statements within the meaning of the federal securities laws.
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," "plans," "would," "should," "may,"
"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. As a result, you should not rely
on any forward-looking statements in this report, or which management may make
orally or in writing from time to time, as predictions of future events nor
guarantees of future performance. We caution you not to place undue reliance on
forward-looking statements, which speak only as the date of this report or as of
the dates indicated in the statements. All of our forward-looking statements,
including those in this report, are qualified in their entirely by this
statement. We expressly 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. Accordingly, you should use
caution in relying on past forward-looking statements to anticipate future
results.
Factors and risks that may impact our future results and performance
include, but are not limited to, those described in Item 1A, "Risk Factors" and
in our other filings with the Securities and Exchange Commission ("SEC"). These
risks include, among others, the following:
o general risks associated with the ownership and operation of real
estate including changes in demand for our storage facilities,
potential liability for environmental contamination, adverse changes
in tax, real estate and zoning laws and regulations, and the impact of
natural disasters;
o risks associated with downturns in the national and local economies in
the markets in which we operate;
o the risk that Public Storage may for any reason be unable to finalize
negotiations and completion of a possible transaction involving
Shurgard Europe;
o the impact of competition from new and existing storage and commercial
facilities and other storage alternatives;
o difficulties in our ability to successfully evaluate, finance,
integrate into our operations and manage acquired and developed
properties;
o risks related to our participation in joint ventures;
o risks associated with international operations including, but not
limited to, unfavorable foreign currency rate fluctuations that could
adversely affect our earnings and cash flows;
o the impact of the regulatory environment as well as national, state,
and local laws and regulations including, without limitation, those
governing REITs;
o risks associated with a possible failure by us to qualify as a REIT
under the Internal Revenue Code of 1986, as amended;
o disruptions or shutdowns of our automated processes and systems;
o difficulties in raising capital at a reasonable cost;
31
o delays in the development process; and
o economic uncertainty due to the impact of war or terrorism.
The risks included here are not exhaustive as it is not possible for
management to predict all possible risk factors that may exist or emerge from
time to time. Investors should refer to our quarterly reports on Form 10-Q for
future periods and current reports on Form 8-K and other information filed from
time to time with the SEC for additional information.
OVERVIEW
Public Storage was organized in 1980. Effective June 1, 2007, following
approval by our shareholders, we reorganized Public Storage, Inc. into Public
Storage, a Maryland real estate investment trust (referred to herein as "the
Company", "the Trust", "we", "us", or "our"). 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. We are the
largest owner and operator of self-storage facilities in the United States
("U.S."), and we have an interest in what we believe is the largest owner and
operator of self-storage facilities in Europe. We significantly increased the
scope and scale of our operations on August 22, 2006, when we merged with
Shurgard Storage Centers, Inc., ("Shurgard" and the merger referred to as the
"Shurgard Merger"), a REIT which had an interest in 487 self-storage facilities
located in the U.S. and an interest in a platform of self-storage facilities in
seven Western European countries.
At December 31, 2007, we had direct and indirect equity interests in 2,012
self-storage facilities located in 38 states within the U.S. operating under the
"Public Storage" name containing approximately 126 million net rentable square
feet of space, and 174 self-storage facilities located in seven Western European
countries which operate under the "Shurgard Storage Centers" name containing
approximately nine million net rentable square feet of space. We also have
direct and indirect equity interests in approximately 21 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 brands.
Competition in the market areas in which we operate is significant and
affects the occupancy levels, rental rates, rental income 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.
BUSINESS ATTRIBUTES
-------------------
We believe that we possess several primary business attributes that permit
us to compete effectively:
CENTRALIZED INFORMATION NETWORKS: Our facilities in the U.S. and Europe are
part of comprehensive centralized reporting and information networks which
enable our U.S. and European management teams to identify changing market
conditions and operating trends as well as analyze customer data, and quickly
change our properties' pricing and promotional mix on an automated basis.
NATIONAL TELEPHONE RESERVATION CENTER: In the U.S., we operate a
centralized telephone reservation system, 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
centralized telephone reservation system enhances our ability to market storage
space in the United States relative to handling these calls at individual
properties, because it allows us to more effectively offer all spaces at all
facilities in the vicinity of a customer and we can provide higher-quality
selling efforts through dedicated sales specialists trained in a central
location. We also provide customers the opportunity to review space availability
and make reservations online through our website, www.publicstorage.com.
32
ECONOMIES OF SCALE: We are the largest provider of self-storage space in
the U.S. and Europe. As of December 31, 2007, we operated 2,186 storage
facilities in which we had an interest and managed 31 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, 2007, we had over
1,095,000 self-storage spaces rented. The size and scope of our operations have
enabled us to achieve high operating margins and a low level of administrative
costs relative to revenues, through the centralization of many functions with
specialists, such as facility maintenance, employee compensation and benefits
programs, pricing of our product, as well as the development and documentation
of standardized operating procedures. We also believe that our major market
concentration provides managerial efficiencies stemming from having a large
number of facilities in close proximity to each other.
BRAND NAME RECOGNITION: Our operations in the U.S. 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. Our facilities tend to be in highly visible and heavily populated
areas, improving the local awareness of our brand. Customer awareness of
self-storage in Europe is emerging. All of our facilities in Europe are
operating under the "Shurgard Storage Centers" brand name. We believe we are the
single largest self-storage operator in Western Europe as of December 31, 2007.
MAJOR MARKET CONCENTRATION IN THE U.S.: We focus our operations in the
major markets in the U.S., which we believe enhances our marketing efficiency.
We can economically purchase large, prominent, well-placed yellow page ads that
allow us to reach the consumer more effectively than smaller operators. We are
also able to purchase and bid aggressively for multiple-keyword advertising on
national Internet search engines. In addition, we are able to market efficiently
using television as a media source. We believe that our competitors cannot use
television advertising, because their limited concentration of facilities does
not provide a sufficient potential customer base to offset the high cost of
television advertising.
In addition, we believe that in recent years, zoning requirements in some
of the major metropolitan markets in which we operate in the U.S. have
increased, resulting in more barriers to new competition. While this has limited
our new development opportunities, it has minimized supply increases and
competition with certain of our properties.
RETAIL OPERATIONS: Through a taxable REIT subsidiary, we sell retail items
associated with the storage business and rent trucks at our self-storage
facilities in order to supplement and strengthen the existing self-storage
business by further meeting the needs of storage customers.
Each of our self-storage locations' rental offices sell locks, boxes, and
packing materials, while certain of the facilities in the U.S. also rent trucks
primarily to storage customers or operate as an agent of long-distance truck
rental companies. These rental offices which conduct these activities include,
in some cases, larger retail-oriented locations.
TENANT INSURANCE PROGRAM: Through taxable REIT subsidiaries, we reinsure
policies issued to our tenants against lost or damaged goods stored by tenants
in our storage facilities. These subsidiaries receive the premiums and bear the
risks associated with the re-insurance. We believe that our tenant insurance
operations further supplement and strengthen the existing self-storage business
and provide 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 properties that are
owned or operated by others in the U.S., (iii) expanding and repackaging
existing U.S. real estate facilities, (iv) participating in the growth of
commercial facilities owned primarily by PSB and (v) capitalizing on the
potential growth in the European market. 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
33
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 and media advertising programs will
continue to enhance our ability to meet these goals.
ACQUIRE PROPERTIES OWNED OR OPERATED BY OTHERS IN THE U.S.: We believe our
presence in and knowledge of substantially all of the major markets in the U.S.
enhances our ability to identify attractive acquisition opportunities and
capitalize on the overall fragmentation in the self-storage industry. Data on
the rental rates and occupancy levels of our existing facilities, which are
often located in proximity to potential acquisition candidates, provide us an
advantage in evaluating the potential of acquisition opportunities.
EXPAND AND REPACKAGE EXISTING REAL ESTATE FACILITIES: We have a substantial
number of facilities in the U.S. that were developed and constructed 20 or more
years ago based upon local competitive and demographic conditions in place at
that time. Population densities and other such conditions may have changed since
then, providing opportunities to expand and further invest into our existing
self-storage locations, either by improving the quality of the existing units by
adding amenities such as climate control, or by expanding these facilities at a
per square foot cost that is typically less than the cost incurred in developing
a new location. At December 31, 2007, we have identified 27 such projects to
expand or repackage our existing facilities in the U.S., for an aggregate cost
of approximately $106.9 million, which will add an aggregate of approximately
1,105,000 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.
In recent years, our rate of development of new self-storage facilities in
the U.S. 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 continue to seek favorable sites and markets for
development, based upon current market conditions. In the short-term we do not
expect any significant investment in new development locations in the U.S.
PARTICIPATE IN THE GROWTH OF COMMERCIAL FACILITIES PRIMARILY THROUGH
OUR OWNERSHIP IN PS BUSINESS PARKS, INC.: At December 31, 2007, we had a 45%
common equity interest in PSB and its operating partnership which, 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, 2007, PSB owned and operated approximately 19.6 million
net rentable square feet of commercial space located in the U.S. located in
eight states.
CAPITALIZE ON THE POTENTIAL FOR GROWTH IN EUROPE: Our European operations
are conducted through Shurgard Self-Storage SCA, a Belgian company referred to
hereinafter as "Shurgard Europe".
The self-storage market in Europe is relatively new, making it difficult to
obtain reliable statistics regarding competition throughout Europe. We track and
maintain information regarding customers and competitors in the markets in which
we operate, and in markets where we are considering expansion.
According to the most recent data provided by the Federation of European
Self-Storage Associations ("FEDESSA"), the self-storage market in Europe
(defined as Belgium, Czech Republic, Denmark, Finland, France, Germany, Italy,
The Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom)
consisted of approximately 1,090 stores as of March 2007, approximately 600 of
which are located in the United Kingdom. We believe, however, that because of
the number of new entrants into the market, FEDESSA may understate the total
number of stores in many markets even as of the date reported. Less fragmented
than the U.S. market, the European self-storage market is dominated by a handful
of larger players and a few midsized operators, with the remainder of the market
consisting of smaller operators. The top five operators of stores in Europe, of
which we believe we are the largest, collectively have approximately 45% of the
aggregate market share for self-storage space, based on net rentable square
footage, as of March 2007. Because of the number of new entrants into the market
and difficulties in collecting data, the information presented by FEDESSA at any
34
time may understate the total number of stores in many markets. However, we
believe the information presented by FEDESSA is the best available measure of
market size and competition.
Although many European consumers are not yet aware of the self-storage
concept, they tend to live in more densely populated areas in smaller living
spaces (as compared to the U.S.) that, we believe, should make self-storage an
attractive option as product knowledge and availability grows. Most Europeans
are familiar with the concept of storage only as an ancillary service provided
by moving companies. The service provided by moving companies is typically full
service, prevents direct access by customers and may involve security issues for
the users because they have less control over their goods in storage. In
addition, most of these moving companies require advance notice to retrieve
goods and charge handling fees and minimum monthly fees, making the cost of
smaller storage requirements costly.
As a result of this low density of self-storage in Europe relative to
population as compared to the U.S., we believe that there is significant growth
potential in Europe, even if the density of self-storage in Europe does not
ultimately approach the levels in the U.S. Capitalizing on this opportunity will
require a significant amount of capital to develop new self-storage facilities
in what could be a process extending through a few decades in time frame,
similar to the trajectory of the U.S. self-storage industry since its inception
in the mid 1960's.
Notwithstanding the potential of this opportunity, we believe that it is
not appropriate to invest significant amounts of our existing U.S. based capital
into Europe, because of a) the lack of tax efficiency of operating in various
tax jurisdictions, many of which subject these operations to income tax as well
as certain taxes upon repatriation of funds to the U.S., b) constraints on
ownership or operations required in order to satisfy the statutory requirements
of being a U.S. REIT, as well as c) the differing risk/return profile of such
investments in European self-storage operations relative to the expectations of
our existing investor base. Accordingly, we believe that separate sources of
capital obtained through a separate public European-based entity, best positions
our European operations for long-term growth. We attempted a share offering in
Europe in mid-2007 in order to establish such a public entity; however, the
offering was abandoned because market conditions were and continue to be
unfavorable.
In January 2008, we announced that we reached an agreement in principle for
a prospective investor to acquire a 51% ownership interest in Shurgard Europe in
a private transaction at a price generally consistent with the previously
disclosed proceeds we expected to receive for our equity interest in last year's
terminated European share offering. No binding agreement has been signed with
the prospective investor and there is no assurance that a binding agreement will
be signed or that a transaction will be completed. We estimate the completion of
the transaction at the end of the first quarter of 2008 assuming a binding
agreement is signed and the conditions related to the transaction are satisfied.
While we intend to reduce our exposure to Europe for the aforementioned
reasons, we intend to continue to hold a significant minority position in
Shurgard Europe in order to participate in this entity's growth.
CRITICAL ACCOUNTING POLICIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations discuss our consolidated financial statements, which have been
prepared in accordance with U.S. generally accepted accounting principles
("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 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.
35
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
REIT under the Code and applicable state laws. We also believe that Shurgard
qualified as a REIT. A REIT generally does not pay corporate level income taxes
on its REIT taxable income that is distributed to its shareholders, and
accordingly, we do not pay income tax on the share of our REIT taxable income
that is distributed to our shareholders.
We therefore do not estimate or accrue any federal income tax expense for
income earned and distributed related to REIT operations. 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 for which 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 for 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 and other intangible assets. The
evaluation of our long-lived assets for impairment includes 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. Future events, or facts and circumstances that currently
exist, that we have not yet identified, could cause us to conclude in the future
that our long-lived assets are impaired. Any resulting impairment loss could
have a material adverse impact on our financial condition and results of
operations.
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 16 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, 2007, we had
approximately 490,000 reinsured policies in the U.S. outstanding representing
aggregate coverage of approximately $1.2 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 16 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.
36
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.
EUROPEAN NET OPERATING LOSSES - INCOME TAX TREATMENT: The Shurgard European
real estate operations generated significant operating losses from inception to
the date of the Shurgard Merger. We recorded a deferred tax asset arising from
the net operating loss carry-forward as of the date of acquisition, and recorded
a valuation allowance against any net deferred tax asset based on the filing
groups in the various countries. To the extent that we determine the valuation
allowance is no longer required for the deferred tax asset associated with the
filing group, the change in the valuation allowance will first be treated as a
reduction of goodwill and other intangible assets related to the Shurgard Merger
before being treated as a reduction to the provision for income taxes.
VALUATION OF ASSETS AND LIABILITIES ACQUIRED IN THE SHURGARD MERGER: We
have estimated the fair value of real estate, intangible assets, debt, and the
other assets and other liabilities acquired in the Shurgard Merger. In addition,
we have estimated the fair market value of the 38.9 million shares that we
issued to the Shurgard shareholders. These estimates are based upon many
assumptions, including interest rates, market values of land and buildings in
the U.S. and Europe, estimated future cash flows from the then tenant base in
place, and the recoverability of certain assets. We believe that the assumptions
used were reasonable, however, these assumptions were subject to a significant
degree of judgment, and others could come to materially different conclusions as
to the estimated values, if different assumptions were used. If the values were
determined using different assumptions than those used, our depreciation and
amortization expense, interest expense, real estate, debt, and intangible assets
could have been materially different.
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
OPERATING RESULTS FOR 2007 AS COMPARED TO 2006: Net income for the year
ended December 31, 2007 was $457.5 million compared to $314.0 million for the
same period in 2006, representing an increase of $143.5 million. This increase
is primarily due to improved operations from our real estate facilities combined
with an increased foreign currency exchange gain and a reduction in general and
administrative expense. These items were partially offset by increases in
depreciation and amortization expense and interest expense.
Comparisons of our revenues, expenses, and weighted average shares
outstanding are significantly impacted by the Shurgard Merger, which closed on
August 22, 2006. The results with respect to the assets and liabilities acquired
in the Shurgard Merger are included in our operating results from August 23,
2006 through December 31, 2006 during the year ended December 31, 2006, as
compared to the entire year ended December 31, 2007.
Net operating income, before depreciation, for our self-storage operations
totaled $1,082.2 million for the year ended December 31, 2007 as compared to
$810.8 million for the same period in 2006, representing an increase of $271.4
million. The increase is primarily due to the addition of 647 facilities that we
acquired in the Shurgard Merger. Net operating income of the former Shurgard
properties was approximately $347.8 million for the year ended December 31,
2007, as compared to $110.1 million for the same period in 2006, which reflects
the operations of these facilities from August 23, 2006 through December 31,
2006.
During the year ended December 31, 2007, we recognized a foreign currency
exchange gain aggregating $57.6 million relating to intercompany loans between
our U.S. and European subsidiaries. The gain was the result of the continued
weakening of the US Dollar relative to the Euro during the year ended December
31, 2007. See "FOREIGN EXCHANGE GAIN" below for further information.
General and administrative expense declined $24.9 million in the year ended
December 31, 2007 as compared to the same period in 2006. This decline was
primarily due to the reduction in integration expenses associated with the
37
Shurgard Merger, contract termination costs, and development costs that were
expensed with respect to terminated projects; offset partially by costs incurred
in 2007 with respect to our reorganization as a Maryland REIT, and the costs
associated with a proposed offering of shares in our European business. These
expenses aggregated $56.4 million for the year ended December 31, 2006 as
compared to $19.0 million for the same period in 2007.
Depreciation and amortization expense for the year ended December 31, 2007
increased by $184.8 million, as compared to the same period in 2006. This
increase is primarily due to increased depreciation and amortization expense
with respect to the buildings and intangible assets acquired in the Shurgard
Merger.
Net income allocable to our common shareholders (after allocating net
income to our preferred and equity shareholders) was $199.4 million or $1.17 per
common share on a diluted basis for the year ended December 31, 2007 compared to
$46.9 million or $0.33 per common share on a diluted basis for the same period
in 2006, representing an increase of $152.5 million or $0.84 per common share on
a diluted basis. The increase in net income allocable to common shareholders and
earnings per common share on a diluted basis are due primarily to the impact of
the factors described above with respect to net income, as well as a decrease in
income allocated to preferred shareholders, as described below.
For the years ended December 31, 2007 and 2006, we allocated $236.8 million
and $214.2 million of our net income, respectively, to our preferred
shareholders based on distributions paid. The year-over-year increase is due to
the issuance of additional preferred securities, partially offset by the
redemption of preferred securities that had higher dividend rates than the newly
preferred securities issued. In 2006, we also recorded allocations of income to
our preferred shareholders with respect to the application of EITF Topic D-42
totaling $31.5 million (or $0.22 per common share on a diluted basis) in
connection with the redemption of preferred securities.
Weighted average diluted shares increased to 170,147,000 for the year ended
December 31, 2007 from 143,715,000 for the year ended December 31, 2006. The
increase in weighted average diluted shares is due primarily to the impact of
the issuance of 38.9 million shares in connection with the Shurgard Merger.
OPERATING RESULTS FOR 2006 AS COMPARED TO 2005: Net income for the year
ended December 31, 2006 was $314.0 million compared to $456.4 million for the
same period in 2005, representing a decrease of $142.4 million, or 31%. This
decrease is primarily due to the temporary impact of certain items related to
the Shurgard Merger. During the year ended December 31, 2006, we incurred
amortization expense totaling $175.9 million due to the amortization of certain
intangible assets acquired in the merger and approximately $44.0 million in
merger integration expenses.
Comparisons of our revenues, expenses, and weighted average shares
outstanding are significantly impacted by the Shurgard Merger, which closed on
August 22, 2006. The results with respect to the assets and liabilities acquired
in the Shurgard Merger are included in our operating results from August 23,
2006 through December 31, 2006 during the year ended December 31, 2006, and none
for the year ended December 31, 2005.
These items were partially offset by improved operations from our
self-storage facilities, reduced minority interest in income and higher interest
income.
Net operating income for our self-storage operations, before depreciation
expense, increased from $630.8 million in 2005 to $810.8 million in 2006,
representing an increase of $180.0 million. This increase was largely due to the
acquisition of additional facilities in the Shurgard Merger. We earned an
aggregate of $110.1 million in net operating income with respect to the
facilities acquired from Shurgard, reflecting the operating results of the
facilities acquired from the date of the merger August 22, 2006, through
December 31, 2006.
Net income allocable to our common shareholders (after allocating net
income to our preferred and equity shareholders) was $46.9 million or $0.33 per
common share on a diluted basis for the year ended December 31, 2006 compared to
$254.4 million or $1.97 per common share on a diluted basis for the same period
in 2005, representing a decrease of $207.5 million or $1.64 per common share.
The decreases in net income allocable to common shareholders and earnings per
38
common diluted share are due primarily to the impact of the factors described
above with respect to net income, in addition to increased income allocated to
preferred shareholders, described below.
For the year ended December 31, 2006 and 2005, we allocated $214.2 million
and $173.0 million of our net income, respectively, to our preferred
shareholders based on distributions paid. The year-over-year increase is due to
the issuance of additional preferred securities, partially offset by the
redemption of preferred securities that had higher dividend rates than the newly
issued preferred securities. In connection with the redemption of preferred
securities, we also recorded allocations of income to our preferred shareholders
with respect to the application of EITF Topic D-42 totaling $31.5 million (or
$0.22 per diluted common share) and $7.5 million (or $0.06 per diluted common
share) for the years ended December 31, 2006 and 2005, respectively.
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 Shurgard Merger, which are included in
our weighted average shares from August 22, 2006 through December 31, 2006.
REAL ESTATE OPERATIONS
--------------------------------------------------------------------------------
DOMESTIC SELF-STORAGE OPERATIONS: Our domestic self-storage operations are
by far the largest component of our operating activities, representing
approximately 81% of our total revenues generated for the year ended December
31, 2007. Rental income with respect to our domestic self-storage operations
grew by 24.4% in 2007 as compared to 2006 and by 24.1% in 2006 as compared to
2005. The year-over-year growth in rental income is primarily due to the
acquisition of additional facilities in connection with the Shurgard Merger
combined with 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 three groups that
management analyzes with respect to the Company's performance. The Public
Storage Same Store group, representing our most mature facilities that we have
owned prior to January 1, 2004, the Shurgard Same Store group, representing a
mature group of facilities that we have owned since August 22, 2006 in
connection with the Shurgard Merger; and Other facilities which primarily
include Shurgard facilities we acquired other than the Same Store Facilities, as
well as the facilities developed or acquired over the past three years.
39
DOMESTIC SELF - STORAGE OPERATIONS SUMMARY: Year ended December 31, Year ended December 31,
-------------------------------------- -----------------------------------
Percentage Percentage
2007 2006 Change 2006 2005 Change
------------ ------------ ------------ ------------ ------------ -----------
(Dollar amounts in thousands)
Rental income:
Same Store Facilities - Public Storage...... $ 925,088 $ 906,076 2.1% $ 906,076 $ 860,533 5.3%
Same Store Facilities - Shurgard............ 268,183 91,956 191.6% 91,956 - -
Other Facilities............................ 274,904 182,202 50.9% 182,202 90,837 100.6%
------------ ------------ ------------ ------------ ------------ -----------
Total rental income....................... 1,468,175 1,180,234 24.4% 1,180,234 951,370 24.1%
------------ ------------ ------------ ------------ ------------ -----------
Cost of operations before depreciation and
amortization expense (a):
Same Store Facilities - Public Storage...... 301,429 299,547 0.6% 299,547 286,645 4.5%
Same Store Facilities - Shurgard............ 87,692 32,439 170.3% 32,439 - -
Other Facilities............................ 98,861 66,774 48.1% 66,774 33,944 96.7%
------------ ------------ ------------ ------------ ------------ -----------
Total cost of operations................. 487,982 398,760 22.4% 398,760 320,589 24.4%
------------ ------------ ------------ ------------ ------------ -----------
Net operating income before depreciation and
amortization expense (a):
Same Store Facilities - Public Storage...... 623,659 606,529 2.8% 606,529 573,888 5.7%
Same Store Facilities - Shurgard............ 180,491 59,517 203.3% 59,517 - -
Other Facilities............................ 176,043 115,428 52.5% 115,428 56,893 102.9%
------------ ------------ ------------ ------------ ------------ -----------
Total net operating income before
depreciation and amortization expense (a) 980,193 781,474 25.4% 781,474 630,781 23.9%
------------ ------------ ------------ ------------ ------------ -----------
Depreciation and amortization expense:
Same Store Facilities - Public Storage...... (162,465) (162,981) (0.3)% (162,981) (168,152) (3.1)%
Same Store Facilities - Shurgard............ (203,485) (136,349) 49.2% (136,349) - -
Other Facilities............................ (122,230) (75,512) 61.9% (75,512) (22,950) 229.0%
------------ ------------ ------------ ------------ ------------ -----------
Total depreciation and amortization expense. (488,180) (374,842) 30.2% (374,842) (191,102) 96.1%
------------ ------------ ------------ ------------ ------------ -----------
Net operating income (loss):
Same Store Facilities - Public Storage...... 461,194 443,548 4.0% 443,548 405,736 9.3%
Same Store Facilities - Shurgard............ (22,994) (76,832) (70.1)% (76,832) - -
Other Facilities............................ 53,813 39,916 34.8% 39,916 33,943 17.6%
------------ ------------ ------------ ------------ ------------ -----------
Total net operating income.................. $ 492,013 $ 406,632 21.0$ 406,632 $ 439,679 (7.5)%
============ ============ ============ ============ ============ ===========
Weighted average square foot occupancy during
the period.................................. 88.4% 88.6% (0.2)% 88.6% 89.6% (1.1)%
Number of self-storage facilities (at end of
period)..................................... 1,984 1,981 0.2% 1,981 1,461 35.6%
Net rentable square feet (in thousands, at end
of period):................................. 124,828 124,003 0.7% 124,003 89,023 39.3%
(a) Total net operating income before depreciation and amortization or "NOI"
is a non-GAAP (generally accepted accounting principles) financial
measure that excludes the impact of depreciation and amortization
expense. See Note 14 to our December 31, 2007 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. Although depreciation and amortization are
operating expenses, 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 and amortization in evaluating our operating
results.
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.
In the above table, the significant increases in revenues and cost of
operations, in 2007 and 2006 as compared to 2005 are primarily due to the
40
acquisition of self-storage facilities in connection with the Shurgard Merger
which was completed on August 22, 2006 (see Note 3 to the consolidated financial
statements). As a result of the Shurgard Merger, we acquired interests in 487
self-storage facilities (32.3 million net rentable square feet) located in the
U.S.
Immediately preceding the close of the Shurgard Merger, all of the acquired
facilities in the U.S. 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 Shurgard Merger.
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 began
to hire additional "bench" property managers in the second quarter of 2006 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 second, third and fourth quarters of 2006 due to the
additional head count.
As a result of the Shurgard Merger, the amount of vacant space increased
significantly in our system. The acquired Shurgard portfolio of 487 facilities
in the U.S. had aggregate average square foot occupancy of 84.4% at August 31,
2006, which was 530 basis points below the 89.7% for the existing Public Storage
portfolio. Average rental rates were approximately the same for each of the
portfolios. Our goal has been to increase our overall portfolio occupancy in
order to be in a position to drive rental rates. The primary focus in meeting
our goal has been to work to improve the Shurgard portfolio's 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 were much more aggressive at reducing our
rental rates, increasing promotional discounts and expanding our marketing
programs during the fourth quarter of 2006 and continued throughout 2007. We
have substantially increased our media advertising expenditures to $25.3 million
in 2007, as compared to $17.7 million in 2006 and $13.7 million in 2005.
We have made significant progress in improving the occupancy level of the
Shurgard portfolio. However, this improvement has come somewhat at the expense
of a reduction in the Public Storage Same Store Facilities' occupancies and
reduced growth in rental rates. We believe that the more aggressive pricing and
discounting at the Shurgard properties, combined with the fact that the Shurgard
properties had relatively more vacant spaces to rent, has resulted in shifting
of new tenant flow not only from our competitors, but also from our existing
portfolio to the Shurgard properties during the past year, putting some pressure
on the occupancies and rental rate growth for the Public Storage Same Store
Facilities.
Short-term occupancy increases, like those we have experienced in the
Shurgard portfolio, tend to result in a higher proportion of short-term tenants
and a resulting increase in move-out ratios, which subsides over time. We
believe this is related to the nature of the occupancy stabilization process,
which we have observed to have two principal stages -- first, the physical
fill-up of the facilities, then the achievement of a stable tenant base with
historical levels of move-outs, as successive groups of tenants move in, the
tenants in such groups with short-term needs (such as moving) move out, and the
tenants with long-term storage needs remain.
In addition to our strategy to increase Shurgard occupancies, our operating
results have been, and will continue to be, impacted by the general economic
trends that affect the self-storage business. While it is difficult to quantify
the impact of these economic trends, and even more difficult to predict what the
impact will be in the future, we do believe that several such factors, including
the slowdown in the national housing market, pressure on consumer disposable
income, as well as reduced year-over-year demand in markets which had enhanced
self-storage demand in 2005 and 2006 due to the hurricanes (such as in Florida),
have negatively impacted self-storage demand and may continue to do so
throughout 2008.
Assuming a continuance of recent demand trends that we have observed over
the past six months, we expect to continue with aggressive pricing, promotional
discounts and marketing in 2008 to maintain or improve our overall occupancy
levels. While we increased the number of markets receiving television
advertising from 25 markets in the fourth quarter of 2006 to 27 markets in the
41
fourth quarter of 2007, aggregate television spending declined from $7.6 million
in the quarter ended December 31, 2006 to $3.3 million in the quarter ended
December 31, 2007. Future media advertising expenditures are not determinable at
this time, and will be driven in part by demand for our self-storage spaces, our
current occupancy levels, as well as our evaluation of the most effective mix of
yellow page, media, and Internet advertising.
We believe that the acquisition of the Shurgard portfolio provided
operational efficiencies, specifically in the areas of marketing, national call
center, and indirect overhead costs that support the operations of the
facilities. We believe that these efficiencies are largely realized and
reflected in our operating results for the year ended December 31, 2007.
DOMESTIC - PUBLIC STORAGE SAME STORE FACILITIES
The facilities included in the Public Storage Same Store Facilities are all
stabilized and have been owned since January 1, 2005 and therefore provide
meaningful comparative data for 2005, 2006 and 2007. The Public Storage Same
Store Facilities contain approximately 77.8 million net rentable square feet,
representing approximately 62% of the aggregate net rentable square feet of our
consolidated domestic self-storage portfolio. 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 - Public Storage."
The following table sets forth additional operating data with respect to these
facilities:
SAME STORE FACILITIES - PUBLIC STORAGE Year ended December 31, Year ended December 31,
-------------------------------------- ------------------------------------
Percentage Percentage
2007 2006 Change 2006 2005 Change
------------- ------------ ---------- ------------ ------------ ----------
(Dollar amounts in thousands, except weighted average amounts)
Rental income...................................... $ 884,379 $ 865,981 2.1% $ 865,981 $ 822,758 5.3%
Late charges and administrative fees collected..... 40,709 40,095 1.5% 40,095 37,775 6.1%
------------- ------------ ---------- ------------ ------------ ----------
Total rental income............................. 925,088 906,076 2.1% 906,076 860,533 5.3%
------------- ------------ ---------- ------------ ------------ ----------
Cost of operations before depreciation and amortization:
Direct property payroll....................... 63,236 63,945 (1.1)% 63,945 59,717 7.1%
Property taxes................................ 85,132 83,262 2.2% 83,262 80,092 4.0%
Repairs and maintenance....................... 29,037 29,515 (1.6)% 29,515 27,947 5.6%
Advertising and promotion..................... 26,495 26,256 0.9% 26,256 25,115 4.5%
Utilities..................................... 21,157 20,459 3.4% 20,459 18,860 8.5%
Property insurance............................ 8,835 9,400 (6.0)% 9,400 8,648 8.7%
Telephone reservation center.................. 8,549 8,316 2.8% 8,316 8,365 (0.6)%
Other cost of management...................... 58,988 58,394 1.0% 58,394 57,901 0.9%
------------- ------------ ---------- ------------ ------------ ----------
Total cost of operations........................ 301,429 299,547 0.6% 299,547 286,645 4.5%
------------- ------------ ---------- ------------ ------------ ----------
Net operating income before depreciation and
amortization expense (e)........................... 623,659 606,529 2.8% 606,529 573,888 5.7%
Depreciation and amortization expense.............. (162,465) (162,981) (0.3)% (162,981) (168,152) (3.1)%
------------- ------------ ---------- ------------ ------------ ----------
Net operating income.............................. $ 461,194 $ 443,548 4.0% $ 443,548 $ 405,736 9.3%
============= ============ ========== ============ ============ ==========
Gross margin (before depreciation and amortization
expense)........................................... 67.4% 66.9% 0.7% 66.9% 66.7% 0.3%
Weighted average for the fiscal year:
Square foot occupancy (a)....................... 90.1% 90.8% (0.8)% 90.8% 91.0% (0.2)%
Realized annual rent per occupied square foot (b) $ 12.62 $ 12.26 2.9% $ 12.26 $ 11.62 5.5%
REVPAF (c)...................................... $ 11.37 $ 11.13 2.2% $ 11.13 $ 10.58 5.2%
Weighted average at December 31:
Square foot occupancy........................... 88.1% 89.3% (1.3)% 89.3% 89.8% (0.6)%
In place annual rent per occupied square foot (d) $ 13.81 $ 13.37 3.3% $ 13.37 $ 12.87 3.9%
Total net rentable square feet (in thousands)...... 77,782 77,782 - 77,782 77,782 -
Number of facilities............................... 1,316 1,316 - 1,316 1,316 -
(a) Square foot occupancies represent weighted average occupancy levels over
the entire period.
42
(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 expense or
"NOI" is a non-GAAP (generally accepted accounting principles) financial
measure that excludes the impact of depreciation and amortization expense,
for our Same Store facilities represents a portion of our total
self-storage segment's net operating income before depreciation and
amortization expense, and is reconciled to the segment total in the table
"domestic self-storage operations summary" above. A reconciliation of our
total self-storage segment's net operating income before depreciation and
amortization expense to consolidated net income is included in Note 14 to
our December 31, 2007 consolidated financial statements, "Segment
Information." Although depreciation and amortization are operating
expenses, 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 and amortization expense in evaluating our operating results.
Rental income increased approximately 2.1% in 2007 as compared to 2006, and
5.3% in 2006 as compared to 2005. These increases were primarily attributable to
higher average realized annual rental rates per occupied square foot, which were
2.9% higher in 2007 as compared to 2006, and 5.5% higher in 2006 as compared to
2005. Higher average realized annual rental rates were offset partially by lower
occupancy levels.
In the first three quarters of 2006, year-over-year revenue growth was
brisk relative to historically experienced growth levels, at 5.9%. Following
this period, growth began to slow, with year-over-year revenue growth of 3.5%
for the quarter ended December 31, 2006. In the first three quarters of 2007,
revenue growth continued to slow to 2.9% in the quarter ended March 31, 2007,
and 1.7% in each of the quarters ended June 30, 2006 and September 30, 2007.
Revenue growth improved somewhat in the fourth quarter of 2007 to 2.1%.
It is difficult for us to pinpoint the exact reasons for this slow down in
revenue growth and the degree to which each factor 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 and our aforementioned
focus on improving the occupancies of the Shurgard portfolio, (ii) hurricane
activity that created unusual demand for storage space in our Florida markets in
2005 and 2004, making year-over-year trends in 2007 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 has been our objective to close the occupancy gap
between the acquired Shurgard properties versus the Public Storage existing
portfolio and achieve a stabilized tenant base. We believe that this strategy
has put pressure on occupancies and rental rate growth on our existing Same
Store facilities since the merger, as demand appears to have shifted somewhat to
the acquired Shurgard facilities as we have adjusted the level of discounts and
monthly rents at the acquired Shurgard facilities to accelerate occupancy
growth. Because it was important for us to maintain our occupancy levels in the
Public Storage Same Store portfolio, we 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 challenging to maintain
occupancy levels at the Public Storage Same Store group of facilities, while at
the same time trying to continue to improve the occupancy levels of the acquired
Shurgard facilities and achieve a stabilized tenant base.
However, since we believe that we have now closed the occupancy gap between
the acquired Shurgard properties versus the Public Storage existing portfolio
and have achieved a stabilized tenant base, we expect that the pressure on
Public Storage Same Store portfolio should subside. Despite this positive
development, the other aforementioned factors noted above may still continue to
have a negative impact on our revenue growth, and as a result it is unclear as
to when we may achieve higher levels of revenue growth in the Public Storage
Same Store pool than we achieved in 2007.
43
Cost of operations (excluding depreciation and amortization) increased by
0.6% in 2007 as compared to 2006, and 4.5% in 2006 as compared to 2005. Growth
increased in 2006 due to higher payroll, property tax, utilities, and repairs
and maintenance expenses. Growth increased minimally in 2007, because the
factors increasing payroll expense in 2006 were somewhat reversed in 2007, and
our property tax, utility, and repairs and maintenance expense growth slowed. To
a lesser extent, 2007's expenses also benefited from scale efficiencies from the
Shurgard Merger.
In 2006, we experienced a 7.1% increase in payroll expense as compared to
2005. This growth was driven by higher wage rates due to a tighter labor market
in several market areas, higher overtime hours due to understaffing issues, as
well as the effects of the Shurgard Merger, with headcount levels increased in
order to manage an increased level of turnover stemming from the merger. In
2007, property payroll expense declined 1.1% as many of the inefficiencies such
as overtime and increased staffing levels that we experienced in 2006, were
eliminated. This was offset partially by higher benefits costs, as we improved
the health benefits offered to our property level employees significantly in
2007. For the last few years, we have also benefited from decreased workers'
compensation costs. For 2008, we expect to incur payroll growth that is higher
than inflation, as we do not expect any further declines in payroll hours
incurred by our property managers and workers' compensation expense should
increase as the declines in expense we experienced in the last few years are
expected to subside.
Property tax expense growth slowed in 2007 as several states (Florida,
Texas, and Arizona) passed laws reducing the property tax rates in 2007. While
there are states (Indiana, Pennsylvania, Georgia and Arizona) considering new
legislation in 2008, nothing has been passed and it is too early to determine
any impact on 2008 property tax expense. Therefore, we expect property tax
expense growth of approximately 4% in 2008.
Repairs and maintenance expense declined 1.6% in 2007 as compared to 2006
but had increased 5.6% in 2006 as compared to 2005. Repairs and maintenance
expense include snow removal costs, which totaled $2,297,000, $1,461,000, and
$2,209,000, in 2005, 2006, and 2007, respectively. Excluding snow removal costs,
repairs and maintenance decreased 4.4% in 2007 as compared to 2006 and increased
9.4% in 2006 as compared to 2005. We expect moderated growth in repairs and
maintenance in 2008.
Advertising and promotion is comprised principally of media (television and
radio), yellow page, and Internet advertising. The Public Storage Same Stores'
pro rata share of advertising and promotion costs increased 0.9% in 2007 as
compared to 2006 and 4.5% in 2006 as compared to 2005. Despite significant
increases in our aggregate level of media advertising of 42.9% in 2007 and 29.2%
in 2006, the Public Storage Same-Store properties benefited from the
efficiencies of the 487 Shurgard properties added to our portfolio in August 22,
2006, as our aggregate costs were allocated over a larger pool of properties.
Utility expenses increased 8.5% in 2006 as compared to 2005, and 3.4% in
2007 as compared to 2006, due principally to fluctuations in electricity and
natural gas costs. Future levels of utility expenses will be dependent primarily
upon current energy prices and, to a lesser extent, due to changes in demand
driven by weather and temperature, both of which are volatile and not
predictable.
Insurance expense increased 8.7% in 2006 as compared to 2005, and declined
6.0% in 2007 as compared to 2006. The increase in 2006 was due to increases in
rates occasioned by the hurricanes that occurred in 2005. The decline in 2007
was likewise market-driven, as softer insurance markets in early 2007 as we
renewed our premiums effective April 1, 2007, enabled us to receive lower
insurance rates.
Telephone reservation center costs decreased 0.6% in 2006 as compared to
2005, and increased 2.8% in 2007 as compared to 2006. We continue to evaluate
our telephone reservation center as we evaluate the appropriate staffing levels
and location of personnel relative to our expanded portfolio, and as a result,
expect telephone reservation center costs to remain somewhat volatile during
early 2008 until we determine our appropriate ongoing level of expenses.
44
The following table summarizes selected quarterly financial data with
respect to the Same Store Facilities:
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:
2007 $ 225,677 $ 230,161 $ 237,434 $ 231,816 $ 925,088
2006 $ 219,297 $ 226,352 $ 233,420 $ 227,007 $ 906,076
2005 $ 207,942 $ 213,666 $ 219,668 $ 219,257 $ 860,533
Total cost of operations
(excluding depreciation
and amortization expense):
2007 $ 77,828 $ 78,234 $ 76,060 $ 69,307 $ 301,429
2006 $ 75,802 $ 76,649 $ 74,947 $ 72,149 $ 299,547
2005 $ 74,039 $ 71,790 $ 71,517 $ 69,299 $ 286,645
Property tax expense:
2007 $ 22,871 $ 21,630 $ 22,718 $ 17,913 $ 85,132
2006 $ 21,988 $ 20,730 $ 21,700 $ 18,844 $ 83,262
2005 $ 21,195 $ 19,832 $ 20,902 $ 18,163 $ 80,092
Advertising and promotion expense:
2007 $ 6,728 $ 9,161 $ 5,947 $ 4,659 $ 26,495
2006 $ 6,963 $ 7,058 $ 4,772 $ 7,463 $ 26,256
2005 $ 6,274 $ 7,258 $ 5,513 $ 6,070 $ 25,115
REVPAF:
2007 $ 11.09 $ 11.32 $ 11.66 $ 11.41 $ 11.37
2006 $ 10.79 $ 11.13 $ 11.46 $ 11.16 $ 11.13
2005 $ 10.24 $ 10.51 $ 10.78 $ 10.78 $ 10.58
Weighted average realized annual
rent per occupied square foot:
2007 $ 12.35 $ 12.37 $ 12.89 $ 12.87 $ 12.62
2006 $ 11.97 $ 12.08 $ 12.55 $ 12.42 $ 12.26
2005 $ 11.40 $ 11.42 $ 11.76 $ 11.91 $ 11.62
Weighted average occupancy levels
for the period:
2007 89.8% 91.5% 90.5% 88.6% 90.1%
2006 90.1% 92.1% 91.3% 89.8% 90.8%
2005 89.8% 92.0% 91.7% 90.5% 91.0%
45
ANALYSIS OF REGIONAL TRENDS
---------------------------
The following table sets forth regional trends in our Same Store Facilities:
Year Ended December 31, Year Ended December 31,
2007 2006 Change 2006 2005 Change
------------ ------------ ----------- ------------ ------------ -----------
(Amounts in thousands, except for weighted average data)
Same Store Facilities Operating Trends
by Region
Rental income:
Southern California (133
facilities)...................... $ 150,670 $ 146,453 2.9% $ 146,453 $ 139,660 4.9%
Northern California (133
facilities)...................... 112,455 108,736 3.4% 108,736 103,116 5.5%
Texas (156 facilities).......... 83,367 80,597 3.4% 80,597 76,490 5.4%
Florida (141 facilities)........ 104,330 106,219 (1.8)% 106,219 98,690 7.6%
Illinois (92 facilities)........ 67,112 64,492 4.1% 64,492 61,897 4.2%
Georgia (60 facilities)......... 32,297 32,173 0.4% 32,173 29,559 8.8%
All other states (601 facilities) 374,857 367,406 2.0% 367,406 351,121 4.6%
------------ ------------ ----------- ------------ ------------ -----------
Total rental income................. 925,088 906,076 2.1% 906,076 860,533 5.3%
------------ ------------ ----------- ------------ ------------ -----------
Cost of operations before depreciation
and amortization expense:
Southern California.............. 32,476 32,949 (1.4)% 32,949 30,746 7.2%
Northern California.............. 28,343 28,328 0.1% 28,328 26,758 5.9%
Texas............................ 34,175 35,528 (3.8)% 35,528 33,039 7.5%
Florida.......................... 34,777 34,265 1.5% 34,265 32,538 5.3%
Illinois......................... 28,714 28,038 2.4% 28,038 25,080 11.8%
Georgia.......................... 10,923 10,876 0.4% 10,876 10,270 5.9%
All other states................. 132,021 129,563 1.9% 129,563 128,214 1.1%
------------ ------------ ----------- ------------ ------------ -----------
Total cost of operations............ 301,429 299,547 0.6% 299,547 286,645 4.5%
------------ ------------ ----------- ------------ ------------ -----------
Net operating income before depreciation
and amortization expense:
Southern California.............. 118,194 113,504 4.1% 113,504 108,914 4.2%
Northern California.............. 84,112 80,408 4.6% 80,408 76,358 5.3%
Texas............................ 49,192 45,069 9.1% 45,069 43,451 3.7%
Florida.......................... 69,553 71,954 (3.3)% 71,954 66,152 8.8%
Illinois......................... 38,398 36,454 5.3% 36,454 36,817 (1.0)%
Georgia.......................... 21,374 21,297 0.4% 21,297 19,289 10.4%
All other states................. 242,836 237,843 2.1% 237,843 222,907 6.7%
------------ ------------ ----------- ------------ ------------ -----------
Total net operating income before
depreciation and amortization
expense.......................... $ 623,659 $ 606,529 2.8% $ 606,529 $ 573,888 5.7%
============ ============ =========== ============ ============ ===========
Weighted average occupancy:
Southern California.............. 90.4% 91.2% (0.9)% 91.2% 92.3% (1.2)%
Northern California.............. 89.8% 90.2% (0.4)% 90.2% 90.5% (0.3)%
Texas............................ 90.8% 90.8% 0.0% 90.8% 90.0% 0.9%
Florida.......................... 89.8% 92.8% (3.2)% 92.8% 93.1% (0.3)%
Illinois......................... 89.1% 89.4% (0.3)% 89.4% 89.5% (0.1)%
Georgia.......................... 90.4% 92.4% (2.2)% 92.4% 92.1% 0.3%
All other states................. 90.0% 90.5% (0.6)% 90.5% 90.7% (0.2)%
------------ ------------ ----------- ------------ ------------ -----------
Total weighted average occupancy.... 90.1% 90.8% (0.8)% 90.8% 91.0% (0.2)%
------------ ------------ ----------- ------------ ------------ -----------
REVPAF:
Southern California.............. $ 17.29 $ 16.81 2.9% $ 16.81 $ 16.02 4.9%
Northern California.............. 14.80 14.32 3.4% 14.32 13.58 5.4%
Texas............................ 8.04 7.77 3.5% 7.77 7.38 5.3%
Florida.......................... 11.86 12.09 (1.9)% 12.09 11.20 7.9%
Illinois......................... 11.39 10.95 4.0% 10.95 10.51 4.2%
Georgia.......................... 8.40 8.38 0.2% 8.38 7.74 8.3%
All other states................. 10.34 10.12 2.2% 10.12 9.68 4.5%
------------ ------------ ----------- ------------ ------------ -----------
Total REVPAF........................ $ 11.37 $ 11.13 2.2% $ 11.13 $ 10.58 5.2%
------------ ------------ ----------- ------------ ------------ -----------
46
SAME STORE FACILITIES OPERATING
TRENDS BY REGION (CONTINUED) Year Ended December 31, Year Ended December 31,
2007 2006 Change 2006 2005 Change
Realized annual rent per occupied square
foot:
Southern California.............. $ 19.13 $ 18.44 3.7% $ 18.44 $ 17.36 6.2%
Northern California.............. 16.47 15.87 3.8% 15.87 15.01 5.7%
Texas............................ 8.86 8.56 3.5% 8.56 8.20 4.4%
Florida.......................... 13.21 13.03 1.4% 13.03 12.02 8.4%
Illinois......................... 12.78 12.24 4.4% 12.24 11.75 4.2%
Georgia.......................... 9.30 9.08 2.4% 9.08 8.40 8.1%
All other states................. 11.49 11.19 2.7% 11.19 10.67 4.9%
------------ ------------ ----------- ------------ ------------ -----------
Total realized rent per square foot. $ 12.62 $ 12.26 2.9% $ 12.26 $ 11.62 5.5%
------------ ------------ ----------- ------------ ------------ -----------
In place annual rent per occupied square
foot at December 31:
Southern California................. $ 20.86 $ 19.98 4.4% $ 19.98 $ 19.15 4.3%
Northern California................. 18.08 17.28 4.6% 17.28 16.62 4.0%
Texas............................... 9.68 9.35 3.5% 9.35 9.00 3.9%
Florida............................. 14.33 14.18 1.1% 14.18 13.37 6.1%
Illinois............................ 14.07 13.36 5.3% 13.36 12.89 3.6%
Georgia............................. 10.34 10.19 1.5% 10.19 9.50 7.3%
All other states.................... 12.55 12.20 2.9% 12.20 11.85 3.0%
------------ ------------ ----------- ------------ ------------ -----------
Total in place rent per occupied
square foot:........................ $ 13.81 $ 13.37 3.3% $ 13.37 $ 12.87 3.9%
============ ============ =========== ============ ============ ===========
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. Florida has been impacted by the comparative impact of high demand
driven by the hurricanes of 2004 and 2005, which resulted in brisk revenue
growth in 2006 of 7.6% as compared to 2005. In 2007, since demand is
comparatively lower, Florida's revenue has declined 1.8% in 2007 as compared to
2006. Over the longer term, we believe that this market benefits from continued
strong population growth and barriers to entry.
DOMESTIC - SHURGARD SAME STORE FACILITIES
-----------------------------------------
In connection with the Shurgard Merger, we acquired 487 self-storage
facilities in the U.S. located in 23 states. A total of 343 facilities have been
operating at a mature stabilized occupancy level for several years under
Shurgard management prior to the merger and then under the Public Storage
management following the merger. These stabilized facilities are referred to as
"Shurgard Same Store Facilities."
47
As reflected in a preceding table entitled "Domestic self - storage
operations summary" above, the historical operating results for this group of
facilities increased significantly for 2007 as compared to 2006 and 2006 as
compared to 2005. These increases were primarily the result of having only a
partial period's operating results in 2006, from August 23, 2006 (date of the
Shurgard Merger) through December 31, 2006, as compared to the entire year ended
December 31, 2007.
To provide additional comparative operating data, the table below sets
forth the operations of the Shurgard Same Store Facilities for the entire
periods presented without regard to the timing of the Shurgard Merger. We
believe that this presentation more effectively portrays how these facilities
are performing, notwithstanding that the data presented for the 2006 and 2005
periods do not represent that actual results included in our operations for
those periods.
Shurgard Domestic Same Store Facilities: (a)
-------------------------------------------- Year Ended December 31, Year Ended December 31,
Percentage Percentage
2007 2006 (a) Change 2006 (a) 2005 (a) Change
----------- ----------- ---------- ------------ ------------ ----------
Revenues: (Dollar amounts in thousands, except weighted average amounts)
Rental income................................. $ 259,588 $ 247,634 4.8% $ 247,634 $ 236,816 4.6%
Late charges and administrative fees collected 8,595 8,618 (0.3)% 8,618 8,436 2.2%
----------- ----------- ---------- ------------ ------------ ----------
Total revenues (b)............................ 268,183 256,252 4.7% 256,252 245,252 4.5%
----------- ----------- ---------- ------------ ------------ ----------
Cost of operations (excluding depreciation expense):
Property taxes ............................... 25,687 24,798 3.6% 24,798 22,282 11.3%
Direct property payroll....................... 17,322 28,181 (38.5)% 28,181 29,716 (5.2)%
Advertising and promotion..................... 6,840 5,639 21.3% 5,639 5,148 9.5%
Utilities..................................... 7,186 7,135 0.7% 7,135 6,577 8.5%
Repairs and maintenance....................... 8,031 6,271 28.1% 6,271 5,961 5.2%
Telephone reservation center.................. 2,226 669 232.7% 669 - -
Property insurance............................ 2,603 1,834 41.9% 1,834 1,404 30.6%
Other costs of management..................... 17,797 21,475 (17.1)% 21,475 23,832 (9.9%)
----------- ----------- ---------- ------------ ------------ ----------
Total cost of operations (b).................... 87,692 96,002 (8.7)% 96,002 94,920 1.1%
----------- ----------- ---------- ------------ ------------ ----------
Net operating income (excluding depreciation
expense) (c)................................... $ 180,491 $ 160,250 12.6% $ 160,250 $ 150,332 6.6%
=========== =========== ========== ============ ============ ==========
Gross margin (before depreciation expense)........ 67.3% 62.5% 7.7% 62.5% 61.3% 2.0%
Weighted average for the period:
Square foot occupancy (d)....................... 88.5% 84.4% 4.9% 84.4% 85.2% (0.9)%
Realized annual rent per occupied square foot (e) $ 13.46 $ 13.46 0.0% $ 13.46 $ 12.75 5.6%
REVPAF (f) (g).................................. $ 11.91 $ 11.36 4.8% $ 11.36 $ 10.86 4.6%
Weighted average at December 31:
Square foot occupancy........................... 87.6% 85.2% 2.8% 85.2% 83.9% 1.5%
In place annual rent per occupied square foot (h) $ 14.47 $ 14.38 0.6% $ 14.38 - -
Total net rentable square feet (in thousands)..... 21,797 21,797 - 21,797 21,797 -
Number of facilities.............................. 343 343 - 343 343 -
(a) We acquired the Shurgard Same Store facilities in connection with the
Shurgard Merger which was completed on August 22, 2006. Included in our
consolidated financial statements are only the historical operating results
for these facilities from the date of the Shurgard Merger through December
31, 2007, the time that these facilities were owned by us. For comparative
purposes, however, the table above includes the historical operating
results for these facilities for each of the three years ended December 31,
2007, which includes operations prior to the Shurgard Merger and not
included in our consolidated financial statements.
(b) 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
48
presented herein will not necessarily compare to amounts previously
presented by Shurgard in its public reporting due to differences in
classification of revenues and expenses, including tenant reinsurance,
retail sales and truck rental activities which are included on our income
statement under "ancillary operations" but were previously presented by
Shurgard as self-storage revenue and operating expenses.
(c) Net operating income (excluding 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 expense 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.
(d) Square foot occupancies represent weighted average occupancy levels over
the entire period.
(e) Realized annual rent per occupied square foot is computed by annualizing
the result of dividing rental income by the weighted average occupied
square footage for the period. Realized annual rent per occupied square
foot takes into consideration promotional discounts and other costs that
reduce rental income from the contractual amounts due.
(f) Annualized rental income per available square foot ("REVPAF") represents
annualized rental income divided by total available net rentable square
feet.
(g) Late charges and administrative fees are excluded from the computation of
realized annual rent per occupied square foot and REVPAF because exclusion
of these amounts provides a better measure of our ongoing level of revenue,
by excluding the volatility of late charges, which are dependent
principally upon the level of tenant delinquency, and administrative fees,
which are dependent principally upon the absolute level of move-ins for a
period.
(h) 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.
Reliable data for in place annual rent per occupied square foot as of
December 31, 2005 is not available.
On the date of the Shurgard Merger, we successfully installed our real-time
property operation system at all U.S. Shurgard locations. As a result, these
facilities were immediately integrated into our national call center, website,
and management structure and began to benefit from our operating platform.
On August 30, 2006, the occupancy of the Shurgard Same-Store facilities was
approximately 84.1%, as compared to 91.3% for the Public Storage Same-Store
facilities. It has been our objective to close this occupancy gap in order to
increase REVPAF at the Shurgard facilities. In attempting to accomplish this
objective, we significantly expanded our domestic pricing, promotional, and
media programs beginning in the fourth quarter of 2006.
Revenues for the Shurgard Same-Store properties increased 4.7% in 2007 as
compared to 2006 and 4.5% in 2006 as compared to 2005. The increase in 2007 is
primarily driven by higher occupancy levels as compared to 2006, while the
increase in 2006 as compared to 2005 is primarily driven by higher realized rent
per occupied square foot.
We have improved the occupancy of the Shurgard Same-Store Facilities, with
average occupancy at December 31, 2007 of 87.6% for the Shurgard Same-Store
facilities as compared to 88.1% for the Public Storage same-store pool. As we
have raised the occupancy of the Shurgard Same-Store facilities, we have
recently been able to be less aggressive on pricing and as a result our trends
in realized rent per occupied square foot trends have improved from a reduction
of 0.6% in the first nine months of 2007 as compared to the same period in 2006,
to a 1.7% increase in the fourth quarter of 2007 as compared to the same period
in 2006.
Property tax expense increased 11.3% in 2006 as compared to 2005, and 3.6%
in 2007 as compared to 2006, due to higher assessments following the Shurgard
Merger, particularly with respect to properties in California.
Payroll expense decreased from $29,716,000 in 2005, to $28,181,000 in 2006,
and to $17,322,000 in 2007. Prior to the Shurgard Merger, Shurgard paid its
property managers higher compensation than what we pay our property managers.
From the date of the merger until December 31, 2006, the existing Shurgard
49
employees' compensation levels were "frozen" at their existing levels. Starting
January 1, 2007, the former Shurgard employees who remained had their
compensation adjusted to the existing Public Storage compensation levels.
Because of this pay disparity and our plan to adjust the former Shurgard
employees' compensation levels, we expected a significant amount of turnover in
the former Shurgard employee ranks following the merger, and as a result we
increased the level of "bench" property managers before the merger so that we
would have sufficient staffing for the properties. As a result, average pay
rates for the property managers staffing the Shurgard properties began declining
in Q4 2006, as many of the higher-compensated former Shurgard employees left and
were replaced with new employees at the Public Storage compensation levels. This
decline, however, was offset partially by the impact of increased numbers of
bench personnel. Pay rates dropped further on January 1, 2007 as all employees
were adjusted to approximate the Public Storage compensation levels. As a
result, the compensation levels paid in 2007 approximate the ongoing
compensation levels.
Overall advertising and promotion increased from $5,148,000 in 2005 to
$5,639,000 in 2006 and to $6,840,000 in 2007. As noted previously, we increased
advertising and promotional activities immediately following the Shurgard Merger
in order to improve the occupancy levels of the facilities acquired in the
merger. Shurgard did not employ media advertising and, as a result, there was no
media advertising in 2005, as compared to $1,477,000 in 2006 and $3,554,000 in
2007.
Yellow page expenditures declined from $3,488,000 in 2005, to $3,027,000 in
2006, to $1,910,000 in 2007. These declines reflect the termination of
Shurgard's yellow page ads in 2006, and the allocation of the pro-rata portion
of Public Storage's aggregate yellow page expenditures following the Shurgard
Merger, which did not increase as a result of the Shurgard Merger. Yellow page
expenditure incurred for 2007 approximates the ongoing expected level of yellow
page costs.
Utility expense increased 8.5% in 2006 as compared to 2005, and 0.7% in
2007 as compared to 2006. Future levels of utility expenses will be dependent
primarily upon current energy prices and changes in demand driven by weather and
temperature, both of which are volatile and not predictable.
Other cost of management, which principally includes supervisory and
indirect overhead costs, decreased 9.9% in 2006 as compared to 2005, and 17.1%
in 2007 as compared to 2006. These reductions principally represent the
synergies created by the merger and the elimination of certain duplicative
operating functions.
50
OTHER FACILITIES
----------------
In addition to the Public Storage and Shurgard Same Store groups of
facilities, at December 31, 2007, we had 325 facilities that were not classified
into either of these pools. These properties include recently acquired
facilities, recently developed facilities and facilities that were recently
expanded by adding additional storage units. In general, these facilities are
not stabilized with respect to occupancies or rental rates. As a result of the
fill-up process and timing of when the facilities were put into place,
year-over-year changes can be significant.
The following table summarizes operating data with respect to these
facilities.
OTHER FACILITIES Year Ended December 31, Year Ended December 31,
-------------------------------------- -------------------------------------
2007 2006 Change 2006 2005 Change
------------ ----------- ----------- ----------- ------------ -----------
(Dollar amounts in thousands, except square foot amounts)
Rental income:
Facilities put in place in 2007............... $ 2,334 $ - $ 2,334 $ - $ - $ -
Facilities put in place in 2006............... 133,077 56,145 76,932 56,145 - 56,145
Facilities put in place prior to 2006......... 54,972 48,796 6,176 48,796 27,297 21,499
Deconsolidated Shurgard facilities (a)........ 2,442 1,942 500 1,942 - 1,942
Expansion facilities.......................... 82,079 75,319 6,760 75,319 63,540 11,779
------------ ----------- ----------- ----------- ------------ -----------
Total rental income........................... 274,904 182,202 92,702 182,202 90,837 91,365
------------ ----------- ----------- ----------- ------------ -----------
Cost of operations before depreciation and
amortization expense:
Facilities put in place in 2007............... 1,351 - 1,351 - - -
Facilities put in place in 2006............... 49,339 21,534 27,805 21,534 - 21,534
Facilities put in place prior to 2006......... 18,134 17,418 716 17,418 10,664 6,754
Deconsolidated Shurgard facilities (a)........ 1,017 813 204 813 - 813
Expansion facilities.......................... 29,020 27,009 2,011 27,009 23,280 3,729
------------ ----------- ----------- ----------- ------------ -----------
Total cost of operations 98,861 66,774 32,087 66,774 33,944 32,830
------------ ----------- ----------- ----------- ------------ -----------
Net operating income before depreciation and
amortization expense:
Facilities put in place in 2007............... 983 - 983 - - -
Facilities put in place in 2006............... 83,738 34,611 49,127 34,611 - 34,611
Facilities put in place prior to 2006......... 36,838 31,378 5,460 31,378 16,633 14,745
Deconsolidated Shurgard facilities (a)........ 1,425 1,129 296 1,129 - 1,129
Expansion facilities.......................... 53,059 48,310 4,749 48,310 40,260 8,050
------------ ----------- ----------- ----------- ------------ -----------
Total net operating income before depreciation
and amortization expense (b).............. 176,043 115,428 60,615 115,428 56,893 58,535
Depreciation and amortization expense............ (122,230) (75,512) (46,718) (75,512) (22,950) (52,562)
------------ ----------- ----------- ----------- ------------ -----------
Net operating income.......................... $ 53,813 $ 39,916 $ 13,897 $ 39,916 $ 33,943 $ 5,973
============ =========== =========== =========== ============ ===========
Weighted average square foot occupancy during the
period:
Facilities put in place in 2007............... 57.0% - - - - -
Facilities put in place in 2006............... 83.7% 79.6% 5.2% 79.6% - -
Facilities put in place prior to 2006......... 85.9% 82.7% 3.9% 82.7% 76.5% 8.1%
Deconsolidated Shurgard facilities (a)........ 88.7% 85.1% 4.2% 85.1% - -
Expansion facilities 81.4% 79.8% 2.0% 79.8% 81.6% (2.2)%
------------ ----------- ----------- ----------- ------------ -----------
83.2% 80.4% 3.5% 80.4% 79.6% 1.0%
============ =========== =========== =========== ============ ===========
51
OTHER FACILITIES Year Ended December 31, Year Ended December 31,
2007 2006 Change 2006 2005 Change
------------ ----------- ----------- ----------- ------------ -----------
Weighted average realized annual rent per occupied
square foot for the period:
Facilities put in place in 2007............... $ 14.64 $ - - $ - $ - -
Facilities put in place in 2006............... 11.80 12.10 (2.5)% 12.10 - -
Facilities put in place prior to 2006 ........ 14.03 12.87 9.0% 12.87 11.53 11.6%
Deconsolidated Shurgard facilities (a)........ 9.48 9.81 (3.4)% 9.81 - -
Expansion facilities 11.59 11.27 2.8% 11.27 11.76 (4.2)%
------------ ----------- ----------- ----------- ------------ -----------
$ 12.16 $ 11.94 1.8% $ 11.94 $ 11.68 2.2%
============ =========== =========== =========== ============ ===========
In place annual rent per occupied square foot at
December 31:
Facilities put in place in 2007............... $ 15.29 $ - - $ - $ - -
Facilities put in place in 2006............... 13.72 12.68 8.2% 12.68 - -
Facilities put in place prior to 2006 ........ 15.69 14.49 8.3% 14.49 13.52 7.2%
Deconsolidated Shurgard facilities (a)........ 8.82 10.46 (15.7)% 10.46 - -
Expansion facilities 13.92 12.48 11.5% 12.48 13.24 (5.7)%
------------ ----------- ----------- ----------- ------------ -----------
$ 14.16 $ 12.97 9.2% $ 12.97 $ 13.35 (2.8)%
============ =========== =========== =========== ============ ===========
At December 31:
Number of Facilities:
Facilities put in place in 2007............ 10 - 10 - - -
Facilities put in place in 2006 (c)........ 166 166 - 166 - 166
Facilities put in place prior to 2006 ..... 58 58 - 58 58 -
Deconsolidated Shurgard facilities (a)..... 5 11 (6) 11 - 11
Expansion facilities....................... 86 87 (1) 87 87 -
------------ ----------- ----------- ----------- ------------ -----------
325 322 3 322 145 177
============ =========== =========== =========== ============ ===========
Net rentable square feet (in thousands):
Facilities put in place in 2007............ 679 - 679 - - -
Facilities put in place in 2006............ 12,057 12,057 - 12,057 - 12,057
Facilities put in place prior to 2006...... 4,352 4,352 - 4,352 4,352 -
Deconsolidated Shurgard facilities (a)..... 268 624 (356) 624 - 624
Expansion facilities....................... 7,893 7,391 502 7,391 6,889 502
------------ ----------- ----------- ----------- ------------ -----------
25,249 24,424 825 24,424 11,241 13,183
============ =========== =========== =========== ============ ===========
(a) Represents the operations of 11 facilities acquired in the Shurgard Merger
which we discontinued consolidation in our financial statements effective
May 24, 2007. On November 15, 2007, we acquired a controlling ownership
position in five of these previously deconsolidated facilities, and
recommenced consolidation of these properties effective November 15, 2007.
The operations for these 11 facilities from August 23, 2006 through May 24,
2007, combined with the operations of the five facilities that we
recommenced consolidation after November 15, 2007, are included in this
table. The revenues and expenses, respectively, of these five facilities
that we consolidate at December 31, 2007 was $2,063,000 and $965,000,
respectively for the year ended December 31, 2007, notwithstanding that
only a partial period of operations was included in the table above.
(b) Total net operating income before depreciation and amortization or "NOI" is
a non-GAAP (generally accepted accounting principles) financial measure
that excludes the impact of depreciation and amortization expense, for our
self-storage facilities represents a portion of our total self-storage
segment's net operating income before depreciation and amortization
expense, 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 and amortization expense to consolidated net
income is included in Note 14 to our December 31, 2007 consolidated
financial statements, "Segment Information." Although depreciation and
amortization expense are operating expenses, 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 and
amortization in evaluating our operating results.
(c) Includes 133 facilities acquired in the Shurgard Merger which are not
stabilized, as well as 33 other facilities that were acquired or newly
developed in 2006.
52
The properties denoted under "Facilities put in place in 2007" and
"Facilities put in place in 2006" were put into operation within the Public
Storage system at various dates throughout each period presented. Accordingly,
rental income, cost of operations, depreciation and amortization, 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, 2007 and 2006, reflect the amounts for those
facilities we owned at each of those respective dates.
In 2007, we acquired seven facilities, in single property transactions, for
an aggregate cost of $72,787,000. These facilities contain in aggregate
approximately 511,000 net rentable square feet, with one facility located in
Hawaii and the remainder in California. In addition, we completed development of
three facilities with aggregate square footage of approximately 168,000 and cost
of $16,051,000.
In 2006, in addition to the facilities we acquired in the Shurgard Merger,
we acquired a total of 12 self-storage facilities, each in single property
transactions. These 12 facilities contain in aggregate approximately 877,000 net
rentable square feet and were acquired for an aggregate cost of $103,544,000.
These facilities are located in California, Florida, Illinois, New York,
Virginia, New Jersey, Delaware, Georgia, and Colorado. Effective January 1,
2006, we commenced consolidating the accounts of three limited partnerships that
we had previously accounted for on the equity method, which owned 16 facilities
with 879,000 net rentable square feet. We also opened 5 newly developed
facilities in 2006.
In 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 markets.
Effective May 24, 2007, due to a loss in control of the related
partnerships that owned these facilities, we began deconsolidating 11 facilities
with an aggregate of 624,000 net rentable square feet (referred to hereinafter
as "The Deconsolidated Shurgard Properties") that we had originally acquired in
the Shurgard Merger. On November 15, 2007, as a result of acquiring a
controlling ownership interest, we recommenced consolidating five of these 11
facilities in our operations. The operating results for these facilities are
included in the table above for the period each respective facility was
consolidated. Our pro-rata share of the operating results of the Deconsolidated
Shurgard Properties for the periods they were not consolidated are presented in
Equity in Earnings of Real Estate Entities.
We believe our presence in and knowledge of substantially all of the major
markets in the U.S. enhances our ability to identify attractive acquisition
opportunities and capitalize on the overall fragmentation in the self-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 non-stabilized facilities will continue to provide
earnings growth during 2007 and into 2008 as these facilities continue to
improve their occupancy levels as well as realized rental rates.
The Expansion facilities represent facilities that have been or are in the
process of being expanded in terms of their square footage. We have spent an
aggregate of $50,625,000 and $45,300,000 in expanding our facilities in 2007 and
2006, respectively.
Our level of new development starts has declined significantly in the last
few years due to increases in construction cost, 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.
53
EUROPEAN SELF-STORAGE OPERATIONS
--------------------------------
In the Shurgard Merger, we acquired 160 facilities located in seven Western
European countries with an aggregate of 8,385,000 net rentable square feet.
Since the Shurgard Merger, we opened 15 additional self-storage facilities in
Europe with an aggregate of 785,000 net rentable square feet. In addition,
during 2007, we discontinued a facility (55,000 net rentable square feet)
located in France. At December 31, 2007, our European operations comprise 174
facilities with an aggregate of 9,115,000 net rentable square feet, of which, 96
of these facilities are referred to as the Europe Same Store Facilities (defined
below). The portfolio consists of 104 facilities are wholly owned facilities and
70 facilities owned by the two joint venture partnerships, in which we have a
20% equity interest.
The following table summarizes certain financial data with respect to our
self-storage operations from the date of the Shurgard Merger (August 23, 2006)
through December 31, 2006:
Europe self - storage operations summary: Year Ended December 31,
-----------------------------------------
Percentage
2007 2006 Change
------------ ------------ -----------
(Dollar amounts in thousands)
Rental income:
Same Store Facilities - Shurgard Europe (a). $ 128,278 $ 41,133 211.9%
Other wholly-owned facilities (b) (c)....... 9,024 3,208 181.3%
Joint Venture Facilities (c) (d)............ 56,977 15,122 276.8%
------------ ------------ -----------
Total rental income....................... 194,279 59,463 226.7%
------------ ------------ -----------
Cost of operations before depreciation and
amortization expense (e):
Same Store Facilities - Shurgard Europe..... 51,417 17,303 197.2%
Other wholly-owned facilities............... 3,523 1,237 184.8%
Joint Venture Facilities.................... 37,305 11,610 221.3%
------------ ------------ -----------
Total cost of operations................. 92,245 30,150 206.0%
------------ ------------ -----------
Net operating income (loss) before depreciation
and amortization expense (e):
Same Store Facilities - Shurgard Europe..... 76,861 23,830 222.5%
Other wholly-owned facilities............... 5,501 1,971 179.1%
Joint Venture Facilities.................... 19,672 3,512 460.1%
------------ ------------ -----------
Total net operating income before
depreciation and amortization expense (e) 102,034 29,313 248.1%
Depreciation and amortization expense.......... (130,924) (59,524) 120.0%
------------ ------------ -----------
Net operating loss............................. $ (28,890) $ (30,211) 4.4%
============ ============ ===========
54
Europe self - storage operations summary:
(Continued)
Year Ended December 31,
Percentage
2007 2006 Change
------------ ------------ -----------
Weighted average square foot occupancy during
the period:
Same Store Facilities - Shurgard Europe... 89.8% 88.6% 1.4%
Other wholly-owned facilities............. 87.2% 90.3% (3.4)%
Joint Venture Facilities.................. 73.8% 72.8% 1.4%
------------ ------------ -----------
83.7% 83.4% 0.4%
============ ============ ===========
At December 31:
Number of Facilities:
Same Store Facilities - Shurgard Europe... 96 96 -
Other wholly-owned facilities............. 8 7 14.3%
Joint Venture Facilities.................. 70 62 12.9%
------------ ------------ -----------
174 165 5.5%
============ ============ ===========
Net rentable square feet (in thousands):
Same Store Facilities - Shurgard Europe... 5,286 5,286 -
Other wholly-owned facilities............. 378 297 27.3%
Joint Venture Facilities.................. 3,451 3,106 11.1%
------------ ------------ -----------
9,115 8,689 4.9%
============ ============ ===========
(a) The European Same Store facilities, described below, are comprised of 96
facilities that are wholly-owned.
(b) The other wholly-owned facilities include eight facilities that we wholly
own, which are not considered European Same Store facilities.
(c) Nine facilities were acquired or developed during 2007 for an aggregate of
approximately $90,075,000. Our joint ventures own eight of these facilities
with aggregate development costs of $81,185,000.
(d) The joint ventures, in which we have a 20% equity interest, own 70
facilities which were acquired or developed from 2003 to 2007.
(e) Total net operating income before depreciation and amortization expense or
"NOI" is a non-GAAP (generally accepted accounting principles) financial
measure that excludes the impact of depreciation and amortization expense,
for our commercial property segment is presented in Note 14 to our
consolidated financial statements, "Segment Information," which includes a
reconciliation of net operating income before depreciation and amortization
expense for this segment to our consolidated net income. Although
depreciation and amortization are operating expenses, 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 and
amortization expense in evaluating our operating results.
Amounts presented in the table above reflect significant increases in
revenues and cost of operations, in 2007 as compared to 2006, and 2006 as
compared to 2005, due to the Shurgard Merger which was completed on August 23,
2006 (see Note 3 to the consolidated financial statements). The operating
results of all of the facilities acquired in the merger and located in Europe
are included in our financial statements and in the table above for periods
after the merger.
The Joint Venture opened eight facilities in 2007 with an aggregate
development cost of $81,185,000. Revenues and expenses presented in the table
above with respect to these properties totaled $869,000 and $2,347,000,
respectively.
The operating data presented in the table below reflect the historical data
through August 22, 2006, the period for which the 96 facilities were operated by
Shurgard, combined with the historical data from August 23, 2006 through
55
December 31, 2007, the period operated under Public Storage. In addition, the
table utilizes the average exchange rates for the year ended December 31, 2007,
rather than the respective exchange rates in effect for each period. We present
this data on such a "constant exchange rate" basis because we believe it allows
comparability of the various periods, and isolates the impact of exchange rates
with respect to the trends in revenues and cost of operations. As a result, the
data presented below does not reflect the actual results included in our
operations for 2005, 2006, and 2007.
Selected Operating Data for the 96 facilities
----------------------------------------------
operated by Shurgard Europe on a stabilized basis
-------------------------------------------------
since January 1, 2005 ("Europe Same Store
-----------------------------------------
Facilities"): (a) Year Ended December 31, Year Ended December 31,
-------------- -------------------------------------- -------------------------------------
Percentage Percentage
2007 2006 Change 2006 2005 Change
------------ ------------ ----------- ------------ ------------ -----------
(Dollar amounts in thousands, except weighted average data,
utilizing constant exchange rates) (b)
Revenues:
Rental income................................. $ 127,001 $ 116,260 9.2% $ 116,260 $ 103,040 12.8%
Late charges and administrative fees collected 1,277 1,127 13.3% 1,127 963 17.0%
------------ ------------ ----------- ------------ ------------ -----------
Total revenues (c)............................ 128,278 117,387 9.3% 117,387 104,003 12.9%
Cost of operations (excluding depreciation and
amortization expense):
Property taxes ............................... 5,746 5,352 7.4% 5,352 4,975 7.6%
Direct property payroll....................... 15,035 16,614 (9.5)% 16,614 15,294 8.6%
Advertising and promotion..................... 4,050 5,832 (30.6)% 5,832 7,639 (23.7)%
Utilities..................................... 2,986 3,229 (7.5)% 3,229 3,024 6.8%
Repairs and maintenance....................... 3,373 3,602 (6.4)% 3,602 3,540 1.8%
Property insurance............................ 1,213 1,564 (22.4)% 1,564 1,658 (5.7)%
Other costs of operations..................... 19,014 18,746 1.4% 18,746 22,119 (15.2)%
------------ ------------ ----------- ------------ ------------ -----------
Total cost of operations (c).................... 51,417 54,939 (6.4)% 54,939 58,249 (5.7)%
------------ ------------ ----------- ------------ ------------ -----------
Net operating income (excluding depreciation and
amortization expense) (d)...................... $ 76,861 $ 62,448 23.1% $ 62,448 $ 45,754 36.5%
============ ============ =========== ============ ============ ===========
Gross margin (before depreciation and amortization
expense).......................................... 59.9% 53.2% 12.6% 53.2% 44.0% 20.9%
Weighted average for the period:
Square foot occupancy (e)....................... 89.8% 85.2% 5.4% 85.2% 78.5% 8.5%
Realized annual rent per occupied square foot (f) $26.75 $25.81 3.6% $25.81 $24.83 3.9%
REVPAF (g) (h).................................. $24.03 $21.99 9.3% $21.99 $19.49 12.8%
Weighted average at December 31:
Square foot occupancy........................... 89.0% 89.1% (0.1)% 89.1% 82.2% 8.4%
In place annual rent per occupied square foot (i) $30.95 $28.68 7.9% $28.68 $27.94 2.6%
Total net rentable square feet (in thousands)..... 5,286 5,286 - 5,286 5,286 -
(a) We acquired the Shurgard Europe Same Store facilities in connection with
the Shurgard Merger which was completed on August 22, 2006. Included in our
consolidated financial statements are only the historical operating results
for these facilities from the date of the Shurgard Merger through December
31, 2007, the time that these facilities were owned by us. For comparative
purposes, however, the table above includes the historical operating
results for these facilities for each of the three years ended December 31,
2007, which includes operations prior to the Shurgard Merger and not
included in our consolidated financial statements.
(b) The majority of our European operations are denominated in Euros. For
comparative purposes, amounts for 2005, 2006, and 2007 are translated at
constant exchange rates representing the average exchange rates for the
year ended December 31, 2007. The average exchange rate for the Euro was
approximately 1.3698 during 2007. The amounts that are included in our
consolidated financial statements are based upon the actual exchange rate
for each period.
(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.
56
(d) Net operating income (excluding depreciation and amortization expense) or
"NOI" is a non-GAAP (generally accepted accounting principles) financial
measure that excludes the impact of depreciation and amortization expense.
Although depreciation and amortization are operating expenses, 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 and
amortization expense in evaluating our operating results. We have not
presented depreciation and amortization expense for these facilities
because the depreciation and amortization 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.
(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 Europe Same Store properties continue to reflect above average growth.
With occupancy stabilized at above 90%, we believe we have pricing power and
expect to generate additional growth through rental rate increases. The
properties are also benefiting from expense control, resulting in negative
expense growth. The European team is selectively adapting various operating
strategies we use in the U.S. and incorporating them into their operating model.
The following table sets forth certain regional trends in the Europe Same
Store facilities:
Year Ended December 31, Year Ended December 31,
----------------------------------- ---------------------------------------
Percentage Percentage
2007 2006 Change 2006 2005 Change
----------- ----------- ---------- ----------- ----------- ------------
(Dollar amounts in thousands, except per square foot amounts,
utilizing constant exchange rates)
Rental income:
Belgium..................................... $ 15,969 $ 14,734 8.4% $ 14,734 $ 14,008 5.2%
Denmark..................................... 5,845 5,180 12.8% 5,180 4,408 17.5%
France...................................... 32,631 30,194 8.1% 30,194 27,975 7.9%
Netherlands................................. 26,007 23,264 11.8% 23,264 19,943 16.7%
Sweden...................................... 26,961 25,150 7.2% 25,150 21,235 18.4%
United Kingdom.............................. 20,865 18,865 10.6% 18,865 16,434 14.8%
----------- ----------- ---------- ----------- ----------- ------------
Total rental income....................... $ 128,278 $ 117,387 9.3% $ 117,387 $ 104,003 12.9%
=========== =========== ========== =========== =========== ============
Cost of operations before depreciation and
amortization expense:
Belgium..................................... $ 6,776 $ 7,443 (9.0)% $ 7,443 $ 7,256 2.6%
Denmark..................................... 2,065 2,622 (21.2)% 2,622 2,855 (8.2)%
France...................................... 14,274 14,657 (2.6)% 14,657 15,793 (7.2)%
Netherlands................................. 10,000 10,900 (8.3)% 10,900 11,894 (8.4)%
Sweden...................................... 10,295 11,024 (6.6)% 11,024 12,247 (10.0)%
United Kingdom.............................. 8,007 8,293 (3.4)% 8,293 8,204 1.1%
----------- ----------- ---------- ----------- ----------- ------------
Total cost of operations before
depreciation and amortization expense..... $ 51,417 $ 54,939 (6.4)% $ 54,939 $ 58,249 (5.7)%
=========== =========== ========== =========== =========== ============
57
(continued)
Year Ended December 31, Year Ended December 31,
----------------------------------- ---------------------------------------
Percentage Percentage
2007 2006 Change 2006 2005 Change
----------- ----------- ---------- ----------- ----------- ------------
(Dollar amounts in thousands, except per square foot amounts)
Net operating income:
Belgium........................................ $ 9,193 $ 7,291 26.1% $ 7,291 $ 6,752 8.0%
Denmark........................................ 3,780 2,558 47.8% 2,558 1,553 64.7%
France......................................... 18,357 15,537 18.2% 15,537 12,182 27.5%
Netherlands.................................... 16,007 12,364 29.5% 12,364 8,049 53.6%
Sweden......................................... 16,666 14,126 18.0% 14,126 8,988 57.2%
United Kingdom................................. 12,858 10,572 21.6% 10,572 8,230 28.5%
----------- ----------- ---------- ----------- ----------- ------------
Total net operating income..................... $ 76,861 $ 62,448 23.1% $ 62,448 $ 45,754 36.5%
=========== =========== ========== =========== =========== ============
Weighted average occupancy levels for the period:
Belgium..................................... 87.1% 80.6% 8.1% 80.6% 76.4% 5.5%
Denmark..................................... 93.5% 90.8% 3.0% 90.8% 85.4% 6.3%
France...................................... 90.3% 87.3% 3.4% 87.3% 83.4% 4.7%
Netherlands................................. 88.7% 83.3% 6.5% 83.3% 72.3% 15.2%
Sweden...................................... 91.9% 89.3% 2.9% 89.3% 80.9% 10.4%
United Kingdom.............................. 90.1% 82.7% 8.9% 82.7% 76.8% 7.7%
----------- ----------- ---------- ----------- ----------- ------------
89.8% 85.2% 5.4% 85.2% 78.5% 8.5%
=========== =========== ========== =========== =========== ============
Weighted average realized annual rent per
occupied square foot:
Belgium..................................... $ 17.91 $ 17.90 0.1% $ 17.90 $ 17.97 (0.4)%
Denmark..................................... 29.50 26.98 9.3% 26.98 24.33 10.9%
France...................................... 28.87 27.57 4.7% 27.57 26.75 3.1%
Netherlands................................. 24.81 23.65 4.9% 23.65 23.39 1.1%
Sweden...................................... 25.92 24.92 4.0% 24.92 23.23 7.3%
United Kingdom.............................. 42.36 41.71 1.6% 41.71 39.21 6.4%
----------- ----------- ---------- ----------- ----------- ------------
$ 26.75 $ 25.81 3.6% $ 25.81 $ 24.83 3.9%
=========== =========== ========== =========== =========== ============
Net rentable square feet (in thousands):
Belgium..................................... 999 999 - 999 999 -
Denmark..................................... 210 210 - 210 210 -
France...................................... 1,236 1,236 - 1,236 1,236 -
Netherlands................................. 1,172 1,172 - 1,172 1,172 -
Sweden...................................... 1,130 1,130 - 1,130 1,130 -
United Kingdom.............................. 539 539 - 539 539 -
----------- ----------- ---------- ----------- ----------- ------------
5,286 5,286 - 5,286 5,286 -
=========== =========== ========== =========== =========== ============
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 -
=========== =========== ========== =========== =========== ============
58
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,
----------------------------------- --------------------------------------
2007 2006 Change 2006 2005 Change
----------- ----------- ----------- ----------- ------------ -----------
(Amounts in thousands)
Revenues:
Tenant reinsurance premiums..... $ 60,411 $ 37,520 $ 22,891 $ 37,520 $ $24,889 $ 12,631
Merchandise sales............... 37,283 26,806 10,477 26,806 22,464 4,342
Containerized storage .......... 14,963 16,345 (1,382) 16,345 16,497 (152)
Truck rentals................... 12,057 13,689 (1,632) 13,689 13,853 (164)
Commercial property operations.. 15,101 12,683 2,418 12,683 11,351 1,332
Property management............. 2,685 2,472 213 2,472 2,967 (495)
----------- ----------- ----------- ----------- ------------ -----------
Total revenues............... 142,500 109,515 32,985 109,515 92,021 17,494
----------- ----------- ----------- ----------- ------------ -----------
Cost of operations:
Tenant reinsurance.............. 17,180 14,794 2,386 14,794 8,234 6,560
Merchandise sales............... 28,810 23,204 5,606 23,204 18,773 4,431
Containerized storage........... 12,995 13,554 (559) 13,554 12,886 668
Truck rentals................... 14,682 12,622 2,060 12,622 12,733 (111)
Commercial property operations.. 5,722 5,167 555 5,167 4,405 762
Property management............. 249 187 62 187 638 (451)
----------- ----------- ----------- ----------- ------------ -----------
Total cost of operations..... 79,638 69,528 10,110 69,528 57,669 11,859
----------- ----------- ----------- ----------- ------------ -----------
Depreciation:
Tenant reinsurance.............. - - - - - -
Merchandise sales............... - - - - - -
Containerized storage.......... (736) (847) 111 (847) (2,808) 1,961
Truck rentals................... - - - - - -
Commercial property operations.. (2,570) (2,355) (215) (2,355) (2,243) (112)
Property management............. - - - - - -
----------- ----------- ----------- ----------- ------------ -----------
Total depreciation........... (3,306) (3,202) 104 (3,202) (5,051) 1,849
----------- ----------- ----------- ----------- ------------ -----------
Net Income (loss):
Tenant reinsurance.............. 43,231 22,726 20,505 22,726 16,655 6,071
Merchandise sales............... 8,473 3,602 4,871 3,602 3,691 (89)
Containerized storage........... 1,232 1,944 (712) 1,944 803 1,141
Truck rentals................... (2,625) 1,067 (3,692) 1,067 1,120 (53)
Commercial property operations.. 6,809 5,161 1,648 5,161 4,703 458
Property management............. 2,436 2,285 151 2,285 2,329 (44)
----------- ----------- ----------- ----------- ------------ -----------
Total net income................ $ 59,556 $ 36,785 $ 22,771 $ 36,785 $ 29,301 $ 7,484
=========== =========== =========== =========== ============ ============
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.
The significant increase in tenant reinsurance operations is due primarily
to the increase in properties associated with the Shurgard Merger. In 2007 and
2006, respectively, tenant insurance revenues included $9,560,000 and $3,243,000
with respect to the Shurgard facilities in the U.S. and $9,605,000 and
$2,731,000, respectively, in tenant insurance revenues with respect to
facilities in Europe.
59
Further contributing to our increase in tenant reinsurance revenues were
higher rates, and an increase in the percentage of our existing tenants
retaining such policies, with respect to our ongoing tenant insurance activities
in the U.S. Approximately 45.5%, 35.1%, and 32.4% of our tenants had such
policies during 2007, 2006, and 2005, respectively.
The future level of tenant reinsurance revenues is largely dependent upon
the number of new tenants electing to purchase policies, the level of premiums
charged for such insurance, and the number of tenants that continue
participating in the insurance program.
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.
MERCHANDISE AND TRUCK RENTAL OPERATIONS: Our subsidiaries sell 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 in the U.S.,
our subsidiaries maintain 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 primary factor impacting the level of operations of these activities is
the level of customer traffic at our self-storage facilities, including the
level of move-ins. The significant increase in merchandise revenues is due
primarily to the increase in properties associated with the Shurgard Merger. In
2007 and 2006, respectively, merchandise revenues included $8,477,000 and
$2,674,000 with respect to the Shurgard facilities in the United States; and
$7,963,000 and $2,390,000, respectively, in merchandise revenues with respect to
Shurgard Europe. In 2007 and 2006, respectively, truck revenues included
$1,694,000 and $795,000 with respect to the Shurgard facilities in the U.S.
CONTAINERIZED STORAGE OPERATIONS: We have containerized storage facilities
located in eight densely populated markets with above-average rent and income.
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. Direct operating costs principally includes payroll, equipment lease
expense, utilities and vehicle expenses (fuel and insurance).
We closed certain containerized storage locations; the results of these
facilities for all periods presented have been reclassified to the line item
"discontinued operations."
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's operations, based on which
we have closed certain of these facilities in recent years, and we may decide to
close additional facilities in the future.
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," below.
60
Our commercial operations are comprised of 1,455,000 net rentable square
feet of commercial space, which is principally operated at certain of the
self-storage facilities. The significant increase in commercial property
revenues is due principally to commercial space in the facilities we acquired in
the Shurgard Merger in the U.S.
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 2008.
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, 2007 (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,
2007 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,
------------------- ------------------------------------- ------------------------------------
2007 2006 Change 2006 2005 Change
----------- ---------- ----------- ----------- ----------- ----------
(Amounts in thousands)
Property operations:
PSB $ 82,279 $ 73,850 $ 8,429 $ 73,850 $ 68,768 $ 5,082
Consistent investments (1)............. 3,322 3,256 66 3,256 2,951 305
Other Investments (2).................. 1,556 - 1,556 - 5,229 (5,229)
----------- ---------- ----------- ----------- ----------- ----------
87,157 77,106 10,051 77,106 76,948 158
----------- ---------- ----------- ----------- ----------- ----------
Depreciation:
PSB.................................... (43,316) (37,919) (5,397) (37,919) (33,593) (4,326)
Consistent investments (1)............. (1,033) (971) (62) (971) (993) 22
Other Investments (2).................. (958) - (958) - (839) 839
----------- ---------- ----------- ----------- ----------- ----------
(45,307) (38,890) (6,417) (38,890) (35,425) (3,465)
----------- ---------- ----------- ----------- ----------- ----------
Other: (3)
PSB (4)................................ (28,461) (26,167) (2,294) (26,167) (16,418) (9,749)
Consistent investments (1)............. (53) (154) 101 (154) (79) (75)
Other Investments (2).................. (598) - (598) - (143) 143
----------- ---------- ----------- ----------- ----------- ----------
(29,112) (26,321) (2,791) (26,321) (16,640) (9,681)
----------- ---------- ----------- ----------- ----------- ----------
Total equity in earnings of real estate
entities:
PSB.................................... 10,502 9,764 738 9,764 18,757 (8,993)
Consistent investments (1)............. 2,236 2,131 105 2,131 1,879 252
Other Investments (2).................. - - - - 4,247 (4,247)
----------- ---------- ----------- ----------- ----------- ----------
$ 12,738 $ 11,895 $ 843 $ 11,895 $24,883 $ (12,988)
=========== ========== =========== =========== =========== ==========
(1) Amounts primarily reflect equity in earnings recorded for investments that
have been held consistently throughout each of the years ended December 31,
2007, 2006 and 2005, including our investment in the Acquisition Joint
Venture that is accounted for on the equity method of accounting (see Note
8 to our consolidated financial statements).
(2) On January 1, 2006, 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. In addition, as described in
Note 2 to our consolidated financial statements, we deconsolidated certain
investments in limited partnerships owning 11 properties effective May 24,
2007, and equity in earnings with respect to these partnerships commenced
effective May 24, 2007. We subsequently acquired interests in certain of
these deconsolidated partnerships owning five properties and recommenced
consolidating these interests effective November 17, 2007.
(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.
61
(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.
Our investment in PSB has remained consistent throughout the years ended
December 31, 2007, 2006 and 2005). Throughout 2005, 2006 and 2007, 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, 2007, PSB owned and operated 19.6 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, 2007 pursuant to
property management agreements.
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.
The "Consistent Investments" are comprised primarily of our equity in
earnings from four limited partnerships, as well as our equity in earnings of
two properties owned by the Acquisition Joint Venture as described more fully in
Note 8 to our consolidated financial statements. We held an approximate
consistent level of equity interest throughout 2005, 2006, and 2007. The Company
formed the four limited partnerships during the 1980's and is the general
partner of these partnerships, and we entered into the Acquisition Joint Venture
in 2004. We manage each of these facilities for a management fee that is
included in "Ancillary operations." The limited partners of the four
partnerships 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 "Consistent Investments" will be
dependent upon the operating results of the 22 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 5 to our consolidated financial statements for the operating results of
these entities for the years ended December 31, 2007, 2006, and 2005.
OTHER INCOME AND EXPENSE ITEMS
--------------------------------------------------------------------------------
INTEREST AND OTHER INCOME: Interest and other income was $11,417,000 in
2007, $31,799,000 in 2006, and $16,447,000 in 2005. Interest and other income
has decreased in 2007 as compared to 2006 principally as a result of lower cash
balances invested in interest bearing accounts, offset by slightly higher
interest rates. Interest and other income increased in 2006 as compared to 2005
principally as a result of higher average cash balances invested in interest
bearing accounts at higher interest rates. The changes in average cash balances
are primarily due to the timing of investing retained cash into real estate
assets; in the case of 2006, we had significant cash balances from proceeds from
preferred equity issuances completed in anticipation of the Shurgard Merger.
DEPRECIATION AND AMORTIZATION: Depreciation and amortization expense was
$622,410,000, $437,568,000 and $196,153,000 for the years ended December 31,
2007, 2006 and 2005, respectively.
The increases in depreciation and amortization expense in 2007 and 2006 are
due primarily to the amortization of intangibles acquired primarily in the
Shurgard Merger totaling $247,844,000 in 2007 and $175,944,000 in 2006. These
intangible assets represent the value of the storage tenants in place at the
time of the merger, and are being amortized relative to the expected future
benefit of the tenants in place to each period. These increases also reflect
depreciation of the buildings acquired in the Shurgard Merger, totaling
approximately $142,800,000 in 2007 and $61,703,000 in 2006. In addition, we
acquired and opened for operations additional self-storage facilities in 2005,
2006, and 2007, resulting in increased depreciation expense of the buildings of
these facilities. Depreciation expense in 2007 with respect to facilities
acquired or opened for operations in 2007 totaled $2,206,000. We expect the
depreciation expense with respect to these facilities to approximate $4,361,000
in 2008.
62
GENERAL AND ADMINISTRATIVE EXPENSE: General and administrative expense was
$59,749,000, $84,661,000, and $21,115,000 for the years ended December 31, 2007,
2006 and 2005 respectively. General and administrative expense principally
consists of 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, certain expenses related to capital raising and merger and
acquisition activities, employee severance, and stock-based compensation.
General and administrative expense includes the following items that vary
depending upon our activities: a) costs and expenses totaling $5,300,000 and
$44,010,000, respectively, during 2007 and 2006, incurred in connection with the
integration of Shurgard and Public Storage b) costs for cancelled development
projects in the U.S. and Europe totaling $2,120,000 and $10,211,000 in 2007 and
2006, respectively; c) $9,600,000 related to our proposed offering of shares in
our European business in 2007; d) $2,019,000 associated with our reorganization
as a Maryland REIT in 2007; e) $1,900,000 in additional incentive compensation
in 2007; and f) contract termination fees of $2,213,000 in 2006. In addition,
with the Shurgard Merger, we began to incur general and administrative expense
relating to the management and administration of the European operations, which
are operated under a separate management team.
Restricted stock and stock option expense amounted to approximately
$8,511,000, $6,309,000, and $4,758,000 for the years ended December 31, 2007,
2006 and 2005, respectively.
INTEREST EXPENSE: Interest expense was $63,671,000, $33,062,000, and
$8,216,000 for the years ended December 31, 2007, 2006 and 2005, respectively.
The increases in interest expense in 2006 and 2007 are primarily due to
$24,855,000 and $58,656,000 in interest incurred on the debt and other
obligations we assumed in the Shurgard Merger. See also Notes 7 and 8 to our
consolidated financial statements for a schedule of our debt balances, principal
repayment requirements, and average interest rates.
Capitalized interest expense totaled $4,746,000, $2,716,000, and $2,820,000
for the years ended December 31, 2007, 2006 and 2005, respectively, in
connection with our development activities. Included in the interest capitalized
for 2007 and 2006 is $2,710,000 and $935,000, respectively, in connection with
our development activities in Europe.
GAIN ON DISPOSITION OF REAL ESTATE INVESTMENTS: During 2007, 2006, and 2005
we have recorded gains on sale of assets, principally partial condemnations and
other disposals of real estate facilities, totaling $1,354,000, $2,177,000, and
$3,099,000, respectively, in 2007, 2006, and 2005.
In addition, on May 14, 2007, one of our European subsidiaries sold limited
liability partner interests ("LLP Interests") it held in Shurgard Self-Storage
SCA ("Shurgard Europe"), also an indirect subsidiary of Public Storage, to
various officers of the Company other than our chief executive officer. The
aggregate proceeds of the sale were $4,909,000. The sale price for the LLP
Interests was the net asset value per LLP Interest using, among other items,
information provided by an independent third party appraisal firm of the net
asset value of Shurgard Europe as of March 31, 2007. In connection with the sale
of these LLP Interests, we recorded a gain of $1,193,000 during 2007,
representing the excess of the sales proceeds less the book value of the LLP
Interests sold. The gain is reflected in gain on disposition of real estate
investments in our accompanying consolidated statements of income.
FOREIGN EXCHANGE GAIN: At December 31, 2007, our European subsidiaries owed
approximately (euro)377.7 million ($555.9 million as of December 31, 2007) to
our domestic subsidiaries. The loans are eliminated in consolidation for
financial reporting purposes. We expect our European subsidiaries to obtain
external financing in the next 12 to 24 months, which will fund the repayment of
63
the loans. The loans, which are denominated in Euros, have not been hedged. The
amount of US dollars that will be received on repayment will depend upon the
exchange rates at the time. Based upon the change in estimated US dollars to be
received caused by fluctuation in currency rates during 2007, foreign currency
translation gains of $57.6 million were recorded in 2007. The U.S. Dollar
exchange rate relative to the Euro was approximately 1.319 and 1.472 at December
31, 2006 and 2007, respectively.
Future foreign exchange gains or losses will be dependent primarily upon
the movement of the Euro relative to the U.S. Dollar, the level of our
intercompany debt and our continued expectation with respect to repaying
intercompany debt.
HURRICANE CASUALTY GAIN OR LOSS: 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 or the estimation of costs of
restoration, 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 2007, we recorded a casualty gain totaling
$2,665,000, representing the realization of such contingent proceeds relating to
hurricanes which occurred in 2005. During 2005, we recorded a casualty loss of
$1,917,000 related to damage to our properties from hurricanes.
INCOME FROM DERIVATIVES, NET: This represents the net gain or loss as
recognized for the changes in the fair market values of those derivative
financial instruments that do not qualify for hedge accounting treatment under
SFAS No. 133, combined with net payments from derivative instruments. We
recognized net income of $851,000 and $3,926,000 for the years ended December
31, 2007 and 2006, respectively. The decrease in income in 2006 is due to the
extinguishment of certain derivatives on January 2, 2007 and, as a result, no
further gains or losses or net payments resulted for these derivatives. We do
not expect any significant activity in these derivatives in 2008.
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, 2007:
Year Ended December 31 Year Ended December 31,
----------------------- -----------------------
2007 2006 Change 2006 2005 Change
---------- ---------- ---------- ---------- ---------- ----------
(Amounts in thousands)
Preferred partnership interests (a).......... $ 21,612 $ 19,055 $ 2,557 $ 19,055 $ 17,021 $ 2,034
Newly consolidated partnerships (b).......... 5,507 5,259 248 5,259 - 5,259
Shurgard European minority interests (c)..... (9,389) (3,631) (5,758) (3,631) - (3,631)
Other minority interests (d)................. 11,813 11,200 613 11,200 15,630 (4,430)
---------- ---------- ---------- ---------- ---------- ----------
Total minority interests in income....... $ 29,543 $ 31,883 $ (2,340) $ 31,883 $ 32,651 $ (768)
========== ========== ========== ========== ========== ==========
(a) The increase in preferred partnership interests is primarily 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) 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 years ended December 31, 2007 and 2006
was $108,000 and $132,000 in depreciation expense.
(c) These amounts reflect income allocated to minority interests from entities
we acquired in the Shurgard Merger. 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 $11,513,000 and $3,013,000 for the years
ended December 31, 2007 and 2006 in depreciation expense.
(d) The other minority interest include depreciation expense of $2,437,000,
$1,339,000, and $3,152,000, respectively, for 2007, 2006, and 2005.
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.
64
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
requirements to shareholders for the foreseeable future.
Operating as a 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 interests, 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.
For the Year Ended December 31,
--------------------------------------------
2007 2006 2005
------------- ------------- -------------
(Amount in thousands)
Net cash provided by operating activities (a)......................... $ 1,013,204 $ 775,400 $ 673,871
Allocable to minority interests (Preferred Units)..................... (21,612) (19,055) (16,147)
------------- ------------- -------------
Cash from operations allocable to our shareholders.................... 991,592 756,345 657,724
Capital improvements to maintain our facilities....................... (69,102) (79,326) (25,890)
------------- ------------- -------------
Remaining operating cash flow available for distributions to our
shareholders....................................................... 922,490 677,019 631,834
Distributions paid:
Preferred share dividends.......................................... (236,757) (214,218) (173,017)
Equity Shares, Series A dividends.................................. (21,424) (21,424) (21,443)
Common shareholders................................................ (340,002) (298,219) (244,200)
------------- ------------- -------------
Cash available for principal payments on debt and reinvestment........ $ 324,307 $ 143,158 $ 193,174
============= ============= =============
(a) Represents net cash provided from operating activities for each respective
year as presented in our December 31, 2007 Consolidated Statements of Cash
Flows.
(b) Cash available for principal payments on debt and reinvestment is not a
substitute for cash flows from operations in our liquidity, ability to
repay our debt, or to meet our distribution requirements.
Cash available for principal payments on debt and reinvestment increased
from $143.2 million in 2006 to $324.3 million in 2007 principally due to a
significant increase in our self-storage operations, primarily as a result of
the Shurgard Merger, as well as additional tax depreciation with respect to the
assets acquired in the Shurgard Merger which serves to reduce our taxable income
and required distributions requirements.
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 shares. We expect to fund our growth strategies and debt obligations with
(i) cash on hand at December 31, 2007, (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 shares have no sinking fund requirement or maturity date and do 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
65
shares at any time, which enable us to refinance higher coupon preferred shares
with new preferred shares at lower rates if appropriate, (iv) preferred shares
do not contain covenants, thus allowing us to maintain significant financial
flexibility, and (v) dividends on the preferred shares can be applied to satisfy
our REIT distribution requirements.
Our credit ratings on each of our series of preferred shares are "Baa1" by
Moody's and "BBB+" by Standard & Poor's.
On March 27, 2007, we entered into a five-year revolving credit agreement
(the "Credit Agreement") with an aggregate limit with respect to borrowings,
letters of credit and foreign currency borrowings in Euros or British pounds of
$300 million. Amounts drawn under the Credit Agreement bear an annual interest
rate ranging from the London Interbank Offered Rate ("LIBOR") plus 0.35% to
LIBOR plus 1.00% depending on our credit ratings (LIBOR plus 0.35% at December
31, 2007). In addition, we are required to pay a quarterly facility fee ranging
from 0.10% per annum to 0.25% per annum depending on our credit ratings (0.10%
per annum at December 31, 2007). We had no outstanding borrowings on our Credit
Agreement at December 31, 2007 or February 28, 2008.
At December 31, 2007, we had undrawn standby letters of credit, which
reduce our borrowing capacity with respect to our line of credit by the amount
of the standby letters of credit, totaling $20.4 million.
The Credit Agreement includes various covenants, the more significant of
which require us to (i) maintain a leverage ratio (as defined therein) of less
than 0.55 to 1.00, (ii) maintain certain fixed charge and interest coverage
ratios (as defined therein) of not less than 1.5 to 1.0 and 1.75 to 1.0,
respectively, and (iii) maintain a minimum total shareholders' equity (as
defined therein). We were in compliance with all covenants of the Credit
Agreement at December 31, 2007.
RECENT ISSUANCE OF PREFERRED SHARES 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.
We believe that our size and financial flexibility enables us to access
capital when appropriate. Since the beginning of 2005 through December 31, 2007,
we have raised approximately $2.6 billion of preferred securities, and used
approximately $1.2 billion of these net proceeds in order to redeem
higher-coupon preferred securities. Over the past several months, accessing
capital through the credit markets has become very difficult, in part due to the
lack of liquidity.
At December 31, 2007, our 7.500% Series V Cumulative Preferred Shares
($172.5 million) were redeemable at our option; however, we have not called
these shares for redemption. In addition, in October 2008 our 6.500% Series W
Cumulative Preferred Shares ($132.5 million), and in November 2008 our 6.450%
Series X Cumulative Preferred Shares ($120.0 million) become available for
redemption at our option. It is not advantageous to redeem these shares at this
time because, based upon current market conditions, we cannot issue additional
preferred securities at a lower coupon rate than the securities that would be
called. The timing of redemption of any of these series of preferred shares will
depend upon many factors including when, or if, market conditions improve such
that we can issue new preferred shares at a lower cost of capital than the
shares that would be redeemed.
In the past we have typically raised additional capital in advance of the
redemption dates to ensure that we have available funds to redeem these
securities. Provided market conditions improve in the future, we may raise
capital in advance to fund redemptions.
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 Code, 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. We believe we have satisfied the REIT distribution
requirement since 1981.
Aggregate dividends paid during 2007 totaled $236.7 million to the holders
of our Cumulative Preferred Shares, $340.0 million to the holders of our common
shares and $21.4 million to the holders of our Equity Shares, Series A. Although
we have not finalized the calculation of our 2007 taxable income, we believe
that the aggregate dividends paid in 2007 to our shareholders enable us to
continue to meet our REIT distribution requirements.
66
During 2007, we paid distributions totaling $21.6 million with respect to
our Preferred Partnership Units. We estimate the 2008 distribution requirements
with respect to the preferred partnership units outstanding at December 31,
2007, to be approximately $21.6 million. In addition, we estimate the 2008
distribution requirements with respect to our preferred shares outstanding at
December 31, 2007, to be approximately $241.3 million, assuming no additional
preferred share issuances or redemptions during 2008.
For 2008, distributions with respect to the common shares and Equity
Shares, 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 for 2008 will be $0.55 per common share. For the first quarter of
2008, a quarterly distribution of $0.55 per common share has been declared by
our Board, representing a 10% increase from our previous dividend of $0.50 per
common share.
With respect to the depositary shares representing the Equity Shares,
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 shares or (ii) $2.45. The depositary shares are non-cumulative, and
have no preference over our Common Shares either as to dividends or in
liquidation.
CAPITAL IMPROVEMENT REQUIREMENTS: During 2008, we have budgeted
approximately $92 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. During the year ended December 31, 2007, we incurred
capital improvements of approximately $69.1 million.
EUROPEAN ACTIVITIES: As we previously disclosed, we attempted to liquidate
a portion of our investment in our European subsidiaries through an initial
public offering, and although market conditions are not favorable at this time
for such a transaction, we continue to evaluate our alternatives and still
believe that a public entity is the best structure for our European operations'
long-term growth. At December 31, 2007, our European subsidiaries owed
approximately (euro)377.7 million ($555.9 million as of December 31, 2007) to
our domestic subsidiaries. We expect our European subsidiaries to obtain
external financing in the next 12 to 24 months, which will fund the repayment of
the loan, resulting in the receipt of additional cash. The loans, which are
denominated in Euros, have not been hedged to limit our exposure to fluctuation
in exchange rates between the Euro and the U.S. Dollar; as a result, the amount
of U.S. Dollars that will be received on repayment will depend upon exchange
rates at the time.
As disclosed in January 2008, we reached an agreement in principle for a
prospective investor to acquire a 51% interest in Shurgard Europe in a private
transaction at a price generally consistent with the previously disclosed
proceeds Public Storage expected to receive for its equity interest in last
year's terminated European share offering. No binding agreement has been signed
with the prospective investor and there is no assurance that a binding agreement
will be signed or that the transaction will be completed. We estimate completion
of the transaction at the end of the first quarter of 2008 assuming a binding
agreement is signed and the conditions related to the transaction are satisfied.
DEBT SERVICE REQUIREMENTS: At December 31, 2007, we have total outstanding
debt of approximately $1.1 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. As of December 31, 2007,
approximately $945.2 million of such debt remains outstanding.
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.
67
Our portfolio of real estate facilities remains substantially unencumbered.
At December 31, 2007, we have domestic mortgage debt outstanding of $236.9
million, which encumbers 88 self-storage facilities with an aggregate net book
value of approximately $601.2 million. In Europe, our joint ventures (in which
we have a 20% ownership interest) had mortgage debt at December 31, 2007
totaling $376.7 million, which encumbers 68 facilities with an aggregate net
book value of approximately $538.9 million at December 31, 2007.
We anticipate that our retained operating cash flow will continue to be
sufficient to enable us to make scheduled principal payments. See Notes 7 and 8
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.
Approximately $189.1 million in debt owed by First Shurgard was originally
scheduled to mature in May 2008. However, in February 2008, under the terms of
the related credit agreement we have requested a one-year extension of the loan
until May 2009. Assuming we have met our loan covenants, which we believe we
have met, the lender is required to grant our request. Notwithstanding our
expectation of receiving the requested one-year extension, if the extension is
not granted, we and our joint venture partner are required to contribute our
pro-rata share of funds necessary to repay the debt. We believe that our joint
venture partner has the intention and ability to contribute their potential 80%
share towards repayment of this debt if it is necessary.
Concurrent with the completion of the proposed transaction for a
prospective investor to acquire a 51% ownership interest in Shurgard Europe, we
will seek to obtain a waiver from the lenders of the Second Shurgard credit
facility for the change in control acceleration clause contained in the credit
facility. See Note 19 to our December 31, 2007 financial statements for further
information regarding the proposed transaction involving Shurgard Europe.
ACQUISITION AND DEVELOPMENT OF FACILITIES: During 2008, 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, 2007, we have a development "pipeline" of 29 projects in
the U.S. and 14 projects in Europe, consisting of newly developed 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, 2007, we have acquired the land for all of the U.S. projects and
seven of the projects in Europe.
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 $190.7 million and will be incurred over the next 24 months. The
following table sets forth certain information with respect to our development
pipeline.
DEVELOPMENT PIPELINE SUMMARY
AS OF DECEMBER 31, 2007 Total
Number Net estimated Costs incurred
of rentable development through Costs to
projects sq. ft. cost 12/31/07 complete
---------- --------- -------------- -------------- --------------
(Amounts in thousands, except number of projects)
U.S. under construction 6 337 $ 39,032 $ 23,302 $ 15,730
U.S. in development, land acquired 23 881 88,105 5,072 83,033
European projects in construction 7 373 61,091 30,327 30,764
European projects under development 7 363 62,790 1,623 61,167
---------- --------- -------------- -------------- --------------
Total Development Pipeline 43 1,954 $ 251,018 $ 60,324 $ 190,694
========== ========= ============== ============== ==============
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 seven European projects that are in construction 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. The future costs with respect to
all other development projects will be funded by us.
68
CONTRACTUAL OBLIGATIONS
Our significant contractual obligations at December 31, 2007 and their
impact on our cash flows and liquidity are summarized below for the years ending
December 31 (amounts in thousands):
Total 2008 2009 2010 2011 2012 Thereafter
---------- ----------- ----------- ---------- ----------- ----------- -----------
Long-term debt (1) ............ $1,204,818 $ 268,563 $ 240,915 $ 48,218 $ 249,875 $ 73,870 $ 323,377
Capital leases (2)............. 44,434 792 807 749 1,453 700 39,933
Operating leases (3)........... 264,875 20,394 16,197 12,053 10,658 10,202 195,371
Construction commitments (4)... 46,494 37,230 9,264 - - - -
---------- ----------- ----------- ---------- ----------- ----------- -----------
Total.......................... $1,560,621 $ 326,979 $ 267,183 $ 61,020 $ 261,986 $ 84,772 $ 558,681
========== =========== =========== ========== =========== =========== ===========
(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. Approximately $189.1 million in debt owed by First
Shurgard was originally scheduled to mature in May 2008. However, in
February 2008, under the terms of the related credit agreement we have
requested a one-year extension of the loan until May 2009. Assuming we have
met our loan covenants, which we believe we have met, the lender is
required to grant our request.
(2) This line item reflects amounts due on five European properties with
commitments extending to April 2052 that we assumed in the Shurgard Merger.
(3) We lease trucks, land, equipment and office space under various operating
leases. Certain leases are cancelable with substantial penalties.
(4) Includes obligations for facilities currently under construction at
December 31, 2007 as described above under "Acquisition and Development of
Facilities."
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 8 to our December
31, 2007 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 condensed consolidated balance sheets. At
December 31, 2007, our Debt to Joint Venture Partner was $38,081,000. 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.
Approximately $189.1 million in debt owed by First Shurgard was originally
scheduled to mature in May 2008. However, in February 2008, under the terms of
the related credit agreement we have requested a one-year extension of the loan
until May 2009. Assuming we have met our loan covenants, which we believe we
have met, the lender is required to grant our request. Notwithstanding our
expectation of receiving the requested one-year extension, if the extension is
not granted, we and our joint venture partner are required to contribute our
pro-rata share of funds necessary to repay the debt. We believe that our joint
venture partner has the intention and ability to contribute their potential 80%
share towards repayment of this debt if it is necessary.
Concurrent with the completion of the proposed transaction for a
prospective investor to acquire a 51% ownership interest in Shurgard Europe, we
will seek to obtain a waiver from the lenders of the Second Shurgard credit
facility for the change in control acceleration clause contained in the credit
facility. See Note 19 to our December 31, 2007 financial statements for further
information regarding the proposed transaction involving Shurgard Europe.
OFF-BALANCE SHEET ARRANGEMENTS: At December 31, 2007 we had no material
off-balance sheet arrangements as defined under Regulation S-K 303(a)(4) and the
instructions thereto.
69
SHARE REPURCHASE PROGRAM: Our Board has authorized the repurchase from time
to time of up to 25,000,000 of our common shares 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 and 2007, we did not repurchase any
shares. During 2008 (through February 28, 2008), we repurchased 1,520,196 shares
for approximately $111.9 million. From the inception of the repurchase program
through February 28, 2008, we have repurchased a total of 23,721,916 common
shares at an aggregate cost of approximately $679.1 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 shares or
preferred shares. At December 31, 2007, our debt as a percentage of total
shareholders' equity (based on book values) was 12.2%.
Our preferred shares are not redeemable at the option of the holders. Our
Series V shares are currently redeemable. Except under certain conditions
relating to the Company's qualification as a REIT, the preferred shares are not
redeemable by the Company prior to the following dates: 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 - September 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, Series M - January 9, 2012 and Series N - July 2, 2012. On or after the
respective dates, each of the series of preferred shares 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 and borrowing
on bank credit facilities, which totaled $1,031,847,000 and none, respectively,
at December 31, 2007.
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
such real estate and intangibles was approximately $1.7 billion at December 31,
2007. Since all foreign debt is denominated in the corresponding functional
currency, our currency exposure is limited to our investment (both equity and
intercompany debt) 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 our outstanding debt at the end of each year (based on
relevant LIBOR of 4.60% and a EURIBOR of 4.29% at December 31, 2007 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, 2007 (dollar amounts in thousands).
70
2008 2009 2010 2011 2012 Thereafter Total Fair Value
---------- --------- ---------- ---------- --------- ---------- ---------- ------------
Fixed rate debt........ $ 27,021 $ 12,508 $ 14,608 $ 227,179 $55,195 $ 311,291 $ 647,802 $ 647,802
Average interest rate.. 6.73% 6.72% 6.71% 6.01% 5.80% 5.50%
----------------------------------------------------------------------------------------------------------------------------
Variable rate debt (1). $ - $ - $ - $ - $ - $ - $ - $ -
Average interest rate..
----------------------------------------------------------------------------------------------------------------------------
Variable rate EURIBOR
debt (2)............. $ 189,064 $187,665 $ - $ - $ - $ - $ 376,729 $ 376,729
Average interest rate.. 6.14% 6.27%
----------------------------------------------------------------------------------------------------------------------------
Interest rate swaps
Swap on EURIBOR........ $ 555 $ 2,003 $ - $ - $ - $ - $ 2,558 $ 2,558
(1) Amounts include borrowings under our line of credit, which expires in 2012.
(2) First Shurgard and Second Shurgard have senior credit agreements
denominated in Euros to borrow, in aggregate, up to (euro)271.6 million
($399.8 million as of December 31, 2007). As of December 31, 2007, the
available amount under those credit facilities was in aggregate (euro)12.5
million ($18.4 million). Approximately $189.1 million in debt owed by First
Shurgard was originally scheduled to mature in May 2008. However, in
February 2008, under the terms of the related credit agreement we have
requested a one-year extension of the loan until May 2009. Assuming we have
met our loan covenants, which we believe we have met, the lender is
required to grant our request.
At December 31, 2007, through the Shurgard Merger, 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:
2008 2009 2010 2011 2012 Thereafter
---------- --------- --------- --------- ---------- -------------
Notional amounts
(in millions).................. $ 120.0 $ - $ - $ - $ - $ -
Weighted average interest rate. 3.73% - - - - -
Based on our outstanding variable-rate EURIBOR debt and interest rate swaps
at December 31, 2007, a hypothetical increase in the interest rates of 100 basis
points would cause the value of our derivative financial instruments to increase
by $3.0 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 $3.0 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. 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, and which are
consolidated for financial reporting purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The financial statements of the Company at December 31, 2007 and December
31, 2006 and for each of the three years in the period ended December 31, 2007
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.
71
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 Securities Exchange Act of 1934, as amended, ("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) and 15d-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, 2007, 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) of the Exchange Act. Based on that evaluation, 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, 2007.
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 Rules
13a-15(f) and 15d-15(f) of the Exchange Act. 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. Based on our evaluation under the framework in
Internal Control-Integrated Framework, our management concluded that our
internal control over financial reporting was effective as of December 31, 2007.
The effectiveness of internal control over financial reporting as of
December 31, 2007, has been audited by Ernst & Young LLP, independent registered
public accounting firm. Ernst & Young LLP's report on the Company's internal
control over financial reporting appears below.
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.
72
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Public Storage
We have audited Public Storage's internal control over financial reporting as of
December 31, 2007, 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'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
included in the accompanying Annual Report of Management on Internal Control
over Financial Reporting. Our responsibility is to express an opinion on 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, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based
on the assessed risk, 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 trustees 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.
In our opinion, Public Storage maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2007, based on the
COSO criteria.
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 as of December 31, 2007 and 2006, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 2007 and our report dated February 28,
2008 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Los Angeles, California
February 28, 2008
73
PART III
ITEM 10. TRUSTEES, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
-----------------------------------------------------
The information required by this item with respect to trustees 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 8, 2008 (the "Proxy Statement") under the caption
"Election of Trustees."
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 50, 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 GF Acquisition Corp. and Union BanCal Corporation.
John Reyes, age 47, 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 47, 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 56, 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 49, 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 as
well as facilities maintenance. 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.
Candace N. Krol, age 46, became Senior Vice President of Human Resources in
September 2005. From 1985 until joining the Company, Ms. Krol was employed by
74
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."
75
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, 2007 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)............ 2,249,758 (b) $66.45 1,107,385
Equity compensation plans not
approved by security holders (c)... 48,484 $23.46 831,671
(a) 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.
(b) Includes 608,768 restricted share units that, if and when vested, will be
settled in common shares of the Company on a one for one basis.
(c) 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 trustees. The principal terms of these
plans are as follows: (1) 2,500,000 common shares 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 TRUSTEE 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
2007 and 2006".
76
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.
77
PUBLIC STORAGE
INDEX TO EXHIBITS (1)
(Items 15(a)(3) and 15(c))
3.1 Articles of Amendment and Restatement of Declaration of Trust of Public
Storage, a Maryland real estate Anvestment trust. Filed with the
Registrant's Current Report on Form 8-K dated June 6, 2007 and
incorporated by reference herein.
3.2 Bylaws of Public Storage, a Maryland real estate investment trust.
Filed with the Registrant's Current Beport on Form 8-K dated June 6,
2007 and incorporated by reference herein.
3.3 Articles Supplementary for Public Storage Equity Shares, Series A.
Filed with the Registrant's Current Aeport on Form 8-K dated June 6,
2007 and incorporated by reference herein.
3.4 Articles Supplementary for Public Storage Equity Shares, Series AAA.
Filed with the Registrant's Current Aeport on Form 8-K dated June 6,
2007 and incorporated by reference herein.
3.5 Articles Supplementary for Public Storage 7.500% Cumulative Preferred
Shares, Series V. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.6 Articles Supplementary for Public Storage 6.500% Cumulative Preferred
Shares, Series W. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.7 Articles Supplementary for Public Storage 6.450% Cumulative Preferred
Shares, Series X. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.8 Articles Supplementary for Public Storage 6.850% Cumulative Preferred
Shares, Series Y. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.9 Articles Supplementary for Public Storage 6.250% Cumulative Preferred
Shares, Series Z. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.10 Articles Supplementary for Public Storage 6.125% Cumulative Preferred
Shares, Series A. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.11 Articles Supplementary for Public Storage 7.125% Cumulative Preferred
Shares, Series B. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.12 Articles Supplementary for Public Storage 6.600% Cumulative Preferred
Shares, Series C. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.13 Articles Supplementary for Public Storage 6.180% Cumulative Preferred
Shares, Series D. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.14 Articles Supplementary for Public Storage 6.750% Cumulative Preferred
Shares, Series E. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.15 Articles Supplementary for Public Storage 6.450% Cumulative Preferred
Shares, Series F. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.16 Articles Supplementary for Public Storage 7.000% Cumulative Preferred
Shares, Series G. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
78
3.17 Articles Supplementary for Public Storage 6.950% Cumulative Preferred
Shares, Series H. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.18 Articles Supplementary for Public Storage 7.250% Cumulative Preferred
Shares, Series I. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.19 Articles Supplementary for Public Storage 7.250% Cumulative Preferred
Shares, Series K. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.20 Articles Supplementary for Public Storage 6.750% Cumulative Preferred
Shares, Series L. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.21 Articles Supplementary for Public Storage 6.625% Cumulative Preferred
Shares, Series M. Filed with the Aegistrant's Current Report on Form
8-K dated June 6, 2007 and incorporated by reference herein.
3.22 Articles Supplementary for Public Storage 7.000% Cumulative Preferred
Shares, Series N. Filed with the Aegistrant's Current Report on Form
8-K dated June 28, 2007 and incorporated by reference herein.
4.1 Master Deposit Agreement, dated as of May 31, 2007. Filed with the
Registrant's Current Report on Form 8-K dated June 6, 2007 and
incorporated by reference herein.
10.1 Amended Management Agreement between Registrant and Public Storage
Commercial Properties Group, Inc. dated as of February 21, 1995. Filed
with Public Storage Inc.'s ("PSI") Annual Report on Form 10-K for the
year ended December 31, 1994 (SEC File No. 001-0839) 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 PSI's Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1997 (SEC File No. 001-0839) 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 PSI's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1999 (SEC File No.
001-0839) and incorporated herein by reference.
10.6 Limited Partnership Agreement of PSAC Development Partners, L.P. Filed
with PSI's Current Report on Form 8-K dated November 15, 1999 (SEC File
No. 001-0839) and incorporated herein by reference.
10.7 Agreement of Limited Liability Company of PSAC Storage Investors,
L.L.C. Filed with PSI's Current Report on Form 8-K dated November 15,
1999 (SEC File No. 001-0839) and incorporated herein by reference.
10.8 Amended and Restated Agreement of Limited Partnership of PSA
Institutional Partners, L.P. Filed with PSI's Annual Report on Form
10-K for the year ended December 31, 1999 (SEC File No. 001-0839) and
incorporated herein by reference.
79
10.9 Amendment to Amended and Restated Agreement of Limited Partnership of
PSA Institutional Partners, L.P. Filed with PSI's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2000 (SEC File No.
001-0839) and incorporated herein by reference.
10.10 Second Amendment to Amended and Restated Agreement of Limited
Partnership of PSA Institutional Partners, L.P. Filed with PSI's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2004 (SEC File No. 001-0839) 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 PSI's
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2004 (SEC File No. 001-0839) and incorporated herein by reference.
10.12 Limited Partnership Agreement of PSAF Acquisition Partners, L.P. Filed
with PSI's Annual Report on Form 10-K for the year ended December 31,
2003 (SEC File No. 001-0839) and incorporated herein by reference.
10.13 Credit Agreement by and among Registrant, Wells Fargo Bank, National
Association and Wachovia Bank, National Association as co-lead
arrangers, and the other financial institutions party thereto, dated
March 27, 2007. Filed with PSI's Current Report on Form 8-K on April 2,
2007 (SEC File No. 001-0839) and incorporated herein by reference.
10.14 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") (SEC File No.
001-11455).
10.15 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 (SEC File No. 001-11455).
10.16 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 (SEC
File No. 001-11455).
10.17* Employment Agreement between Registrant and B. Wayne Hughes dated as of
November 16, 1995. Filed with PSI's Annual Report on Form 10-K for the
year ended December 31, 1995 (SEC File No. 001-0839) and incorporated
herein by reference.
10.18* Shurgard Storage Centers, Inc. 1995 Long Term Incentive Compensation
Plan. Incorporated by reference to Appendix B of Definitive Proxy
Statement dated June 8, 1995 filed by Shurgard (SEC File No.
001-11455).
10.19* Shurgard Storage Centers, Inc. 2000 Long-Term Incentive Plan.
Incorporated by reference to Exhibit 10.27 to Annual Report on Form
10-K for the year ended December 31, 2000 filed by Shurgard (SEC File
No. 001-11455).
10.20* Shurgard Storage Centers, Inc. 2004 Long Term Incentive Compensation
Plan. Incorporated by reference to Appendix A of Definitive Proxy
Statement dated June 7, 2004 filed by Shurgard (SEC File No.
001-11455).
10.21* Public Storage, Inc. 1996 Stock Option and Incentive Plan. Filed with
PSI's Annual Report on Form 10-K for the year ended December 31, 2000
(SEC File No. 001-0839) and incorporated herein by reference.
80
10.22* Public Storage, Inc. 2000 Non-Executive/Non-Director Stock Option and
Incentive Plan. Filed with PSI's Registration Statement on Form S-8
(SEC File No. 333-52400) and incorporated herein by reference.
10.23* Public Storage, Inc. 2001 Non-Executive/Non-Director Stock Option and
Incentive Plan. Filed with PSI's Registration Statement on Form S-8
(SEC File No. 333-59218) and incorporated herein by reference.
10.24* Public Storage, Inc. 2001 Stock Option and Incentive Plan ("2001
Plan"). Filed with PSI's Registration Statement on Form S-8 (SEC File
No. 333-59218) and incorporated herein by reference.
10.25* Form of 2001 Plan Non-qualified Stock Option Agreement. Filed with
PSI's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2004 (SEC File No. 001-0839) and incorporated herein by
reference.
10.26* Form of 2001 Plan Restricted Share Unit Agreement. Filed with PSI's
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2004 (SEC File No. 001-0839) and incorporated herein by reference.
10.27* Form of 2001 Plan Non-Qualified Outside Director Stock Option
Agreement. Filed with PSI's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2004 (SEC File No. 001-0839) and
incorporated herein by reference.
10.28* Public Storage, Inc. Performance Based Compensation Plan for Covered
Employees. Filed with PSI's Current Report on Form 8-K dated May 11,
2005 (SEC File No. 001-0839) and incorporated herein by reference.
10.29* Public Storage 2007 Equity and Performance-Based Incentive Compensation
Plan. Filed as Exhibit 4.1 to Registrant's Registration Statement on
Form S-8 (SEC File No. 333-144907) and incorporated herein by
reference.
10.30* Form of 2007 Plan Restricted Stock Unit Agreement. Filed with
Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 2007 and incorporated herein by reference.
10.31* Form of 2007 Plan Stock Option Agreement. Filed with Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and
incorporated herein by reference.
10.32 Form of Stock Purchase Agreement. Filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2007 and
incorporated herein by reference.
10.33* Form of Indemnity Agreement. Filed with Registrant's Amendment No. 1 to
Registration Statement on Form S-4 (SEC File No. 333-141448) and
incorporated herein by reference.
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 Registrant's
Annual Report on Form 10-K for the year ended December 31, 2004 and
incorporated herein by reference.
21 Subsidiaries of the Registrant. Filed herewith.
23 Consent of Independent Registered Accounting Firm. 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.
81
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. 001-33519 unless otherwise indicated.
82
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
Date: February 29, 2008 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 February 29, 2008
------------------------------- Executive Officer, President and Trustee
Ronald L. Havner, Jr. (principal executive officer)
/s/ John Reyes
------------------------------- Senior Vice President and Chief Financial Officer February 29, 2008
John Reyes (principal financial officer and principal
accounting officer)
/s/ B. Wayne Hughes Chairman of the Board February 29, 2008
-------------------------------
B. Wayne Hughes
/s/ Dann V. Angeloff Trustee February 29, 2008
-------------------------------
Dann V. Angeloff
/s/ William C. Baker Trustee February 29, 2008
-------------------------------
William C. Baker
/s/ John T. Evans Trustee February 29, 2008
-------------------------------
John T. Evans
/s/ Uri P. Harkham Trustee February 29, 2008
-------------------------------
Uri P. Harkham
/s/ B. Wayne Hughes, Jr. Trustee February 29, 2008
-------------------------------
B. Wayne Hughes, Jr.
/s/ Harvey Lenkin Trustee February 29, 2008
-------------------------------
Harvey Lenkin
/s/ Gary E. Pruitt Trustee February 29, 2008
-------------------------------
Gary E. Pruitt
/s/ Daniel C. Staton Trustee February 29, 2008
-------------------------------
Daniel C. Staton
83
PUBLIC STORAGE
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, 2007 and 2006..................................... F-2
For each of the three years in the period ended December 31, 2007:
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-103
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 Trustees and Shareholders
Public Storage
We have audited the accompanying consolidated balance sheets of Public Storage
as of December 31, 2007 and 2006, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the three years in the
period ended December 31, 2007. 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 at December 31, 2007 and 2006, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2007, 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's internal control over financial reporting as of December 31, 2007,
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, 2008 expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Los Angeles, California
February 28, 2008
F-1
PUBLIC STORAGE
CONSOLIDATED BALANCE SHEETS
December 31, 2007 and 2006
(Amounts in thousands, except share data)
December 31, December 31,
2007 2006
---------------- ----------------
ASSETS
Cash and cash equivalents.................................................... $ 245,444 $ 535,684
Real estate facilities, at cost:
Land...................................................................... 3,021,309 2,959,875
Buildings................................................................. 8,637,498 8,301,990
---------------- ----------------
11,658,807 11,261,865
Accumulated depreciation.................................................. (2,128,225) (1,754,362)
---------------- ----------------
9,530,582 9,507,503
Construction in process................................................... 60,324 90,038
---------------- ----------------
9,590,906 9,597,541
Investment in real estate entities........................................... 306,743 301,905
Goodwill..................................................................... 174,634 174,634
Intangible assets, net....................................................... 173,745 414,602
Restricted cash.............................................................. 18,972 19,900
Other assets................................................................. 132,658 154,207
---------------- ----------------
Total assets................................................... $ 10,643,102 $ 11,198,473
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Borrowings on bank credit facilities......................................... $ - $ 345,000
Notes payable................................................................ 1,031,847 1,466,284
Debt to joint venture partner................................................ 38,081 37,258
Preferred shares called for redemption....................................... - 302,150
Accrued and other liabilities................................................ 303,357 333,706
---------------- ----------------
Total liabilities................................................... 1,373,285 2,484,398
Minority interest:
Preferred partnership interests........................................... 325,000 325,000
Other partnership interests............................................... 181,688 181,030
Commitments and contingencies (Note 16)
Shareholders' equity:
Cumulative Preferred Shares of beneficial interest, $0.01 par value,
100,000,000 shares authorized, 1,739,500 shares issued (in series) and
outstanding, (1,712,600 at December 31, 2006) at liquidation preference. 3,527,500 2,855,000
Common Shares of beneficial interest, $0.10 par value, 650,000,000 shares
authorized, 169,422,475 shares issued and outstanding (169,144,467 at
December 31, 2006)...................................................... 16,943 16,915
Equity Shares of beneficial interest, Series A, $0.01 par value, 100,000,000
shares authorized, 8,744.193 shares issued and outstanding.............. - -
Paid-in capital........................................................... 5,653,975 5,661,507
Cumulative net income..................................................... 3,960,827 3,503,292
Cumulative distributions paid............................................. (4,446,181) (3,847,998)
Accumulated other comprehensive income.................................... 50,065 19,329
---------------- ----------------
Total shareholders' equity.......................................... 8,763,129 8,208,045
---------------- ----------------
Total liabilities and shareholders' equity..................... $ 10,643,102 $ 11,198,473
================ ================
See accompanying notes.
F-2
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF INCOME
For each of the three years in the period ended December 31, 2007
(Amounts in thousands, except per share amounts)
2007 2006 2005
-------------- ------------- --------------
Revenues:
Self-storage rental income................................... $ 1,662,454 $ 1,239,697 $ 951,370
Ancillary operating revenue.................................. 142,500 109,515 92,021
Interest and other income.................................... 11,417 31,799 16,447
-------------- ------------- --------------
1,816,371 1,381,011 1,059,838
-------------- ------------- --------------
Expenses:
Cost of operations (excluding depreciation and amortization):
Self-storage facilities................................... 580,227 428,910 320,589
Ancillary operations...................................... 79,638 69,528 57,669
Depreciation and amortization................................. 622,410 437,568 196,153
General and administrative.................................... 59,749 84,661 21,115
Interest expense.............................................. 63,671 33,062 8,216
-------------- ------------- --------------
1,405,695 1,053,729 603,742
-------------- ------------- --------------
Income from continuing operations before equity in earnings of real
estate entities, casualty gain (loss), gain on disposition of real
estate and real estate investments, foreign currency
exchange gain, income from derivatives and minority interest in
income....................................................... 410,676 327,282 456,096
Equity in earnings of real estate entities...................... 12,738 11,895 24,883
Casualty gain (loss) ........................................... 2,665 - (1,917)
Gain on disposition of real estate and real estate investments.. 2,547 2,177 3,099
Foreign currency exchange gain.................................. 57,593 336 -
Income from derivatives, net.................................... 851 3,926 -
Minority interest in income.................................... (29,543) (31,883) (32,651)
-------------- ------------- --------------
Income from continuing operations............................... 457,527 313,733 449,510
Cumulative effect of a change in accounting principle........... - 578 -
Discontinued operations......................................... 8 (285) 6,883
-------------- ------------- --------------
Net income...................................................... $ 457,535 $ 314,026 $ 456,393
============== ============= ==============
Net income allocation:
----------------------
Allocable to preferred shareholders based on distributions paid $ 236,757 $ 214,218 $ 173,017
Allocable to preferred shareholders based on redemptions..... - 31,493 7,538
Allocable to Equity Shares, Series A......................... 21,424 21,424 21,443
Allocable to common shareholders............................. 199,354 46,891 254,395
-------------- ------------- --------------
$ 457,535 $ 314,026 $ 456,393
============== ============= ==============
Net income per common share - basic
Continuing operations........................................ $ 1.18 $ 0.33 $ 1.93
Discontinued operations...................................... - - 0.05
-------------- ------------- --------------
$ 1.18 $ 0.33 $ 1.98
============== ============= ==============
Net income per common share - diluted
Continuing operations........................................ $ 1.17 $ 0.33 $ 1.92
Discontinued operations...................................... - - 0.05
-------------- ------------- --------------
$ 1.17 $ 0.33 $ 1.97
============== ============= ==============
Net income per depositary share of Equity Shares, Series A (basic
and diluted) ................................................ $ 2.45 $ 2.45 $ 2.45
============== ============= ==============
Basic weighted average common shares outstanding................ 169,342 142,760 128,159
============== ============= ==============
Diluted weighted average common shares outstanding.............. 170,147 143,715 128,819
============== ============= ==============
Weighted average shares of Equity Shares, Series A (basic and
diluted) .................................................... 8,744 8,744 8,752
============== ============= ==============
See accompanying notes.
F-3
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For each of the three years in the period ended December 31, 2007
(Amounts in thousands, except share and per share amounts)
Cumulative
Preferred Common Paid-in Cumulative
Shares Shares Capital Net Income
------------- ---------- ------------- ------------
Balances at December 31, 2004...................................... $ 2,102,150 $ 12,853 $ 2,457,568 $ 2,732,873
Issuance of Cumulative Preferred Shares (25,050 shares)......... 626,250 - (19,665) -
Redemption of Cumulative Preferred Shares (2,306,900 shares).... (230,000) - (34) -
Repurchase of preferred partnership units (Note 11) ............ - - 874 -
Issuance of common shares (282,998 shares) (Note 12) ........... - 28 7,483 -
Repurchase of common shares (84,000 shares) (Note 12)........... - (8) (4,982) -
Stock distribution from unconsolidated real estate entities
(635,885 common shares and 31,909 Equity Shares, Series A,
depositary shares)(Note 5)..................................... - (64) (14,456) -
Stock option and restricted share unit expense (Note 13)........ - - 3,883 -
Net income...................................................... - - - 456,393
Distributions to shareholders:
Cumulative Preferred Shares................................... - - - -
Equity Shares, Series A....................................... - - - -
Common Shares ($1.90 per share)............................... - - - -
------------- ---------- ------------- ------------
Balances at December 31, 2005...................................... 2,498,400 12,809 2,430,671 3,189,266
Issuance of Cumulative Preferred Shares (52,500 shares) ........ 1,312,500 - (39,932) -
Redemption of Cumulative Preferred Shares (38,236 shares)....... (955,900) - - -
Issuance of common shares (41,054,904 shares) (Note 11) ........ - 4,106 3,267,564 -
Stock option and restricted share unit expense (Note 13)........ - - 3,204 -
Net income...................................................... - - - 314,026
Distributions to shareholders:
Cumulative Preferred Shares................................... - - - -
Equity Shares, Series A....................................... - - - -
Common Shares ($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
Issuance of Cumulative Preferred Shares (26,900 shares) ........ 672,500 - (20,608) -
Issuance of common shares (278,008 shares) (Note 11) ........... - 28 8,429 -
Stock option and restricted share unit expense (Note 13)........ - - 4,647 -
Net income...................................................... - - - 457,535
Distributions to shareholders:
Cumulative Preferred Shares................................... - - - -
Equity Shares, Series A....................................... - - - -
Common Shares ($2.00 per share)............................... - - - -
Accumulated other comprehensive income:
Foreign currency translation adjustments..................... - - - -
------------- ---------- ------------- ------------
Balances at December 31, 2007...................................... $ 3,527,500 $ 16,943 $ 5,653,975 $ 3,960,827
============= ========== ============= ============
Accumulated
Other Total
Cumulative Comprehensive Shareholders'
Distributions Income Equity
-------------- -------------- ---------------
Balances at December 31, 2004...................................... $ (2,875,477) $ - $ 4,429,967
Issuance of Cumulative Preferred Shares (25,050 shares)......... - - 606,585
Redemption of Cumulative Preferred Shares (2,306,900 shares).... - - (230,034)
Repurchase of preferred partnership units (Note 11) ............ - - 874
Issuance of common shares (282,998 shares) (Note 12) ........... - - 7,511
Repurchase of common shares (84,000 shares) (Note 12)........... - - (4,990)
Stock distribution from unconsolidated real estate entities
(635,885 common shares and 31,909 Equity Shares, Series A,
depositary shares)(Note 5)..................................... - - (14,520)
Stock option and restricted share unit expense (Note 13)........ - - 3,883
Net income...................................................... - - 456,393
Distributions to shareholders:
Cumulative Preferred Shares................................... (173,017) - (173,017)
Equity Shares, Series A....................................... (21,443) - (21,443)
Common Shares ($1.90 per share)............................... (244,200) - (244,200)
-------------- -------------- ---------------
Balances at December 31, 2005...................................... (3,314,137) - 4,817,009
Issuance of Cumulative Preferred Shares (52,500 shares) ........ - - 1,272,568
Redemption of Cumulative Preferred Shares (38,236 shares)....... - - (955,900)
Issuance of common shares (41,054,904 shares) (Note 11) ........ - - 3,271,670
Stock option and restricted share unit expense (Note 13)........ - - 3,204
Net income...................................................... - - 314,026
Distributions to shareholders:
Cumulative Preferred Shares................................... (214,218) - (214,218)
Equity Shares, Series A....................................... (21,424) - (21,424)
Common Shares ($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
Issuance of Cumulative Preferred Shares (26,900 shares) ........ - - 651,892
Issuance of common shares (278,008 shares) (Note 11) ........... - - 8,457
Stock option and restricted share unit expense (Note 13)........ - - 4,647
Net income...................................................... - - 457,535
Distributions to shareholders:
Cumulative Preferred Shares................................... (236,757) - (236,757)
Equity Shares, Series A....................................... (21,424) - (21,424)
Common Shares ($2.00 per share)............................... (340,002) - (340,002)
Accumulated other comprehensive income:
Foreign currency translation adjustments..................... - 30,736 30,736
-------------- -------------- ---------------
Balances at December 31, 2007...................................... $ (4,446,181) $ 50,065 $ 8,763,129
============== ============== ===============
See accompanying notes.
F-4
PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF CASH FLOWS
For each of the three years in the period ended December 31, 2007
(Amounts in thousands)
2007 2006 2005
-------------- -------------- -------------
Cash flows from operating activities:
Net income............................................................... $ 457,535 $ 314,026 $ 456,393
Adjustments to reconcile net income to net cash provided by operating
activities:
Amortization of note premium, net of increase in debt to joint venture
partner (Notes 7 and 8).............................................. (4,861) (3,109) (1,026)
Gain on sales of real estate and real estate investments
(Notes 4 and 12)...................................................... (6,883) (4,547) (8,279)
Real estate impairment associated with casualty losses (Note 4)......... - 996 2,592
Depreciation and amortization........................................... 622,410 437,568 196,153
Write off of capitalized development project costs...................... 2,120 10,354 -
Equity in earnings of real estate entities.............................. (12,738) (11,895) (24,883)
Foreign currency exchange gain.......................................... (57,593) (336) -
Income from derivatives, net............................................ (851) (3,926) -
Distributions received from the real estate entities (Note 5)........... 23,606 17,699 23,112
Distributions paid to other minority interests.......................... (20,047) (16,300) (18,177)
Non-cash portion of stock-based compensation expense.................... 4,647 3,204 3,883
Minority interest in income............................................. 29,543 31,883 32,651
Other operating activities.............................................. (23,684) (217) 11,452
-------------- -------------- -------------
Total adjustments.................................................... 555,669 461,374 217,478
-------------- -------------- -------------
Net cash provided by operating activities............................ 1,013,204 775,400 673,871
-------------- -------------- -------------
Cash flows from investing activities:
Capital improvements to real estate facilities ......................... (69,102) (79,326) (25,890)
Construction in process................................................. (124,534) (119,648) (86,248)
Acquisition of real estate facilities................................... (72,787) (98,954) (254,549)
Acquisition of minority interests....................................... - (62,300) (92,815)
Cash portion of the merger with Shurgard Storage Centers, Inc. (Note 3). - (137,261) -
(Deconsolidation) consolidation of partnerships (Note 2)................ (65) 3,024 -
Acquisition of partnership interests in the Unconsolidated Entities
(Note 2)............................................................. (1,598) - -
Proceeds from sales of real estate...................................... 8,708 14,545 14,755
Sale of real estate investments to affiliates (Note 10)................. 4,909 - -
Reductions (additions) to restricted cash............................... 928 (8,394) (9,490)
Proceeds from sales of held-to-maturity investments (Note 2) .......... 6,066 13,074 7,452
Acquisition of held-to-maturity investments (Note 2).................... - - (6,361)
Other investing activities.............................................. - (20,650) -
-------------- -------------- -------------
Net cash used in investing activities................................ (247,475) (495,890) (453,146)
-------------- -------------- -------------
Cash flows from financing activities:
Net (repayments) borrowings on bank credit facilities................... (345,000) 345,000 -
Principal payments on notes payable..................................... (508,942) (696,557) (14,543)
Repayment of debt to related party (Note 10) ........................... - - (64,513)
Proceeds from borrowing on European notes payable ...................... 54,081 28,891 -
Contributions received from European minority interests ................ - 15,800 -
Net proceeds from the issuance of common shares......................... 8,457 85,369 7,511
Net proceeds from the issuance of cumulative preferred shares........... 651,892 1,272,568 606,585
Repurchases of common shares............................................ - - (4,990)
Redemption of cumulative preferred shares............................... (302,150) (826,250) (112,409)
Redemption of preferred partnership interests........................... - - (85,000)
Issuance of preferred partnership interests............................. - 100,000 -
Distributions paid to shareholders...................................... (598,183) (533,861) (438,660)
Distributions paid to holders of preferred partnership interests
Note 10)............................................................. (21,612) (19,055) (16,147)
Net proceeds from financing through acquisition joint venture (Note 8).. - - 19,197
-------------- -------------- -------------
Net cash used in financing activities................................ (1,061,457) (228,095) (102,969)
-------------- -------------- -------------
Net (decrease) increase in cash and cash equivalents........................ (295,728) 51,415 117,756
Net effect of foreign exchange translation on cash.......................... 5,488 2,274 -
Cash and cash equivalents at the beginning of the year...................... 535,684 481,995 364,239
-------------- -------------- -------------
Cash and cash equivalents at the end of the year............................ $ 245,444 $ 535,684 $ 481,995
============== ============== =============
See accompanying notes.
F-5
(Continued)
2007 2006 2005
-------------- -------------- -------------
Supplemental schedule of non cash investing and financing activities:
Foreign currency translation adjustment:
Real estate facilities, net of accumulated depreciation........... (127,456) (34,696) -
Construction in process........................................... (4,623) (1,373) -
Intangible assets, net............................................ (6,226) (6,381) -
Other assets...................................................... (6,219) (717) -
Notes payable..................................................... 38,116 17,970 -
Accrued and other liabilities..................................... 13,827 4,237 -
Minority interest - other partnership interests................... 9,740 3,905 -
Accumulated other comprehensive income............................ 88,329 19,329 -
Deconsolidation of real estate entities:
Real estate facilities, net of accumulated depreciation........... 41,409 - -
Investment in real estate entities................................ (23,079) - -
Intangible assets, net............................................ 1,816 - -
Other assets...................................................... 344 - -
Notes payable..................................................... (19,329) - -
Accrued and other liabilities..................................... (544) - -
Minority interest - other partnership interests................... (682) - -
Real estate acquired in exchange for assumption of mortgage note....... - (4,590) -
Mortgage note assumed in connection with the acquisition of real estate - 4,590 -
Merger with Shurgard Storage Centers, Inc.:
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 - other partnership interests.................... - 144,196 -
Notes payable and bank credit facility............................. - 2,000,549 -
Common shares...................................................... - 3,891 -
Paid in capital................................................... - 3,182,255 -
Consolidation of entities pursuant to Emerging Issues Task Force Topic
04-5 or in connection with the acquisition of an interest in the
Unconsolidated Entities:
Minority interest - other partnership interests.................... - 3,963 -
Real estate facilities............................................. (14,604) (22,459) -
Investments in real estate entities................................ - 20,846 -
Intangible assets.................................................. (1,048) - -
Other assets....................................................... - (167) -
Accrued and other liabilities...................................... - 841 -
Notes payable...................................................... 6,681 - -
Revaluation of debt to joint venture partner (Note 8):
Debt due to joint venture partner.................................. 640 1,386 -
Other assets....................................................... (640) (1,386) -
Partnership units converted into common shares (Note 10):
Minority interest.................................................. - (155) -
Common shares...................................................... - 1 -
Paid in capital................................................... - 154 -
See accompanying notes.
F-6
2007 2006 2005
-------------- -------------- -------------
Supplemental schedule of non cash investing and financing activities:
(continued)
Retirement of Common Stock and Equity Stock, Series A, received as a
distribution from affiliated entities (Note 5):
Common shares...................................................... - - (64)
Paid-in capital.................................................... - - (14,456)
Investment in real estate entities................................. - - 14,520
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
See accompanying notes.
F-7
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
1. Description of the Business
---------------------------
Public Storage, Inc., formerly a California corporation, was
organized in 1980. Effective June 1, 2007, following approval by our
shareholders, we reorganized Public Storage, Inc. into Public Storage, a
Maryland real estate investment trust (referred to herein as "the Company",
"the Trust", "we", "us", or "our"). 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 ("U.S."). As a result of the merger with Shurgard Storage
Centers, Inc. ("Shurgard" and the merger referred to as the "Shurgard
Merger") on August 22, 2006, we also have self-storage facilities located
in seven Western European countries (Note 3). Our European operations are
conducted through Shurgard Self-Storage SCA, a Belgian company ("Shurgard
Europe").
In addition to our self-storage facilities, we own (i) interests
in commercial properties containing commercial and industrial space for
rent, (ii) interests in facilities that lease storage containers, and (iii)
other ancillary operations conducted at our self-storage locations
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 December 31, 2007, we had direct and indirect equity interests
in 2,012 self-storage facilities located in 38 states operating under the
"Public Storage" name, and 174 self-storage facilities located in Europe
which operate under the "Shurgard Storage Centers" name. We also have
direct and indirect equity interests in approximately 21 million net
rentable square feet of commercial space located in 11 states in the U.S.
Any reference to the number of properties, square footage, number
of tenant reinsurance policies outstanding and the aggregate coverage of
such reinsurance policies are unaudited and outside the scope of our
independent registered public accounting firm's audit of our financial
statements in accordance with the standards of the Public Company
Accounting Oversight Board.
2. Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
---------------------
The consolidated financial statements are presented on an accrual
basis in accordance with U.S. generally accepted accounting principles
("GAAP") 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, 2007 presentation. In previous presentations,
certain cash balances held by our captive insurance entities which are
restricted as to their use were included in cash and cash equivalents in
the Company's consolidated balance sheets. These restricted balances are
reclassified as "restricted cash" (see also "Restricted cash" below).
Certain reclassifications have also been made from previous presentations
as a result of discontinued operations (see also "Discontinued operations"
below).
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
("VIE's"). VIE's in which we are the primary beneficiary are consolidated.
Entities that are not VIE's that we control are consolidated.
F-8
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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").
The accounts of the entities we control along with the accounts of
the VIE's that we are the primary beneficiary of are included in our
consolidated financial statements along with those of the Company. We
account for our investment in entities that we do not control, or entities
for which we are not the primary beneficiary and over which we have
significant influence, using the equity method of accounting. Changes in
consolidation status are reflected effective the date the change of control
or determination of primary beneficiary status occurred, and previously
reported periods are not restated. The entities that we consolidate during
the periods, to which the reference applies, are referred to hereinafter as
the "Consolidated Entities." The entities that we have an interest in but
do not consolidate during the periods, to which the reference applies, are
referred to hereinafter as the "Unconsolidated Entities." We account for
the Unconsolidated Entities under the equity method of accounting.
Collectively, at December 31, 2007, the Company and the
Consolidated Entities own a total of 2,166 real estate facilities,
consisting of 1,984 self-storage facilities in the U.S., 174 self-storage
facilities in Europe, three industrial facilities used by our containerized
storage operations and five commercial properties.
At December 31, 2007, the Unconsolidated Entities are comprised of
various limited and joint venture partnerships and PS Business Parks, Inc.
("PSB"). These entities own in aggregate 28 self-storage facilities and, in
the case of PSB, approximately 19.6 million net rentable square feet of
commercial space at December 31, 2007.
Deconsolidation of Certain Entities
-----------------------------------
On May 24, 2007, a judgment was rendered which resulted in the
loss of our effective control over several limited partnerships and as a
result, we discontinued consolidating these entities and began to account
for our ownership in these limited partnerships using the equity method of
accounting, effective the date of the judgment. Notwithstanding our loss of
control, we continue to retain all of our previous financial interests in
these partnerships.
Use of Estimates
----------------
The preparation of the consolidated financial statements in
conformity with GAAP requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements
and accompanying notes. Actual results could differ from those estimates.
Income Taxes
------------
For all taxable years subsequent to 1980, the Company has
qualified and intends to continue to qualify as a REIT, as defined in
Section 856 of the Internal Revenue Code. As a REIT, we do not incur
federal or significant state tax 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 2007, 2006, and 2005 and,
accordingly, no provision for income taxes has been made in the
accompanying consolidated financial statements on income produced and
distributed on real estate rental operations. Our taxable REIT subsidiaries
are subject to regular corporate tax on their income.
F-9
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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 market 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, and accrued and other liabilities, the carrying values as
presented on the consolidated balance sheets are reasonable estimates of
fair value.
Financial assets that are exposed to credit risk consist primarily
of cash and cash equivalents and accounts receivable. Cash and cash
equivalents, consisting 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 small individual customer balances. See Note
7 for an estimate of the fair values of our notes payable.
We have operations in Europe and accordingly, our operations and
financial position are affected by fluctuations in the exchange rates
between the Euro, and to a lesser extent, other European currencies,
against the U.S. dollar.
Other assets at December 31, 2007 include derivative financial
instruments totaling $5,015,000 ($11,810,000 at December 31, 2006) reported
at estimated fair value. See Note 9 for further discussion of the fair
value of our derivative financial instruments.
Restricted Cash
---------------
Restricted cash at December 31, 2007 and December 31, 2006,
consists of cash held by our captive insurance entities which, due to
insurance and other regulations with respect to required reserves and
minimum capital requirements, can only be utilized to pay captive claims.
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. Costs associated with the sale of real estate
facilities or interests in real estate investments are expensed as
incurred. The purchase cost of existing self-storage facilities that we
F-10
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
acquire are allocated based upon relative fair value of the land, building
and tenant intangible components of the real estate facility. Expenditures
for repairs and maintenance are expensed when incurred and included in cost
of operations. Depreciation expense 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
evaluation at December 31, 2007.
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.
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. No impairment was identified from our
evaluations as of December 31, 2007.
Accounting for Stock-Based Compensation
---------------------------------------
We utilize the Fair Value Method (as defined in Note 13) of
accounting for our employee stock options. Restricted share unit expense is
recorded over the relevant service period. See Note 13 for additional
information on our accounting for employee share options and restricted
share 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 held for
sale and fleet of rental trucks. We recorded a gain on dispostion of
containerized storage assets of $1,143,000 in the year ended December 31,
2005.
Accrued and Other Liabilities
-----------------------------
Accrued and other liabilities consist primarily of real property
tax accruals, value-added tax accruals with respect to our European
operations, tenant prepayments of rent, trade payables, losses and loss
adjustment liabilities for our self-insured risks (described below), and
accrued interest. Tenant prepaid rent totaled $67,063,000 at December 31,
2007 ($64,291,000 at December 31, 2006), while property and value-added tax
accruals approximated $82,647,000 at December 31, 2007 ($80,336,000 at
December 31, 2006).
We are self-insured for a portion of the risks associated with our
property and casualty losses, workers compensation, and employee health
care. We also utilize third-party insurance carriers to limit our self
insurance exposure. We accrue liabilities for uninsured losses and loss
adjustment expense, which at December 31, 2007 totaled $26,643,000
($31,532,000 at December 31, 2006). Liabilities for losses and loss
F-11
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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.
Through a wholly-owned subsidiary, we reinsure policies against
claims for losses to goods stored by tenants in our self-storage
facilities. For our U.S. 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 and
expensed as ancillary costs of operations.
While we believe that the amount of estimated accrued liabilities
with respect to tenant claims, property, casualty, workers compensation,
and employee healthcare are adequate, the ultimate losses that are actually
paid may be different than what we have accrued. The methods for making
such estimates and for establishing the resulting liabilities are regularly
reviewed.
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"). Our goodwill balance
of $174,634,000 is reported net of accumulated amortization of $85,085,000
as of December 31, 2007 and 2006 in our accompanying consolidated balance
sheets.
Other Intangible Assets
-----------------------
As a result of the Shurgard Merger (Note 3), we acquired
finite-lived intangible assets comprised primarily of tenant intangibles
representing the value of the tenants in place at the date of the merger
valued at $565,341,000 and the "Shurgard" trade name, which we continue to
use in Europe, valued at $18,824,000. During 2007, intangible assets were
increased by approximately $8,803,000 due to the impact of changes in
foreign currency exchange rates and the acquisition of tenant intangibles
in connection with the acquisition of additional self-storage facilities.
In May 2007, our intangible assets decreased by $1,816,000 in connection
with the deconsolidation of our investment in certain limited partnerships
as noted above.
The tenant intangible assets are amortized relative to the
expected benefit of the tenants in place to each period and relative to the
benefit of the below-market leases. The Shurgard trade name has an
indefinite life and, accordingly, we do not amortize this asset but instead
analyze it on an annual basis for impairment.
Amortization expense of $247,844,000 and $175,944,000 was recorded
for our finite-lived intangible assets for the years ended December 31,
2007 and 2006, respectively. The estimated annual amortization expense for
our finite-lived intangible assets is as follows:
2008 $ 74,387,000
2009 24,539,000
2010 15,100,000
2011 11,780,000
2012 7,572,000
2013 and beyond 21,543,000
Our finite-lived intangible assets are reported net of accumulated
F-12
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
amortization of $423,788,000 as of December 31, 2007 ($175,944,000 as of
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 and amount
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.
During the second quarter of 2007, a share offering of Shurgard
Europe, our European operations, was initiated to be listed on Eurolist of
EuronextTM Brussels. Due to adverse market conditions, this offering was
withdrawn on June 21, 2007. There is no estimate as to when or if a future
offering may occur. We incurred $9.6 million in expenses related to the
proposed offering of shares which is included in general and administrative
expense for the year ended December 31, 2007.
Foreign Exchange Translation
----------------------------
The local currency is the functional currency for our European
subsidiaries. Assets and liabilities (other than for intercompany balances,
which are discussed below) are translated at end-of-period exchange rates
while revenues and expenses are translated at the average exchange rates in
effect during the period. The Euro was translated at an end-of-period
exchange rate of approximately 1.472 in U.S. dollars per Euro at December
31, 2007 (1.319 at December 31, 2006). Equity is translated at historical
rates and the resulting cumulative translation adjustments, to the extent
not included in net income, are included as a component of accumulated
other comprehensive income (loss) until the translation adjustments are
realized. Included in other accumulated comprehensive income was a
cumulative foreign currency translation adjustment gain of $50,065,000 at
December 31, 2007 ($19,329,000 at December 31, 2006).
Intercompany loans among our European subsidiaries and our
domestic subsidiaries totaled $555,879,000 and $521,072,000 at December 31,
2007 and 2006, respectively, and are eliminated in consolidation. When such
loans, which are denominated in Euros, are expected to be settled and
remitted to our domestic subsidiaries in the form of U.S. Dollars in the
near term (generally, within one to two years), as is the case with these
loans, we recognize foreign exchange rate gains or losses as a result of
changes in exchange rates between the Euro and the U.S. Dollar during the
period. During 2007 and 2006, these loans increased due to recognized
foreign currency gains totaling $57,593,000 and $336,000, respectively, and
during 2007 these loans declined $22,786,000 due to repayments.
Other Comprehensive Income
--------------------------
Total comprehensive income reflects our net income, adjusted for
any portion of currency translation adjustments related to our European
subsidiaries which are not already reflected into current net income. Other
comprehensive income aggregated $30,736,000 and $19,329,000 for the years
ended December 31, 2007 and 2006, respectively, which is reflected as an
addition to shareholders' equity.
F-13
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
Our total comprehensive income is as follows:
For the Year Ended December 31,
2007 2006 2005
------------ ------------- ------------
(Amounts in thousands)
Net income................................ $ 457,535 $ 314,026 $ 456,393
Other comprehensive income:
Aggregate foreign currency translation
adjustments......................... 88,329 19,665 -
Less: foreign currency translation
adjustments reflected in net income. (57,593) (336) -
------------ ------------- ------------
Other comprehensive income for the year... 30,736 19,329 -
------------ ------------- ------------
Total comprehensive income................ $ 488,271 $ 333,355 $ 456,393
============ ============= ============
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 or the estimation of
costs of restoration, are treated as contingent proceeds in accordance with
Statement of Financial Accounting Standards No. 5 ("SFAS 5"), and not
recorded until the uncertainties are satisfied. During 2007, we recorded a
casualty gain totaling $2,665,000, representing the realization of such
contingent proceeds relating to hurricanes which occurred in 2005.
Derivative Financial Instruments
--------------------------------
We have certain derivative financial instruments held by our two
joint venture partnerships in Europe, including interest rate caps,
interest rate swaps, cross-currency swaps and foreign currency forward
contracts. These derivatives were entered into by the joint venture
partnerships in order to mitigate currency and exchange rate fluctuation
risk in connection with borrowings, and are not 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.
For all periods presented, none of the derivatives were considered
effective hedges because at the time of the Shurgard Merger, we believed it
was not highly likely that the debt and the related derivative instruments
would 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 from derivatives, net" on our consolidated statements of income.
Environmental Costs
-------------------
Our policy is to accrue environmental assessments and estimated
remediation costs 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 our facilities, which individually or in the
aggregate would be material to our overall business, financial condition,
or results of operations.
F-14
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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:
For the Year Ended December 31,
--------------------------------------
2007 2006 2005
----------- ----------- -----------
(Amounts in thousands)
Rental income..................... $ 1,599 $ 1,332 $ 1,679
Cost of operations................ (4,221) (2,341) (787)
Depreciation expense.............. (484) (650) (332)
Asset impairment charges.......... (918) (996) -
Lease termination costs........... (304) - -
Net gain on dispositions.......... 4,336 2,370 6,323
----------- ----------- -----------
Total discontinued operations..... $ 8 $ (285) $ 6,883
=========== =========== ===========
Net Income per Common Share
---------------------------
In computing net income allocated to our common shareholders, we
first allocate net income to our preferred shareholders ($236,757,000,
$214,218,000 and $173,017,000 for the years ended December 31, 2007, 2006
and 2005, respectively) to arrive at net income allocable to our common
shareholders.
In addition, when we call any of our Cumulative Preferred Shares
for redemption, we record an additional allocation of income to our
preferred shareholders equal to the excess of a) the cash required to
redeem the securities over b) the net proceeds from the original issuance
of the securities. Such allocations totaled $31,493,000 and $7,538,000 in
2006 and 2005, respectively, (none in 2007).
The remaining net income is allocated among our regular common
shares and our Equity Shares, Series A using the two-class method which
allocates income based upon the dividends declared (or accumulated) for
each security in the period, combined with each security's rights to
earnings (or losses) that were not distributed to shareholders. Under this
method, the Equity Shares, Series A, were allocated net income of
$21,424,000, $21,424,000 and $21,443,000 for the years ended December 31,
2007, 2006 and 2005, respectively. Net income of $199,354,000, $46,891,000
and $254,395,000 for the years ended December 31, 2007, 2006 and 2005,
respectively, was allocated to the regular common shareholders.
Basic net income per share is computed using the weighted average
common shares outstanding (prior to the dilutive impact of stock options
and restricted share units outstanding). Diluted net income per common
share is computed using the weighted average common shares outstanding
(adjusted for the impact, if dilutive, of stock options and restricted
share units outstanding). Weighted average common shares excludes shares
owned by the Consolidated Entities as described in Note 10 for all periods
presented, as these common shares are eliminated in consolidation.
F-15
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
3. Shurgard Merger
---------------
On August 22, 2006, the Company merged with Shurgard, a REIT which
had interests in 487 self-storage facilities in the U.S. and 160
self-storage facilities in Europe.
Shurgard shareholders received 0.82 of our common shares 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 common shares of Public Storage (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
==============
As described more fully in Note 2, intangible assets consist of
the estimated value of the existing tenants in place at the date of the
merger, the estimated value of the land leases acquired, and the estimated
value of the "Shurgard Storage Centers" trade name, which we are continuing
to use in Europe.
The results of operations of the facilities acquired in the
Shurgard Merger 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.
F-16
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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. Real Estate Facilities
----------------------
Activity in real estate facilities during 2007, 2006 and 2005 is
as follows:
2007 2006 2005
--------------- --------------- ---------------
(Amounts in thousands)
Operating facilities, at cost:
Beginning balance....................................... $ 11,261,865 $ 5,930,484 $ 5,510,750
Capital improvements.................................... 69,102 79,326 25,890
Acquisition of real estate facilities from third parties 71,258 103,544 254,549
Newly developed facilities opened for operations........ 156,751 161,131 86,888
Newly consolidated facilities (Note 5).................. 14,604 22,459 -
Acquired in the Shurgard Merger (Note 3)................ - 4,887,507 -
Deconsolidation of Entities (Note 2).................... (42,473) - -
Disposition of real estate facilities................... (4,202) (5,860) (8,582)
Casualty loss (Note 2).................................. - - (8,953)
Abandoned facility...................................... - (1,545) -
Acquisition of minority interests (Note 10)............. - 50,123 69,942
Impact of foreign exchange rate changes................. 131,902 34,696 -
--------------- --------------- ---------------
Ending balance.......................................... 11,658,807 11,261,865 5,930,484
--------------- --------------- ---------------
Accumulated depreciation:
Beginning balance....................................... (1,754,362) (1,500,128) (1,320,200)
Depreciation expense.................................... (371,665) (255,615) (186,048)
Reduction due to disposition of real estate facilities.. 1,184 832 3,154
Deconsolidation of Entities (Note 2).................... 1,064 - -
Abandoned facility...................................... - 549 -
Casualty loss (Note 2).................................. - - 2,966
Impact of foreign exchange rate changes................. (4,446) - -
--------------- --------------- ---------------
Ending balance.......................................... (2,128,225) (1,754,362) (1,500,128)
--------------- --------------- ---------------
Construction in process:
Beginning balance...................................... 90,038 54,472 56,160
Current development.................................... 124,534 119,648 86,248
Newly developed facilities opened for operations....... (156,751) (161,131) (86,888)
Acquired in the merger with Shurgard (Note 3).......... - 91,000 -
Write off of development costs......................... (2,120) (10,354) -
Dispositions during the year........................... - (4,970) (1,048)
Impact of foreign exchange rate changes................ 4,623 1,373 -
--------------- --------------- ---------------
Ending balance......................................... 60,324 90,038 54,472
--------------- --------------- ---------------
Total real estate facilities............................. $ 9,590,906 $ 9,597,541 $ 4,484,828
=============== =============== ===============
F-17
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
During 2007, we completed three development and 14 expansion
projects in the U.S. which in aggregate added approximately 670,000 net
rentable square feet of self-storage space at a total cost of $66,676,000
(960,000 net rentable square feet at a total cost of $115,046,000 in 2006
and 1,472,000 net rentable square feet at a total cost of $86,888,000 in
2005). Also in 2007, we completed nine development projects in Europe which
in aggregate added approximately 479,000 net rentable square feet of
self-storage space at a total cost of $90,075,000 (306,000 net rentable
square feet at a total cost of $46,085,000 in 2006). During 2007, we
acquired seven self-storage facilities (511,000 net rentable square feet)
in the U.S. from third parties for an aggregate cost of $72,787,000, in
cash; $71,258,000 was allocated to real estate facilities and $1,529,000
was allocated to intangibles, based upon the estimated relative fair values
of the land, buildings and intangibles.
Excluding self-storage facilities acquired in the Shurgard Merger
(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.
Construction in process at December 31, 2007 includes the
development costs relating to 29 projects in the U.S. (1,218,000 net
rentable square feet), consisting of newly developed self-storage
facilities, conversion of space at facilities that was previously used for
containerized storage and expansions to existing self-storage facilities,
with costs incurred of $28,374,000 at December 31, 2007 and total estimated
costs to complete of $98,763,000 (unaudited). In addition, we have 14
projects to develop new self-storage facilities in Europe (737,000
aggregate net rentable square feet), with costs incurred at December 31,
2007 of $31,950,000 and total estimated costs to complete of $91,931,000
(unaudited).
From time to time, our facilities are subject to condemnation
proceeds, resulting in disposal of a portion or, in some cases, the entire
facility. In addition, we dispose of unused parcels of land in certain
cases. When an entire real estate facility is disposed of (one facility in
2007, two facilities in 2006 and one facility in 2005), the operating
results of these disposed facilities, including the gain on sale are
classified in discontinued operations on our consolidated statements of
income for all periods presented. During 2007, 2006, and 2005, we received
net proceeds from such disposal transactions totaling $8,708,000,
$14,545,000, and $14,755,000, respectively. Aggregate gains on sale
included on our accompanying consolidated statements of income were
$5,690,000, $4,547,000, and $8,279,000 in 2007, 2006, and 2005,
respectively, of which $4,336,000, $2,370,000, and $6,323,000 in such gains
were included in discontinued operations.
In 2005, we recorded casualty losses of $1,917,000 as a result of
damage to our facilities from hurricanes. These casualty losses were
comprised of the book value of assets damaged of $5,987,000 less insurance
proceeds of approximately $4,070,000. 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.
We capitalize interest incurred on debt during the course of
construction of our self-storage facilities. Interest capitalized for the
years ended December 31, 2007, 2006 and 2005 was $4,746,000, $2,716,000 and
$2,820,000, respectively.
At December 31, 2007, the adjusted basis of real estate facilities
for federal tax purposes was approximately $9.4 billion (unaudited).
F-18
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
5. Investments in Real Estate Entities
-----------------------------------
Interests in entities for periods that they are either VIE's that
we are not the primary beneficiary of, or other non-VIE entities that we do
not have a controlling financial interest in, are accounted for using the
equity method of accounting.
During 2007, 2006, and 2005, we recognized earnings from our
investments in real estate entities of $12,738,000, $11,895,000, and
$24,883,000, respectively, and received cash distributions totaling
$23,606,000, $17,699,000, and $23,112,000, respectively. In addition,
during 2005, we received a distribution from affiliated entities of 635,885
of our common shares and 31,909 depositary shares of our Equity Shares,
Series A, with an aggregate book value of $14,520,000.
In May 2007, we discontinued consolidating certain limited
partnerships and began to account for our investments in these entities
using the equity method (Note 2). As a result, investments in real estate
entities increased by $23,079,000, representing the aggregate book value of
our investment in these limited partnerships.
In November 2007, we acquired the remaining interests we did not
own in certain limited partnerships owning five of these facilities
(269,000 net rentable square feet) for $1,200,000 in cash. These entities
were previously accounted for using the equity method of accounting,
however, with the acquisition of the remaining interests in these limited
partnerships we began consolidating the accounts of these entities which
resulted in a decrease in investment in real estate entities of $7,373,000,
and adjustments to the following balance sheet accounts (amounts in
thousands):
Total
------------
Real estate facilities, net......................... $ 14,604
Intangible assets................................... 1,048
Notes payable....................................... (6,681)
The following table sets forth our investments in the real estate
entities at December 31, 2007 and 2006, and our equity in earnings of real
estate entities for each of the three years ended December 31, 2007
(amounts in thousands):
Investments in Real Estate Equity in Earnings of Real Estate Entities
Entities at December 31, for the Year Ended December 31,
------------------------------- -------------------------------------------
2007 2006 2007 2006 2005
------------- -------------- ------------ ------------ -------------
PSB $ 273,717 $ 283,700 $ 10,502 $ 9,764 $ 18,757
Other investments.............. 33,026 18,205 2,236 2,131 6,126
------------- -------------- ------------ ------------ -------------
Total...................... $ 306,743 $ 301,905 $ 12,738 $ 11,895 $ 24,883
============= ============== ============ ============ =============
Investment in PS Business Parks, Inc.
-------------------------------------
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 45%
common equity interest in PSB as of December 31, 2007. 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
throughout 2007, 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,
2007 ($52.55 per share of PSB common stock), the shares and units had a
market value of approximately $668.6 million as compared to a book value of
$273.7 million.
F-19
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
At December 31, 2007, PSB owned and operated approximately 19.6
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.
2007 2006 2005
---------------- ----------------- -----------------
(Amounts in thousands)
For the year ended December 31,
Total operating revenue.............................. $ 271,499 $ 242,839 $ 220,183
Costs of operations and other operating expenses..... (92,277) (81,717) (71,627)
Other income and expense, net........................ 974 4,299 3,558
Depreciation and amortization........................ (98,521) (86,216) (76,178)
Discontinued operations.............................. - 1,643 15,620
Minority interest.................................... (13,009) (16,268) (16,262)
---------------- ----------------- -----------------
Net income......................................... $ 68,666 $ 64,580 $ 75,294
================ ================= ==================
2007 2006
--------------- ----------------
(Amounts in thousands)
At December 31,
Total assets (primarily real estate)................. $ 1,516,283 $ 1,463,599
Total debt........................................... 60,725 67,048
Other liabilities.................................... 50,758 43,129
Preferred equity and preferred minority interests.... 811,000 705,250
Common equity and common minority interests.......... 593,800 648,172
Other Investments
-----------------
At December 31, 2007, other investments include an aggregate
common equity ownership of approximately 28% in a) 5 entities that own an
aggregate of 22 self-storage facilities that we held on a consistent basis
for each of the years ended December 31, 2007 and 2006, respectively, and
b) entities owning six self-storage facilities, which we deconsolidated
effective May 24, 2007, as described in Note 2.
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:
2007 2006 2005
------------ ------------ ------------
(Amounts in thousands)
For the year ended December 31,
Total revenue........................ $ 21,601 $ 18,707 $ 16,563
Cost of operations and other expenses (8,933) (7,395) (6,390)
Depreciation and amortization........ (3,883) (3,235) (2,039)
------------ ------------ ------------
Net income....................... $ 8,785 $ 8,077 $ 8,134
============ ============ ============
2007 2006
------------ ------------
(Amounts in thousands)
At December 31,
Total assets (primarily storage
facilities)...................... $ 75,903 $ 77,809
Total debt........................... 12,409 12,735
Other liabilities.................... 774 1,395
Total Partners' equity............... 62,720 63,679
F-20
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
6. Bank Credit Facilities
----------------------
On March 27, 2007, we entered into a five-year revolving credit
agreement (the "Credit Agreement") with an aggregate limit with respect to
borrowings and letters of credit of $300 million. Amounts drawn on the
Credit Agreement bear an annual interest rate ranging from the London
Interbank Offered Rate ("LIBOR") plus 0.35% to LIBOR plus 1.00% depending
on our credit ratings (LIBOR plus 0.35% at December 31, 2007). In addition,
we are required to pay a quarterly facility fee ranging from 0.10% per
annum to 0.25% per annum depending on our credit ratings (0.10% per annum
at December 31, 2007). We had no outstanding borrowings on our Credit
Agreement at December 31, 2007 or at February 28, 2008.
The Credit Agreement includes various covenants, the more
significant of which require us to (i) maintain a leverage ratio (as
defined therein) of less than 0.55 to 1.00, (ii) maintain certain fixed
charge and interest coverage ratios (as defined therein) of not less than
1.5 to 1.0 and 1.75 to 1.0, respectively, and (iii) maintain a minimum
total shareholders' equity (as defined therein). We were in compliance with
all covenants of the Credit Agreement at December 31, 2007.
At December 31, 2007, we had undrawn standby letters of credit,
which reduce our borrowing capability with respect to our line of credit by
the amount of the letters of credit, totaling $20,408,000 ($21,068,000 at
December 31, 2006). The beneficiaries of these standby letters of credit
were primarily certain insurance companies associated with our captive
insurance and tenant re-insurance activities.
On December 27, 2006, we entered into a $300 million unsecured
short-term credit agreement (the "Bridge Loan") with a commercial bank that
matured April 1, 2007. 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.
F-21
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
7. Notes Payable
-------------
The carrying amount of our notes payable at December 31, 2007 and
2006 consist of the following (dollar amounts in thousands):
December 31, 2007 December 31, 2006
---------------------------- --------------------------
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 $ 199,435 $ 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
$10,905 of unamortized premium at December 31, 2007) ............... 210,905 216,700 214,033 221,244
6.53% effective rate, 7.625% stated note rate which matured April 2007. - - 50,119 50,119
7.66% senior unsecured note which matured January 2007................. - - 11,200 11,200
DOMESTIC MORTGAGE NOTES:
5.59% average effective rate fixed rate mortgage notes payable, secured by 57
real estate facilities with a net book value of $422,607 at December 31,
2007 and stated note rates between 4.95% and 7.76%, due between January
2008 and August 2015 (carrying amount includes $3,278 of
unamortized premium at December 31, 2007) .......................... 150,288 156,120 166,737 164,953
Variable rate mortgage notes payable................................... - - 8,428 8,428
5.29% average effective rate fixed rate mortgage notes payable, secured
by 31 real estate facilities with a net book value of $178,591 at
December 31, 2007, stated note rates between 5.40% and 8.75%, principal
and interest payable monthly, due at varying dates between October 2009
and September 2028 (carrying amount includes $3,541 of unamortized
premium at December 31, 2007)........................................ 86,609 88,601 91,489 89,049
EUROPEAN SECURED NOTES PAYABLE:
(euro)325 million notes payable due originally in 2011, but prepaid in
January 2007........................................................ - - 428,760 428,760
First Shurgard credit agreement, due in 2008, secured by 38 real estate
facilities with a net book value of $285,757 at December 31, 2007
(interest rate of EURIBOR + 2.25%, 6.139% average for the year ended
December 31, 2007, 5.976% rate at December 31, 2007 which approximate
market rates)....................................................... 189,064 189,064 172,832 172,832
Second Shurgard credit agreement, due in 2009, secured by 30 real estate
facilities with a net book value of $253,134 at December 31, 2007
(interest rate of EURIBOR + 2.25%, 6.268% average for the year ended
December 31, 2007, 6.769% rate at December 31, 2007 which approximate 187,665 187,665 116,086 116,086
market rates).......................................................
Liability under Capital Leases......................................... 7,316 7,316 6,600 6,600
-------------- ------------- ------------- ------------
Total notes payable............................................. $1,031,847 $1,044,901 $1,466,284 $ 1,475,270
============== ============= ============= ============
F-22
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
The 5.875% and 5.73% effective rate domestic unsecured notes
payable were recorded at their estimated fair value upon assumption based
upon estimated market rates for debt with similar terms and ratings. The
initial premium of $15,692,000, representing the difference between the
stated note rate and fair value on August 23, 2006, 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 of 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, 2007.
The 5.59% average effective rate fixed rate domestic 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, representing
the difference between the stated note rate and fair value on August 23,
2006, 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 we believe have been met at December 31, 2007.
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, joint venture partnerships in
which we have a 20% interest, (see Note 10) have senior credit agreements
denominated in Euros to borrow, in aggregate, up to (euro)271.6 million
($399.8 million as of December 31, 2007). As of December 31, 2007, the
available amounts under those credit facilities were, in the aggregate,
(euro)12.5 million ($18.4 million). These credit facilities were put into
place to fund development costs of various self-storage projects. Our draws
under the First Shurgard and Second Shurgard credit facilities 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, 2007, we were in compliance with these financial covenants.
In February 2008, we requested a one year extension on the First Shurgard
credit agreement through May 26, 2009. Assuming we have met our loan
covenants, which we believe we have met, the lender is required to grant
our request. Concurrent with the completion of the proposed transaction for
a prospective investor to acquire a 51% ownership interest in Shurgard
Europe, we will seek to obtain a waiver from the lenders of the Second
Shurgard credit facility for the change in control acceleration clause
contained in the credit facility. See Note 19 for further information
regarding the proposed transaction involving Shurgard Europe.
F-23
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
At December 31, 2007, approximate principal maturities of our
notes payable are as follows (amounts in thousands):
Domestic Domestic Liabilities
Unsecured Mortgage Notes European under
Notes Payable Payable Notes Payable Capital Leases Total
---------------- ------------------ --------------- --------------- ----------------
2008......................... $ 3,512 $ 23,509 $ 189,064 $ 115 $ 216,200
2009......................... 3,720 8,788 187,665 (a) 127 200,300
2010......................... 3,939 10,669 - 88 14,696
2011......................... 199,734 27,445 - 804 227,983
2012......................... - 55,195 - 44 55,239
Thereafter................... 200,000 111,291 - 6,138 317,429
---------------- ------------------ --------------- --------------- ----------------
$ 410,905 $ 236,897 $ 376,729 $ 7,316 $ 1,031,847
================ ================== =============== =============== ================
Weighted average effective rate 5.8% 5.5% 6.2% 9.9% 5.9%
================ ================== =============== =============== ================
(a) Approximately $189.1 million in debt owed by First Shurgard was originally
scheduled to mature in May 2008. However, in February 2008, under the terms
of the related credit agreement we have requested a one-year extension of
the loan until May 2009. Assuming we have met our loan covenants, which we
believe we have met, the lender is contractually obligated to grant our
request.
We incurred interest expense with respect to our notes payable,
capital leases, debt to joint venture partner and line of credit
aggregating $68,417,000, $35,778,000 and $11,036,000 for the years ended
December 31, 2007, 2006 and 2005, respectively. These amounts were
comprised of $73,278,000, $38,887,000 and $12,062,000 in cash for the years
December 31, 2007, 2006 and 2005, respectively, less $4,861,000, $3,109,000
and $1,026,000 in amortization of premium net of increase in Debt to Joint
Venture Partner described in Note 8, respectively.
The net book value of the properties under capital leases was
$34,153,000 as of December 31, 2007, which is net of accumulated
depreciation of $1,711,000.
8. 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 $38,081,000 and $37,258,000 due the
joint venture partner as of December 31, 2007 and 2006, respectively,
approximate the fair value of our partner's 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 we will record adjustments 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 $640,000 during 2007 and $1,386,000 during 2006 as a result of
our periodic review of fair value.
A total of $3,183,000, $3,066,000 and $2,939,000 was recorded as
interest expense on our consolidated statements of income with respect to
our Debt to Joint Venture Partner during the years ended December 31, 2007,
F-24
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
2006 and 2005, respectively, representing our partner's pro rata share of
net earnings with respect to the properties we sold to the Acquisition
Joint Venture (an 8.5% return on their investment). This interest expense
was comprised of a total of $3,000,000, $2,890,000 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, 2007,
2006 and 2005, respectively, and increases in the Debt to Joint Venture
Partner of $183,000, $176,000 and $405,000 for the years ended December 31,
2007, 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 Acquisition
Joint Venture.
9. Derivative Financial Instruments
--------------------------------
As described in Note 2, under Derivative Financial Instruments, we
report derivative financial instruments at fair value on our consolidated
balance sheet and changes in fair values for the years ended December 31,
2007 and 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, 2007 December 31, 2006
----------------- -----------------
(Amounts in thousands)
Assets:
Interest rate contracts................................ $ 5,015 $ 11,810
================= =================
Liabilities:
Interest rate contracts................................ $ - $ (4,162)
Foreign currency exchange contracts.................... (308) (7,837)
----------------- -----------------
$ (308) $ (11,999)
================= =================
For the year ended December 31, 2007, net income from derivatives
of $851,000 ($3,926,000 in 2006) was comprised of a change in value of the
related instruments resulting in a gain of $874,000 ($5,840,000 in 2006),
offset by $23,000 ($1,914,000 in 2006) 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.
10. 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 the consolidated financial statements. Minority
interest in income consists of the minority interests' share of the
operating results of the Consolidated Entities.
F-25
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
PREFERRED PARTNERSHIP INTERESTS
The following table summarizes the preferred partnership units
outstanding at December 31, 2007 and 2006:
December 31, 2007 December 31, 2006
------------------------- ----------------------------
Earliest Redemption
Date or Dates Distribution Units Carrying Units Carrying
Series Redeemed 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 4,000 100,000
------------ ----------- ----------- -------------
Total............ 13,000 $ 325,000 13,000 $ 325,000
============ =========== =========== =============
Income allocated to the preferred minority interests totaled
$21,612,000, $19,055,000 and $16,147,000 for the years ended December 31,
2007, 2006 and 2005, respectively, comprised of distributions paid. In
2005, income allocated to the preferred minority interests was increased by
$874,000 due to the application of 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.
On May 9, 2006, one of the Consolidated Entities issued 4,000,000
units of our 7.25% Series J Preferred Partnership Units for cash proceeds
of $100,000,000.
Subject to certain conditions, the Series NN preferred units are
convertible into our 6.40% Series NN Cumulative Preferred Shares of
beneficial interest, the Series Z preferred units are convertible into our
6.25% Series Z Cumulative Preferred Shares of beneficial interest and the
Series J preferred units are convertible into our 7.25% Series J Cumulative
Preferred Shares of beneficial interest. The holders of the Series Z
preferred partnership units have a one-time option exercisable five years
from issuance (October 12, 2009), to require us to redeem their units for
$25,000,000 in cash, plus any unpaid distribution.
OTHER PARTNERSHIP INTERESTS
Income is allocated to the minority interests based upon their pro
rata interest in the operating results of the Consolidated Entities. The
following tables set forth the minority interests at December 31, 2007 and
2006 as well as the income allocated to minority interests for the years
ended December 31, 2007 and 2006 with respect to the other partnership
interests:
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 2007 2006 2007 2006 2005
---------------------------------- -------------- -------------- ---------------- -------------- -------------
(Amounts in thousands)
European joint ventures.......... $ 140,385 $ 140,034 $ (9,389) $ (3,631) $ -
European investors............... 3,520 - (196) - -
Convertible Partnership Units.... 5,516 5,710 270 151 469
Other consolidated partnerships.. 32,267 35,286 17,246 16,308 15,161
-------------- -------------- ---------------- -------------- -------------
Total other partnership interests $ 181,688 $ 181,030 $ 7,931 $ 12,828 $ 15,630
============== ============== ================ ============== =============
F-26
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
Distributions paid to minority interests for the years ended
December 31, 2007, 2006 and 2005 were $20,047,000, $16,300,000 and
$18,177,000, respectively. Minority interests increased $9,740,000 and
$3,905,000 as a result of the impact of foreign currency translation in the
years ended December 31, 2007 and 2006, respectively.
European Joint Ventures
-----------------------
Through the Shurgard Merger, we acquired an interest in two joint
venture entities: First Shurgard SPRL ("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,
2007, First Shurgard and Second Shurgard had aggregate total assets of
$581.4 million ($501.0 million at December 31, 2006), total liabilities of
$406.4 million ($320.9 million at December 31, 2006), and credit facilities
collateralized by assets with a net book value of $538.9 million. At
December 31, 2007, First Shurgard's and Second Shurgard's creditors had no
recourse to the general credit of Public Storage or Shurgard Europe other
than certain loan commitments. At December 31, 2007, Public Storage could
subscribe to up to (euro)7.5 million ($11.0 million) 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.
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. Our joint venture partners currently contest
whether we have the right to purchase their interests under this procedure.
On January 17, 2007, we filed an arbitration action related to our
intention to terminate the joint venture early. See Note 16 for further
discussion of the arbitration proceedings.
European Investors
------------------
In the second quarter of 2007, one of our European subsidiaries
sold limited liability partner interests ("LLP Interests") it held in
Shurgard Self-Storage SCA ("Shurgard Europe"), also an indirect subsidiary
of Public Storage, to various officers of the Company, other than our chief
executive officer. The aggregate proceeds of the sale were $4,909,000. The
sale price for the LLP Interests was the net asset value per LLP Interest
using, among other items, information provided by an independent third
party appraisal firm of the net asset value of Shurgard Europe as of March
31, 2007. The Company has a right, but not the obligation to repurchase the
LLP Interests upon (1) upon a purchaser's termination of employment or (2)
for any reason, on or after May 14, 2008. The repurchase price is set at
the lesser of (1) the then net asset value per share or (2) the original
purchase price with a 10% compounded annual return. In connection with the
sale of these LLP Interests, we recorded a gain of $1,193,000 during 2007,
representing the excess of the sales proceeds over the book value of the
LLP Interests sold. The gain is reflected in gain on disposition of real
estate investments on our accompanying consolidated statements of income.
The investment of these various officers is included in minority interest -
other partnership interests on our accompanying consolidated balance sheet
at December 31, 2007 and their pro rata share of the earnings of Shurgard
Europe are reflected in minority interest in income - other partnership
interests on our accompanying consolidated statements of income for the
year ended December 31, 2007.
F-27
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
Convertible Partnership Units
-----------------------------
At December 31, 2007 and, 2006, one of the Consolidated Entities
had approximately 231,978 convertible partnership units ("Convertible
Units") outstanding representing a limited partnership interest in the
entity. The Convertible Units are convertible on a one-for-one basis
(subject to certain limitations) into common shares 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.
Other Consolidated Partnerships
-------------------------------
At December 31, 2007 and 2006, the other consolidated partnerships
reflect common equity interests that we do not own in 33 entities
(generally partnerships) that own in aggregate 177 self-storage facilities.
The related partnership agreements 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.
In May 2007 we discontinued consolidating certain of these
partnerships due to our losing effective control of them. As a result,
minority interest in income with respect to these partnerships ceased
effective May 2007, and $682,000 in minority interest was eliminated.
In connection with the Shurgard Merger we obtained partial equity
interests in certain joint ventures. Following the Shurgard Merger, in 2006
we acquired the minority interests in certain of these 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).
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 $532 million at December 31, 2007 and 2006.
F-28
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
11. Shareholders' Equity
--------------------
Cumulative Preferred Shares
---------------------------
At December 31, 2007 and 2006, we had the following series of
Cumulative Preferred Shares of beneficial interest outstanding:
At December 31, 2007 At December 31, 2006
Earliest ---------------------------- -----------------------------
Redemption Dividend Shares Carrying Shares Carrying
Series Date Rate Outstanding Amount Outstanding Amount
------------------ -------------- ------------ -------------- ------------- -------------- ------------
(Dollar amounts in thousands)
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 4,200 105,000
Series I 5/3/11 7.250% 20,700 517,500 20,700 517,500
Series K 8/8/11 7.250% 18,400 460,000 18,400 460,000
Series L 10/20/11 6.750% 9,200 230,000 9,200 230,000
Series M 1/9/12 6.625% 20,000 500,000 - -
Series N 7/2/12 7.000% 6,900 172,500 - -
-------------- ------------- -------------- ------------
Total Cumulative Preferred Shares 1,739,500 $ 3,527,500 1,712,600 $ 2,855,000
============== ============= ============== ============
The holders of our Cumulative Preferred Shares have general
preference rights with respect to liquidation and quarterly distributions.
Holders of the preferred shares, 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 shares (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 until events of default have been cured. At
December 31, 2007, there were no dividends in arrears and the Debt Ratio
was 8.4%.
Upon issuance of our Cumulative Preferred Shares of beneficial
interest, we classify the liquidation value as preferred equity on our
consolidated balance sheet with any issuance costs recorded as a reduction
to paid-in capital. Upon redemption, we apply EITF Topic D-42, allocating
income to the preferred shareholders equal to the original issuance costs.
On January 9, 2007, we issued 20,000 depositary shares, with each
depositary share representing 1/1,000 of a share of our 6.625% Cumulative
Preferred Shares, Series M. The offering resulted in $500,000,000 of gross
proceeds.
On July 2, 2007, we issued 6,900 depositary shares each
representing 1/1,000 of our 7.000% Cumulative Preferred Shares, Series N,
for gross proceeds of approximately $172,500,000.
During 2006, we issued four series of Cumulative Preferred Shares:
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 -
F-29
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
issued October 20, 2006, 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 2006, we redeemed our Series R and Series S Cumulative
Preferred Shares at par value plus accrued dividends. In December 2006, we
called for redemption our Series T and Series U Cumulative Preferred
Shares, at par. The aggregated redemption value of $302,150,000 of these
two series was classified as a liability at December 31, 2006 and repaid in
the year ended December 31, 2007. 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 redemption value of $172,500,000 of this series was
classified as a liability at December 31, 2005 and repaid in the year ended
December 31, 2006.
EQUITY SHARES
The Company is authorized to issue 100,000,000 Equity Shares of
beneficial interest. The Articles of Amendment and Restatement of
Declaration of Trust provide that the Equity Shares may be issued from time
to time in one or more series and give our Board broad authority to fix the
dividend and distribution rights, conversion and voting rights, redemption
provisions and liquidation rights of each series of Equity Shares.
EQUITY SHARES, SERIES A
At December 31, 2007 and 2006, we had 8,744,193 depositary shares
outstanding, each representing 1/1,000 of an Equity Share, Series A
("Equity Shares A"). The Equity Shares A rank on parity with our common
shares and junior to the Cumulative Preferred Shares with respect to
general preference rights and have 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 our common
shares or (ii) $2.45 per annum. We have no obligation to pay distributions
on the depositary shares 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 representing the
Equity Shares A 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 of the depositary shares will be convertible at the option of the
shareholder into .956 common shares. The depositary shares are otherwise
not convertible into common shares. Holders of depositary shares vote as a
single class with holders of our common shares on shareholder matters, but
the depositary shares have the equivalent of one-tenth of a vote per
depositary share.
EQUITY SHARES, SERIES AAA
In November 1999, we sold $100,000,000 (4,289,544 shares) of
Equity Shares, Series AAA ("Equity Shares AAA") to the Consolidated
Development Joint Venture. On November 17, 2005, upon the acquisition of
Mr. Hughes' interest in PSAC, we owned 100% of the partnership interest in
the Consolidated Development Joint Venture. For all periods presented, the
Equity Shares, Series AAA and related dividends are eliminated in
consolidation.
COMMON SHARES
Common Shares
-------------
During 2007, 2006 and 2005, activity with respect to our common
shares was as follows:
F-30
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
2007 2006 2005
------------------------ --------------------------- -------------------------
Shares Amount Shares Amount Shares Amount
---------- ----------- ------------- ------------ ----------- ------------
(Dollar amounts in thousands)
Employee stock-based
compensation (Note 14)....... 278,008 $ 8,457 2,135,761 $ 85,369 282,998 $ 7,511
Merger with Shurgard:
Issuance of common shares
(Note 3)................... - - 38,913,187 3,116,850 - -
Conversion of stock options.. - - - 69,296 - -
Conversion of partnership units.. - - 5,956 155 - -
Shares received as a distribution
from unconsolidated entities. - - - - (635,885) (14,520)
Repurchases of common shares..... - - - - (84,000) (4,990)
---------- ----------- ------------- ------------ ----------- ------------
278,008 $ 8,457 41,054,904 $3,271,670 (436,887) $ (11,999)
========== =========== ============= ============ =========== ============
During 2005, we received a distribution of 503,110 shares, and one
of the Consolidated Entities received 132,775 shares, of our common shares
previously held by the Unconsolidated Entities. The 503,110 shares that we
received were retired.
Our Board of Trustees has authorized the repurchase from time to
time of up to 25,000,000 of our common shares on the open market or in
privately negotiated transactions. Through December 31, 2007, we have
repurchased a total of 22,201,720 of our Common Shares pursuant to this
authorization.
At December 31, 2007 and 2006, we had 2,298,242 and 2,219,404 of
common shares reserved in connection with our share-based incentive plans,
respectively, (see Note 13) and 231,978 shares reserved for the conversion
of Convertible Partnership Units, respectively.
At December 31, 2007 and 2006, certain entities we consolidate
owned 1,146,207 common shares. These shares continue to be legally issued
and outstanding. 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.
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, 2007,
distributions for the common shares, Equity Shares, Series A, and all the
various series of preferred shares were classified as follows:
2007 (unaudited)
-------------------------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
--------------- --------------- ------------- ---------------
Ordinary Income 99.88% 98.83% 100.00% 97.33%
Long-Term Capital Gain 0.12% 1.17% 0.00% 2.671%
--------------- --------------- ------------- ---------------
Total 100.00% 100.00% 100.00% 100.00%
=============== =============== ============= ===============
F-31
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
A percentage of the ordinary income is "qualified dividend income"
for each quarter of 2007 as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
Qualified dividend....... 0.0000% 0.0000% 0.0000% 3.9242%
=========== =========== =========== ===========
The following table summarizes dividends declared and paid for the
years ended December 31, 2007, 2006 and 2005:
2007 2006 2005
---------------------- ------------------------- -----------------------
Per share Total Per share Total Per share Total
---------- ----------- ----------- ----------- ----------- ----------
(Amounts in thousands, except per share data)
Preferred Shares
Series E - - - - $0.208 457
Series F - - - - $0.819 1,884
Series Q - - $0.108 742 $2.150 14,835
Series R - - $1.483 30,255 $2.000 40,800
Series S - - $1.641 9,437 $1.969 11,320
Series T $0.090 548 $1.906 11,601 $1.906 11,601
Series U $0.259 1,557 $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 $1.713 2,740
Series Z $1.563 7,031 $1.563 7,031 $1.563 7,031
Series A $1.531 7,044 $1.531 7,044 $1.531 7,044
Series B $1.781 7,748 $1.781 7,748 $1.781 7,748
Series C $1.650 7,590 $1.650 7,590 $1.650 7,590
Series D $1.545 8,344 $1.545 8,344 $1.292 6,976
Series E $1.688 9,536 $1.688 9,536 $1.144 6,463
Series F $1.613 16,124 $1.613 16,124 $0.543 5,430
Series G $1.750 7,000 $1.750 7,000 $0.093 370
Series H $1.738 7,298 $1.654 6,945 - -
Series I $1.813 37,519 $1.203 24,908 - -
Series K $1.813 33,350 $0.725 13,340 - -
Series L $1.688 15,526 $0.338 3,105 - -
Series M $1.624 32,481 - - - -
Series N $0.874 6,031 - - - -
---------- --------- ----------
236,757 214,218 173,017
Common Shares
Common $2.000 340,002 $2.000 298,219 $1.900 244,200
Equity Shares, Series A $2.450 21,424 $2.450 21,424 $2.450 21,443
---------- --------- ----------
Total dividends $598,183 $533,861 $438,660
========== ========= ==========
F-32
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
12. Related Party Transactions
--------------------------
Relationships and transactions with the Hughes Family
-----------------------------------------------------
Mr. Hughes, the Company's Chairman of the Board of Trustees and
his family (collectively the "Hughes Family") have ownership interests in,
and operate approximately 48 self-storage facilities in Canada under the
name "Public Storage" ("PS Canada") pursuant to a royalty-free 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 shares outstanding at December 31, 2007. We
have a right of first refusal to acquire the stock or assets of the
corporation that manages the 48 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.
Through consolidated entities, we continue to reinsure risks
relating to loss of goods stored by tenants in the self-storage facilities
in Canada. During the years ended December 31, 2007, 2006 and 2005,
respectively, we received $906,000, $989,000 and $1,052,000, 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.
The Company and Mr. Hughes are co-general partners in certain
consolidated entities and affiliated entities of the Company that are not
consolidated, and the Hughes Family owns 47.9% of the voting stock of a
private REIT that owns limited partnership interests in five affiliated
partnerships, in which the Company holds 46% of the voting and 100% of the
nonvoting stock of the entity and substantially all the economic interest.
The Hughes Family also owns limited partnership interests in certain of
these partnerships and holds securities in PSB. The Company and the Hughes
Family receive distributions from these entities in accordance with the
terms of the partnership agreements or other organizational documents.
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 trustee 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 $74,000, $68,000 and $45,000 for the years ended
December 31, 2007, 2006 and 2005, 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 $724,000, $625,000 and $579,000 for the years
ended December 31, 2007, 2006 and 2005, respectively, in management fees
with respect to PSB's property management services. At December 31, 2007,
included in other liabilities are normal recurring amounts owed to PSB of
$717,000 ($871,000 at December 31, 2006), for unpaid management fees and
certain other operating expenses related to the managed facilities which
are initially paid by PSB on our behalf and then reimbursed by us.
During 2007, PSB acquired certain commercial facilities that
include self-storage space. We are managing this self-storage space for PSB
for a management fee equal to 6% of revenues generated by the self-storage
space. We recorded management fees with respect to these facilities
amounting to $47,000 for the year ended December 31, 2007 (none in 2006 and
2005).
F-33
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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 $304,000, $320,000
and $340,000 for the years ended December 31, 2007, 2006 and 2005,
respectively.
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 $2.5 million, $2.3 million and
$4.1 million for the years ended December 31, 2007, 2006 and 2005,
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.
On May 14, 2007, one of our European subsidiaries sold limited
liability partner interests ("LLP Interests") it held in Shurgard Europe,
also an indirect subsidiary of Public Storage, to various officers of the
Company, other than our chief executive officer. The aggregate proceeds of
the sale were $4,909,000. The sale price for the LLP Interests was the net
asset value per LLP Interest using, among other items, information provided
by an independent third party appraisal firm of the net asset value of
Shurgard Europe as of March 31, 2007. The Company has a right, but not the
obligation to repurchase the LLP Interests (1) upon a purchaser's
termination of employment or (2) for any reason, on or after May 14, 2008.
The repurchase price is set at the lesser of (1) the then net asset value
per share or (2) the original purchase price with a 10% compounded annual
return. In connection with the sale of these LLP Interests, we recorded a
gain of $1,193,000 during 2007, representing the excess of the sales
proceeds over the book value of the LLP Interests sold. The gain is
reflected in gain on disposition of real estate investments on our
accompanying consolidated statements of income. The investment of these
various officers is included in minority interest - other partnership
interests on our accompanying consolidated balance sheet at December 31,
2007 and their pro rata share of the earnings of Shurgard Europe are
reflected in minority interest in income - other partnership interests on
our accompanying consolidated statements of income for the year ended
December 31, 2007.
13. Share-Based Compensation
------------------------
Stock Options
-------------
We have various stock option plans (collectively referred to as
the "PS Plans"). Under the PS Plans, the Company has granted non-qualified
options to certain trustees, officers and key employees to purchase the
Company's common shares at a price equal to the fair market value of the
common shares at the date of grant. Generally, options under the PS 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 between eight years and ten years after
the date they became exercisable. The PS Plans also provide for the grant
of restricted shares (see below) to officers, key employees and service
providers on terms determined by an authorized committee of our Board.
We recognize compensation expense for share-based awards based
upon their fair value on the date of grant amortized over the applicable
F-34
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
vesting period (the "Fair Value Method"), less an allowance for estimated
future forfeited awards.
Information with respect to stock options during 2007, 2006 and
2005 is as follows:
2007 2006 2005
--------------------------- ------------------------- -------------------------
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 1,602,934 $52.08 1,423,146 $41.46 1,441,901 $35.07
Granted (a) 323,333 91.64 2,208,328 49.67 288,000 62.56
Exercised (b) (200,793) 40.58 (2,026,540) 41.99 (249,520) 30.10
Cancelled (36,000) 53.67 (2,000) 52.98 (57,235) 36.84
------------ ---------- ----------- ----------- ----------- -----------
Options outstanding December 31 (c) (d) 1,689,474 $60.72 1,602,934 $52.08 1,423,146 $41.46
============ ========== =========== =========== ============ ===========
Price range of options outstanding at
December 31: (d) $22.94 to $97.47 $22.94 to $96.61 $18.00 to $69.87
Options exercisable at December 31 (e): 911,709 $45.60 856,993 $38.96 780,350 $31.38
============ ========== =========== =========== ============ ===========
(a) On August 22, 2006, in connection with the Shurgard Merger, we converted
each outstanding Shurgard stock option into 0.82 options exercisable for
the Company's common shares. 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
$11,326,000, $10,791,000, and $7,508,000 for the years ended December 31,
2007, 2006, and 2005, respectively.
(c) The options outstanding at December 31, 2007, have remaining average
contractual lives of 6.9 years, and an aggregate intrinsic value, based
upon the December 31, 2007 closing price of our common shares, of
approximately $31,259,000.
(d) Approximately 201,585, 263,205 and 372,570 options have exercise prices
less than $30 at December 31, 2007, 2006, and 2005, respectively.
Approximately 1,166,500, 894,000 and 624,000 options have exercise prices
greater than $45 at December 31, 2007, 2006 and 2005, respectively.
(e) The aggregate intrinsic value of exercisable options at December 31, 2007,
based upon the closing price of our common shares at December 31, 2007,
amounted to approximately $26,385,000. Options exercisable at December 31,
2007 have a weighted average remaining contractual life of approximately
5.6 years.
We recognize compensation expense for share-based awards based
upon their fair value on the date of grant amortized over the applicable
service period (the "Fair Value Method"), less an allowance for estimated
future forfeited awards. 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 recorded stock option expense of $1,347,000,
$1,173,000, and $1,010,000, respectively, in 2007, 2006, and 2005.
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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: 2007 2006 2005
------------- ------------ -------------
(Dollar amounts in thousands, except per-share
amounts)
Average estimated value per option granted, utilizing the
Black-Scholes method.............................................. $9.46 $9.72 $6.77
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% 4.6% 4.0%
Expected volatility (b)....................................... 0.228 0.227 0.234
Expected dividend yield....................................... 7.0% 7.0% 7.0%
(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, 2007, the total compensation cost related to non-vested
stock option awards amounts to approximately $4,575,000, which will be
recognized over the remaining vesting period.
RESTRICTED SHARE UNITS
Outstanding restricted share 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 share 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 share units in exchange for the
units.
The total value of each restricted share unit grant, based upon
the market price of our common shares at the date of grant, is amortized
over the service 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.
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
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 ended December
31, 2006.
Outstanding restricted share 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. For purposes of the
disclosures that follow, "fair value" on any particular date reflects the
closing market price of our common shares on that date.
During the year ended December 31, 2007, 187,925 restricted share
units were granted with an aggregate fair value on the date of grant of
approximately $18,860,000, 82,943 restricted share units were forfeited
(aggregate grant-date fair value of $6,831,000), and 112,684 restricted
share units vested (aggregate grant-date fair value of $6,871,000) with an
F-36
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
aggregate fair value on the date of vesting of $10,192,000. This vesting
resulted in the issuance of 77,215 common shares. In addition, cash
compensation was paid to employees in lieu of 35,469 common shares based
upon the market value of the shares at the date of vesting, and used to
settle the employees' tax liability generated by the vesting.
During the year ended December 31, 2006, 419,170 restricted share
units were granted with an aggregate fair value on the date of grant of
approximately $33,861,000, 31,370 restricted share units were forfeited
(aggregate grant-date fair value of $1,924,000), and 71,160 restricted
share 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 common shares. In addition, cash
compensation was paid to employees in lieu of 24,001 common shares 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 share
units were granted with an aggregate fair value on the date of grant of
approximately $9,633,000, 74,200 restricted share units were forfeited
(aggregate grant-date fair value of $3,388,000), and 47,760 restricted
share 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 common shares. In addition, cash
compensation was paid to employees in lieu of 14,282 common shares 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.
At December 31, 2007, approximately 608,768 restricted share units
were outstanding (616,470 and 299,830 at December 31, 2006 and 2005,
respectively) with an aggregate fair value at December 31, 2007, based upon
the closing price of our common shares, of approximately $44,690,000. The
aggregate grant-date fair value of the 608,768 restricted share units
outstanding at December 31, 2007 was approximately $48,578,000 ($43,421,000
for the 616,470 restricted share units at December 31, 2006), which will be
recognized over the remaining vesting period of approximately four years. A
total of $7,164,000, $5,136,000, and $3,748,000 in restricted share expense
was recorded for the years ended December 31, 2007, 2006 and 2005,
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.
14. Segment Information
-------------------
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 with respect to
our domestic operations (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, (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 the Unconsolidated Entities.
F-37
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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. The operations of our European segment are
included in our financial statements effective August 23, 2006 when we
completed the Shurgard Merger. 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 paid to outside parties and
general and administrative expense. Assets of our European operations at
December 31, 2007, include real estate with a book value of approximately
$1.6 billion ($1.4 billion at December 31, 2006), intangibles with a book
value of approximately $87 million ($167 million at December 31, 2006), and
other assets with a book value of approximately $60 million ($65 million at
December 31, 2006). At December 31, 2007, liabilities of our European
operations include; intercompany payables of $556 million ($521 million at
December 31, 2006), debt of $384 million ($724 million at December 31,
2006) and accrued and other liabilities of $101 million ($108 million at
December 31, 2006). At December 31, 2006, assets of our European operations
included approximately $480 million in cash (of which approximately $429
million was utilized on January 2, 2007 to prepay the (euro)325M
collateralized notes).
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):
F-38
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
For the year ended December 31, 2007
Domestic Other Items Not
Domestic European Ancillary Allocated to Total
Self-Storage Operations Operations Segments Consolidated
-------------- ------------- ------------ --------------- --------------
(Amounts in thousands)
Revenues:
Self-storage rental income.................... $ 1,468,175 $ 194,279 $ - $ - $ 1,662,454
Ancillary operating revenue................... - 17,568 124,932 - 142,500
Interest and other income..................... - - - 11,417 11,417
-------------- ------------- ------------ --------------- --------------
1,468,175 211,847 124,932 11,417 1,816,371
-------------- ------------- ------------ --------------- --------------
Expenses:
Cost of operations (excluding depreciation and
amortization below):
Self-storage facilities.................... 487,982 92,245 - - 580,227
Ancillary operations....................... - 5,196 74,442 - 79,638
Depreciation and amortization.................. 488,180 130,924 3,306 - 622,410
General and administrative..................... - 20,321 - 39,428 59,749
Interest expense............................... - 22,108 - 41,563 63,671
-------------- ------------- ------------ --------------- --------------
976,162 270,794 77,748 80,991 1,405,695
-------------- ------------- ------------ --------------- --------------
Income (loss) from continuing operations before
equity in earnings of real estate entities,
casualty gain, gain on disposition of real estate
investments, foreign currency exchange gain,
income from derivatives and minority
interest in income............................ 492,013 (58,947) 47,184 (69,574) 410,676
Equity in earnings of real estate entities....... 2,236 - 10,502 - 12,738
Casualty gain.................................... 2,665 - - - 2,665
Gain on disposition of real estate investments... - - - 2,547 2,547
Foreign currency exchange gain................... - 57,593 - - 57,593
Income from derivatives, net..................... - 851 - - 851
Minority interest in (income) loss............... (17,320) 9,389 - (21,612) (29,543)
-------------- ------------- ------------ --------------- --------------
Income (loss) from continuing operations......... 479,594 8,886 57,686 (88,639) 457,527
Discontinued operations.......................... - (965) - 973 8
-------------- ------------- ------------ --------------- --------------
Net income (loss)................................ $ 479,594 $ 7,921 $ 57,686 $ (87,666) $ 457,535
============== ============= ============ =============== ==============
F-39
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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 $ 59,463 $ - $ - $ 1,239,697
Ancillary operating revenue................... - 5,121 104,394 - 109,515
Interest and other income..................... - - - 31,799 31,799
--------------- ------------- ------------- ---------------- --------------
1,180,234 64,584 104,394 31,799 1,381,011
--------------- ------------- ------------- ---------------- --------------
Expenses:
Cost of operations (excluding depreciation and
amortization below):
Self-storage facilities.................... 398,760 30,150 - - 428,910
Ancillary operations....................... - 2,210 67,318 - 69,528
Depreciation and amortization.................. 374,842 59,524 3,202 - 437,568
General and administrative..................... - 10,245 - 74,416 84,661
Interest expense............................... - 13,109 - 19,953 33,062
--------------- ------------- ------------- ---------------- --------------
773,602 115,238 70,520 94,369 1,053,729
--------------- ------------- ------------- ---------------- --------------
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............................ 406,632 (50,654) 33,874 (62,570) 327,282
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......... 392,304 (42,761) 43,638 (79,448) 313,733
Cumulative effect of a change in accounting
principle..................................... - - - 578 578
Discontinued operations.......................... - (313) - 28 (285)
--------------- ------------- ------------- ---------------- --------------
Net income (loss)................................ $ 392,304 $ (43,074) $ 43,638 $ (78,842) $ 314,026
=============== ============= ============= ================ ==============
F-40
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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................... - - 92,021 - 92,021
Interest and other income..................... - - - 16,447 16,447
--------------- ------------- ------------- ---------------- --------------
951,370 - 92,021 16,447 1,059,838
--------------- ------------- ------------- ---------------- --------------
Expenses:
Cost of operations (excluding depreciation and
amortization below):
Self-storage facilities.................... 320,589 - - - 320,589
Ancillary operations....................... - - 57,669 - 57,669
Depreciation and amortization.................. 191,102 - 5,051 - 196,153
General and administrative..................... - - - 21,115 21,115
Interest expense............................... - - - 8,216 8,216
--------------- ------------- ------------- ---------------- --------------
511,691 - 62,720 29,331 603,742
--------------- ------------- ------------- ---------------- --------------
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 - 29,301 (12,884) 456,096
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 - 48,058 (28,723) 449,510
Discontinued operations.......................... - - - 6,883 6,883
--------------- ------------- ------------- ---------------- --------------
Net income (loss)................................ $ 430,175 $ - $ 48,058 $ (21,840) $ 456,393
=============== ============= ============= ================ ==============
F-41
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
15. Recent Accounting Pronouncements and Guidance
---------------------------------------------
The Fair Value Option for Financial Assets and Financial Liabilities
--------------------------------------------------------------------
In February 2007, the Financial Accounting Standards Board (the
"FASB") issued SFAS No. 159, "The Fair Value Option for Financial Assets
and Financial Liabilities, including an amendment of FASB Statement No.
115" ("SFAS No. 159"). SFAS No. 159 provides companies with an option to
report selected financial assets and liabilities at fair value. The
standard establishes presentation and disclosure requirements designed to
facilitate comparisons between companies that choose different measurement
attributes for similar types of assets and liabilities. SFAS No. 159 is
effective as of the beginning of an entity's first fiscal year beginning
after November 15, 2007. We do not expect the adoption of SFAS No. 159 to
have a material impact on our financial condition or results of operations.
Accounting for Uncertainty in Income Taxes
------------------------------------------
In July 2006, 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 was 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. We adopted the provisions of FIN 48 as of January 1,
2007. The adoption of FIN 48 had no material impact on our financial
position, operating results or cash flows. See Note 17 for further
discussion of our adoption of FIN 48.
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 adoption of SFAS No. 157 to
have a material impact on our financial condition or results of operations.
16. 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
F-42
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
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. On November 26, 2007, the Court
entered an order dismissing the matter in its entirety without any
liability to the Company.
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, whose liability Public Storage assumed
following the merger of Public Storage and Shurgard on August 22, 2006. In
June 2007, the Court certified a class of all Shurgard renters who rented a
storage unit at a Shurgard facility in California that was smaller than
represented. On November 26, 2007, the Court entered an order dismissing
the matter in its entirety without any liability to the Company.
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
our Board 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).
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. Subsequently, the Company filed
a motion for summary judgment seeking to dismiss the matter in its
entirety. On June 22, 2007, the Court granted the Company's summary
judgment motion as to the causes of action relating to the subclasses
certified and dismissed those claims. The only surviving claims are those
relating to the named plaintiff only. The plaintiff has filed an appeal to
the Court's June 22, 2007 summary judgment ruling. An appeal to the Court's
June 22, 2007 order granting the Company's summary judgment motion is
currently pending.
F-43
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
Simas v. Public Storage, Inc. (filed January 2006) (Superior Court
------------------------------------------------------------------
of California - Orange County)
------------------------------
The plaintiff brought this action against the Company on behalf of
a purported class who bought insurance coverage at the 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, the 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. A subsequent demurrer was filed and sustained
without leave to amend. The case was therefore dismissed. The plaintiff has
appealed the trial court's ruling and this appeal is currently pending.
European Joint Venture Arbitration Proceeding
---------------------------------------------
The Company holds indirectly a 20% interest in each of two joint
ventures in Europe, First Shurgard and Second Shurgard that collectively
own 70 self-storage properties in Europe. On August 24, 2006, the Company,
through its affiliate, Shurgard Europe, served an exit notice on the
European joint venture partners informing them of its intention to purchase
their interests in First Shurgard and Second Shurgard pursuant to an early
exit procedure that the Company believes is provided for in the respective
joint venture agreements. The exit notice offered to pay the joint venture
partners an amount for their interests in accordance with the provisions of
the joint venture agreements. The joint ventures partners have contested
both the valuation of their interests and whether the Company has the right
to purchase its interests under this early exit procedure. Accordingly, it
is uncertain as to whether the Company will acquire such interests pursuant
to the early exit notice served. On January 17, 2007, Shurgard Europe filed
an arbitration request with the International Chamber of Commerce to compel
arbitration of the matter. The arbitration proceedings are currently
scheduled to begin on June 30, 2008.
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
estimated maximum annual exposure for losses that are below the deductibles
set forth in the third-party insurance contracts, assuming multiple
significant events occur, is approximately $37 million. In addition, if
losses exhaust the third-party insurers' limit of coverage of $75 million
for property coverage including earthquake coverage ((euro)25 million for
Europe) 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, 2007, we had approximately 490,000 reinsured policies outstanding
representing aggregate coverage of approximately $1.2 billion. Our exposure
to tenant insurance losses are minimal with respect to our European
operations due to third-party insurance coverage.
F-44
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
Development and Acquisition of Real Estate Facilities
-----------------------------------------------------
We currently have 43 projects in our development pipeline,
consisting of newly developed self-storage facilities, expansions and
enhancements to existing self-storage facilities. The total estimated cost
of these facilities is approximately $273 million of which $60,324,000 has
been spent at December 31, 2007. These projects are subject to
contingencies. We expect to incur these expenditures over the next 12 - 24
months. As of February 27, 2008, we are under contract to purchase two
self-storage facilities in California (total approximate net rental square
feet of 248,000) at an aggregate cost of $31,025,000, which includes
approximately $9,900,000 of assumed debt. We anticipate that these
acquisitions will be funded entirely by us. These contracts are subject to
significant contingencies, and there is no assurance that these facilities
will be acquired.
Operating Lease Obligations
We lease trucks, land, equipment and office space. At December 31,
2007, the future minimum rental payments required under our operating
leases for the years ending December 31, principally representing amounts
payable under land leases for our European subsidiaries, are as follows
(amounts in thousands):
2008...................................... $ 20,394
2009...................................... 16,197
2010...................................... 12,053
2011...................................... 10,658
2012...................................... 10,202
Thereafter................................ 195,371
-----------
$ 264,875
===========
We lease trucks, land, equipment and office space under various
operating leases. 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 $14.7 million,
$9.8 million, and $6.3 million for the years ended December 31, 2007,
respectively. Certain of our land leases include escalation clauses, and we
recognize related lease expenses on a straight-line basis.
17. 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, we do not incur
federal or significant state tax on that portion of our REIT taxable income
which is distributed to our shareholders, provided that we meet certain
tests. We believe that the Company has met these REIT requirements during
2007.
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. We are
subject to the income tax provisions of the various European countries in
which we have rental real estate operations.
As of August 23, 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-45
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
The provision for income tax, including Federal, State, and
Foreign taxes, totaled $8,598,000, $5,100,000 and $200,000 for 2007, 2006
and 2005, respectively. These amounts are included in General and
Administrative Expense as well as Cost of Operations - Ancillary
Operations.
We adopted the provisions of Financial Accounting Standards Board
("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes
- an interpretation of FASB Statement No. 109" ("FIN 48"), on January 1,
2007. FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statement in accordance with FASB
Statement 109, "Accounting for Income Taxes", and prescribes a recognition
threshold and measurement process for financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax
return. FIN 48 also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosures and
transition.
Based on our evaluation, we have concluded that there are no
significant uncertain tax positions requiring recognition in our financial
statements. Our evaluation was performed for the tax years ended December
31, 2004, 2005, 2006 and 2007, the tax years which remain subject to
examination by major tax jurisdictions as of December 31, 2007.
We may from time to time be assessed interest or penalties by
certain tax jurisdictions, although any such assessments have historically
been minimal and immaterial to our financial results. In the event we have
received an assessment for interest and/or penalties, it has been
classified in the financial statements as general and administrative
expense.
At December 31, 2007, the Company had net operating loss
carryforwards of $516.9 million related to U.S. federal, state and foreign
jurisdictions ($20.4 million of U.S. federal, $35 million of state and
$461.5 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 2008. As
of December 31, 2007 and 2006, we provided a full valuation allowance
against any net deferred tax asset arising in the various country filing
groups from net operating losses, because sufficient uncertainty exists at
this time regarding the future realization of these tax benefits within
individual tax jurisdictions. The utilization of the net operating losses
acquired in the Shurgard Merger will not result in a reduction of our
future tax expense.
18. Supplementary Quarterly Financial Data (unaudited)
--------------------------------------------------
Three Months Ended
---------------------------------------------------------------
March 31, June 30, September 30, December 31,
2007 (b) 2007 (b) 2007 (b) 2007
------------- ------------- -------------- --------------
(Amounts in thousands, except per share data)
Revenues (a)..................... $ 434,181 $ 448,901 $ 468,871 $ 464,418
============= ============= ============== ==============
Cost of operations (excluding
depreciation expense) (a)........ $ 168,754 $ 170,235 $ 166,043 $ 154,833
============= ============= ============== ==============
Depreciation expense............. $ 170,790 $ 162,439 $ 144,105 $ 145,076
============= ============= ============== ==============
Income from continuing operations $ 66,450 $ 82,875 $ 157,763 $ 150,439
============= ============= ============== ==============
Net income....................... $ 65,391 $ 82,177 $ 156,406 $ 153,561
============= ============= ============== ==============
Per Common Share (Note 2):
Net income - Basic........... $ 0.01 $ 0.12 $ 0.54 $ 0.52
============= ============= ============== ==============
Net income - Diluted......... $ 0.01 $ 0.11 $ 0.53 $ 0.52
============= ============= ============== ==============
F-46
PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
Three Months Ended
---------------------------------------------------------------
March 31, June 30, September 30, December 31,
2006 2006 2006 2006
------------- ------------- -------------- --------------
(Amounts in thousands, except per share data)
Revenues (a)..................... $ 278,448 $ 297,787 $ 371,188 $ 433,588
============= ============= ============== ==============
Cost of operations (excluding
depreciation expense) (a)........ $ 102,783 $ 106,112 $ 127,581 $ 161,962
============= ============= ============== ==============
Depreciation expense............. $ 50,006 $ 48,544 $ 113,442 $ 225,576
============= ============= ============== ==============
Income (loss) from continuing
operations....................... $ 113,630 $ 129,146 $ 79,244 $ (8,287)
============= ============= ============== ==============
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)
============= ============= ============== ==============
(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." Revenues and cost of operations
also differ due to the impact of discontinued operations accounting as
described in Note 2.
(b) Depreciation expense, income from continuing operations, net income and net
income per common share differs from the amounts previously presented in
our respective financial statements for the quarters ended March 31, 2007,
June 30, 2007 and September 30, 2007. We recorded a reduction in
depreciation expense totaling $14,326,000 in our books and records in the
quarter ended December 31, 2007. Of this adjustment, $5,613,000, $5,073,000
and $3,640,000 was for each of the three month periods ended March 31,
2007, June 30, 2007 and September 30, 2007 and is reflected in the
respective quarterly amounts.
19. Subsequent Events
-----------------
In January 2008, we announced that we reached an agreement in
principle for a prospective investor to acquire a 51% ownership interest in
Shurgard Europe in a private transaction at a price generally consistent
with the previously disclosed proceeds we expected to receive for our
equity interest in last year's terminated European share offering. No
binding agreement has been signed with the prospective investor and there
is no assurance that a binding agreement will be signed or that a
transaction will be completed. We estimate the completion of the
transaction at the end of the first quarter of 2008 assuming a binding
agreement is signed and the conditions related to the transaction are
satisfied.
Approximately $189.1 million in debt owed by First Shurgard was
originally scheduled to mature in May 2008. However, in February 2008,
under the terms of the related credit agreement we have requested a
one-year extension of the loan until May 2009. Assuming we have met our
loan covenants, which we believe we have met, the lender is required to
grant our request. Notwithstanding our expectation of receiving the
requested one-year extension, if the extension is not granted, we and our
joint venture partner are required to contribute our pro-rata share of
funds necessary to repay the debt. We believe that our joint venture
partner has the intention and ability to contribute their potential 80%
share towards repayment of this debt if it is necessary.
From January 1, 2008 through February 28, 2008, we repurchased a
total of 1,520,196 of our common shares for an aggregate of approximately
$111.9 million.
F-47
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
Self-storage Facilities - United States
1/1/81 Newport News / Jefferson Avenue - 108 1,071 695 -
1/1/81 Virginia Beach / Diamond Springs - 186 1,094 835 -
8/1/81 San Jose / Snell - 312 1,815 427 -
10/1/81 Tampa / Lazy Lane - 282 1,899 752 -
6/1/82 San Jose / Tully - 645 1,579 10,903 -
6/1/82 San Carlos / Storage - 780 1,387 651 -
6/1/82 Mountain View - 1,180 1,182 2,382 -
6/1/82 Cupertino / Storage - 572 1,270 543 -
10/1/82 Sorrento Valley - 1,002 1,343 (784) -
10/1/82 Northwood - 1,034 1,522 585 -
12/1/82 Port/Halsey - 357 1,150 (396) 326
12/1/82 Sacto/Folsom - 396 329 722 323
1/1/83 Platte - 409 953 517 428
1/1/83 Semoran - 442 1,882 8,249 720
1/1/83 Raleigh/Yonkers - 203 914 640 425
3/1/83 Blackwood - 213 1,559 403 595
4/1/83 Vailsgate - 103 990 889 505
5/1/83 Delta Drive - 67 481 357 241
6/1/83 Ventura - 658 1,734 357 583
9/1/83 Southington - 124 1,233 293 546
9/1/83 Southhampton - 331 1,738 747 806
9/1/83 Webster/Keystone - 449 1,688 766 813
9/1/83 Dover - 107 1,462 715 627
9/1/83 Newcastle - 227 2,163 560 817
9/1/83 Newark - 208 2,031 445 746
9/1/83 Langhorne - 263 3,549 631 1,445
9/1/83 Hobart - 215 1,491 803 838
9/1/83 Ft. Wayne/W. Coliseum - 160 1,395 545 535
9/1/83 Ft. Wayne/Bluffton - 88 675 328 285
10/1/83 Orlando J. Y. Parkway - 383 1,512 474 622
11/1/83 Aurora - 505 758 536 341
11/1/83 Campbell - 1,379 1,849 (344) 474
11/1/83 Col Springs/Ed - 471 1,640 227 554
11/1/83 Col Springs/Mv - 320 1,036 427 441
11/1/83 Thorton - 418 1,400 267 536
11/1/83 Oklahoma City - 454 1,030 1,111 620
11/1/83 Tucson - 343 778 801 420
11/1/83 Webster/Nasa - 1,570 2,457 1,808 1,372
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
Self-storage Facilities - United States
1/1/81 Newport News / Jefferson Avenue 108 1,766 1,874 1,668
1/1/81 Virginia Beach / Diamond Springs 186 1,929 2,115 1,802
8/1/81 San Jose / Snell 312 2,242 2,554 2,242
10/1/81 Tampa / Lazy Lane 282 2,651 2,933 2,450
6/1/82 San Jose / Tully 2,971 10,156 13,127 4,194
6/1/82 San Carlos / Storage 780 2,038 2,818 1,992
6/1/82 Mountain View 1,046 3,698 4,744 1,510
6/1/82 Cupertino / Storage 572 1,813 2,385 1,681
10/1/82 Sorrento Valley 651 910 1,561 817
10/1/82 Northwood 1,034 2,107 3,141 1,768
12/1/82 Port/Halsey 357 1,080 1,437 856
12/1/82 Sacto/Folsom 396 1,374 1,770 1,083
1/1/83 Platte 409 1,898 2,307 1,553
1/1/83 Semoran 442 10,851 11,293 3,993
1/1/83 Raleigh/Yonkers 203 1,979 2,182 1,536
3/1/83 Blackwood 212 2,558 2,770 2,003
4/1/83 Vailsgate 103 2,384 2,487 1,822
5/1/83 Delta Drive 67 1,079 1,146 821
6/1/83 Ventura 658 2,674 3,332 2,100
9/1/83 Southington 123 2,073 2,196 1,575
9/1/83 Southhampton 331 3,291 3,622 2,553
9/1/83 Webster/Keystone 448 3,268 3,716 2,560
9/1/83 Dover 107 2,804 2,911 2,070
9/1/83 Newcastle 227 3,540 3,767 2,732
9/1/83 Newark 208 3,222 3,430 2,508
9/1/83 Langhorne 263 5,625 5,888 4,394
9/1/83 Hobart 215 3,132 3,347 2,408
9/1/83 Ft. Wayne/W. Coliseum 160 2,475 2,635 1,921
9/1/83 Ft. Wayne/Bluffton 88 1,288 1,376 984
10/1/83 Orlando J. Y. Parkway 383 2,608 2,991 2,058
11/1/83 Aurora 505 1,635 2,140 1,178
11/1/83 Campbell 1,379 1,979 3,358 1,535
11/1/83 Col Springs/Ed 470 2,422 2,892 1,904
11/1/83 Col Springs/Mv 320 1,904 2,224 1,403
11/1/83 Thorton 418 2,203 2,621 1,678
11/1/83 Oklahoma City 454 2,761 3,215 2,053
11/1/83 Tucson 343 1,999 2,342 1,428
11/1/83 Webster/Nasa 1,570 5,637 7,207 4,194
F-48
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
----------------------------------------------------------------------------------------------------------------------------------
12/1/83 Charlotte - 165 1,274 537 442
12/1/83 Greensboro/Market - 214 1,653 965 794
12/1/83 Greensboro/Electra - 112 869 420 382
12/1/83 Columbia - 171 1,318 536 492
12/1/83 Richmond - 176 1,360 661 468
12/1/83 Augusta - 97 747 527 324
12/1/83 Tacoma - 553 1,173 506 487
1/1/84 Fremont/Albrae - 636 1,659 549 532
1/1/84 Belton - 175 858 1,202 378
1/1/84 Gladstone - 275 1,799 751 640
1/1/84 Hickman/112 - 257 1,848 (458) 618
1/1/84 Holmes - 289 1,333 494 455
1/1/84 Independence - 221 1,848 781 609
1/1/84 Merriam - 255 1,469 641 480
1/1/84 Olathe - 107 992 410 361
1/1/84 Shawnee - 205 1,420 996 502
1/1/84 Topeka - 75 1,049 528 356
3/1/84 Marrietta/Cobb - 73 542 499 259
3/1/84 Manassas - 320 1,556 482 553
3/1/84 Pico Rivera - 743 807 376 321
4/1/84 Providence - 92 1,087 483 423
4/1/84 Milwaukie/Oregon - 289 584 356 311
5/1/84 Raleigh/Departure - 302 2,484 1,088 788
5/1/84 Virginia Beach - 509 2,121 1,211 776
5/1/84 Philadelphia/Grant - 1,041 3,262 833 971
5/1/84 Garland - 356 844 453 360
6/1/84 Lorton - 435 2,040 857 682
6/1/84 Baltimore - 382 1,793 1,026 634
6/1/84 Laurel - 501 2,349 958 824
6/1/84 Delran - 279 1,472 466 573
6/1/84 Orange Blossom - 226 924 271 398
6/1/84 Cincinnati - 402 1,573 940 672
6/1/84 Florence - 185 740 597 376
7/1/84 Trevose/Old Lincoln - 421 1,749 585 582
8/1/84 Medley - 584 1,016 1,018 464
8/1/84 Oklahoma City - 340 1,310 679 652
8/1/84 Newport News - 356 2,395 854 1,013
8/1/84 Kaplan/Walnut Hill - 971 2,359 1,122 1,041
8/1/84 Kaplan/Irving - 677 1,592 4,743 639
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
12/1/83 Charlotte 165 2,253 2,418 1,815
12/1/83 Greensboro/Market 214 3,412 3,626 2,702
12/1/83 Greensboro/Electra 112 1,671 1,783 1,348
12/1/83 Columbia 171 2,346 2,517 1,894
12/1/83 Richmond 176 2,489 2,665 2,021
12/1/83 Augusta 97 1,598 1,695 1,195
12/1/83 Tacoma 553 2,166 2,719 1,768
1/1/84 Fremont/Albrae 636 2,740 3,376 2,217
1/1/84 Belton 175 2,438 2,613 1,678
1/1/84 Gladstone 274 3,191 3,465 2,513
1/1/84 Hickman/112 158 2,107 2,265 1,443
1/1/84 Holmes 289 2,282 2,571 1,832
1/1/84 Independence 221 3,238 3,459 2,427
1/1/84 Merriam 255 2,590 2,845 2,000
1/1/84 Olathe 107 1,763 1,870 1,416
1/1/84 Shawnee 205 2,918 3,123 2,011
1/1/84 Topeka 75 1,933 2,008 1,386
3/1/84 Marrietta/Cobb 73 1,300 1,373 961
3/1/84 Manassas 320 2,591 2,911 2,076
3/1/84 Pico Rivera 743 1,504 2,247 1,217
4/1/84 Providence 92 1,993 2,085 1,617
4/1/84 Milwaukie/Oregon 289 1,251 1,540 976
5/1/84 Raleigh/Departure 302 4,360 4,662 3,271
5/1/84 Virginia Beach 499 4,118 4,617 3,073
5/1/84 Philadelphia/Grant 1,040 5,067 6,107 4,023
5/1/84 Garland 356 1,657 2,013 1,192
6/1/84 Lorton 435 3,579 4,014 2,813
6/1/84 Baltimore 382 3,453 3,835 2,734
6/1/84 Laurel 500 4,132 4,632 3,247
6/1/84 Delran 279 2,511 2,790 1,891
6/1/84 Orange Blossom 226 1,593 1,819 1,235
6/1/84 Cincinnati 402 3,185 3,587 2,380
6/1/84 Florence 185 1,713 1,898 1,265
7/1/84 Trevose/Old Lincoln 421 2,916 3,337 2,264
8/1/84 Medley 520 2,562 3,082 1,549
8/1/84 Oklahoma City 339 2,642 2,981 2,004
8/1/84 Newport News 356 4,262 4,618 3,260
8/1/84 Kaplan/Walnut Hill 971 4,522 5,493 3,406
8/1/84 Kaplan/Irving 677 6,974 7,651 3,265
F-49
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
-------------------------------------------------------------------------------------------------------------------------------
9/1/84 Cockrell Hill - 380 913 1,273 675
11/1/84 Omaha - 109 806 531 399
11/1/84 Hialeah - 886 1,784 436 672
12/1/84 Austin/Lamar - 643 947 759 443
12/1/84 Pompano - 399 1,386 958 698
12/1/84 Fort Worth - 122 928 75 303
12/1/84 Montgomeryville - 215 2,085 525 776
1/1/85 Cranston - 175 722 385 267
1/1/85 Bossier City - 184 1,542 720 656
2/1/85 Simi Valley - 737 1,389 376 520
2/1/85 Hurst - 231 1,220 261 480
3/1/85 Chattanooga - 202 1,573 973 683
3/1/85 Portland - 285 941 438 438
3/1/85 Fern Park - 144 1,107 275 432
3/1/85 Fairfield - 338 1,187 568 527
3/1/85 Houston / Westheimer - 850 1,179 882 -
4/1/85 Austin/ S. First - 778 1,282 421 711
4/1/85 Cincinnati/ E. Kemper - 232 1,573 365 853
4/1/85 Cincinnati/ Colerain - 253 1,717 650 932
4/1/85 Florence/ Tanner Lane - 218 1,477 510 835
4/1/85 Laguna Hills - 1,224 3,303 513 1,213
5/1/85 Tacoma/ Phillips Rd. - 396 1,204 333 669
5/1/85 Milwaukie/ Mcloughlin - 458 742 431 620
5/1/85 Manchester/ S. Willow - 371 2,129 9 854
5/1/85 Longwood - 355 1,645 410 669
5/1/85 Columbus/Busch Blvd. - 202 1,559 672 592
5/1/85 Columbus/Kinnear Rd. - 241 1,865 737 771
5/1/85 Worthington - 221 1,824 661 709
5/1/85 Arlington - 201 1,497 663 618
6/1/85 N. Hollywood/ Raymer - 967 848 269 515
6/1/85 Grove City/ Marlane Drive - 150 1,157 567 471
6/1/85 Reynoldsburg - 204 1,568 795 598
7/1/85 San Diego/ Kearny Mesa Rd - 783 1,750 437 962
7/1/85 Scottsdale/ 70th St - 632 1,368 463 742
7/1/85 Concord/ Hwy 29 - 150 750 546 587
7/1/85 Columbus/Morse Rd. - 195 1,510 511 670
7/1/85 Columbus/Kenney Rd. - 199 1,531 720 598
7/1/85 Westerville - 199 1,517 932 620
7/1/85 Springfield - 90 699 484 332
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-------------------------------------------------------------------------------------------------------------
9/1/84 Cockrell Hill 380 2,861 3,241 2,142
11/1/84 Omaha 109 1,736 1,845 1,331
11/1/84 Hialeah 886 2,892 3,778 2,208
12/1/84 Austin/Lamar 642 2,150 2,792 1,547
12/1/84 Pompano 399 3,042 3,441 2,148
12/1/84 Fort Worth 122 1,306 1,428 985
12/1/84 Montgomeryville 215 3,386 3,601 2,552
1/1/85 Cranston 175 1,374 1,549 1,068
1/1/85 Bossier City 184 2,918 3,102 2,200
2/1/85 Simi Valley 736 2,286 3,022 1,724
2/1/85 Hurst 231 1,961 2,192 1,477
3/1/85 Chattanooga 202 3,229 3,431 2,254
3/1/85 Portland 285 1,817 2,102 1,325
3/1/85 Fern Park 144 1,814 1,958 1,363
3/1/85 Fairfield 338 2,282 2,620 1,688
3/1/85 Houston / Westheimer 849 2,062 2,911 1,855
4/1/85 Austin/ S. First 778 2,414 3,192 1,708
4/1/85 Cincinnati/ E. Kemper 232 2,791 3,023 1,968
4/1/85 Cincinnati/ Colerain 253 3,299 3,552 2,235
4/1/85 Florence/ Tanner Lane 218 2,822 3,040 1,957
4/1/85 Laguna Hills 1,223 5,030 6,253 3,771
5/1/85 Tacoma/ Phillips Rd. 396 2,206 2,602 1,560
5/1/85 Milwaukie/ Mcloughlin 458 1,793 2,251 1,273
5/1/85 Manchester/ S. Willow 371 2,992 3,363 2,089
5/1/85 Longwood 355 2,724 3,079 2,026
5/1/85 Columbus/Busch Blvd. 202 2,823 3,025 2,047
5/1/85 Columbus/Kinnear Rd. 241 3,373 3,614 2,438
5/1/85 Worthington 220 3,195 3,415 2,336
5/1/85 Arlington 201 2,778 2,979 2,040
6/1/85 N. Hollywood/ Raymer 967 1,632 2,599 1,152
6/1/85 Grove City/ Marlane Drive 150 2,195 2,345 1,616
6/1/85 Reynoldsburg 204 2,961 3,165 2,169
7/1/85 San Diego/ Kearny Mesa Rd 783 3,149 3,932 2,192
7/1/85 Scottsdale/ 70th St 632 2,573 3,205 1,765
7/1/85 Concord/ Hwy 29 150 1,883 2,033 1,303
7/1/85 Columbus/Morse Rd. 195 2,691 2,886 1,992
7/1/85 Columbus/Kenney Rd. 199 2,849 3,048 2,060
7/1/85 Westerville 305 2,963 3,268 2,083
7/1/85 Springfield 90 1,515 1,605 1,098
F-50
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
7/1/85 Dayton/Needmore Road - 144 1,108 560 460
7/1/85 Dayton/Executive Blvd. - 160 1,207 491 569
7/1/85 Lilburn - 331 969 320 424
9/1/85 Madison/ Copps Ave. - 450 1,150 471 665
9/1/85 Columbus/ Sinclair - 307 893 410 519
9/1/85 Philadelphia/ Tacony St - 118 1,782 349 856
10/1/85 N. Hollywood/ Whitsett - 1,524 2,576 445 1,302
10/1/85 Portland/ SE 82nd St - 354 496 388 380
10/1/85 Columbus/ Ambleside - 124 1,526 253 644
10/1/85 Indianapolis/ Pike Place - 229 1,531 575 856
10/1/85 Indianapolis/ Beach Grove - 198 1,342 478 709
10/1/85 Hartford/ Roberts - 219 1,481 5,929 966
10/1/85 Wichita/ S. Rock Rd. - 501 1,478 440 657
10/1/85 Wichita/ E. Harry - 313 1,050 181 468
10/1/85 Wichita/ S. Woodlawn - 263 905 225 437
10/1/85 Wichita/ E. Kellogg - 185 658 45 261
10/1/85 Wichita/ S. Tyler - 294 1,004 146 530
10/1/85 Wichita/ W. Maple - 234 805 85 313
10/1/85 Wichita/ Carey Lane - 192 674 99 296
10/1/85 Wichita/ E. Macarthur - 220 775 (32) 323
10/1/85 Joplin/ S. Range Line - 264 904 244 465
10/1/85 San Antonio/ Wetmore Rd. - 306 1,079 597 638
10/1/85 San Antonio/ Callaghan - 288 1,016 533 543
10/1/85 San Antonio/ Zarzamora - 364 1,281 748 674
10/1/85 San Antonio/ Hackberry - 388 1,367 2,755 1,001
10/1/85 San Antonio/ Fredericksburg - 287 1,009 786 597
10/1/85 Dallas/ S. Westmoreland - 474 1,670 240 734
10/1/85 Dallas/ Alvin St. - 359 1,266 346 559
10/1/85 Fort Worth/ W. Beach St. - 356 1,252 306 531
10/1/85 Fort Worth/ E. Seminary - 382 1,346 296 552
10/1/85 Fort Worth/ Cockrell St. - 323 1,136 213 515
11/1/85 Everett/ Evergreen - 706 2,294 622 1,076
11/1/85 Seattle/ Empire Way - 1,652 5,348 872 2,198
12/1/85 Milpitas - 1,623 1,577 414 913
12/1/85 Pleasanton/ Santa Rita - 1,226 2,078 523 1,160
12/1/85 Amherst/ Niagra Falls - 132 701 380 400
12/1/85 West Sams Blvd. - 164 1,159 (240) 383
12/1/85 MacArthur Rd. - 204 1,628 248 638
12/1/85 Brockton/ Main - 153 2,020 (115) 678
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------ Accumulated
Acquired Description Land Buildings Total Depreciation
------------------------------------------------------------------------------------------------------------
7/1/85 Dayton/Needmore Road 144 2,128 2,272 1,556
7/1/85 Dayton/Executive Blvd. 159 2,268 2,427 1,708
7/1/85 Lilburn 330 1,714 2,044 1,239
9/1/85 Madison/ Copps Ave. 450 2,286 2,736 1,575
9/1/85 Columbus/ Sinclair 307 1,822 2,129 1,273
9/1/85 Philadelphia/ Tacony St 118 2,987 3,105 2,081
10/1/85 N. Hollywood/ Whitsett 1,524 4,323 5,847 3,021
10/1/85 Portland/ SE 82nd St 354 1,264 1,618 888
10/1/85 Columbus/ Ambleside 124 2,423 2,547 1,665
10/1/85 Indianapolis/ Pike Place 229 2,962 3,191 2,153
10/1/85 Indianapolis/ Beach Grove 198 2,529 2,727 1,688
10/1/85 Hartford/ Roberts 409 8,186 8,595 2,327
10/1/85 Wichita/ S. Rock Rd. 642 2,434 3,076 1,653
10/1/85 Wichita/ E. Harry 285 1,727 2,012 1,228
10/1/85 Wichita/ S. Woodlawn 263 1,567 1,830 1,106
10/1/85 Wichita/ E. Kellogg 185 964 1,149 653
10/1/85 Wichita/ S. Tyler 294 1,680 1,974 1,197
10/1/85 Wichita/ W. Maple 234 1,203 1,437 772
10/1/85 Wichita/ Carey Lane 192 1,069 1,261 735
10/1/85 Wichita/ E. Macarthur 220 1,066 1,286 736
10/1/85 Joplin/ S. Range Line 264 1,613 1,877 1,153
10/1/85 San Antonio/ Wetmore Rd. 306 2,314 2,620 1,694
10/1/85 San Antonio/ Callaghan 288 2,092 2,380 1,490
10/1/85 San Antonio/ Zarzamora 364 2,703 3,067 1,926
10/1/85 San Antonio/ Hackberry 388 5,123 5,511 2,474
10/1/85 San Antonio/ Fredericksburg 287 2,392 2,679 1,697
10/1/85 Dallas/ S. Westmoreland 474 2,644 3,118 1,949
10/1/85 Dallas/ Alvin St. 359 2,171 2,530 1,525
10/1/85 Fort Worth/ W. Beach St. 356 2,089 2,445 1,506
10/1/85 Fort Worth/ E. Seminary 382 2,194 2,576 1,593
10/1/85 Fort Worth/ Cockrell St. 323 1,864 2,187 1,382
11/1/85 Everett/ Evergreen 705 3,993 4,698 3,011
11/1/85 Seattle/ Empire Way 1,701 8,369 10,070 5,965
12/1/85 Milpitas 1,622 2,905 4,527 1,974
12/1/85 Pleasanton/ Santa Rita 1,225 3,762 4,987 2,579
12/1/85 Amherst/ Niagra Falls 132 1,481 1,613 1,041
12/1/85 West Sams Blvd. 164 1,302 1,466 972
12/1/85 MacArthur Rd. 204 2,514 2,718 1,845
12/1/85 Brockton/ Main 153 2,583 2,736 1,888
F-51
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
12/1/85 Eatontown/ Hwy 35 - 308 4,067 934 1,648
12/1/85 Denver/ Leetsdale - 603 847 291 408
1/1/86 Mapleshade/ Rudderow - 362 1,811 471 825
1/1/86 Bordentown/ Groveville - 196 981 184 471
1/1/86 Sun Valley/ Sheldon - 544 1,836 427 793
1/1/86 Las Vegas/ Highland - 432 848 317 420
2/1/86 Costa Mesa/ Pomona - 1,405 1,520 566 693
2/1/86 Brea/ Imperial Hwy - 1,069 2,165 435 954
2/1/86 Skokie/ McCormick - 638 1,912 524 779
2/1/86 Colorado Springs/ Sinton - 535 1,115 675 631
2/1/86 Oklahoma City/ Penn - 146 829 221 406
2/1/86 Oklahoma City/ 39th - 238 812 385 477
3/1/86 Jacksonville/ Wiley - 140 510 324 331
3/1/86 St. Louis/ Forder - 517 1,133 368 534
3/3/86 Tampa / 56th - 450 1,360 689 -
4/1/86 Reno/ Telegraph - 649 1,051 849 682
4/1/86 St. Louis/Kirkham - 199 1,001 417 401
4/1/86 St. Louis/Reavis - 192 958 268 384
4/1/86 Fort Worth/East Loop - 196 804 301 369
5/1/86 Westlake Village - 1,205 995 5,381 429
5/1/86 Sacramento/Franklin Blvd. - 872 978 3,511 389
6/1/86 Richland Hills - 543 857 494 404
6/1/86 West Valley/So. 3600 - 208 1,552 665 413
7/1/86 Colorado Springs/ Hollow Tree - 574 726 437 426
7/1/86 West LA/Purdue Ave. - 2,415 3,585 367 1,212
7/1/86 Capital Heights/Central Ave. - 649 3,851 500 1,277
7/1/86 Pontiac/Dixie Hwy. - 259 2,091 271 756
8/1/86 Laurel/Ft. Meade Rd. - 475 1,475 530 630
8/1/86 Hammond / Calumet - 97 751 852 366
9/1/86 Kansas City/S. 44th. - 509 1,906 754 737
9/1/86 Lakewood / Wadsworth - 6th - 1,070 3,155 824 1,027
10/1/86 Peralta/Fremont - 851 1,074 327 456
10/1/86 Birmingham/Highland - 89 786 310 398
10/1/86 Birmingham/Riverchase - 262 1,338 564 645
10/1/86 Birmingham/Eastwood - 166 1,184 512 612
10/1/86 Birmingham/Forestdale - 152 948 311 519
10/1/86 Birmingham/Centerpoint - 265 1,305 442 525
10/1/86 Birmingham/Roebuck Plaza - 101 399 368 425
10/1/86 Birmingham/Greensprings - 347 1,173 398 281
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------ Accumulated
Acquired Description Land Buildings Total Depreciation
-----------------------------------------------------------------------------------------------------------
12/1/85 Eatontown/ Hwy 35 308 6,649 6,957 4,705
12/1/85 Denver/ Leetsdale 603 1,546 2,149 1,133
1/1/86 Mapleshade/ Rudderow 362 3,107 3,469 2,253
1/1/86 Bordentown/ Groveville 196 1,636 1,832 1,199
1/1/86 Sun Valley/ Sheldon 544 3,056 3,600 2,230
1/1/86 Las Vegas/ Highland 432 1,585 2,017 1,163
2/1/86 Costa Mesa/ Pomona 1,404 2,780 4,184 1,974
2/1/86 Brea/ Imperial Hwy 1,069 3,554 4,623 2,607
2/1/86 Skokie/ McCormick 638 3,215 3,853 2,242
2/1/86 Colorado Springs/ Sinton 535 2,421 2,956 1,682
2/1/86 Oklahoma City/ Penn 146 1,456 1,602 1,025
2/1/86 Oklahoma City/ 39th 238 1,674 1,912 1,214
3/1/86 Jacksonville/ Wiley 140 1,165 1,305 837
3/1/86 St. Louis/ Forder 516 2,036 2,552 1,479
3/3/86 Tampa / 56th 450 2,049 2,499 1,676
4/1/86 Reno/ Telegraph 648 2,583 3,231 1,745
4/1/86 St. Louis/Kirkham 199 1,819 2,018 1,259
4/1/86 St. Louis/Reavis 192 1,610 1,802 1,185
4/1/86 Fort Worth/East Loop 196 1,474 1,670 1,071
5/1/86 Westlake Village 1,256 6,754 8,010 1,605
5/1/86 Sacramento/Franklin Blvd. 1,139 4,611 5,750 2,654
6/1/86 Richland Hills 543 1,755 2,298 1,284
6/1/86 West Valley/So. 3600 208 2,630 2,838 1,808
7/1/86 Colorado Springs/ Hollow Tree 574 1,589 2,163 1,084
7/1/86 West LA/Purdue Ave. 2,415 5,164 7,579 3,735
7/1/86 Capital Heights/Central Ave. 649 5,628 6,277 4,137
7/1/86 Pontiac/Dixie Hwy. 259 3,118 3,377 2,274
8/1/86 Laurel/Ft. Meade Rd. 475 2,635 3,110 1,845
8/1/86 Hammond / Calumet 97 1,969 2,066 1,317
9/1/86 Kansas City/S. 44th. 508 3,398 3,906 2,414
9/1/86 Lakewood / Wadsworth - 6th 1,070 5,006 6,076 3,817
10/1/86 Peralta/Fremont 851 1,857 2,708 1,354
10/1/86 Birmingham/Highland 149 1,434 1,583 1,024
10/1/86 Birmingham/Riverchase 278 2,531 2,809 1,828
10/1/86 Birmingham/Eastwood 232 2,242 2,474 1,579
10/1/86 Birmingham/Forestdale 190 1,740 1,930 1,276
10/1/86 Birmingham/Centerpoint 273 2,264 2,537 1,637
10/1/86 Birmingham/Roebuck Plaza 340 953 1,293 668
10/1/86 Birmingham/Greensprings 16 2,183 2,199 1,585
F-52
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
10/1/86 Birmingham/Hoover-Lorna - 372 1,128 446 431
10/1/86 Midfield/Bessemer - 170 355 465 112
10/1/86 Huntsville/Leeman Ferry Rd. - 158 992 442 558
10/1/86 Huntsville/Drake - 253 1,172 311 538
10/1/86 Anniston/Whiteside - 59 566 235 329
10/1/86 Houston/Glenvista - 595 1,043 915 494
10/1/86 Houston/I-45 - 704 1,146 1,261 604
10/1/86 Houston/Rogerdale - 1,631 2,792 872 1,232
10/1/86 Houston/Gessner - 1,032 1,693 1,221 746
10/1/86 Houston/Richmond-Fairdale - 1,502 2,506 1,500 1,160
10/1/86 Houston/Gulfton - 1,732 3,036 1,323 1,398
10/1/86 Houston/Westpark - 503 854 432 435
10/1/86 Jonesboro - 157 718 336 370
10/1/86 Houston / South Loop West - 1,299 3,491 1,549 1,366
10/1/86 Houston / Plainfield Road - 904 2,319 1,362 920
10/1/86 Houston / North Freeway - 719 1,987 468 609
10/1/86 Houston / Old Katy Road - 1,365 3,431 870 1,274
10/1/86 Houston / Long Point - 451 1,187 723 563
10/1/86 Austin / Research Blvd. - 1,390 1,710 699 672
11/1/86 Arleta / Osborne Street - 987 663 349 290
12/1/86 Lynnwood / 196th Street - 1,063 1,602 7,467 571
12/1/86 N. Auburn / Auburn Way N. - 606 1,144 456 533
12/1/86 Gresham / Burnside & 202nd - 351 1,056 518 482
12/1/86 Denver / Sheridan Boulevard - 1,033 2,792 1,206 1,007
12/1/86 Marietta / Cobb Parkway - 536 2,764 1,144 1,016
12/1/86 Hillsboro / T.V. Highway - 461 574 313 414
12/1/86 San Antonio / West Sunset Road - 1,206 1,594 794 649
12/31/86 Monrovia / Myrtle Avenue - 1,149 2,446 233 -
12/31/86 Chatsworth / Topanga - 1,447 1,243 3,801 -
12/31/86 Houston / Larkwood - 247 602 464 -
12/31/86 Northridge - 3,624 1,922 7,143 -
12/31/86 Santa Clara / Duane - 1,950 1,004 453 -
12/31/86 Oyster Point - 1,569 1,490 531 -
12/31/86 Walnut - 767 613 5,502 -
3/1/87 Annandale / Ravensworth - 679 1,621 400 596
4/1/87 City Of Industry / Amar - 748 2,052 564 702
5/1/87 Oklahoma City / W. Hefner - 459 941 472 417
7/1/87 Oakbrook Terrace - 912 2,688 1,768 399
8/1/87 San Antonio/Austin Hwy. - 400 850 38 164
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-------------------------------------------------------------------------------------------------------------
10/1/86 Birmingham/Hoover-Lorna 266 2,111 2,377 1,519
10/1/86 Midfield/Bessemer 95 1,007 1,102 686
10/1/86 Huntsville/Leeman Ferry Rd. 198 1,952 2,150 1,367
10/1/86 Huntsville/Drake 248 2,026 2,274 1,476
10/1/86 Anniston/Whiteside 107 1,082 1,189 793
10/1/86 Houston/Glenvista 594 2,453 3,047 1,680
10/1/86 Houston/I-45 703 3,012 3,715 2,091
10/1/86 Houston/Rogerdale 1,630 4,897 6,527 3,495
10/1/86 Houston/Gessner 1,032 3,660 4,692 2,678
10/1/86 Houston/Richmond-Fairdale 1,501 5,167 6,668 3,710
10/1/86 Houston/Gulfton 1,731 5,758 7,489 4,181
10/1/86 Houston/Westpark 502 1,722 2,224 1,151
10/1/86 Jonesboro 156 1,425 1,581 1,008
10/1/86 Houston / South Loop West 1,298 6,407 7,705 4,815
10/1/86 Houston / Plainfield Road 903 4,602 5,505 3,239
10/1/86 Houston / North Freeway 661 3,122 3,783 2,266
10/1/86 Houston / Old Katy Road 1,163 5,777 6,940 3,559
10/1/86 Houston / Long Point 451 2,473 2,924 1,895
10/1/86 Austin / Research Blvd. 1,390 3,081 4,471 2,295
11/1/86 Arleta / Osborne Street 986 1,303 2,289 949
12/1/86 Lynnwood / 196th Street 1,405 9,298 10,703 3,525
12/1/86 N. Auburn / Auburn Way N. 605 2,134 2,739 1,659
12/1/86 Gresham / Burnside & 202nd 351 2,056 2,407 1,508
12/1/86 Denver / Sheridan Boulevard 1,033 5,005 6,038 3,744
12/1/86 Marietta / Cobb Parkway 535 4,925 5,460 3,627
12/1/86 Hillsboro / T.V. Highway 461 1,301 1,762 1,037
12/1/86 San Antonio / West Sunset Road 1,206 3,037 4,243 2,162
12/31/86 Monrovia / Myrtle Avenue 1,148 2,680 3,828 2,147
12/31/86 Chatsworth / Topanga 1,448 5,043 6,491 1,829
12/31/86 Houston / Larkwood 246 1,067 1,313 790
12/31/86 Northridge 3,641 9,048 12,689 2,601
12/31/86 Santa Clara / Duane 1,949 1,458 3,407 1,150
12/31/86 Oyster Point 1,569 2,021 3,590 1,592
12/31/86 Walnut 768 6,114 6,882 1,932
3/1/87 Annandale / Ravensworth 679 2,617 3,296 1,919
4/1/87 City Of Industry / Amar 748 3,318 4,066 1,775
5/1/87 Oklahoma City / W. Hefner 459 1,830 2,289 1,312
7/1/87 Oakbrook Terrace 1,580 4,187 5,767 3,279
8/1/87 San Antonio/Austin Hwy. 399 1,053 1,452 965
F-53
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
10/1/87 Plantation/S. State Rd. - 924 1,801 (119) 298
10/1/87 Rockville/Fredrick Rd. - 1,695 3,305 8,953 519
2/1/88 Anaheim/Lakeview - 995 1,505 81 256
6/7/88 Mesquite / Sorrento Drive - 928 1,011 3,570 -
7/1/88 Fort Wayne - 101 1,524 241 663
1/1/92 Costa Mesa - 533 980 812 -
3/1/92 Dallas / Walnut St. - 537 1,008 435 -
5/1/92 Camp Creek - 576 1,075 501 -
9/1/92 Orlando/W. Colonial - 368 713 257 -
9/1/92 Jacksonville/Arlington - 554 1,065 321 -
10/1/92 Stockton/Mariners - 381 730 240 -
11/18/92 Virginia Beach/General Booth Blvd - 599 1,119 563 -
1/1/93 Redwood City/Storage - 907 1,684 277 -
1/1/93 City Of Industry - 1,611 2,991 902 -
1/1/93 San Jose/Felipe - 1,124 2,088 735 -
1/1/93 Baldwin Park/Garvey Ave - 840 1,561 442 -
3/19/93 Westminister / W. 80th - 840 1,586 433 -
4/26/93 Costa Mesa / Newport 834 2,141 3,989 5,531 -
5/13/93 Austin /N. Lamar - 919 1,695 8,591 -
5/28/93 Jacksonville/Phillips Hwy. - 406 771 243 -
5/28/93 Tampa/Nebraska Avenue - 550 1,043 479 -
6/9/93 Calabasas / Ventura Blvd. - 1,762 3,269 333 -
6/9/93 Carmichael / Fair Oaks - 573 1,052 283 -
6/9/93 Santa Clara / Duane - 454 834 148 -
6/10/93 Citrus Heights / Sylvan Road - 438 822 252 -
6/25/93 Trenton / Allen Road - 623 1,166 294 -
6/30/93 Los Angeles/W.Jefferson Blvd - 1,085 2,017 244 -
7/16/93 Austin / So. Congress Ave - 777 1,445 389 -
8/1/93 Gaithersburg / E. Diamond - 602 1,139 233 -
8/11/93 Atlanta / Northside - 1,150 2,149 483 -
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 1,633 306 -
10/1/93 Citrus Heights - 527 987 222 -
10/1/93 Lakewood / 6th Ave - 798 1,489 65 -
10/27/93 Houston / S Shaver St - 481 896 249 -
11/3/93 Upland/S. Euclid Ave. - 431 807 570 -
11/16/93 Norcross / Jimmy Carter - 627 1,167 254 -
11/16/93 Seattle / 13th - 1,085 2,015 754 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
10/1/87 Plantation/S. State Rd. 923 1,981 2,904 1,812
10/1/87 Rockville/Fredrick Rd. 1,702 12,770 14,472 3,608
2/1/88 Anaheim/Lakeview 995 1,842 2,837 1,678
6/7/88 Mesquite / Sorrento Drive 1,044 4,465 5,509 2,284
7/1/88 Fort Wayne 101 2,428 2,529 1,505
1/1/92 Costa Mesa 535 1,790 2,325 1,558
3/1/92 Dallas / Walnut St. 537 1,443 1,980 1,343
5/1/92 Camp Creek 575 1,577 2,152 1,037
9/1/92 Orlando/W. Colonial 367 971 1,338 677
9/1/92 Jacksonville/Arlington 554 1,386 1,940 923
10/1/92 Stockton/Mariners 380 971 1,351 664
11/18/92 Virginia Beach/General Booth Blvd 599 1,682 2,281 1,078
1/1/93 Redwood City/Storage 906 1,962 2,868 1,247
1/1/93 City Of Industry 1,610 3,894 5,504 2,603
1/1/93 San Jose/Felipe 1,124 2,823 3,947 1,722
1/1/93 Baldwin Park/Garvey Ave 840 2,003 2,843 1,350
3/19/93 Westminister / W. 80th 840 2,019 2,859 1,262
4/26/93 Costa Mesa / Newport 3,732 7,929 11,661 3,412
5/13/93 Austin /N. Lamar 1,421 9,784 11,205 3,359
5/28/93 Jacksonville/Phillips Hwy. 406 1,014 1,420 672
5/28/93 Tampa/Nebraska Avenue 550 1,522 2,072 828
6/9/93 Calabasas / Ventura Blvd. 1,761 3,603 5,364 2,181
6/9/93 Carmichael / Fair Oaks 572 1,336 1,908 880
6/9/93 Santa Clara / Duane 453 983 1,436 615
6/10/93 Citrus Heights / Sylvan Road 437 1,075 1,512 694
6/25/93 Trenton / Allen Road 623 1,460 2,083 922
6/30/93 Los Angeles/W.Jefferson Blvd 1,085 2,261 3,346 1,404
7/16/93 Austin / So. Congress Ave 777 1,834 2,611 1,217
8/1/93 Gaithersburg / E. Diamond 602 1,372 1,974 828
8/11/93 Atlanta / Northside 1,150 2,632 3,782 1,629
8/11/93 Smyrna/ Rosswill Rd 446 1,097 1,543 734
8/13/93 So. Brunswick/Highway 1,076 2,459 3,535 1,547
10/1/93 Denver / Federal Blvd 875 1,939 2,814 1,192
10/1/93 Citrus Heights 527 1,209 1,736 721
10/1/93 Lakewood / 6th Ave 685 1,667 2,352 1,008
10/27/93 Houston / S Shaver St 481 1,145 1,626 729
11/3/93 Upland/S. Euclid Ave. 508 1,300 1,808 761
11/16/93 Norcross / Jimmy Carter 626 1,422 2,048 871
11/16/93 Seattle / 13th 1,085 2,769 3,854 1,765
F-54
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
-------------------------------------------------------------------------------------------------------------------------------
12/9/93 Salt Lake City - 765 1,422 59 -
12/16/93 West Valley City - 683 1,276 283 -
12/21/93 Pinellas Park / 34th St. W - 607 1,134 302 -
12/28/93 New Orleans / S. Carrollton Ave - 1,575 2,941 507 -
12/29/93 Orange / Main - 1,238 2,317 1,748 -
12/29/93 Sunnyvale / Wedell - 554 1,037 821 -
12/29/93 El Cajon / Magnolia - 421 791 664 -
12/29/93 Orlando / S. Semoran Blvd. - 462 872 722 -
12/29/93 Tampa / W. Hillsborough Ave - 352 665 568 -
12/29/93 Irving / West Loop 12 - 341 643 234 -
12/29/93 Fullerton / W. Commonwealth - 904 1,687 1,287 -
12/29/93 N. Lauderdale / Mcnab Rd - 628 1,182 774 -
12/29/93 Los Alimitos / Cerritos - 695 1,299 721 -
12/29/93 Frederick / Prospect Blvd. - 573 1,082 641 -
12/29/93 Indianapolis / E. Washington - 403 775 771 -
12/29/93 Gardena / Western Ave. - 552 1,035 677 -
12/29/93 Palm Bay / Bobcock Street - 409 775 609 -
1/10/94 Hialeah / W. 20Th Ave. - 1,855 3,497 46 -
1/12/94 Sunnyvale / N. Fair Oaks Ave - 689 1,285 356 -
1/12/94 Honolulu / Iwaena - - 3,382 1,076 -
1/12/94 Miami / Golden Glades - 579 1,081 621 -
1/21/94 Herndon / Centreville Road - 1,584 2,981 568 -
2/8/94 Las Vegas/S. Martin Luther King Blvd. - 1,383 2,592 1,286 -
2/28/94 Arlingtn/Old Jeffersn Davishwy - 735 1,399 646 -
3/8/94 Beaverton / Sw Barnes Road - 942 1,810 236 -
3/21/94 Austin / Arboretum - 473 897 2,799 -
3/25/94 Tinton Falls / Shrewsbury Ave - 1,074 2,033 331 -
3/25/94 East Brunswick / Milltown Road - 1,282 2,411 468 -
3/25/94 Mercerville / Quakerbridge Road - 1,109 2,111 348 -
3/31/94 Hypoluxo - 735 1,404 2,085 -
4/26/94 No. Highlands / Roseville Road - 980 1,835 518 -
5/12/94 Fort Pierce/Okeechobee Road - 438 842 177 -
5/24/94 Hempstead/Peninsula Blvd. - 2,053 3,832 515 -
5/24/94 La/Huntington - 483 905 310 -
6/9/94 Chattanooga / Brainerd Road - 613 1,170 277 -
6/9/94 Chattanooga / Ringgold Road - 761 1,433 512 -
6/18/94 Las Vegas / S. Valley View Blvd - 837 1,571 346 -
6/23/94 Las Vegas / Tropicana - 750 1,408 413 -
6/23/94 Henderson / Green Valley Pkwy - 1,047 1,960 325 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------ Accumulated
Acquired Description Land Buildings Total Depreciation
------------------------------------------------------------------------------------------------------------
12/9/93 Salt Lake City 633 1,613 2,246 615
12/16/93 West Valley City 682 1,560 2,242 961
12/21/93 Pinellas Park / 34th St. W 607 1,436 2,043 899
12/28/93 New Orleans / S. Carrollton Ave 1,575 3,448 5,023 2,305
12/29/93 Orange / Main 1,593 3,710 5,303 2,075
12/29/93 Sunnyvale / Wedell 725 1,687 2,412 996
12/29/93 El Cajon / Magnolia 541 1,335 1,876 768
12/29/93 Orlando / S. Semoran Blvd. 601 1,455 2,056 878
12/29/93 Tampa / W. Hillsborough Ave 436 1,149 1,585 650
12/29/93 Irving / West Loop 12 354 864 1,218 545
12/29/93 Fullerton / W. Commonwealth 1,159 2,719 3,878 1,558
12/29/93 N. Lauderdale / Mcnab Rd 798 1,786 2,584 1,037
12/29/93 Los Alimitos / Cerritos 874 1,841 2,715 1,057
12/29/93 Frederick / Prospect Blvd. 692 1,604 2,296 974
12/29/93 Indianapolis / E. Washington 505 1,444 1,949 785
12/29/93 Gardena / Western Ave. 694 1,570 2,264 880
12/29/93 Palm Bay / Bobcock Street 525 1,268 1,793 777
1/10/94 Hialeah / W. 20Th Ave. 1,590 3,808 5,398 2,320
1/12/94 Sunnyvale / N. Fair Oaks Ave 657 1,673 2,330 962
1/12/94 Honolulu / Iwaena - 4,458 4,458 2,451
1/12/94 Miami / Golden Glades 557 1,724 2,281 1,016
1/21/94 Herndon / Centreville Road 1,358 3,775 5,133 2,144
2/8/94 Las Vegas/S. Martin Luther King Blvd. 1,435 3,826 5,261 2,150
2/28/94 Arlingtn/Old Jeffersn Davishwy 630 2,150 2,780 1,364
3/8/94 Beaverton / Sw Barnes Road 807 2,181 2,988 1,373
3/21/94 Austin / Arboretum 1,553 2,616 4,169 1,224
3/25/94 Tinton Falls / Shrewsbury Ave 920 2,518 3,438 1,506
3/25/94 East Brunswick / Milltown Road 1,099 3,062 4,161 1,877
3/25/94 Mercerville / Quakerbridge Road 950 2,618 3,568 1,595
3/31/94 Hypoluxo 630 3,594 4,224 2,844
4/26/94 No. Highlands / Roseville Road 840 2,493 3,333 1,520
5/12/94 Fort Pierce/Okeechobee Road 375 1,082 1,457 827
5/24/94 Hempstead/Peninsula Blvd. 1,762 4,638 6,400 2,615
5/24/94 La/Huntington 414 1,284 1,698 739
6/9/94 Chattanooga / Brainerd Road 525 1,535 2,060 958
6/9/94 Chattanooga / Ringgold Road 652 2,054 2,706 1,314
6/18/94 Las Vegas / S. Valley View Blvd 718 2,036 2,754 1,171
6/23/94 Las Vegas / Tropicana 643 1,928 2,571 1,111
6/23/94 Henderson / Green Valley Pkwy 897 2,435 3,332 1,411
F-55
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
6/24/94 Las Vegas / N. Lamb Blvd. - 869 1,629 130 -
6/30/94 Birmingham / W. Oxmoor Road - 532 1,004 527 -
7/20/94 Milpitas / Dempsey Road - 1,260 2,358 265 -
8/17/94 Beaverton / S.W. Denny Road - 663 1,245 160 -
8/17/94 Irwindale / Central Ave. - 674 1,263 156 -
8/17/94 Suitland / St. Barnabas Rd - 1,530 2,913 500 -
8/17/94 North Brunswick / How Lane - 1,238 2,323 159 -
8/17/94 Lombard / 64th - 847 1,583 381 -
8/17/94 Alsip / 27th - 406 765 171 -
9/15/94 Huntsville / Old Monrovia Road - 613 1,157 261 -
9/27/94 West Haven / Bull Hill Lane - 455 873 5,406 -
9/30/94 San Francisco / Marin St. - 1,227 2,339 1,343 -
9/30/94 Baltimore / Hillen Street - 580 1,095 501 -
9/30/94 San Francisco /10th & Howard - 1,423 2,668 335 -
9/30/94 Montebello / E. Whittier - 383 732 222 -
9/30/94 Arlington / Collins - 228 435 324 -
9/30/94 Miami / S.W. 119th Ave - 656 1,221 127 -
9/30/94 Blackwood / Erial Road - 774 1,437 171 -
9/30/94 Concord / Monument - 1,092 2,027 448 -
9/30/94 Rochester / Lee Road - 469 871 336 -
9/30/94 Houston / Bellaire - 623 1,157 379 -
9/30/94 Austin / Lamar Blvd - 781 1,452 177 -
9/30/94 Milwaukee / Lovers Lane Rd - 469 871 270 -
9/30/94 Monterey / Del Rey Oaks - 1,093 1,897 131 -
9/30/94 St. Petersburg / 66Th St. - 427 793 306 -
9/30/94 Dayton Bch / N. Nova Road - 396 735 241 -
9/30/94 Maple Shade / Route 38 - 994 1,846 268 -
9/30/94 Marlton / Route 73 N. - 938 1,742 170 -
9/30/94 Naperville / E. Ogden Ave - 683 1,268 264 -
9/30/94 Long Beach / South Street - 1,778 3,307 488 -
9/30/94 Aloha / S.W. Shaw - 805 1,495 143 -
9/30/94 Alexandria / S. Pickett - 1,550 2,879 339 -
9/30/94 Houston / Highway 6 North - 1,120 2,083 298 -
9/30/94 San Antonio/Nacogdoches Rd - 571 1,060 276 -
9/30/94 San Ramon/San Ramon Valley - 1,530 2,840 662 -
9/30/94 San Rafael / Merrydale Rd - 1,705 3,165 225 -
9/30/94 San Antonio / Austin Hwy - 592 1,098 295 -
9/30/94 Sharonville / E. Kemper - 574 1,070 430 -
10/13/94 Davie / State Road 84 - 744 1,467 947 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-------------------------------------------------------------------------------------------------------------
6/24/94 Las Vegas / N. Lamb Blvd. 669 1,959 2,628 920
6/30/94 Birmingham / W. Oxmoor Road 456 1,607 2,063 1,083
7/20/94 Milpitas / Dempsey Road 1,080 2,803 3,883 1,627
8/17/94 Beaverton / S.W. Denny Road 568 1,500 2,068 862
8/17/94 Irwindale / Central Ave. 578 1,515 2,093 856
8/17/94 Suitland / St. Barnabas Rd 1,311 3,632 4,943 2,104
8/17/94 North Brunswick / How Lane 1,061 2,659 3,720 1,503
8/17/94 Lombard / 64th 726 2,085 2,811 1,150
8/17/94 Alsip / 27th 348 994 1,342 586
9/15/94 Huntsville / Old Monrovia Road 525 1,506 2,031 926
9/27/94 West Haven / Bull Hill Lane 1,963 4,771 6,734 1,867
9/30/94 San Francisco / Marin St. 1,371 3,538 4,909 1,959
9/30/94 Baltimore / Hillen Street 497 1,679 2,176 959
9/30/94 San Francisco /10th & Howard 1,221 3,205 4,426 1,846
9/30/94 Montebello / E. Whittier 329 1,008 1,337 610
9/30/94 Arlington / Collins 195 792 987 532
9/30/94 Miami / S.W. 119th Ave 562 1,442 2,004 792
9/30/94 Blackwood / Erial Road 663 1,719 2,382 968
9/30/94 Concord / Monument 935 2,632 3,567 1,579
9/30/94 Rochester / Lee Road 402 1,274 1,676 820
9/30/94 Houston / Bellaire 534 1,625 2,159 959
9/30/94 Austin / Lamar Blvd 668 1,742 2,410 1,004
9/30/94 Milwaukee / Lovers Lane Rd 402 1,208 1,610 724
9/30/94 Monterey / Del Rey Oaks 903 2,218 3,121 1,299
9/30/94 St. Petersburg / 66Th St. 366 1,160 1,526 665
9/30/94 Dayton Bch / N. Nova Road 339 1,033 1,372 604
9/30/94 Maple Shade / Route 38 852 2,256 3,108 1,316
9/30/94 Marlton / Route 73 N. 805 2,045 2,850 1,357
9/30/94 Naperville / E. Ogden Ave 585 1,630 2,215 907
9/30/94 Long Beach / South Street 1,523 4,050 5,573 2,316
9/30/94 Aloha / S.W. Shaw 690 1,753 2,443 1,004
9/30/94 Alexandria / S. Pickett 1,329 3,439 4,768 1,963
9/30/94 Houston / Highway 6 North 960 2,541 3,501 1,464
9/30/94 San Antonio/Nacogdoches Rd 489 1,418 1,907 860
9/30/94 San Ramon/San Ramon Valley 1,311 3,721 5,032 2,103
9/30/94 San Rafael / Merrydale Rd 1,461 3,634 5,095 2,057
9/30/94 San Antonio / Austin Hwy 507 1,478 1,985 845
9/30/94 Sharonville / E. Kemper 492 1,582 2,074 928
10/13/94 Davie / State Road 84 637 2,521 3,158 1,433
F-56
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
-------------------------------------------------------------------------------------------------------------------------------
10/13/94 Carrollton / Marsh Lane - 770 1,437 1,437 -
10/31/94 Sherman Oaks / Van Nuys Blvd - 1,278 2,461 1,031 -
12/19/94 Salt Lake City/West North Temple - 490 917 (51) -
12/28/94 Milpitas / Watson - 1,575 2,925 337 -
12/28/94 Las Vegas / Jones Blvd - 1,208 2,243 225 -
12/28/94 Venice / Guthrie - 578 1,073 188 -
12/30/94 Apple Valley / Foliage Ave - 910 1,695 282 -
1/4/95 Chula Vista / Main Street - 735 1,802 249 -
1/5/95 Pantego / West Park - 315 735 168 -
1/12/95 Roswell / Alpharetta - 423 993 434 -
1/23/95 North Bergen / Tonne - 1,564 3,772 584 -
1/23/95 San Leandro / Hesperian - 734 1,726 169 -
1/24/95 Nashville / Elm Hill - 338 791 476 -
2/3/95 Reno / S. Mccarron Blvd - 1,080 2,537 229 -
2/15/95 Schiller Park - 1,688 3,939 480 -
2/15/95 Lansing - 1,514 3,534 574 -
2/15/95 Pleasanton - 1,257 2,932 142 -
2/15/95 LA/Sepulveda - 1,453 3,390 182 -
2/28/95 Decatur / Flat Shoal - 970 2,288 767 -
2/28/95 Smyrna / S. Cobb - 663 1,559 513 -
2/28/95 Downey / Bellflower - 916 2,158 286 -
2/28/95 Vallejo / Lincoln - 445 1,052 332 -
2/28/95 Lynnwood / 180th St - 516 1,205 270 -
2/28/95 Kent / Pacific Hwy - 728 1,711 192 -
2/28/95 Kirkland - 1,254 2,932 518 -
2/28/95 Federal Way/Pacific - 785 1,832 319 -
2/28/95 Tampa / S. Dale - 791 1,852 310 -
2/28/95 Burlingame/Adrian Rd - 2,280 5,349 524 -
2/28/95 Miami / Cloverleaf - 606 1,426 369 -
2/28/95 Pinole / San Pablo - 639 1,502 363 -
2/28/95 South Gate / Firesto - 1,442 3,449 451 -
2/28/95 San Jose / Mabury - 892 2,088 234 -
2/28/95 La Puente / Valley Blvd - 591 1,390 258 -
2/28/95 San Jose / Capitol E - 1,215 2,852 156 -
2/28/95 Milwaukie / 40th Street - 576 1,388 139 -
2/28/95 Portland / N. Lombard - 812 1,900 249 -
2/28/95 Miami / Biscayne - 1,313 3,076 402 -
2/28/95 Chicago / Clark Street - 442 1,031 425 -
2/28/95 Palatine / Dundee - 698 1,643 613 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
10/13/94 Carrollton / Marsh Lane 1,021 2,623 3,644 1,430
10/31/94 Sherman Oaks / Van Nuys Blvd 1,423 3,347 4,770 1,871
12/19/94 Salt Lake City/West North Temple 385 971 1,356 380
12/28/94 Milpitas / Watson 1,350 3,487 4,837 1,959
12/28/94 Las Vegas / Jones Blvd 1,035 2,641 3,676 1,458
12/28/94 Venice / Guthrie 495 1,344 1,839 745
12/30/94 Apple Valley / Foliage Ave 780 2,107 2,887 1,221
1/4/95 Chula Vista / Main Street 735 2,051 2,786 1,190
1/5/95 Pantego / West Park 315 903 1,218 543
1/12/95 Roswell / Alpharetta 423 1,427 1,850 921
1/23/95 North Bergen / Tonne 1,550 4,370 5,920 2,342
1/23/95 San Leandro / Hesperian 733 1,896 2,629 1,035
1/24/95 Nashville / Elm Hill 337 1,268 1,605 841
2/3/95 Reno / S. Mccarron Blvd 1,080 2,766 3,846 1,522
2/15/95 Schiller Park 1,688 4,419 6,107 2,230
2/15/95 Lansing 1,514 4,108 5,622 1,938
2/15/95 Pleasanton 1,256 3,075 4,331 1,486
2/15/95 LA/Sepulveda 1,453 3,572 5,025 1,704
2/28/95 Decatur / Flat Shoal 970 3,055 4,025 1,799
2/28/95 Smyrna / S. Cobb 662 2,073 2,735 1,144
2/28/95 Downey / Bellflower 916 2,444 3,360 1,319
2/28/95 Vallejo / Lincoln 445 1,384 1,829 800
2/28/95 Lynnwood / 180th St 516 1,475 1,991 882
2/28/95 Kent / Pacific Hwy 728 1,903 2,631 1,052
2/28/95 Kirkland 1,253 3,451 4,704 1,884
2/28/95 Federal Way/Pacific 785 2,151 2,936 1,242
2/28/95 Tampa / S. Dale 791 2,162 2,953 1,262
2/28/95 Burlingame/Adrian Rd 2,280 5,873 8,153 3,189
2/28/95 Miami / Cloverleaf 606 1,795 2,401 1,063
2/28/95 Pinole / San Pablo 639 1,865 2,504 1,071
2/28/95 South Gate / Firesto 1,442 3,900 5,342 2,270
2/28/95 San Jose / Mabury 892 2,322 3,214 1,256
2/28/95 La Puente / Valley Blvd 591 1,648 2,239 980
2/28/95 San Jose / Capitol E 1,214 3,009 4,223 1,642
2/28/95 Milwaukie / 40th Street 579 1,524 2,103 859
2/28/95 Portland / N. Lombard 812 2,149 2,961 1,212
2/28/95 Miami / Biscayne 1,313 3,478 4,791 1,815
2/28/95 Chicago / Clark Street 442 1,456 1,898 895
2/28/95 Palatine / Dundee 698 2,256 2,954 1,339
F-57
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
2/28/95 Williamsville/Transit - 284 670 313 -
2/28/95 Amherst / Sheridan - 484 1,151 258 -
3/2/95 Everett / Highway 99 - 859 2,022 295 -
3/2/95 Burien / 1St Ave South - 763 1,783 546 -
3/2/95 Kent / South 238th Street - 763 1,783 290 -
3/31/95 Cheverly / Central Ave - 911 2,164 447 -
5/1/95 Sandy / S. State Street - 1,043 2,442 (181) -
5/3/95 Largo / Ulmerton Roa - 263 654 197 -
5/8/95 Fairfield/Western Street - 439 1,030 110 -
5/8/95 Dallas / W. Mockingbird - 1,440 3,371 306 -
5/8/95 East Point / Lakewood - 884 2,071 482 -
5/25/95 Falls Church / Gallows Rd - 350 835 9,363 -
6/12/95 Baltimore / Old Waterloo - 769 1,850 238 -
6/12/95 Pleasant Hill / Hookston - 766 1,848 191 -
6/12/95 Mountain View/Old Middlefield - 2,095 4,913 201 -
6/30/95 San Jose / Blossom Hill - 1,467 3,444 259 -
6/30/95 Fairfield / Kings Highway - 1,811 4,273 417 -
6/30/95 Pacoima / Paxton Street 298 840 1,976 233 -
6/30/95 Portland / Prescott - 647 1,509 244 -
6/30/95 St. Petersburg - 352 827 308 -
6/30/95 Dallas / Audelia Road - 1,166 2,725 1,110 -
6/30/95 Miami Gardens - 823 1,929 336 -
6/30/95 Grand Prairie / 19th - 566 1,329 163 -
6/30/95 Joliet / Jefferson Street - 501 1,181 218 -
6/30/95 Bridgeton / Pennridge - 283 661 201 -
6/30/95 Portland / S.E.92nd - 638 1,497 225 -
6/30/95 Houston / S.W. Freeway - 537 1,254 6,947 -
6/30/95 Milwaukee / Brown - 358 849 280 -
6/30/95 Orlando / W. Oak Ridge - 698 1,642 365 -
6/30/95 Lauderhill / State Road - 644 1,508 337 -
6/30/95 Orange Park /Blanding Blvd - 394 918 379 -
6/30/95 St. Petersburg /Joe'S Creek - 704 1,642 280 -
6/30/95 St. Louis / Page Service Drive - 531 1,241 199 -
6/30/95 Independence /E. 42nd - 438 1,023 215 -
6/30/95 Cherry Hill / Dobbs Lane - 716 1,676 229 -
6/30/95 Edgewater Park / Route 130 - 683 1,593 247 -
6/30/95 Beaverton / S.W. 110 - 572 1,342 228 -
6/30/95 Markham / W. 159Th Place - 230 539 231 -
6/30/95 Houston / N.W. Freeway - 447 1,066 207 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
2/28/95 Williamsville/Transit 283 984 1,267 613
2/28/95 Amherst / Sheridan 483 1,410 1,893 807
3/2/95 Everett / Highway 99 858 2,318 3,176 1,315
3/2/95 Burien / 1St Ave South 763 2,329 3,092 1,317
3/2/95 Kent / South 238th Street 763 2,073 2,836 1,199
3/31/95 Cheverly / Central Ave 910 2,612 3,522 1,403
5/1/95 Sandy / S. State Street 923 2,381 3,304 919
5/3/95 Largo / Ulmerton Roa 262 852 1,114 498
5/8/95 Fairfield/Western Street 439 1,140 1,579 619
5/8/95 Dallas / W. Mockingbird 1,439 3,678 5,117 1,915
5/8/95 East Point / Lakewood 884 2,553 3,437 1,437
5/25/95 Falls Church / Gallows Rd 3,607 6,941 10,548 1,157
6/12/95 Baltimore / Old Waterloo 769 2,088 2,857 1,137
6/12/95 Pleasant Hill / Hookston 742 2,063 2,805 1,116
6/12/95 Mountain View/Old Middlefield 2,094 5,115 7,209 2,671
6/30/95 San Jose / Blossom Hill 1,467 3,703 5,170 1,973
6/30/95 Fairfield / Kings Highway 1,810 4,691 6,501 2,458
6/30/95 Pacoima / Paxton Street 840 2,209 3,049 1,201
6/30/95 Portland / Prescott 647 1,753 2,400 970
6/30/95 St. Petersburg 352 1,135 1,487 673
6/30/95 Dallas / Audelia Road 1,165 3,836 5,001 2,227
6/30/95 Miami Gardens 823 2,265 3,088 1,214
6/30/95 Grand Prairie / 19th 566 1,492 2,058 829
6/30/95 Joliet / Jefferson Street 501 1,399 1,900 802
6/30/95 Bridgeton / Pennridge 283 862 1,145 532
6/30/95 Portland / S.E.92nd 638 1,722 2,360 970
6/30/95 Houston / S.W. Freeway 1,140 7,598 8,738 2,181
6/30/95 Milwaukee / Brown 357 1,130 1,487 674
6/30/95 Orlando / W. Oak Ridge 697 2,008 2,705 1,106
6/30/95 Lauderhill / State Road 644 1,845 2,489 1,000
6/30/95 Orange Park /Blanding Blvd 393 1,298 1,691 694
6/30/95 St. Petersburg /Joe'S Creek 703 1,923 2,626 1,042
6/30/95 St. Louis / Page Service Drive 531 1,440 1,971 820
6/30/95 Independence /E. 42nd 438 1,238 1,676 705
6/30/95 Cherry Hill / Dobbs Lane 715 1,906 2,621 1,052
6/30/95 Edgewater Park / Route 130 683 1,840 2,523 943
6/30/95 Beaverton / S.W. 110 572 1,570 2,142 872
6/30/95 Markham / W. 159Th Place 229 771 1,000 452
6/30/95 Houston / N.W. Freeway 447 1,273 1,720 698
F-58
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
-------------------------------------------------------------------------------------------------------------------------------
6/30/95 Portland / Gantenbein - 537 1,262 267 -
6/30/95 Upper Chichester/Market St. - 569 1,329 183 -
6/30/95 Fort Worth / Hwy 80 - 379 891 297 -
6/30/95 Greenfield/ S. 108th - 728 1,707 494 -
6/30/95 Altamonte Springs - 566 1,326 282 -
6/30/95 Seattle / Delridge Way - 760 1,779 278 -
6/30/95 Elmhurst / Lake Frontage Rd - 748 1,758 267 -
6/30/95 Los Angeles / Beverly Blvd - 787 1,886 787 -
6/30/95 Lawrenceville / Brunswick - 841 1,961 189 -
6/30/95 Richmond / Carlson - 865 2,025 346 -
6/30/95 Liverpool / Oswego Road - 545 1,279 370 -
6/30/95 Rochester / East Ave - 578 1,375 540 -
6/30/95 Pasadena / E. Beltway - 757 1,767 193 -
7/13/95 Tarzana / Burbank Blvd - 2,895 6,823 690 -
7/31/95 Orlando / Lakehurst - 450 1,063 183 -
7/31/95 Livermore / Portola - 921 2,157 281 -
7/31/95 San Jose / Tully - 912 2,137 518 -
7/31/95 Mission Bay - 1,617 3,785 589 -
7/31/95 Las Vegas / Decatur - 1,147 2,697 454 -
7/31/95 Pleasanton / Stanley - 1,624 3,811 397 -
7/31/95 Castro Valley / Grove - 757 1,772 135 -
7/31/95 Honolulu / Kaneohe - 1,215 2,846 2,256 -
7/31/95 Chicago / Wabash Ave - 645 1,535 3,617 -
7/31/95 Springfield / Parker - 765 1,834 277 -
7/31/95 Huntington Bch/Gotham - 765 1,808 241 -
7/31/95 Tucker / Lawrenceville - 630 1,480 249 -
7/31/95 Marietta / Canton Road - 600 1,423 347 -
7/31/95 Wheeling / Hintz - 450 1,054 186 -
8/1/95 Gresham / Division - 607 1,428 121 -
8/1/95 Tucker / Lawrenceville - 600 1,405 382 -
8/1/95 Decatur / Covington - 720 1,694 281 -
8/11/95 Studio City/Ventura - 1,285 3,015 382 -
8/12/95 Smyrna / Hargrove Road - 1,020 3,038 559 -
9/1/95 Hayward / Mission Blvd - 1,020 2,383 328 -
9/1/95 Park City / Belvider - 600 1,405 152 -
9/1/95 New Castle/Dupont Parkway - 990 2,369 237 -
9/1/95 Las Vegas / Rainbow - 1,050 2,459 132 -
9/1/95 Mountain View / Reng - 945 2,216 173 -
9/1/95 Venice / Cadillac - 930 2,182 440 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
6/30/95 Portland / Gantenbein 537 1,529 2,066 861
6/30/95 Upper Chichester/Market St. 569 1,512 2,081 818
6/30/95 Fort Worth / Hwy 80 378 1,189 1,567 604
6/30/95 Greenfield/ S. 108th 727 2,202 2,929 1,204
6/30/95 Altamonte Springs 566 1,608 2,174 863
6/30/95 Seattle / Delridge Way 760 2,057 2,817 1,145
6/30/95 Elmhurst / Lake Frontage Rd 748 2,025 2,773 1,100
6/30/95 Los Angeles / Beverly Blvd 787 2,673 3,460 1,443
6/30/95 Lawrenceville / Brunswick 840 2,151 2,991 1,152
6/30/95 Richmond / Carlson 864 2,372 3,236 1,347
6/30/95 Liverpool / Oswego Road 545 1,649 2,194 950
6/30/95 Rochester / East Ave 578 1,915 2,493 1,082
6/30/95 Pasadena / E. Beltway 757 1,960 2,717 1,053
7/13/95 Tarzana / Burbank Blvd 2,894 7,514 10,408 3,957
7/31/95 Orlando / Lakehurst 450 1,246 1,696 694
7/31/95 Livermore / Portola 921 2,438 3,359 1,295
7/31/95 San Jose / Tully 912 2,655 3,567 1,476
7/31/95 Mission Bay 1,616 4,375 5,991 2,450
7/31/95 Las Vegas / Decatur 1,147 3,151 4,298 1,729
7/31/95 Pleasanton / Stanley 1,624 4,208 5,832 2,193
7/31/95 Castro Valley / Grove 756 1,908 2,664 996
7/31/95 Honolulu / Kaneohe 2,133 4,184 6,317 2,042
7/31/95 Chicago / Wabash Ave 645 5,152 5,797 1,576
7/31/95 Springfield / Parker 765 2,111 2,876 1,131
7/31/95 Huntington Bch/Gotham 765 2,049 2,814 1,109
7/31/95 Tucker / Lawrenceville 630 1,729 2,359 958
7/31/95 Marietta / Canton Road 600 1,770 2,370 1,005
7/31/95 Wheeling / Hintz 450 1,240 1,690 688
8/1/95 Gresham / Division 607 1,549 2,156 829
8/1/95 Tucker / Lawrenceville 600 1,787 2,387 1,028
8/1/95 Decatur / Covington 720 1,975 2,695 1,104
8/11/95 Studio City/Ventura 1,285 3,397 4,682 1,791
8/12/95 Smyrna / Hargrove Road 1,020 3,597 4,617 1,864
9/1/95 Hayward / Mission Blvd 1,020 2,711 3,731 1,420
9/1/95 Park City / Belvider 600 1,557 2,157 827
9/1/95 New Castle/Dupont Parkway 990 2,606 3,596 1,382
9/1/95 Las Vegas / Rainbow 1,050 2,591 3,641 1,350
9/1/95 Mountain View / Reng 945 2,389 3,334 1,264
9/1/95 Venice / Cadillac 930 2,622 3,552 1,380
F-59
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
9/1/95 Simi Valley /Los Angeles - 1,590 3,724 356 -
9/1/95 Spring Valley/Foreman - 1,095 2,572 423 -
9/6/95 Darien / Frontage Road - 975 2,321 254 -
9/30/95 Whittier - 215 384 211 781
9/30/95 Van Nuys/Balboa - 295 657 120 1,148
9/30/95 Huntington Beach - 176 321 157 738
9/30/95 Monterey Park - 124 346 44 782
9/30/95 Downey - 191 317 130 825
9/30/95 Del Amo - 474 742 441 922
9/30/95 Carson - 375 735 418 428
9/30/95 Van Nuys/Balboa Blvd - 1,920 4,504 600 -
10/31/95 San Lorenzo /Hesperian - 1,590 3,716 426 -
10/31/95 Chicago / W. 47th Street - 300 708 308 -
10/31/95 Los Angeles / Eastern - 455 1,070 212 -
11/15/95 Costa Mesa - 522 1,218 162 -
11/15/95 Plano / E. 14th - 705 1,646 155 -
11/15/95 Citrus Heights/Sunrise - 520 1,213 248 -
11/15/95 Modesto/Briggsmore Ave - 470 1,097 161 -
11/15/95 So San Francisco/Spruce - 1,905 4,444 556 -
11/15/95 Pacheco/Buchanan Circle - 1,681 3,951 618 -
11/16/95 Palm Beach Gardens - 657 1,540 207 -
11/16/95 Delray Beach - 600 1,407 226 -
1/1/96 Bensenville/York Rd - 667 1,602 291 895
1/1/96 Louisville/Preston - 211 1,060 151 594
1/1/96 San Jose/Aborn Road - 615 1,342 103 759
1/1/96 Englewood/Federal - 481 1,395 154 777
1/1/96 W. Hollywood/Santa Monica - 3,415 4,577 510 2,552
1/1/96 Orland Hills/W. 159th - 917 2,392 367 1,342
1/1/96 Merrionette Park - 818 2,020 202 1,122
1/1/96 Denver/S Quebec - 1,849 1,941 470 1,086
1/1/96 Tigard/S.W. Pacific - 633 1,206 218 705
1/1/96 Coram/Middle Count - 507 1,421 183 792
1/1/96 Houston/FM 1960 - 635 1,294 324 783
1/1/96 Kent/Military Trail - 409 1,670 330 956
1/1/96 Turnersville/Black - 165 1,360 172 758
1/1/96 Sewell/Rts. 553 - 323 1,138 162 658
1/1/96 Maple Shade/Fellowship - 331 1,421 169 803
1/1/96 Hyattsville/Kenilworth - 509 1,757 213 1,000
1/1/96 Waterbury/Captain - 434 2,089 247 1,162
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
9/1/95 Simi Valley /Los Angeles 1,590 4,080 5,670 2,142
9/1/95 Spring Valley/Foreman 1,095 2,995 4,090 1,555
9/6/95 Darien / Frontage Road 975 2,575 3,550 1,323
9/30/95 Whittier 215 1,376 1,591 813
9/30/95 Van Nuys/Balboa 295 1,925 2,220 1,106
9/30/95 Huntington Beach 176 1,216 1,392 702
9/30/95 Monterey Park 124 1,172 1,296 706
9/30/95 Downey 191 1,272 1,463 747
9/30/95 Del Amo 474 2,105 2,579 1,238
9/30/95 Carson 375 1,581 1,956 805
9/30/95 Van Nuys/Balboa Blvd 1,919 5,105 7,024 2,460
10/31/95 San Lorenzo /Hesperian 1,590 4,142 5,732 1,999
10/31/95 Chicago / W. 47th Street 300 1,016 1,316 557
10/31/95 Los Angeles / Eastern 454 1,283 1,737 632
11/15/95 Costa Mesa 522 1,380 1,902 683
11/15/95 Plano / E. 14th 705 1,801 2,506 882
11/15/95 Citrus Heights/Sunrise 520 1,461 1,981 731
11/15/95 Modesto/Briggsmore Ave 470 1,258 1,728 649
11/15/95 So San Francisco/Spruce 1,904 5,001 6,905 2,515
11/15/95 Pacheco/Buchanan Circle 1,680 4,570 6,250 2,269
11/16/95 Palm Beach Gardens 657 1,747 2,404 910
11/16/95 Delray Beach 600 1,633 2,233 866
1/1/96 Bensenville/York Rd 667 2,788 3,455 1,264
1/1/96 Louisville/Preston 211 1,805 2,016 757
1/1/96 San Jose/Aborn Road 615 2,204 2,819 972
1/1/96 Englewood/Federal 481 2,326 2,807 1,063
1/1/96 W. Hollywood/Santa Monica 3,414 7,640 11,054 3,253
1/1/96 Orland Hills/W. 159th 917 4,101 5,018 1,873
1/1/96 Merrionette Park 818 3,344 4,162 1,449
1/1/96 Denver/S Quebec 1,848 3,498 5,346 1,486
1/1/96 Tigard/S.W. Pacific 633 2,129 2,762 922
1/1/96 Coram/Middle Count 507 2,396 2,903 1,020
1/1/96 Houston/FM 1960 635 2,401 3,036 1,054
1/1/96 Kent/Military Trail 409 2,956 3,365 1,254
1/1/96 Turnersville/Black 165 2,290 2,455 994
1/1/96 Sewell/Rts. 553 323 1,958 2,281 847
1/1/96 Maple Shade/Fellowship 331 2,393 2,724 1,011
1/1/96 Hyattsville/Kenilworth 508 2,971 3,479 1,256
1/1/96 Waterbury/Captain 434 3,498 3,932 1,341
F-60
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
1/1/96 Bedford Hts/Miles - 835 1,577 313 929
1/1/96 Livonia/Newburgh - 635 1,407 193 783
1/1/96 Sunland/Sunland Blvd. - 631 1,965 146 1,090
1/1/96 Des Moines - 448 1,350 153 768
1/1/96 Oxonhill/Indianhead - 772 2,017 424 1,141
1/1/96 Sacramento/N. 16th - 582 2,610 226 1,466
1/1/96 Houston/Westheimer - 1,508 2,274 314 1,304
1/1/96 San Pablo/San Pablo - 565 1,232 186 713
1/1/96 Bowie/Woodcliff - 718 2,336 265 1,292
1/1/96 Milwaukee/S. 84th - 444 1,868 350 1,091
1/1/96 Clinton/Malcolm Road - 593 2,123 288 1,187
1/3/96 San Gabriel - 1,005 2,345 424 -
1/5/96 San Francisco, Second St. - 2,880 6,814 217 -
1/12/96 San Antonio, TX - 912 2,170 108 -
2/29/96 Naples, FL/Old US 41 - 849 2,016 276 -
2/29/96 Lake Worth, FL/S. Military Tr. - 1,782 4,723 141 -
2/29/96 Brandon, FL/W Brandon Blvd. - 1,928 4,523 1,018 -
2/29/96 Coral Springs FL/W Sample Rd. - 3,480 8,148 209 -
2/29/96 Delray Beach FL/S Military Tr. - 941 2,222 203 -
2/29/96 Jupiter FL/Military Trail - 2,280 5,347 371 -
2/29/96 Lakeworth FL/Lake Worth Rd - 737 1,742 191 -
2/29/96 New Port Richey/State Rd 54 - 857 2,025 298 -
2/29/96 Sanford FL/S Orlando Dr - 734 1,749 2,101 -
3/8/96 Atlanta/Roswell - 898 3,649 168 -
3/31/96 Oakland - 1,065 2,764 472 -
3/31/96 Saratoga - 2,339 6,081 236 -
3/31/96 Randallstown - 1,359 3,527 454 -
3/31/96 Plano - 650 1,682 137 -
3/31/96 Houston - 543 1,402 188 -
3/31/96 Irvine - 1,920 4,975 1,294 -
3/31/96 Milwaukee - 542 1,402 178 -
3/31/96 Carrollton - 578 1,495 159 -
3/31/96 Torrance - 1,415 3,675 199 -
3/31/96 Jacksonville - 713 1,845 244 -
3/31/96 Dallas - 315 810 1,809 -
3/31/96 Houston - 669 1,724 679 -
3/31/96 Baltimore - 842 2,180 290 -
3/31/96 New Haven - 740 1,907 (155) -
4/1/96 Chicago/Pulaski - 764 1,869 331 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
1/1/96 Bedford Hts/Miles 835 2,819 3,654 1,281
1/1/96 Livonia/Newburgh 635 2,383 3,018 994
1/1/96 Sunland/Sunland Blvd. 631 3,201 3,832 1,317
1/1/96 Des Moines 447 2,272 2,719 973
1/1/96 Oxonhill/Indianhead 772 3,582 4,354 1,537
1/1/96 Sacramento/N. 16th 581 4,303 4,884 1,515
1/1/96 Houston/Westheimer 1,507 3,893 5,400 1,719
1/1/96 San Pablo/San Pablo 565 2,131 2,696 895
1/1/96 Bowie/Woodcliff 718 3,893 4,611 1,578
1/1/96 Milwaukee/S. 84th 444 3,309 3,753 1,398
1/1/96 Clinton/Malcolm Road 592 3,599 4,191 1,470
1/3/96 San Gabriel 1,005 2,769 3,774 1,423
1/5/96 San Francisco, Second St. 2,879 7,032 9,911 3,512
1/12/96 San Antonio, TX 912 2,278 3,190 1,136
2/29/96 Naples, FL/Old US 41 849 2,292 3,141 1,183
2/29/96 Lake Worth, FL/S. Military Tr. 1,781 4,865 6,646 2,397
2/29/96 Brandon, FL/W Brandon Blvd. 1,928 5,541 7,469 3,146
2/29/96 Coral Springs FL/W Sample Rd. 3,479 8,358 11,837 4,067
2/29/96 Delray Beach FL/S Military Tr. 940 2,426 3,366 1,250
2/29/96 Jupiter FL/Military Trail 2,279 5,719 7,998 2,859
2/29/96 Lakeworth FL/Lake Worth Rd 736 1,934 2,670 999
2/29/96 New Port Richey/State Rd 54 856 2,324 3,180 1,199
2/29/96 Sanford FL/S Orlando Dr 974 3,610 4,584 1,810
3/8/96 Atlanta/Roswell 898 3,817 4,715 1,855
3/31/96 Oakland 1,065 3,236 4,301 1,656
3/31/96 Saratoga 2,339 6,317 8,656 3,073
3/31/96 Randallstown 1,359 3,981 5,340 1,995
3/31/96 Plano 649 1,820 2,469 922
3/31/96 Houston 543 1,590 2,133 794
3/31/96 Irvine 1,920 6,269 8,189 2,987
3/31/96 Milwaukee 542 1,580 2,122 804
3/31/96 Carrollton 578 1,654 2,232 816
3/31/96 Torrance 1,415 3,874 5,289 1,920
3/31/96 Jacksonville 712 2,090 2,802 1,091
3/31/96 Dallas 315 2,619 2,934 935
3/31/96 Houston 669 2,403 3,072 1,317
3/31/96 Baltimore 842 2,470 3,312 1,273
3/31/96 New Haven 667 1,825 2,492 974
4/1/96 Chicago/Pulaski 763 2,201 2,964 1,007
F-61
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
----------------------------------------------------------------------------------------------------------------------------------
4/1/96 Las Vegas/Desert Inn - 1,115 2,729 189 -
4/1/96 Torrance/Crenshaw - 916 2,243 149 -
4/1/96 Weymouth - 485 1,187 344 -
4/1/96 St. Louis/Barrett Station Road - 630 1,542 165 -
4/1/96 Rockville/Randolph - 1,153 2,823 286 -
4/1/96 Simi Valley/East Street - 970 2,374 108 -
4/1/96 Houston/Westheimer - 1,390 3,402 6,287 -
4/3/96 Naples - 1,187 2,809 498 -
6/26/96 Boca Raton - 3,180 7,468 708 -
6/28/96 Venice - 669 1,575 199 -
6/30/96 Las Vegas - 921 2,155 375 -
6/30/96 Bedford Park - 606 1,419 267 -
6/30/96 Los Angeles - 692 1,616 171 -
6/30/96 Silver Spring - 1,513 3,535 327 -
6/30/96 Newark - 1,051 2,458 142 -
6/30/96 Brooklyn - 783 1,830 1,124 -
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 3,117 185 -
9/5/96 Spring Valley/S Pascack rd - 1,260 2,966 1,011 -
9/16/96 Dallas/Royal Lane - 1,008 2,426 293 -
9/16/96 Colorado Springs/Tomah Drive - 731 1,759 183 -
9/16/96 Lewisville/S. Stemmons - 603 1,451 174 -
9/16/96 Las Vegas/Boulder Hwy. - 947 2,279 435 -
9/16/96 Sarasota/S. Tamiami Trail - 584 1,407 1,460 -
9/16/96 Willow Grove/Maryland Road - 673 1,620 162 -
9/16/96 Houston/W. Montgomery Rd. - 524 1,261 285 -
9/16/96 Denver/W. Hampden - 1,084 2,609 229 -
9/16/96 Littleton/Southpark Way - 922 2,221 430 -
9/16/96 Petaluma/Baywood Drive - 861 2,074 175 -
9/16/96 Canoga Park/Sherman Way - 1,543 3,716 606 -
9/16/96 Jacksonville/South Lane Ave. - 554 1,334 311 -
9/16/96 Newport News/Warwick Blvd. - 575 1,385 191 -
9/16/96 Greenbrook/Route 22 - 1,227 2,954 637 -
9/16/96 Monsey/Route 59 - 1,068 2,572 225 -
9/16/96 Santa Rosa/Santa Rosa Ave. - 575 1,385 137 -
9/16/96 Fort Worth/Brentwood - 823 2,016 250 -
9/16/96 Glendale/San Fernando Road - 2,500 6,124 264 -
9/16/96 Houston/Harwin - 549 1,344 250 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-------------------------------------------------------------------------------------------------------------
4/1/96 Las Vegas/Desert Inn 1,115 2,918 4,033 1,383
4/1/96 Torrance/Crenshaw 916 2,392 3,308 1,113
4/1/96 Weymouth 485 1,531 2,016 675
4/1/96 St. Louis/Barrett Station Road 630 1,707 2,337 771
4/1/96 Rockville/Randolph 1,153 3,109 4,262 1,442
4/1/96 Simi Valley/East Street 969 2,483 3,452 1,121
4/1/96 Houston/Westheimer 1,389 9,690 11,079 3,851
4/3/96 Naples 1,186 3,308 4,494 1,610
6/26/96 Boca Raton 3,179 8,177 11,356 4,231
6/28/96 Venice 669 1,774 2,443 905
6/30/96 Las Vegas 921 2,530 3,451 1,319
6/30/96 Bedford Park 606 1,686 2,292 895
6/30/96 Los Angeles 691 1,788 2,479 877
6/30/96 Silver Spring 1,513 3,862 5,375 1,930
6/30/96 Newark 1,051 2,600 3,651 1,269
6/30/96 Brooklyn 783 2,954 3,737 1,507
7/2/96 Glen Burnie/Furnace Br Rd 1,754 4,909 6,663 2,222
7/22/96 Lakewood/W Hampton 716 2,186 2,902 1,033
8/13/96 Norcross/Holcomb Bridge Rd 954 3,303 4,257 1,581
9/5/96 Spring Valley/S Pascack rd 1,260 3,977 5,237 1,891
9/16/96 Dallas/Royal Lane 1,007 2,720 3,727 1,310
9/16/96 Colorado Springs/Tomah Drive 730 1,943 2,673 912
9/16/96 Lewisville/S. Stemmons 602 1,626 2,228 795
9/16/96 Las Vegas/Boulder Hwy. 946 2,715 3,661 1,415
9/16/96 Sarasota/S. Tamiami Trail 584 2,867 3,451 980
9/16/96 Willow Grove/Maryland Road 672 1,783 2,455 852
9/16/96 Houston/W. Montgomery Rd. 523 1,547 2,070 769
9/16/96 Denver/W. Hampden 1,083 2,839 3,922 1,375
9/16/96 Littleton/Southpark Way 922 2,651 3,573 1,336
9/16/96 Petaluma/Baywood Drive 861 2,249 3,110 1,100
9/16/96 Canoga Park/Sherman Way 1,543 4,322 5,865 2,246
9/16/96 Jacksonville/South Lane Ave. 554 1,645 2,199 834
9/16/96 Newport News/Warwick Blvd. 575 1,576 2,151 799
9/16/96 Greenbrook/Route 22 1,226 3,592 4,818 1,693
9/16/96 Monsey/Route 59 1,068 2,797 3,865 1,324
9/16/96 Santa Rosa/Santa Rosa Ave. 575 1,522 2,097 739
9/16/96 Fort Worth/Brentwood 823 2,266 3,089 1,061
9/16/96 Glendale/San Fernando Road 2,499 6,389 8,888 2,969
9/16/96 Houston/Harwin 549 1,594 2,143 772
F-62
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
9/16/96 Irvine/Cowan Street - 1,890 4,631 428 -
9/16/96 Fairfield/Dixie Highway - 427 1,046 169 -
9/16/96 Mesa/Country Club Drive - 701 1,718 650 -
9/16/96 San Francisco/Geary Blvd. - 2,957 7,244 500 -
9/16/96 Houston/Gulf Freeway - 701 1,718 5,100 -
9/16/96 Las Vegas/S. Decatur Blvd. - 1,037 2,539 281 -
9/16/96 Tempe/McKellips Road - 823 1,972 412 -
9/16/96 Richland Hills/Airport Fwy. - 473 1,158 217 -
10/11/96 Hampton/Pembroke Road - 1,080 2,346 (136) -
10/11/96 Norfolk/Widgeon Road - 1,110 2,405 (229) -
10/11/96 Richmond/Bloom Lane - 1,188 2,512 (108) -
10/11/96 Virginia Beach/Southern Blvd - 282 610 300 -
10/11/96 Chesapeake/Military Hwy - 912 1,974 465 -
10/11/96 Richmond/Midlothian Park - 762 1,588 550 -
10/11/96 Roanoke/Peters Creek Road - 819 1,776 381 -
10/11/96 Orlando/E Oakridge Rd - 927 2,020 492 -
10/11/96 Orlando/South Hwy 17-92 - 1,170 2,549 314 -
10/25/96 Austin/Renelli - 1,710 3,990 375 -
10/25/96 Austin/Santiago - 900 2,100 234 -
10/25/96 Dallas/East N.W. Highway - 698 1,628 715 -
10/25/96 Dallas/Denton Drive - 900 2,100 251 -
10/25/96 Houston/Hempstead - 518 1,207 463 -
10/25/96 Pasadena/So. Shaver - 420 980 463 -
10/31/96 Houston/Joel Wheaton Rd - 465 1,085 254 -
10/31/96 Mt Holly/541 Bypass - 360 840 369 -
11/13/96 Town East/Mesquite - 330 770 281 -
11/14/96 Bossier City LA - 633 1,488 (81) -
12/5/96 Lake Forest/Bake Parkway - 971 2,173 588 -
12/16/96 Cherry Hill/Old Cuthbert - 645 1,505 883 -
12/16/96 Oklahoma City/SW 74th - 375 875 176 -
12/16/96 Oklahoma City/S Santa Fe - 360 840 177 -
12/16/96 Oklahoma City/S. May - 360 840 164 -
12/16/96 Arlington/S. Watson Rd. - 930 2,170 754 -
12/16/96 Richardson/E. Arapaho - 1,290 3,010 531 -
12/23/96 Eagle Rock/Colorado - 330 813 440 -
12/23/96 Upper Darby/Lansdowne - 899 2,272 282 -
12/23/96 Plymouth Meeting /Chemical - 1,109 2,802 235 -
12/23/96 Philadelphia/Byberry - 1,019 2,575 368 -
12/23/96 Ft. Lauderdale/State Road - 1,199 3,030 310 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-------------------------------------------------------------------------------------------------------------
9/16/96 Irvine/Cowan Street 1,890 5,059 6,949 2,381
9/16/96 Fairfield/Dixie Highway 427 1,215 1,642 592
9/16/96 Mesa/Country Club Drive 701 2,368 3,069 1,106
9/16/96 San Francisco/Geary Blvd. 2,956 7,745 10,701 3,658
9/16/96 Houston/Gulf Freeway 701 6,818 7,519 1,988
9/16/96 Las Vegas/S. Decatur Blvd. 1,036 2,821 3,857 1,348
9/16/96 Tempe/McKellips Road 823 2,384 3,207 1,155
9/16/96 Richland Hills/Airport Fwy. 472 1,376 1,848 714
10/11/96 Hampton/Pembroke Road 914 2,376 3,290 939
10/11/96 Norfolk/Widgeon Road 908 2,378 3,286 921
10/11/96 Richmond/Bloom Lane 994 2,598 3,592 1,059
10/11/96 Virginia Beach/Southern Blvd 282 910 1,192 521
10/11/96 Chesapeake/Military Hwy 912 2,439 3,351 1,302
10/11/96 Richmond/Midlothian Park 762 2,138 2,900 1,234
10/11/96 Roanoke/Peters Creek Road 819 2,157 2,976 1,075
10/11/96 Orlando/E Oakridge Rd 927 2,512 3,439 1,181
10/11/96 Orlando/South Hwy 17-92 1,170 2,863 4,033 1,361
10/25/96 Austin/Renelli 1,709 4,366 6,075 2,082
10/25/96 Austin/Santiago 900 2,334 3,234 1,159
10/25/96 Dallas/East N.W. Highway 697 2,344 3,041 932
10/25/96 Dallas/Denton Drive 900 2,351 3,251 1,111
10/25/96 Houston/Hempstead 517 1,671 2,188 911
10/25/96 Pasadena/So. Shaver 420 1,443 1,863 795
10/31/96 Houston/Joel Wheaton Rd 465 1,339 1,804 676
10/31/96 Mt Holly/541 Bypass 360 1,209 1,569 643
11/13/96 Town East/Mesquite 330 1,051 1,381 507
11/14/96 Bossier City LA 557 1,483 2,040 601
12/5/96 Lake Forest/Bake Parkway 972 2,760 3,732 1,167
12/16/96 Cherry Hill/Old Cuthbert 645 2,388 3,033 1,244
12/16/96 Oklahoma City/SW 74th 375 1,051 1,426 497
12/16/96 Oklahoma City/S Santa Fe 360 1,017 1,377 532
12/16/96 Oklahoma City/S. May 360 1,004 1,364 513
12/16/96 Arlington/S. Watson Rd. 930 2,924 3,854 1,473
12/16/96 Richardson/E. Arapaho 1,290 3,541 4,831 1,704
12/23/96 Eagle Rock/Colorado 444 1,139 1,583 429
12/23/96 Upper Darby/Lansdowne 899 2,554 3,453 1,267
12/23/96 Plymouth Meeting /Chemical 1,109 3,037 4,146 1,077
12/23/96 Philadelphia/Byberry 1,019 2,943 3,962 1,367
12/23/96 Ft. Lauderdale/State Road 1,199 3,340 4,539 1,617
F-63
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
-------------------------------------------------------------------------------------------------------------------------------
12/23/96 Englewood/Costilla - 1,739 4,393 238 -
12/23/96 Lilburn/Beaver Ruin Road - 600 1,515 217 -
12/23/96 Carmichael/Fair Oaks - 809 2,045 300 -
12/23/96 Portland/Division Street - 989 2,499 215 -
12/23/96 Napa/Industrial - 660 1,666 166 -
12/23/96 Wheatridge/W. 44th Avenue - 1,439 3,636 207 -
12/23/96 Las Vegas/Charleston - 1,049 2,651 250 -
12/23/96 Las Vegas/South Arvill - 929 2,348 249 -
12/23/96 Los Angeles/Santa Monica - 3,328 8,407 576 -
12/23/96 Warren/Schoenherr Rd. - 749 1,894 229 -
12/23/96 Portland/N.E. 71st Avenue - 869 2,196 292 -
12/23/96 Broadview/S. 25th Avenue - 1,289 3,257 371 -
12/23/96 Winter Springs/W. St. Rte 434 - 689 1,742 179 -
12/23/96 Tampa/15th Street - 420 1,060 361 -
12/23/96 Pompano Beach/S. Dixie Hwy. - 930 2,292 427 -
12/23/96 Overland Park/Mastin - 990 2,440 3,275 -
12/23/96 Auburn/R Street - 690 1,700 253 -
12/23/96 Federal Heights/W. 48th Ave. - 720 1,774 293 -
12/23/96 Decatur/Covington - 930 2,292 276 -
12/23/96 Forest Park/Jonesboro Rd. - 540 1,331 299 -
12/23/96 Mangonia Park/Australian Ave. - 840 2,070 185 -
12/23/96 Whittier/Colima - 540 1,331 152 -
12/23/96 Kent/Pacific Hwy South - 930 2,292 221 -
12/23/96 Topeka/8th Street - 150 370 407 -
12/23/96 Denver East Evans - 1,740 4,288 296 -
12/23/96 Pittsburgh/California Ave. - 630 1,552 124 -
12/23/96 Ft. Lauderdale/Powerline - 660 1,626 391 -
12/23/96 Philadelphia/Oxford - 900 2,218 289 -
12/23/96 Dallas/Lemmon Ave. - 1,710 4,214 194 -
12/23/96 Alsip/115th Street - 750 1,848 4,624 -
12/23/96 Green Acres/Jog Road - 600 1,479 151 -
12/23/96 Pompano Beach/Sample Road - 1,320 3,253 155 -
12/23/96 Wyndmoor/Ivy Hill - 2,160 5,323 319 -
12/23/96 W. Palm Beach/Belvedere - 960 2,366 252 -
12/23/96 Renton 174th St. - 960 2,366 402 -
12/23/96 Sacramento/Northgate - 1,021 2,647 193 -
12/23/96 Phoenix/19th Avenue - 991 2,569 286 -
12/23/96 Bedford Park/Cicero - 1,321 3,426 451 -
12/23/96 Lake Worth/Lk Worth - 1,111 2,880 283 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
12/23/96 Englewood/Costilla 1,738 4,632 6,370 2,128
12/23/96 Lilburn/Beaver Ruin Road 599 1,733 2,332 848
12/23/96 Carmichael/Fair Oaks 809 2,345 3,154 1,125
12/23/96 Portland/Division Street 989 2,714 3,703 1,275
12/23/96 Napa/Industrial 659 1,833 2,492 893
12/23/96 Wheatridge/W. 44th Avenue 1,438 3,844 5,282 1,814
12/23/96 Las Vegas/Charleston 1,049 2,901 3,950 1,351
12/23/96 Las Vegas/South Arvill 929 2,597 3,526 1,224
12/23/96 Los Angeles/Santa Monica 3,327 8,984 12,311 4,100
12/23/96 Warren/Schoenherr Rd. 749 2,123 2,872 1,029
12/23/96 Portland/N.E. 71st Avenue 869 2,488 3,357 1,240
12/23/96 Broadview/S. 25th Avenue 1,289 3,628 4,917 1,777
12/23/96 Winter Springs/W. St. Rte 434 689 1,921 2,610 922
12/23/96 Tampa/15th Street 420 1,421 1,841 773
12/23/96 Pompano Beach/S. Dixie Hwy. 930 2,719 3,649 1,395
12/23/96 Overland Park/Mastin 1,306 5,399 6,705 1,955
12/23/96 Auburn/R Street 690 1,953 2,643 967
12/23/96 Federal Heights/W. 48th Ave. 720 2,067 2,787 957
12/23/96 Decatur/Covington 930 2,568 3,498 1,263
12/23/96 Forest Park/Jonesboro Rd. 540 1,630 2,170 786
12/23/96 Mangonia Park/Australian Ave. 840 2,255 3,095 1,092
12/23/96 Whittier/Colima 540 1,483 2,023 696
12/23/96 Kent/Pacific Hwy South 930 2,513 3,443 1,204
12/23/96 Topeka/8th Street 150 777 927 371
12/23/96 Denver East Evans 1,739 4,585 6,324 2,139
12/23/96 Pittsburgh/California Ave. 630 1,676 2,306 809
12/23/96 Ft. Lauderdale/Powerline 660 2,017 2,677 1,057
12/23/96 Philadelphia/Oxford 900 2,507 3,407 1,181
12/23/96 Dallas/Lemmon Ave. 1,709 4,409 6,118 2,051
12/23/96 Alsip/115th Street 750 6,472 7,222 1,785
12/23/96 Green Acres/Jog Road 600 1,630 2,230 781
12/23/96 Pompano Beach/Sample Road 1,320 3,408 4,728 1,610
12/23/96 Wyndmoor/Ivy Hill 2,159 5,643 7,802 2,643
12/23/96 W. Palm Beach/Belvedere 960 2,618 3,578 1,270
12/23/96 Renton 174th St. 960 2,768 3,728 1,323
12/23/96 Sacramento/Northgate 1,021 2,840 3,861 1,340
12/23/96 Phoenix/19th Avenue 991 2,855 3,846 1,377
12/23/96 Bedford Park/Cicero 1,321 3,877 5,198 1,865
12/23/96 Lake Worth/Lk Worth 1,111 3,163 4,274 1,528
F-64
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
12/23/96 Arlington/Algonquin - 991 2,569 897 -
12/23/96 Seattle/15th Avenue - 781 2,024 288 -
12/23/96 Southington/Spring - 811 2,102 343 -
12/23/96 Clifton/Broad Street - 1,411 3,659 240 -
12/23/96 Hillside/Glenwood - 563 4,051 441 -
12/23/96 Nashville/Dickerson Pike - 990 2,440 243 -
12/23/96 Madison/Gallatin Road - 780 1,922 435 -
12/30/96 Concorde/Treat - 1,396 3,258 330 -
12/30/96 Virginia Beach - 535 1,248 193 -
12/30/96 San Mateo - 2,408 5,619 269 -
1/22/97 Austin, 1033 E. 41 Street - 257 3,633 122 -
4/12/97 Annandale / Backlick - 955 2,229 390 -
4/12/97 Ft. Worth / West Freeway - 667 1,556 329 -
4/12/97 Campbell / S. Curtner - 2,550 5,950 791 -
4/12/97 Aurora / S. Idalia - 1,002 2,338 654 -
4/12/97 Santa Cruz / Capitola - 1,037 2,420 347 -
4/12/97 Indianapolis / Lafayette Road - 682 1,590 644 -
4/12/97 Indianapolis / Route 31 - 619 1,444 521 -
4/12/97 Farmingdale / Broad Hollow Rd. - 1,568 3,658 870 -
4/12/97 Tyson's Corner / Springhill Rd. - 3,861 9,010 1,485 -
4/12/97 Fountain Valley / Newhope - 1,137 2,653 406 -
4/12/97 Dallas / Winsted - 1,375 3,209 528 -
4/12/97 Columbia / Broad River Rd. - 121 282 173 -
4/12/97 Livermore / S. Front Road - 876 2,044 207 -
4/12/97 Garland / Plano - 889 2,073 258 -
4/12/97 San Jose / Story Road - 1,352 3,156 565 -
4/12/97 Aurora / Abilene - 1,406 3,280 514 -
4/12/97 Antioch / Sunset Drive - 1,035 2,416 293 -
4/12/97 Rancho Cordova / Sunrise - 1,048 2,445 426 -
4/12/97 Berlin / Wilbur Cross - 756 1,764 363 -
4/12/97 Whittier / Whittier Blvd. - 648 1,513 207 -
4/12/97 Peabody / Newbury Street - 1,159 2,704 630 -
4/12/97 Denver / Blake - 602 1,405 227 -
4/12/97 Evansville / Green River Road - 470 1,096 213 -
4/12/97 Burien / First Ave. So. - 792 1,847 279 -
4/12/97 Rancho Cordova / Mather Field - 494 1,153 395 -
4/12/97 Sugar Land / Eldridge - 705 1,644 291 -
4/12/97 Columbus / Eastland Drive - 602 1,405 334 -
4/12/97 Slickerville / Black Horse Pike - 539 1,258 254 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-------------------------------------------------------------------------------------------------------------
12/23/96 Arlington/Algonquin 991 3,466 4,457 1,753
12/23/96 Seattle/15th Avenue 780 2,313 3,093 1,112
12/23/96 Southington/Spring 810 2,446 3,256 1,162
12/23/96 Clifton/Broad Street 1,411 3,899 5,310 1,830
12/23/96 Hillside/Glenwood 563 4,492 5,055 2,192
12/23/96 Nashville/Dickerson Pike 990 2,683 3,673 1,288
12/23/96 Madison/Gallatin Road 780 2,357 3,137 1,124
12/30/96 Concorde/Treat 1,396 3,588 4,984 1,667
12/30/96 Virginia Beach 535 1,441 1,976 702
12/30/96 San Mateo 2,408 5,888 8,296 2,698
1/22/97 Austin, 1033 E. 41 Street 257 3,755 4,012 1,675
4/12/97 Annandale / Backlick 955 2,619 3,574 1,216
4/12/97 Ft. Worth / West Freeway 667 1,885 2,552 844
4/12/97 Campbell / S. Curtner 2,549 6,742 9,291 2,972
4/12/97 Aurora / S. Idalia 1,002 2,992 3,994 1,418
4/12/97 Santa Cruz / Capitola 1,037 2,767 3,804 1,245
4/12/97 Indianapolis / Lafayette Road 681 2,235 2,916 953
4/12/97 Indianapolis / Route 31 618 1,966 2,584 896
4/12/97 Farmingdale / Broad Hollow Rd. 1,567 4,529 6,096 2,036
4/12/97 Tyson's Corner / Springhill Rd. 3,860 10,496 14,356 4,766
4/12/97 Fountain Valley / Newhope 1,137 3,059 4,196 1,348
4/12/97 Dallas / Winsted 1,375 3,737 5,112 1,692
4/12/97 Columbia / Broad River Rd. 121 455 576 260
4/12/97 Livermore / S. Front Road 876 2,251 3,127 1,011
4/12/97 Garland / Plano 888 2,332 3,220 1,067
4/12/97 San Jose / Story Road 1,352 3,721 5,073 1,659
4/12/97 Aurora / Abilene 1,405 3,795 5,200 1,742
4/12/97 Antioch / Sunset Drive 1,035 2,709 3,744 1,202
4/12/97 Rancho Cordova / Sunrise 1,048 2,871 3,919 1,371
4/12/97 Berlin / Wilbur Cross 756 2,127 2,883 986
4/12/97 Whittier / Whittier Blvd. 648 1,720 2,368 774
4/12/97 Peabody / Newbury Street 1,158 3,335 4,493 1,607
4/12/97 Denver / Blake 602 1,632 2,234 763
4/12/97 Evansville / Green River Road 470 1,309 1,779 614
4/12/97 Burien / First Ave. So. 791 2,127 2,918 992
4/12/97 Rancho Cordova / Mather Field 494 1,548 2,042 694
4/12/97 Sugar Land / Eldridge 704 1,936 2,640 886
4/12/97 Columbus / Eastland Drive 602 1,739 2,341 853
4/12/97 Slickerville / Black Horse Pike 539 1,512 2,051 735
F-65
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
4/12/97 Seattle / Aurora - 1,145 2,671 319 -
4/12/97 Gaithersburg / Christopher Ave. - 972 2,268 432 -
4/12/97 Manchester / Tolland Turnpike - 807 1,883 330 -
6/25/97 L.A./Venice Blvd. - 523 1,221 1,862 -
6/25/97 Kirkland-Totem - 2,131 4,972 272 -
6/25/97 Idianapolis - 471 1,098 315 -
6/25/97 Dallas - 699 1,631 97 -
6/25/97 Atlanta - 1,183 2,761 174 -
6/25/97 Bensalem - 1,159 2,705 132 -
6/25/97 Evansville - 429 1,000 69 -
6/25/97 Austin - 813 1,897 96 -
6/25/97 Harbor City - 1,244 2,904 286 -
6/25/97 Birmingham - 539 1,258 140 -
6/25/97 Sacramento - 489 1,396 (61) -
6/25/97 Carrollton - 441 1,029 53 -
6/25/97 La Habra - 822 1,918 176 -
6/25/97 Lombard - 1,527 3,564 1,774 -
6/25/97 Fairfield - 740 1,727 104 -
6/25/97 Seattle - 1,498 3,494 9,658 -
6/25/97 Bellevue - 1,653 3,858 230 -
6/25/97 Citrus Heights - 642 1,244 620 -
6/25/97 San Jose - 1,273 2,971 38 -
6/25/97 Stanton - 948 2,212 87 -
6/25/97 Garland - 486 1,135 106 -
6/25/97 Westford - 857 1,999 413 -
6/25/97 Dallas - 1,627 3,797 779 -
6/25/97 Wheat Ridge - 1,054 2,459 438 -
6/25/97 Berlin - 825 1,925 4,493 -
6/25/97 Gretna - 1,069 2,494 609 -
6/25/97 Spring - 461 1,077 263 -
6/25/97 Sacramento - 592 1,380 1,090 -
6/25/97 Houston/South Dairyashford - 856 1,997 429 -
6/25/97 Naperville - 1,108 2,585 517 -
6/25/97 Carrollton - 1,158 2,702 673 -
6/25/97 Waipahu - 1,620 3,780 868 -
6/25/97 Davis - 628 1,465 236 -
6/25/97 Decatur - 951 2,220 436 -
6/25/97 Jacksonville - 653 1,525 364 -
6/25/97 Chicoppe - 663 1,546 465 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
4/12/97 Seattle / Aurora 1,144 2,991 4,135 1,370
4/12/97 Gaithersburg / Christopher Ave. 972 2,700 3,672 1,223
4/12/97 Manchester / Tolland Turnpike 807 2,213 3,020 988
6/25/97 L.A./Venice Blvd. 1,044 2,562 3,606 919
6/25/97 Kirkland-Totem 2,130 5,245 7,375 2,402
6/25/97 Idianapolis 471 1,413 1,884 626
6/25/97 Dallas 699 1,728 2,427 786
6/25/97 Atlanta 1,183 2,935 4,118 1,337
6/25/97 Bensalem 1,159 2,837 3,996 1,281
6/25/97 Evansville 400 1,098 1,498 517
6/25/97 Austin 813 1,993 2,806 905
6/25/97 Harbor City 1,244 3,190 4,434 1,534
6/25/97 Birmingham 539 1,398 1,937 662
6/25/97 Sacramento 489 1,335 1,824 578
6/25/97 Carrollton 441 1,082 1,523 487
6/25/97 La Habra 822 2,094 2,916 936
6/25/97 Lombard 2,046 4,819 6,865 2,059
6/25/97 Fairfield 740 1,831 2,571 827
6/25/97 Seattle 1,447 13,203 14,650 2,764
6/25/97 Bellevue 1,653 4,088 5,741 1,826
6/25/97 Citrus Heights 642 1,864 2,506 927
6/25/97 San Jose 1,273 3,009 4,282 1,325
6/25/97 Stanton 947 2,300 3,247 1,030
6/25/97 Garland 486 1,241 1,727 562
6/25/97 Westford 857 2,412 3,269 1,073
6/25/97 Dallas 1,627 4,576 6,203 2,081
6/25/97 Wheat Ridge 1,053 2,898 3,951 1,291
6/25/97 Berlin 504 6,739 7,243 1,361
6/25/97 Gretna 1,069 3,103 4,172 1,525
6/25/97 Spring 461 1,340 1,801 607
6/25/97 Sacramento 720 2,342 3,062 980
6/25/97 Houston/South Dairyashford 856 2,426 3,282 1,081
6/25/97 Naperville 1,108 3,102 4,210 1,373
6/25/97 Carrollton 1,157 3,376 4,533 1,506
6/25/97 Waipahu 1,619 4,649 6,268 2,032
6/25/97 Davis 628 1,701 2,329 764
6/25/97 Decatur 951 2,656 3,607 1,226
6/25/97 Jacksonville 653 1,889 2,542 854
6/25/97 Chicoppe 662 2,012 2,674 928
F-66
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
6/25/97 Alexandria - 1,533 3,576 598 -
6/25/97 Houston/Veterans Memorial Dr. - 458 1,070 250 -
6/25/97 Los Angeles/Olympic - 4,392 10,247 1,366 -
6/25/97 Littleton - 1,340 3,126 654 -
6/25/97 Metairie - 1,229 2,868 258 -
6/25/97 Louisville - 717 1,672 358 -
6/25/97 East Hazel Crest - 753 1,757 2,270 -
6/25/97 Edmonds - 1,187 2,770 444 -
6/25/97 Foster City - 1,064 2,483 383 -
6/25/97 Chicago - 1,160 2,708 552 -
6/25/97 Philadelphia - 924 2,155 420 -
6/25/97 Dallas/Vilbig Rd. - 508 1,184 288 -
6/25/97 Staten Island - 1,676 3,910 615 -
6/25/97 Pelham Manor - 1,209 2,820 872 -
6/25/97 Irving - 469 1,093 224 -
6/25/97 Elk Grove - 642 1,497 320 -
6/25/97 LAX - 1,312 3,062 569 -
6/25/97 Denver - 1,316 3,071 756 -
6/25/97 Plano - 1,369 3,193 570 -
6/25/97 Lynnwood - 839 1,959 406 -
6/25/97 Lilburn - 507 1,182 437 -
6/25/97 Parma - 881 2,055 716 -
6/25/97 Davie - 1,086 2,533 696 -
6/25/97 Allen Park - 953 2,223 571 -
6/25/97 Aurora - 808 1,886 468 -
6/25/97 San Diego/16th Street - 932 2,175 709 -
6/25/97 Sterling Heights - 766 1,787 608 -
6/25/97 East L.A./Boyle Heights - 957 2,232 552 -
6/25/97 Springfield/Alban Station - 1,317 3,074 859 -
6/25/97 Littleton - 868 2,026 508 -
6/25/97 Sacramento/57th Street - 869 2,029 556 -
6/25/97 Miami - 1,762 4,111 1,049 -
8/13/97 Santa Monica / Wilshire Blvd. - 2,040 4,760 369 -
10/1/97 Marietta /Austell Rd - 398 1,326 350 681
10/1/97 Denver / Leetsdale - 1,407 1,682 322 952
10/1/97 Baltimore / York Road - 1,538 1,952 770 1,125
10/1/97 Bolingbrook - 737 1,776 295 927
10/1/97 Kent / Central - 483 1,321 198 687
10/1/97 Geneva / Roosevelt - 355 1,302 218 665
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
6/25/97 Alexandria 1,532 4,175 5,707 1,838
6/25/97 Houston/Veterans Memorial Dr. 458 1,320 1,778 587
6/25/97 Los Angeles/Olympic 4,390 11,615 16,005 5,025
6/25/97 Littleton 1,339 3,781 5,120 1,720
6/25/97 Metairie 1,229 3,126 4,355 1,518
6/25/97 Louisville 716 2,031 2,747 918
6/25/97 East Hazel Crest 1,213 3,567 4,780 1,831
6/25/97 Edmonds 1,187 3,214 4,401 1,432
6/25/97 Foster City 1,064 2,866 3,930 1,247
6/25/97 Chicago 1,160 3,260 4,420 1,497
6/25/97 Philadelphia 923 2,576 3,499 1,168
6/25/97 Dallas/Vilbig Rd. 507 1,473 1,980 664
6/25/97 Staten Island 1,675 4,526 6,201 2,011
6/25/97 Pelham Manor 1,208 3,693 4,901 1,741
6/25/97 Irving 468 1,318 1,786 604
6/25/97 Elk Grove 642 1,817 2,459 827
6/25/97 LAX 1,312 3,631 4,943 1,660
6/25/97 Denver 1,316 3,827 5,143 1,718
6/25/97 Plano 1,368 3,764 5,132 1,650
6/25/97 Lynnwood 839 2,365 3,204 1,072
6/25/97 Lilburn 506 1,620 2,126 742
6/25/97 Parma 880 2,772 3,652 1,243
6/25/97 Davie 1,085 3,230 4,315 1,473
6/25/97 Allen Park 953 2,794 3,747 1,266
6/25/97 Aurora 808 2,354 3,162 1,059
6/25/97 San Diego/16th Street 932 2,884 3,816 1,328
6/25/97 Sterling Heights 766 2,395 3,161 1,077
6/25/97 East L.A./Boyle Heights 956 2,785 3,741 1,229
6/25/97 Springfield/Alban Station 1,317 3,933 5,250 1,713
6/25/97 Littleton 868 2,534 3,402 1,147
6/25/97 Sacramento/57th Street 869 2,585 3,454 1,149
6/25/97 Miami 1,761 5,161 6,922 2,290
8/13/97 Santa Monica / Wilshire Blvd. 2,039 5,130 7,169 2,308
10/1/97 Marietta /Austell Rd 440 2,315 2,755 986
10/1/97 Denver / Leetsdale 1,554 2,809 4,363 1,241
10/1/97 Baltimore / York Road 1,699 3,686 5,385 1,629
10/1/97 Bolingbrook 814 2,921 3,735 1,257
10/1/97 Kent / Central 533 2,156 2,689 928
10/1/97 Geneva / Roosevelt 392 2,148 2,540 947
F-67
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
10/1/97 Denver / Sheridan - 429 1,105 324 587
10/1/97 Mountlake Terrace - 1,017 1,783 259 950
10/1/97 Carol Stream/ St.Charles - 185 1,187 275 591
10/1/97 Marietta / Cobb Park - 420 1,131 344 619
10/1/97 Venice / Rose - 5,468 5,478 996 3,117
10/1/97 Ventura / Ventura Blvd - 911 2,227 426 1,146
10/1/97 Studio City/ Ventura - 2,421 1,610 196 995
10/1/97 Madison Heights - 428 1,686 3,192 1,014
10/1/97 Lax / Imperial - 1,662 2,079 223 1,159
10/1/97 Justice / Industrial - 233 1,181 185 589
10/1/97 Burbank / San Fernando - 1,825 2,210 316 1,223
10/1/97 Pinole / Appian Way - 728 1,827 238 935
10/1/97 Denver / Tamarac Park - 2,545 1,692 491 1,127
10/1/97 Gresham / Powell - 322 1,298 284 646
10/1/97 Warren / Mound Road - 268 1,025 228 528
10/1/97 Woodside/Brooklyn - 5,016 3,950 1,028 3,195
10/1/97 Enfield / Elm Street - 399 1,900 348 945
10/1/97 Roselle / Lake Street - 312 1,411 238 710
10/1/97 Milwaukee / Appleton - 324 1,385 287 706
10/1/97 Emeryville / Bay St - 1,602 1,830 257 1,091
10/1/97 Monterey / Del Rey - 257 1,048 233 563
10/1/97 San Leandro / Washington - 660 1,142 193 653
10/1/97 Boca Raton / N.W. 20 - 1,140 2,256 515 1,198
10/1/97 Washington Dc/So Capital - 1,437 4,489 528 2,274
10/1/97 Lynn / Lynnway - 463 3,059 484 1,513
10/1/97 Pompano Beach - 1,077 1,527 895 869
10/1/97 Lake Oswego/ N.State - 465 1,956 287 972
10/1/97 Daly City / Mission - 389 2,921 265 1,389
10/1/97 Odenton / Route 175 - 456 2,104 465 1,053
10/1/97 Novato / Landing - 2,416 3,496 339 1,706
10/1/97 St. Louis / Lindberg - 584 1,508 351 711
10/1/97 Oakland/International - 358 1,568 262 700
10/1/97 Stockton / March Lane - 663 1,398 258 657
10/1/97 Des Plaines / Golf Rd - 1,363 3,093 276 1,118
10/1/97 Morton Grove / Wauke - 2,658 3,232 6,313 822
10/1/97 Los Angeles / Jefferson - 1,090 1,580 285 820
10/1/97 Los Angeles / Martin - 869 1,152 133 717
10/1/97 San Leandro / E. 14th - 627 1,289 148 608
10/1/97 Tucson / Tanque Verde - 345 1,709 329 709
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
10/1/97 Denver / Sheridan 474 1,971 2,445 856
10/1/97 Mountlake Terrace 1,123 2,886 4,009 1,194
10/1/97 Carol Stream/ St.Charles 205 2,033 2,238 853
10/1/97 Marietta / Cobb Park 464 2,050 2,514 874
10/1/97 Venice / Rose 6,041 9,018 15,059 3,503
10/1/97 Ventura / Ventura Blvd 1,006 3,704 4,710 1,553
10/1/97 Studio City/ Ventura 2,675 2,547 5,222 1,069
10/1/97 Madison Heights 473 5,847 6,320 1,124
10/1/97 Lax / Imperial 1,836 3,287 5,123 1,421
10/1/97 Justice / Industrial 258 1,930 2,188 827
10/1/97 Burbank / San Fernando 2,016 3,558 5,574 1,489
10/1/97 Pinole / Appian Way 804 2,924 3,728 1,242
10/1/97 Denver / Tamarac Park 2,811 3,044 5,855 1,386
10/1/97 Gresham / Powell 356 2,194 2,550 869
10/1/97 Warren / Mound Road 296 1,753 2,049 712
10/1/97 Woodside/Brooklyn 5,541 7,648 13,189 2,726
10/1/97 Enfield / Elm Street 441 3,151 3,592 1,247
10/1/97 Roselle / Lake Street 344 2,327 2,671 971
10/1/97 Milwaukee / Appleton 357 2,345 2,702 971
10/1/97 Emeryville / Bay St 1,770 3,010 4,780 1,265
10/1/97 Monterey / Del Rey 284 1,817 2,101 701
10/1/97 San Leandro / Washington 729 1,919 2,648 782
10/1/97 Boca Raton / N.W. 20 1,259 3,850 5,109 1,454
10/1/97 Washington Dc/So Capital 1,588 7,140 8,728 2,566
10/1/97 Lynn / Lynnway 511 5,008 5,519 1,990
10/1/97 Pompano Beach 1,190 3,178 4,368 1,062
10/1/97 Lake Oswego/ N.State 514 3,166 3,680 1,195
10/1/97 Daly City / Mission 430 4,534 4,964 1,768
10/1/97 Odenton / Route 175 504 3,574 4,078 1,289
10/1/97 Novato / Landing 2,904 5,053 7,957 2,167
10/1/97 St. Louis / Lindberg 728 2,426 3,154 1,095
10/1/97 Oakland/International 475 2,413 2,888 1,016
10/1/97 Stockton / March Lane 811 2,165 2,976 907
10/1/97 Des Plaines / Golf Rd 1,630 4,220 5,850 1,831
10/1/97 Morton Grove / Wauke 3,110 9,915 13,025 2,792
10/1/97 Los Angeles / Jefferson 1,322 2,453 3,775 991
10/1/97 Los Angeles / Martin 1,066 1,805 2,871 716
10/1/97 San Leandro / E. 14th 774 1,898 2,672 777
10/1/97 Tucson / Tanque Verde 469 2,623 3,092 1,101
F-68
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
10/1/97 Randolph / Warren St - 2,330 1,914 554 1,332
10/1/97 Forrestville / Penn. - 1,056 2,347 361 1,114
10/1/97 Bridgeport - 4,877 2,739 804 1,651
10/1/97 North Hollywood/Vine - 906 2,379 235 1,211
10/1/97 Santa Cruz / Portola - 535 1,526 190 761
10/1/97 Hyde Park / River St - 626 1,748 484 665
10/1/97 Dublin / San Ramon Rd - 942 1,999 235 803
10/1/97 Vallejo / Humboldt - 473 1,651 201 757
10/1/97 Fremont/Warm Springs - 848 2,885 282 1,105
10/1/97 Seattle / Stone Way - 829 2,180 403 1,080
10/1/97 W. Olympia - 149 1,096 379 452
10/1/97 Mercer/Parkside Ave - 359 1,763 296 962
10/1/97 Bridge Water / Main - 445 2,054 353 811
10/1/97 Norwalk / Hoyt Street - 2,369 3,049 619 1,391
11/2/97 Lansing - 758 1,768 (20) -
11/7/97 Phoenix - 1,197 2,793 276 -
11/13/97 Tinley Park - 1,422 3,319 117 -
3/17/98 Houston/De Soto Dr. - 659 1,537 210 -
3/17/98 Houston / East Freeway - 593 1,384 323 -
3/17/98 Austin/Ben White - 692 1,614 140 -
3/17/98 Arlington/E.Pioneer - 922 2,152 273 -
3/17/98 Las Vegas/Tropicana - 1,285 2,998 177 -
3/17/98 Branford / Summit Place - 728 1,698 222 -
3/17/98 Las Vegas / Charleston - 791 1,845 136 -
3/17/98 So. San Francisco - 1,550 3,617 245 -
3/17/98 Pasadena / Arroyo Prkwy - 3,005 7,012 655 -
3/17/98 Tempe / E. Broadway - 633 1,476 365 -
3/17/98 Phoenix / N. 43rd Ave - 443 1,033 388 -
3/17/98 Phoenix/No. 43rd - 380 886 485 -
3/17/98 Phoenix / Black Canyon - 380 886 259 -
3/17/98 Phoenix/Black Canyon - 136 317 197 -
3/17/98 Nesconset / Southern - 1,423 3,321 249 -
4/1/98 St. Louis / Hwy. 141 - 659 1,628 4,576 -
4/1/98 Island Park / Austin - 2,313 3,015 (345) -
4/1/98 Akron / Brittain Rd. - 275 2,248 (127) -
4/1/98 Patchogue/W.Sunrise - 936 2,184 272 -
4/1/98 Havertown/West Chester - 1,254 2,926 151 -
4/1/98 Schiller Park/River - 568 1,390 153 -
4/1/98 Chicago / Cuyler - 1,400 2,695 246 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
10/1/97 Randolph / Warren St 2,718 3,412 6,130 1,248
10/1/97 Forrestville / Penn. 1,312 3,566 4,878 1,529
10/1/97 Bridgeport 5,612 4,459 10,071 1,867
10/1/97 North Hollywood/Vine 1,166 3,565 4,731 1,416
10/1/97 Santa Cruz / Portola 689 2,323 3,012 941
10/1/97 Hyde Park / River St 759 2,764 3,523 1,106
10/1/97 Dublin / San Ramon Rd 1,118 2,861 3,979 1,179
10/1/97 Vallejo / Humboldt 620 2,462 3,082 1,006
10/1/97 Fremont/Warm Springs 1,072 4,048 5,120 1,655
10/1/97 Seattle / Stone Way 1,078 3,414 4,492 1,308
10/1/97 W. Olympia 209 1,867 2,076 702
10/1/97 Mercer/Parkside Ave 503 2,877 3,380 1,106
10/1/97 Bridge Water / Main 576 3,087 3,663 1,203
10/1/97 Norwalk / Hoyt Street 2,793 4,635 7,428 1,939
11/2/97 Lansing 730 1,776 2,506 787
11/7/97 Phoenix 1,197 3,069 4,266 1,337
11/13/97 Tinley Park 1,422 3,436 4,858 1,426
3/17/98 Houston/De Soto Dr. 659 1,747 2,406 753
3/17/98 Houston / East Freeway 593 1,707 2,300 751
3/17/98 Austin/Ben White 682 1,764 2,446 721
3/17/98 Arlington/E.Pioneer 922 2,425 3,347 1,088
3/17/98 Las Vegas/Tropicana 1,285 3,175 4,460 1,348
3/17/98 Branford / Summit Place 727 1,921 2,648 830
3/17/98 Las Vegas / Charleston 791 1,981 2,772 843
3/17/98 So. San Francisco 1,549 3,863 5,412 1,566
3/17/98 Pasadena / Arroyo Prkwy 3,004 7,668 10,672 3,029
3/17/98 Tempe / E. Broadway 632 1,842 2,474 810
3/17/98 Phoenix / N. 43rd Ave 443 1,421 1,864 692
3/17/98 Phoenix/No. 43rd 379 1,372 1,751 578
3/17/98 Phoenix / Black Canyon 379 1,146 1,525 523
3/17/98 Phoenix/Black Canyon 136 514 650 294
3/17/98 Nesconset / Southern 1,423 3,570 4,993 1,468
4/1/98 St. Louis / Hwy. 141 1,344 5,519 6,863 1,878
4/1/98 Island Park / Austin 1,373 3,610 4,983 1,414
4/1/98 Akron / Brittain Rd. 669 1,727 2,396 642
4/1/98 Patchogue/W.Sunrise 936 2,456 3,392 1,038
4/1/98 Havertown/West Chester 1,249 3,082 4,331 1,304
4/1/98 Schiller Park/River 568 1,543 2,111 671
4/1/98 Chicago / Cuyler 1,400 2,941 4,341 1,297
F-69
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
4/1/98 Chicago Heights/West - 468 1,804 182 -
4/1/98 Arlington Hts/University - 670 3,004 170 -
4/1/98 Cicero / Ogden - 1,678 2,266 345 -
4/1/98 Chicago/W. Howard St. - 974 2,875 396 -
4/1/98 Chicago/N. Western Ave - 1,453 3,205 292 -
4/1/98 Chicago/Northwest Hwy - 925 2,412 119 -
4/1/98 Chicago/N. Wells St. - 1,446 2,828 160 -
4/1/98 Chicago / Pulaski Rd. - 1,276 2,858 191 -
4/1/98 Artesia / Artesia - 625 1,419 106 -
4/1/98 Arcadia / Lower Azusa - 821 1,369 277 -
4/1/98 Manassas / Centreville - 405 2,137 369 -
4/1/98 La Downtwn/10 Fwy - 1,608 3,358 263 -
4/1/98 Bellevue / Northup - 1,232 3,306 613 -
4/1/98 Hollywood/Cole & Wilshire - 1,590 1,785 141 -
4/1/98 Atlanta/John Wesley - 1,233 1,665 303 -
4/1/98 Montebello/S. Maple - 1,274 2,299 135 -
4/1/98 Lake City/Forest Park - 248 1,445 131 -
4/1/98 Baltimore / W. Patap - 403 2,650 182 -
4/1/98 Fraser/Groesbeck Hwy - 368 1,796 114 -
4/1/98 Vallejo / Mini Drive - 560 1,803 107 -
4/1/98 San Diego/54th & Euclid - 952 2,550 372 -
4/1/98 Miami / 5th Street - 2,327 3,234 290 -
4/1/98 Silver Spring/Hill - 922 2,080 205 -
4/1/98 Chicago/E. 95th St. - 397 2,357 195 -
4/1/98 Chicago / S. Harlem - 791 1,424 132 -
4/1/98 St. Charles /Highway - 623 1,501 205 -
4/1/98 Chicago/Burr Ridge Rd. - 421 2,165 324 -
4/1/98 Yonkers / Route 9a - 1,722 3,823 346 -
4/1/98 Silverlake/Glendale - 2,314 5,481 308 -
4/1/98 Chicago/Harlem Ave - 1,430 3,038 301 -
4/1/98 Bethesda / Butler Rd - 1,146 2,509 92 -
4/1/98 Dundalk / Wise Ave - 447 2,005 182 -
4/1/98 St. Louis / Hwy. 141 - 659 1,628 73 -
4/1/98 Island Park / Austin - 2,313 3,015 311 -
4/1/98 Dallas / Kingsly - 1,095 1,712 162 -
5/1/98 Berkeley / 2nd St. - 1,914 4,466 29 -
5/8/98 Cleveland / W. 117th - 930 2,277 340 -
5/8/98 La /Venice Blvd - 1,470 3,599 151 -
5/8/98 Aurora / Farnsworth - 960 2,350 111 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
4/1/98 Chicago Heights/West 468 1,986 2,454 896
4/1/98 Arlington Hts/University 670 3,174 3,844 1,346
4/1/98 Cicero / Ogden 1,677 2,612 4,289 1,255
4/1/98 Chicago/W. Howard St. 973 3,272 4,245 1,421
4/1/98 Chicago/N. Western Ave 1,453 3,497 4,950 1,513
4/1/98 Chicago/Northwest Hwy 925 2,531 3,456 1,073
4/1/98 Chicago/N. Wells St. 1,446 2,988 4,434 1,277
4/1/98 Chicago / Pulaski Rd. 1,276 3,049 4,325 1,278
4/1/98 Artesia / Artesia 625 1,525 2,150 755
4/1/98 Arcadia / Lower Azusa 821 1,646 2,467 845
4/1/98 Manassas / Centreville 405 2,506 2,911 1,272
4/1/98 La Downtwn/10 Fwy 1,607 3,622 5,229 1,808
4/1/98 Bellevue / Northup 1,231 3,920 5,151 1,916
4/1/98 Hollywood/Cole & Wilshire 1,590 1,926 3,516 944
4/1/98 Atlanta/John Wesley 1,233 1,968 3,201 1,022
4/1/98 Montebello/S. Maple 1,273 2,435 3,708 1,205
4/1/98 Lake City/Forest Park 248 1,576 1,824 789
4/1/98 Baltimore / W. Patap 402 2,833 3,235 1,392
4/1/98 Fraser/Groesbeck Hwy 368 1,910 2,278 923
4/1/98 Vallejo / Mini Drive 560 1,910 2,470 935
4/1/98 San Diego/54th & Euclid 952 2,922 3,874 1,468
4/1/98 Miami / 5th Street 2,327 3,524 5,851 1,789
4/1/98 Silver Spring/Hill 921 2,286 3,207 1,203
4/1/98 Chicago/E. 95th St. 397 2,552 2,949 1,354
4/1/98 Chicago / S. Harlem 791 1,556 2,347 819
4/1/98 St. Charles /Highway 623 1,706 2,329 914
4/1/98 Chicago/Burr Ridge Rd. 421 2,489 2,910 1,234
4/1/98 Yonkers / Route 9a 1,721 4,170 5,891 2,147
4/1/98 Silverlake/Glendale 2,313 5,790 8,103 2,955
4/1/98 Chicago/Harlem Ave 1,430 3,339 4,769 1,660
4/1/98 Bethesda / Butler Rd 1,146 2,601 3,747 1,301
4/1/98 Dundalk / Wise Ave 447 2,187 2,634 1,096
4/1/98 St. Louis / Hwy. 141 659 1,701 2,360 938
4/1/98 Island Park / Austin 2,313 3,326 5,639 1,773
4/1/98 Dallas / Kingsly 1,095 1,874 2,969 920
5/1/98 Berkeley / 2nd St. 1,836 4,573 6,409 1,903
5/8/98 Cleveland / W. 117th 930 2,617 3,547 1,108
5/8/98 La /Venice Blvd 1,470 3,750 5,220 1,505
5/8/98 Aurora / Farnsworth 960 2,461 3,421 996
F-70
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
-------------------------------------------------------------------------------------------------------------------------------
5/8/98 Santa Rosa / Hopper - 1,020 2,497 201 -
5/8/98 Golden Valley / Winn - 630 1,542 188 -
5/8/98 St. Louis / Benham - 810 1,983 217 -
5/8/98 Chicago / S. Chicago - 840 2,057 211 -
10/1/98 El Segundo / Sepulveda - 6,586 5,795 329 -
10/1/98 Atlanta / Memorial Dr. - 414 2,239 309 -
10/1/98 Chicago / W. 79th St - 861 2,789 334 -
10/1/98 Chicago / N. Broadway - 1,918 3,824 476 -
10/1/98 Dallas / Greenville - 1,933 2,892 157 -
10/1/98 Tacoma / Orchard - 358 1,987 207 -
10/1/98 St. Louis / Gravois - 312 2,327 327 -
10/1/98 White Bear Lake - 578 2,079 224 -
10/1/98 Santa Cruz / Soquel - 832 2,385 130 -
10/1/98 Coon Rapids / Hwy 10 - 330 1,646 125 -
10/1/98 Oxnard / Hueneme Rd - 923 3,925 235 -
10/1/98 Vancouver/ Millplain - 343 2,000 101 -
10/1/98 Tigard / Mc Ewan - 597 1,652 89 -
10/1/98 Griffith / Cline - 299 2,118 109 -
10/1/98 Miami / Sunset Drive - 1,656 2,321 1,707 -
10/1/98 Farmington / 9 Mile - 580 2,526 243 -
10/1/98 Los Gatos / University - 2,234 3,890 276 -
10/1/98 N. Hollywood - 1,484 3,143 93 -
10/1/98 Petaluma / Transport - 460 1,840 4,953 -
10/1/98 Chicago / 111th - 341 2,898 2,302 -
10/1/98 Upper Darby / Market - 808 5,011 280 -
10/1/98 San Jose / Santa - 966 3,870 117 -
10/1/98 San Diego / Morena - 3,173 5,469 247 -
10/1/98 Brooklyn /Rockaway Ave - 6,272 9,691 575 -
10/1/98 Revere / Charger St - 1,997 3,727 548 -
10/1/98 Las Vegas / E. Charles - 602 2,545 299 -
10/1/98 Laurel / Baltimore Ave - 1,899 4,498 212 -
10/1/98 East La/Figueroa & 4th - 1,213 2,689 148 -
10/1/98 Oldsmar / Tampa Road - 760 2,154 2,843 -
10/1/98 Ft. Lauderdale /S.W. - 1,046 2,928 315 -
10/1/98 Miami / Nw 73rd St - 1,050 3,064 169 -
12/9/98 Miami / Nw 115th Ave - 1,095 2,349 4,931 -
1/1/99 New Orleans/St.Charles - 1,463 2,634 (330) -
1/6/99 Brandon / E. Brandon Blvd - 1,560 3,695 85 -
3/12/99 St. Louis / N. Lindbergh Blvd. - 1,688 3,939 397 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------------
5/8/98 Santa Rosa / Hopper 1,020 2,698 3,718 1,080
5/8/98 Golden Valley / Winn 630 1,730 2,360 727
5/8/98 St. Louis / Benham 810 2,200 3,010 922
5/8/98 Chicago / S. Chicago 840 2,268 3,108 901
10/1/98 El Segundo / Sepulveda 6,584 6,126 12,710 2,442
10/1/98 Atlanta / Memorial Dr. 414 2,548 2,962 1,082
10/1/98 Chicago / W. 79th St 861 3,123 3,984 1,354
10/1/98 Chicago / N. Broadway 1,917 4,301 6,218 1,707
10/1/98 Dallas / Greenville 1,933 3,049 4,982 1,224
10/1/98 Tacoma / Orchard 358 2,194 2,552 881
10/1/98 St. Louis / Gravois 312 2,654 2,966 1,079
10/1/98 White Bear Lake 578 2,303 2,881 963
10/1/98 Santa Cruz / Soquel 832 2,515 3,347 1,026
10/1/98 Coon Rapids / Hwy 10 330 1,771 2,101 734
10/1/98 Oxnard / Hueneme Rd 923 4,160 5,083 1,683
10/1/98 Vancouver/ Millplain 342 2,102 2,444 852
10/1/98 Tigard / Mc Ewan 597 1,741 2,338 713
10/1/98 Griffith / Cline 299 2,227 2,526 885
10/1/98 Miami / Sunset Drive 2,266 3,418 5,684 1,298
10/1/98 Farmington / 9 Mile 580 2,769 3,349 1,115
10/1/98 Los Gatos / University 2,234 4,166 6,400 1,630
10/1/98 N. Hollywood 1,483 3,237 4,720 1,283
10/1/98 Petaluma / Transport 857 6,396 7,253 1,870
10/1/98 Chicago / 111th 431 5,110 5,541 1,675
10/1/98 Upper Darby / Market 807 5,292 6,099 2,114
10/1/98 San Jose / Santa 966 3,987 4,953 1,585
10/1/98 San Diego / Morena 3,172 5,717 8,889 2,251
10/1/98 Brooklyn /Rockaway Ave 6,270 10,268 16,538 4,200
10/1/98 Revere / Charger St 1,996 4,276 6,272 1,753
10/1/98 Las Vegas / E. Charles 602 2,844 3,446 1,213
10/1/98 Laurel / Baltimore Ave 1,898 4,711 6,609 1,903
10/1/98 East La/Figueroa & 4th 1,213 2,837 4,050 1,102
10/1/98 Oldsmar / Tampa Road 1,049 4,708 5,757 1,599
10/1/98 Ft. Lauderdale /S.W. 1,045 3,244 4,289 1,286
10/1/98 Miami / Nw 73rd St 1,049 3,234 4,283 1,309
12/9/98 Miami / Nw 115th Ave 1,185 7,190 8,375 1,343
1/1/99 New Orleans/St.Charles 1,039 2,728 3,767 1,114
1/6/99 Brandon / E. Brandon Blvd 1,560 3,780 5,340 1,287
3/12/99 St. Louis / N. Lindbergh Blvd. 1,687 4,337 6,024 1,740
F-71
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
3/12/99 St. Louis /Vandeventer Midtown - 699 1,631 429 -
3/12/99 St. Ann / Maryland Heights - 1,035 2,414 346 -
3/12/99 Florissant / N. Hwy 67 - 971 2,265 276 -
3/12/99 Ferguson Area-W.Florissant - 1,194 2,732 528 -
3/12/99 Florissant / New Halls Ferry Rd - 1,144 2,670 531 -
3/12/99 St. Louis / Airport - 785 1,833 266 -
3/12/99 St. Louis/ S.Third St - 1,096 2,557 126 -
3/12/99 Kansas City / E. 47th St. - 610 1,424 180 -
3/12/99 Kansas City /E. 67th Terrace - 1,136 2,643 282 -
3/12/99 Kansas City / James A. Reed Rd - 749 1,748 134 -
3/12/99 Independence / 291 - 871 2,032 158 -
3/12/99 Raytown / Woodson Rd - 915 2,134 138 -
3/12/99 Kansas City / 34th Main Street - 114 2,599 714 -
3/12/99 Columbia / River Dr - 671 1,566 317 -
3/12/99 Columbia / Buckner Rd - 714 1,665 368 -
3/12/99 Columbia / Decker Park Rd - 605 1,412 128 -
3/12/99 Columbia / Rosewood Dr - 777 1,814 122 -
3/12/99 W. Columbia / Orchard Dr. - 272 634 225 -
3/12/99 W. Columbia / Airport Blvd - 493 1,151 250 -
3/12/99 Greenville / Whitehorse Rd - 882 2,058 256 -
3/12/99 Greenville / Woods Lake Rd - 364 849 188 -
3/12/99 Mauldin / N. Main Street - 571 1,333 267 -
3/12/99 Simpsonville / Grand View Dr - 582 1,358 153 -
3/12/99 Taylors / Wade Hampton Blvd - 650 1,517 173 -
3/12/99 Charleston/Ashley Phosphate - 839 1,950 345 -
3/12/99 N. Charleston / Dorchester Rd - 380 886 168 -
3/12/99 N. Charleston / Dorchester - 487 1,137 240 -
3/12/99 Charleston / Sam Rittenberg Blvd - 555 1,296 154 -
3/12/99 Hilton Head / Office Park Rd - 1,279 2,985 205 -
3/12/99 Columbia / Plumbers Rd - 368 858 268 -
3/12/99 Greenville / Pineknoll Rd - 927 2,163 239 -
3/12/99 Hilton Head / Yacht Cove Dr - 1,182 2,753 334 -
3/12/99 Spartanburg / Chesnee Hwy - 533 1,244 580 -
3/12/99 Charleston / Ashley River Rd - 1,114 2,581 269 -
3/12/99 Columbia / Broad River - 1,463 3,413 423 -
3/12/99 Charlotte / East Wt Harris Blvd - 736 1,718 157 -
3/12/99 Charlotte / North Tryon St. - 708 1,653 632 -
3/12/99 Charlotte / South Blvd - 641 1,496 259 -
3/12/99 Kannapolis / Oregon St - 463 1,081 204 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
3/12/99 St. Louis /Vandeventer Midtown 699 2,060 2,759 748
3/12/99 St. Ann / Maryland Heights 1,034 2,761 3,795 1,094
3/12/99 Florissant / N. Hwy 67 970 2,542 3,512 1,041
3/12/99 Ferguson Area-W.Florissant 1,177 3,277 4,454 1,374
3/12/99 Florissant / New Halls Ferry Rd 1,144 3,201 4,345 1,338
3/12/99 St. Louis / Airport 785 2,099 2,884 858
3/12/99 St. Louis/ S.Third St 1,096 2,683 3,779 1,011
3/12/99 Kansas City / E. 47th St. 610 1,604 2,214 661
3/12/99 Kansas City /E. 67th Terrace 1,134 2,927 4,061 1,080
3/12/99 Kansas City / James A. Reed Rd 749 1,882 2,631 715
3/12/99 Independence / 291 871 2,190 3,061 857
3/12/99 Raytown / Woodson Rd 914 2,273 3,187 864
3/12/99 Kansas City / 34th Main Street 114 3,313 3,427 1,404
3/12/99 Columbia / River Dr 671 1,883 2,554 762
3/12/99 Columbia / Buckner Rd 713 2,034 2,747 904
3/12/99 Columbia / Decker Park Rd 605 1,540 2,145 617
3/12/99 Columbia / Rosewood Dr 777 1,936 2,713 744
3/12/99 W. Columbia / Orchard Dr. 272 859 1,131 381
3/12/99 W. Columbia / Airport Blvd 493 1,401 1,894 545
3/12/99 Greenville / Whitehorse Rd 882 2,314 3,196 849
3/12/99 Greenville / Woods Lake Rd 364 1,037 1,401 414
3/12/99 Mauldin / N. Main Street 571 1,600 2,171 616
3/12/99 Simpsonville / Grand View Dr 573 1,520 2,093 605
3/12/99 Taylors / Wade Hampton Blvd 650 1,690 2,340 653
3/12/99 Charleston/Ashley Phosphate 823 2,311 3,134 891
3/12/99 N. Charleston / Dorchester Rd 379 1,055 1,434 431
3/12/99 N. Charleston / Dorchester 487 1,377 1,864 554
3/12/99 Charleston / Sam Rittenberg Blvd 555 1,450 2,005 569
3/12/99 Hilton Head / Office Park Rd 1,279 3,190 4,469 1,201
3/12/99 Columbia / Plumbers Rd 368 1,126 1,494 436
3/12/99 Greenville / Pineknoll Rd 927 2,402 3,329 963
3/12/99 Hilton Head / Yacht Cove Dr 1,180 3,089 4,269 1,177
3/12/99 Spartanburg / Chesnee Hwy 533 1,824 2,357 789
3/12/99 Charleston / Ashley River Rd 1,108 2,856 3,964 1,091
3/12/99 Columbia / Broad River 1,462 3,837 5,299 1,481
3/12/99 Charlotte / East Wt Harris Blvd 736 1,875 2,611 729
3/12/99 Charlotte / North Tryon St. 708 2,285 2,993 932
3/12/99 Charlotte / South Blvd 641 1,755 2,396 683
3/12/99 Kannapolis / Oregon St 463 1,285 1,748 499
F-72
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
3/12/99 Durham / E. Club Blvd - 947 2,209 230 -
3/12/99 Durham / N. Duke St. - 769 1,794 196 -
3/12/99 Raleigh / Maitland Dr - 679 1,585 352 -
3/12/99 Greensboro / O'henry Blvd - 577 1,345 465 -
3/12/99 Gastonia / S. York Rd - 467 1,089 237 -
3/12/99 Durham / Kangaroo Dr. - 1,102 2,572 552 -
3/12/99 Pensacola / Brent Lane - 402 938 (61) -
3/12/99 Pensacola / Creighton Road - 454 1,060 137 -
3/12/99 Jacksonville / Park Avenue - 905 2,113 192 -
3/12/99 Jacksonville / Phillips Hwy - 665 1,545 303 -
3/12/99 Clearwater / Highland Ave - 724 1,690 303 -
3/12/99 Tarpon Springs / Us Highway 19 - 892 2,081 315 -
3/12/99 Orlando /S. Orange Blossom Trail - 1,229 2,867 255 -
3/12/99 Casselberry Ii - 1,160 2,708 226 -
3/12/99 Miami / Nw 14th Street - 1,739 4,058 223 -
3/12/99 Tarpon Springs / Highway 19 - 1,179 2,751 432 -
3/12/99 Ft. Myers / Tamiami Trail South - 834 1,945 (228) -
3/12/99 Jacksonville / Ft. Caroline Rd. - 1,037 2,420 286 -
3/12/99 Orlando / South Semoran - 565 1,319 87 -
3/12/99 Jacksonville / Southside Blvd. - 1,278 2,982 356 -
3/12/99 Miami / Nw 7th Ave - 783 1,827 178 -
3/12/99 Vero Beach / Us Hwy 1 - 678 1,583 149 -
3/12/99 Ponte Vedra / Palm Valley Rd. - 745 2,749 767 -
3/12/99 Miami Lakes / Nw 153rd St. - 425 992 180 -
3/12/99 Deerfield Beach / Sw 10th St. - 1,844 4,302 97 -
3/12/99 Apopka / S. Orange Blossom - 307 717 257 -
3/12/99 Davie / University - 313 4,379 664 -
3/12/99 Arlington / Division - 998 2,328 118 -
3/12/99 Duncanville/S.Cedar Ridge - 1,477 3,447 287 -
3/12/99 Carrollton / Trinity Mills West - 530 1,237 111 -
3/12/99 Houston / Wallisville Rd. - 744 1,736 200 -
3/12/99 Houston / Fondren South - 647 1,510 175 -
3/12/99 Houston / Addicks Satsuma - 409 954 172 -
3/12/99 Addison / Inwood Road - 1,204 2,808 73 -
3/12/99 Garland / Jackson Drive - 755 1,761 109 -
3/12/99 Garland / Buckingham Road - 492 1,149 130 -
3/12/99 Houston / South Main - 1,461 3,409 235 -
3/12/99 Plano / Parker Road-Avenue K - 1,517 3,539 226 -
3/12/99 Houston / Bingle Road - 576 1,345 165 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
3/12/99 Durham / E. Club Blvd 946 2,440 3,386 925
3/12/99 Durham / N. Duke St. 769 1,990 2,759 768
3/12/99 Raleigh / Maitland Dr 679 1,937 2,616 719
3/12/99 Greensboro / O'henry Blvd 576 1,811 2,387 727
3/12/99 Gastonia / S. York Rd 466 1,327 1,793 534
3/12/99 Durham / Kangaroo Dr. 1,102 3,124 4,226 1,250
3/12/99 Pensacola / Brent Lane 228 1,051 1,279 419
3/12/99 Pensacola / Creighton Road 454 1,197 1,651 534
3/12/99 Jacksonville / Park Avenue 905 2,305 3,210 895
3/12/99 Jacksonville / Phillips Hwy 663 1,850 2,513 760
3/12/99 Clearwater / Highland Ave 724 1,993 2,717 797
3/12/99 Tarpon Springs / Us Highway 19 892 2,396 3,288 925
3/12/99 Orlando /S. Orange Blossom Trail 1,228 3,123 4,351 1,213
3/12/99 Casselberry Ii 1,160 2,934 4,094 1,120
3/12/99 Miami / Nw 14th Street 1,739 4,281 6,020 1,612
3/12/99 Tarpon Springs / Highway 19 1,179 3,183 4,362 1,258
3/12/99 Ft. Myers / Tamiami Trail South 834 1,717 2,551 659
3/12/99 Jacksonville / Ft. Caroline Rd. 1,037 2,706 3,743 1,054
3/12/99 Orlando / South Semoran 565 1,406 1,971 528
3/12/99 Jacksonville / Southside Blvd. 1,278 3,338 4,616 1,326
3/12/99 Miami / Nw 7th Ave 783 2,005 2,788 808
3/12/99 Vero Beach / Us Hwy 1 678 1,732 2,410 682
3/12/99 Ponte Vedra / Palm Valley Rd. 745 3,516 4,261 1,345
3/12/99 Miami Lakes / Nw 153rd St. 425 1,172 1,597 424
3/12/99 Deerfield Beach / Sw 10th St. 1,843 4,400 6,243 1,623
3/12/99 Apopka / S. Orange Blossom 307 974 1,281 399
3/12/99 Davie / University 313 5,043 5,356 1,729
3/12/99 Arlington / Division 997 2,447 3,444 896
3/12/99 Duncanville/S.Cedar Ridge 1,477 3,734 5,211 1,450
3/12/99 Carrollton / Trinity Mills West 530 1,348 1,878 527
3/12/99 Houston / Wallisville Rd. 744 1,936 2,680 703
3/12/99 Houston / Fondren South 647 1,685 2,332 644
3/12/99 Houston / Addicks Satsuma 409 1,126 1,535 455
3/12/99 Addison / Inwood Road 1,203 2,882 4,085 1,058
3/12/99 Garland / Jackson Drive 754 1,871 2,625 697
3/12/99 Garland / Buckingham Road 492 1,279 1,771 518
3/12/99 Houston / South Main 1,460 3,645 5,105 1,359
3/12/99 Plano / Parker Road-Avenue K 1,516 3,766 5,282 1,411
3/12/99 Houston / Bingle Road 576 1,510 2,086 604
F-73
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
3/12/99 Houston / Mangum Road - 737 1,719 292 -
3/12/99 Houston / Hayes Road - 916 2,138 129 -
3/12/99 Katy / Dominion Drive - 995 2,321 66 -
3/12/99 Houston / Fm 1960 West - 513 1,198 209 -
3/12/99 Webster / Fm 528 Road - 756 1,764 119 -
3/12/99 Houston / Loch Katrine Lane - 580 1,352 177 -
3/12/99 Houston / Milwee St. - 779 1,815 256 -
3/12/99 Lewisville / Highway 121 - 688 1,605 204 -
3/12/99 Richardson / Central Expressway - 465 1,085 124 -
3/12/99 Houston / Hwy 6 South - 569 1,328 128 -
3/12/99 Houston / Westheimer West - 1,075 2,508 70 -
3/12/99 Ft. Worth / Granbury Road - 763 1,781 121 -
3/12/99 Houston / New Castle - 2,346 5,473 1,301 -
3/12/99 Dallas / Inwood Road - 1,478 3,448 132 -
3/12/99 Fort Worth / Loop 820 North - 729 1,702 333 -
3/12/99 Arlington / Cooper St - 779 1,818 155 -
3/12/99 Webster / Highway 3 - 677 1,580 77 -
3/12/99 Augusta / Peach Orchard Rd - 860 2,007 322 -
3/12/99 Martinez / Old Petersburg Rd - 407 950 246 -
3/12/99 Jonesboro / Tara Blvd - 785 1,827 338 -
3/12/99 Atlanta / Briarcliff Rd - 2,171 5,066 285 -
3/12/99 Decatur / N Decatur Rd - 933 2,177 304 -
3/12/99 Douglasville / Westmoreland - 453 1,056 225 -
3/12/99 Doraville / Mcelroy Rd - 827 1,931 292 -
3/12/99 Roswell / Alpharetta - 1,772 4,135 207 -
3/12/99 Douglasville / Duralee Lane - 533 1,244 172 -
3/12/99 Douglasville / Highway 5 - 804 1,875 524 -
3/12/99 Forest Park / Jonesboro - 659 1,537 205 -
3/12/99 Marietta / Whitlock - 1,016 2,370 209 -
3/12/99 Marietta / Cobb - 727 1,696 498 -
3/12/99 Norcross / Jones Mill Rd - 1,142 2,670 195 -
3/12/99 Norcross / Dawson Blvd - 1,232 2,874 434 -
3/12/99 Forest Park / Old Dixie Hwy - 895 2,070 500 -
3/12/99 Decatur / Covington - 1,764 4,116 234 -
3/12/99 Alpharetta / Maxwell Rd - 1,075 2,509 140 -
3/12/99 Alpharetta / N. Main St - 1,240 2,893 118 -
3/12/99 Atlanta / Bolton Rd - 866 2,019 211 -
3/12/99 Riverdale / Georgia Hwy 85 - 1,075 2,508 186 -
3/12/99 Kennesaw / Rutledge Road - 803 1,874 417 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------------
3/12/99 Houston / Mangum Road 737 2,011 2,748 816
3/12/99 Houston / Hayes Road 916 2,267 3,183 878
3/12/99 Katy / Dominion Drive 994 2,388 3,382 877
3/12/99 Houston / Fm 1960 West 513 1,407 1,920 556
3/12/99 Webster / Fm 528 Road 756 1,883 2,639 707
3/12/99 Houston / Loch Katrine Lane 579 1,530 2,109 581
3/12/99 Houston / Milwee St. 778 2,072 2,850 810
3/12/99 Lewisville / Highway 121 688 1,809 2,497 681
3/12/99 Richardson / Central Expressway 465 1,209 1,674 481
3/12/99 Houston / Hwy 6 South 569 1,456 2,025 534
3/12/99 Houston / Westheimer West 1,074 2,579 3,653 939
3/12/99 Ft. Worth / Granbury Road 763 1,902 2,665 691
3/12/99 Houston / New Castle 2,345 6,775 9,120 2,359
3/12/99 Dallas / Inwood Road 1,477 3,581 5,058 1,322
3/12/99 Fort Worth / Loop 820 North 729 2,035 2,764 740
3/12/99 Arlington / Cooper St 779 1,973 2,752 724
3/12/99 Webster / Highway 3 677 1,657 2,334 630
3/12/99 Augusta / Peach Orchard Rd 860 2,329 3,189 1,004
3/12/99 Martinez / Old Petersburg Rd 407 1,196 1,603 496
3/12/99 Jonesboro / Tara Blvd 783 2,167 2,950 908
3/12/99 Atlanta / Briarcliff Rd 2,170 5,352 7,522 2,046
3/12/99 Decatur / N Decatur Rd 933 2,481 3,414 977
3/12/99 Douglasville / Westmoreland 452 1,282 1,734 576
3/12/99 Doraville / Mcelroy Rd 827 2,223 3,050 924
3/12/99 Roswell / Alpharetta 1,772 4,342 6,114 1,644
3/12/99 Douglasville / Duralee Lane 533 1,416 1,949 581
3/12/99 Douglasville / Highway 5 803 2,400 3,203 1,121
3/12/99 Forest Park / Jonesboro 658 1,743 2,401 732
3/12/99 Marietta / Whitlock 1,015 2,580 3,595 1,014
3/12/99 Marietta / Cobb 727 2,194 2,921 933
3/12/99 Norcross / Jones Mill Rd 1,142 2,865 4,007 1,123
3/12/99 Norcross / Dawson Blvd 1,231 3,309 4,540 1,333
3/12/99 Forest Park / Old Dixie Hwy 889 2,576 3,465 1,067
3/12/99 Decatur / Covington 1,763 4,351 6,114 1,620
3/12/99 Alpharetta / Maxwell Rd 1,075 2,649 3,724 1,003
3/12/99 Alpharetta / N. Main St 1,240 3,011 4,251 1,123
3/12/99 Atlanta / Bolton Rd 865 2,231 3,096 882
3/12/99 Riverdale / Georgia Hwy 85 1,074 2,695 3,769 1,031
3/12/99 Kennesaw / Rutledge Road 803 2,291 3,094 945
F-74
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
3/12/99 Lawrenceville / Buford Dr. - 256 597 97 -
3/12/99 Hanover Park / W. Lake Street - 1,320 3,081 208 -
3/12/99 Chicago / W. Jarvis Ave - 313 731 93 -
3/12/99 Chicago / N. Broadway St - 535 1,249 319 -
3/12/99 Carol Stream / Phillips Court - 829 1,780 126 -
3/12/99 Winfield / Roosevelt Road - 1,109 2,587 315 -
3/12/99 Schaumburg / S. Roselle Road - 659 1,537 109 -
3/12/99 Tinley Park / Brennan Hwy - 771 1,799 233 -
3/12/99 Schaumburg / Palmer Drive - 1,333 3,111 475 -
3/12/99 Mobile / Hillcrest Road - 554 1,293 179 -
3/12/99 Mobile / Azalea Road - 517 1,206 262 -
3/12/99 Mobile / Moffat Road - 537 1,254 297 -
3/12/99 Mobile / Grelot Road - 804 1,877 214 -
3/12/99 Mobile / Government Blvd - 407 950 300 -
3/12/99 New Orleans / Tchoupitoulas - 1,092 2,548 428 -
3/12/99 Louisville / Breckenridge Lane - 581 1,356 111 -
3/12/99 Louisville - 554 1,292 188 -
3/12/99 Louisville / Poplar Level - 463 1,080 167 -
3/12/99 Chesapeake / Western Branch - 1,274 2,973 256 -
3/12/99 Centreville / Lee Hwy - 1,650 3,851 213 -
3/12/99 Sterling / S. Sterling Blvd - 1,282 2,992 203 -
3/12/99 Manassas / Sudley Road - 776 1,810 230 -
3/12/99 Longmont / Wedgewood Ave - 717 1,673 110 -
3/12/99 Fort Collins / So.College Ave - 745 1,739 224 -
3/12/99 Colo Sprngs / Parkmoor Village - 620 1,446 271 -
3/12/99 Colo Sprngs / Van Teylingen - 1,216 2,837 195 -
3/12/99 Denver / So. Clinton St. - 462 1,609 159 -
3/12/99 Denver / Washington St. - 795 1,846 462 -
3/12/99 Colo Sprngs / Centennial Blvd - 1,352 3,155 97 -
3/12/99 Colo Sprngs / Astrozon Court - 810 1,889 305 -
3/12/99 Arvada / 64th Ave - 671 1,566 111 -
3/12/99 Golden / Simms Street - 918 2,143 379 -
3/12/99 Lawrence / Haskell Ave - 636 1,484 192 -
3/12/99 Overland Park / Hemlock St - 1,168 2,725 175 -
3/12/99 Lenexa / Long St. - 720 1,644 74 -
3/12/99 Shawnee / Hedge Lane Terrace - 570 1,331 158 -
3/12/99 Mission / Foxridge Dr - 1,657 3,864 206 -
3/12/99 Milwaukee / W. Dean Road - 1,362 3,163 592 -
3/12/99 Columbus / Morse Road - 1,415 3,302 996 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------------
3/12/99 Lawrenceville / Buford Dr. 256 694 950 290
3/12/99 Hanover Park / W. Lake Street 1,320 3,289 4,609 1,244
3/12/99 Chicago / W. Jarvis Ave 313 824 1,137 336
3/12/99 Chicago / N. Broadway St 535 1,568 2,103 691
3/12/99 Carol Stream / Phillips Court 782 1,953 2,735 717
3/12/99 Winfield / Roosevelt Road 1,108 2,903 4,011 1,075
3/12/99 Schaumburg / S. Roselle Road 659 1,646 2,305 639
3/12/99 Tinley Park / Brennan Hwy 771 2,032 2,803 802
3/12/99 Schaumburg / Palmer Drive 1,333 3,586 4,919 1,316
3/12/99 Mobile / Hillcrest Road 554 1,472 2,026 606
3/12/99 Mobile / Azalea Road 517 1,468 1,985 607
3/12/99 Mobile / Moffat Road 537 1,551 2,088 592
3/12/99 Mobile / Grelot Road 804 2,091 2,895 821
3/12/99 Mobile / Government Blvd 407 1,250 1,657 469
3/12/99 New Orleans / Tchoupitoulas 1,092 2,976 4,068 1,179
3/12/99 Louisville / Breckenridge Lane 581 1,467 2,048 569
3/12/99 Louisville 553 1,481 2,034 588
3/12/99 Louisville / Poplar Level 463 1,247 1,710 530
3/12/99 Chesapeake / Western Branch 1,274 3,229 4,503 1,238
3/12/99 Centreville / Lee Hwy 1,635 4,079 5,714 2,023
3/12/99 Sterling / S. Sterling Blvd 1,270 3,207 4,477 1,233
3/12/99 Manassas / Sudley Road 776 2,040 2,816 835
3/12/99 Longmont / Wedgewood Ave 717 1,783 2,500 673
3/12/99 Fort Collins / So.College Ave 745 1,963 2,708 754
3/12/99 Colo Sprngs / Parkmoor Village 620 1,717 2,337 678
3/12/99 Colo Sprngs / Van Teylingen 1,215 3,033 4,248 1,174
3/12/99 Denver / So. Clinton St. 462 1,768 2,230 645
3/12/99 Denver / Washington St. 792 2,311 3,103 905
3/12/99 Colo Sprngs / Centennial Blvd 1,352 3,252 4,604 1,205
3/12/99 Colo Sprngs / Astrozon Court 809 2,195 3,004 844
3/12/99 Arvada / 64th Ave 671 1,677 2,348 646
3/12/99 Golden / Simms Street 918 2,522 3,440 1,056
3/12/99 Lawrence / Haskell Ave 636 1,676 2,312 666
3/12/99 Overland Park / Hemlock St 1,168 2,900 4,068 1,089
3/12/99 Lenexa / Long St. 709 1,729 2,438 632
3/12/99 Shawnee / Hedge Lane Terrace 570 1,489 2,059 597
3/12/99 Mission / Foxridge Dr 1,656 4,071 5,727 1,541
3/12/99 Milwaukee / W. Dean Road 1,357 3,760 5,117 1,588
3/12/99 Columbus / Morse Road 1,415 4,298 5,713 1,753
F-75
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
3/12/99 Milford / Branch Hill - 527 1,229 2,418 -
3/12/99 Fairfield / Dixie - 519 1,211 112 -
3/12/99 Cincinnati / Western Hills - 758 1,769 232 -
3/12/99 Austin / N. Mopac Expressway - 865 2,791 94 -
3/12/99 Atlanta / Dunwoody Place - 1,410 3,296 328 -
3/12/99 Kennedale/Bowman Sprgs - 425 991 97 -
3/12/99 Colo Sprngs/N.Powers - 1,124 2,622 348 -
3/12/99 St. Louis/S. Third St - 206 480 28 -
3/12/99 Orlando / L.B. Mcleod Road - 521 1,217 201 -
3/12/99 Jacksonville / Roosevelt Blvd. - 851 1,986 396 -
3/12/99 Miami-Kendall / Sw 84th Street - 935 2,180 231 -
3/12/99 North Miami Beach / 69th St - 1,594 3,720 499 -
3/12/99 Miami Beach / Dade Blvd - 962 2,245 338 -
3/12/99 Chicago / N. Natchez Ave - 1,684 3,930 335 -
3/12/99 Chicago / W. Cermak Road - 1,294 3,019 847 -
3/12/99 Kansas City / State Ave - 645 1,505 313 -
3/12/99 Lenexa / Santa Fe Trail Road - 713 1,663 186 -
3/12/99 Waukesha / Foster Court - 765 1,785 169 -
3/12/99 River Grove / N. 5th Ave. - 1,094 2,552 41 -
3/12/99 St. Charles / E. Main St. - 951 2,220 (269) -
3/12/99 Chicago / West 47th St. - 705 1,645 106 -
3/12/99 Carol Stream / S. Main Place - 1,320 3,079 328 -
3/12/99 Carpentersville /N. Western Ave - 911 2,120 156 -
3/12/99 Elgin / E. Chicago St. - 570 2,163 109 -
3/12/99 Elgin / Big Timber Road - 1,347 3,253 359 -
3/12/99 Chicago / S. Pulaski Road - 458 2,118 322 -
3/12/99 Aurora / Business 30 - 900 2,097 211 -
3/12/99 Streamwood / Old Church Road - 855 1,991 87 -
3/12/99 Mt. Prospect / Central Road - 802 1,847 532 -
3/12/99 Geneva / Gary Ave - 1,072 2,501 195 -
3/12/99 Naperville / Lasalle Ave - 1,501 3,502 126 -
3/31/99 Forest Park - 270 3,378 4,391 -
4/1/99 Fresno - 44 206 (226) 804
5/1/99 Stockton - 151 402 (159) 2,017
6/30/99 Winter Park/N. Semor - 342 638 412 728
6/30/99 N. Richland Hills - 455 769 328 832
6/30/99 Rolling Meadows/Lois - 441 849 416 898
6/30/99 Gresham/Burnside - 354 544 221 627
6/30/99 Jacksonville/University - 211 741 270 700
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
3/12/99 Milford / Branch Hill 527 3,647 4,174 1,124
3/12/99 Fairfield / Dixie 519 1,323 1,842 522
3/12/99 Cincinnati / Western Hills 758 2,001 2,759 828
3/12/99 Austin / N. Mopac Expressway 865 2,885 3,750 1,000
3/12/99 Atlanta / Dunwoody Place 1,390 3,644 5,034 1,380
3/12/99 Kennedale/Bowman Sprgs 425 1,088 1,513 423
3/12/99 Colo Sprngs/N.Powers 1,123 2,971 4,094 1,155
3/12/99 St. Louis/S. Third St 206 508 714 183
3/12/99 Orlando / L.B. Mcleod Road 521 1,418 1,939 523
3/12/99 Jacksonville / Roosevelt Blvd. 851 2,382 3,233 1,009
3/12/99 Miami-Kendall / Sw 84th Street 934 2,412 3,346 948
3/12/99 North Miami Beach / 69th St 1,594 4,219 5,813 1,544
3/12/99 Miami Beach / Dade Blvd 962 2,583 3,545 1,085
3/12/99 Chicago / N. Natchez Ave 1,684 4,265 5,949 1,613
3/12/99 Chicago / W. Cermak Road 1,293 3,867 5,160 1,647
3/12/99 Kansas City / State Ave 645 1,818 2,463 739
3/12/99 Lenexa / Santa Fe Trail Road 712 1,850 2,562 746
3/12/99 Waukesha / Foster Court 765 1,954 2,719 776
3/12/99 River Grove / N. 5th Ave. 1,034 2,653 3,687 1,231
3/12/99 St. Charles / E. Main St. 801 2,101 2,902 1,026
3/12/99 Chicago / West 47th St. 705 1,751 2,456 656
3/12/99 Carol Stream / S. Main Place 1,319 3,408 4,727 1,324
3/12/99 Carpentersville /N. Western Ave 909 2,278 3,187 888
3/12/99 Elgin / E. Chicago St. 570 2,272 2,842 836
3/12/99 Elgin / Big Timber Road 1,347 3,612 4,959 1,411
3/12/99 Chicago / S. Pulaski Road 458 2,440 2,898 883
3/12/99 Aurora / Business 30 899 2,309 3,208 900
3/12/99 Streamwood / Old Church Road 853 2,080 2,933 774
3/12/99 Mt. Prospect / Central Road 795 2,386 3,181 934
3/12/99 Geneva / Gary Ave 1,072 2,696 3,768 983
3/12/99 Naperville / Lasalle Ave 1,500 3,629 5,129 1,357
3/31/99 Forest Park 270 7,769 8,039 2,921
4/1/99 Fresno 193 635 828 254
5/1/99 Stockton 590 1,821 2,411 661
6/30/99 Winter Park/N. Semor 427 1,693 2,120 517
6/30/99 N. Richland Hills 568 1,816 2,384 641
6/30/99 Rolling Meadows/Lois 551 2,053 2,604 739
6/30/99 Gresham/Burnside 441 1,305 1,746 442
6/30/99 Jacksonville/University 263 1,659 1,922 615
F-76
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
6/30/99 Irving/W. Airport - 419 960 249 857
6/30/99 Houston/Highway 6 So. - 751 1,006 1,033 1,057
6/30/99 Concord/Arnold - 827 1,553 583 1,874
6/30/99 Rockville/Gude Drive - 602 768 399 880
6/30/99 Bradenton/Cortez Road - 476 885 450 906
6/30/99 San Antonio/Nw Loop - 511 786 269 855
6/30/99 Anaheim / La Palma - 1,378 851 273 1,221
6/30/99 Spring Valley/Sweetwater - 271 380 5,057 416
6/30/99 Ft. Myers/Tamiami - 948 962 391 1,208
6/30/99 Littleton/Centennial - 421 804 334 812
6/30/99 Newark/Cedar Blvd - 729 971 474 1,067
6/30/99 Falls Church/Columbia - 901 975 332 1,141
6/30/99 Fairfax / Lee Highway - 586 1,078 397 1,106
6/30/99 Wheat Ridge / W. 44th - 480 789 297 831
6/30/99 Huntington Bch/Gotham - 952 890 363 1,130
6/30/99 Fort Worth/McCart - 372 942 219 703
6/30/99 San Diego/Clairemont - 1,601 2,035 454 2,034
6/30/99 Houston/Millridge N. - 1,160 1,983 455 2,433
6/30/99 Woodbridge/Jefferson - 840 1,689 348 1,446
6/30/99 Mountainside - 1,260 1,237 2,642 1,523
6/30/99 Woodbridge / Davis - 1,796 1,623 668 1,996
6/30/99 Huntington Beach - 1,026 1,437 171 1,450
6/30/99 Edison / Old Post Rd - 498 1,267 342 1,175
6/30/99 Northridge/Parthenia - 1,848 1,486 295 1,839
6/30/99 Brick Township/Brick - 590 1,431 316 1,364
6/30/99 Stone Mountain/Rock - 1,233 288 356 852
6/30/99 Hyattsville - 768 2,186 313 1,919
6/30/99 Union City / Alvarado - 992 1,776 264 1,690
6/30/99 Oak Park / Greenfield - 621 1,735 272 1,490
6/30/99 Tujunga/Foothill Blvd - 1,746 2,383 283 2,370
7/1/99 Pantego/W. Pioneer Pkwy - 432 1,228 68 -
7/1/99 Nashville/Lafayette St - 486 1,135 258 -
7/1/99 Nashville/Metroplex Dr - 380 886 245 -
7/1/99 Madison / Myatt Dr - 441 1,028 115 -
7/1/99 Hixson / Highway 153 - 488 1,138 281 -
7/1/99 Hixson / Gadd Rd - 207 484 440 -
7/1/99 Red Bank / Harding Rd - 452 1,056 326 -
7/1/99 Nashville/Welshwood Dr - 934 2,179 308 -
7/1/99 Madison/Williams Ave - 1,318 3,076 863 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
6/30/99 Irving/W. Airport 524 1,961 2,485 670
6/30/99 Houston/Highway 6 So. 936 2,911 3,847 1,108
6/30/99 Concord/Arnold 1,031 3,806 4,837 1,430
6/30/99 Rockville/Gude Drive 751 1,898 2,649 707
6/30/99 Bradenton/Cortez Road 588 2,129 2,717 817
6/30/99 San Antonio/Nw Loop 638 1,783 2,421 597
6/30/99 Anaheim / La Palma 1,720 2,003 3,723 649
6/30/99 Spring Valley/Sweetwater 356 5,768 6,124 950
6/30/99 Ft. Myers/Tamiami 1,184 2,325 3,509 812
6/30/99 Littleton/Centennial 526 1,845 2,371 699
6/30/99 Newark/Cedar Blvd 910 2,331 3,241 826
6/30/99 Falls Church/Columbia 1,126 2,223 3,349 816
6/30/99 Fairfax / Lee Highway 732 2,435 3,167 895
6/30/99 Wheat Ridge / W. 44th 599 1,798 2,397 683
6/30/99 Huntington Bch/Gotham 1,189 2,146 3,335 787
6/30/99 Fort Worth/McCart 464 1,772 2,236 466
6/30/99 San Diego/Clairemont 1,999 4,125 6,124 1,446
6/30/99 Houston/Millridge N. 1,449 4,582 6,031 1,537
6/30/99 Woodbridge/Jefferson 1,048 3,275 4,323 905
6/30/99 Mountainside 1,594 5,068 6,662 1,063
6/30/99 Woodbridge / Davis 2,243 3,840 6,083 1,423
6/30/99 Huntington Beach 1,282 2,802 4,084 951
6/30/99 Edison / Old Post Rd 621 2,661 3,282 964
6/30/99 Northridge/Parthenia 2,307 3,161 5,468 1,008
6/30/99 Brick Township/Brick 736 2,965 3,701 969
6/30/99 Stone Mountain/Rock 1,540 1,189 2,729 384
6/30/99 Hyattsville 959 4,227 5,186 1,437
6/30/99 Union City / Alvarado 1,239 3,483 4,722 1,143
6/30/99 Oak Park / Greenfield 774 3,344 4,118 1,143
6/30/99 Tujunga/Foothill Blvd 2,180 4,602 6,782 1,448
7/1/99 Pantego/W. Pioneer Pkwy 432 1,296 1,728 336
7/1/99 Nashville/Lafayette St 486 1,393 1,879 588
7/1/99 Nashville/Metroplex Dr 379 1,132 1,511 470
7/1/99 Madison / Myatt Dr 441 1,143 1,584 461
7/1/99 Hixson / Highway 153 487 1,420 1,907 619
7/1/99 Hixson / Gadd Rd 207 924 1,131 465
7/1/99 Red Bank / Harding Rd 452 1,382 1,834 586
7/1/99 Nashville/Welshwood Dr 934 2,487 3,421 972
7/1/99 Madison/Williams Ave 1,318 3,939 5,257 1,572
F-77
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
7/1/99 Nashville/Mcnally Dr - 884 2,062 565 -
7/1/99 Hermitage/Central Ct - 646 1,508 198 -
7/1/99 Antioch/Cane Ridge Rd - 353 823 206 -
9/1/99 Charlotte / Ashley Road - 664 1,551 159 -
9/1/99 Raleigh / Capital Blvd - 927 2,166 308 -
9/1/99 Charlotte / South Blvd. - 734 1,715 62 -
9/1/99 Greensboro/W.Market St. - 603 1,409 72 -
10/8/99 Belmont / O'neill Ave - 869 4,659 167 -
10/11/99 Matthews - 937 3,165 285 1,665
11/15/99 Poplar, Memphis - 1,631 3,093 321 2,201
12/17/99 Dallas / Swiss Ave - 1,862 4,344 226 -
12/30/99 Oak Park/Greenfield Rd - 1,184 3,685 (53) -
12/30/99 Santa Anna - 2,657 3,293 468 3,083
1/21/00 Hanover Park - 262 3,104 76 -
1/25/00 Memphis / N.Germantwn Pkwy - 884 3,024 194 1,237
1/31/00 Rowland Heights/Walnut - 681 1,589 115 -
2/8/00 Lewisville / Justin Rd - 529 2,919 2,683 1,585
2/28/00 Plano / Avenue K - 2,064 10,407 1,810 -
4/1/00 Hyattsville/Edmonson - 1,036 2,657 92 -
4/29/00 St.Louis/Ellisville Twn Centre - 765 4,377 341 1,621
5/2/00 Mill Valley - 1,412 3,294 (339) -
5/2/00 Culver City - 2,439 5,689 (649) -
5/26/00 Phoenix/N. 35th Ave - 868 2,967 57 -
6/5/00 Mount Sinai / Route 25a - 950 3,338 289 1,923
6/15/00 Pinellas Park - 526 2,247 290 1,100
6/30/00 San Antonio/Broadway St - 1,131 4,558 1,270 -
7/13/00 Lincolnwood - 1,598 3,727 350 -
7/17/00 La Palco/New Orleans - 1,023 3,204 189 1,709
7/29/00 Tracy/1615& 1650 W.11th S - 1,745 4,530 322 -
8/1/00 Pineville - 2,197 3,417 369 2,262
8/23/00 Morris Plains - 1,501 4,300 680 3,596
8/31/00 Florissant/New Halls Fry - 800 4,225 95 -
8/31/00 Orange, CA - 661 1,542 6,041 -
9/1/00 Bayshore, NY - 1,277 2,980 1,730 -
9/1/00 Los Angeles, CA - 590 1,376 598 -
9/13/00 Merrillville - 343 2,474 214 1,449
9/15/00 Gardena / W. El Segundo - 1,532 3,424 147 -
9/15/00 Chicago / Ashland Avenue - 850 4,880 845 -
9/15/00 Oakland / Macarthur - 678 2,751 309 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
7/1/99 Nashville/Mcnally Dr 884 2,627 3,511 1,164
7/1/99 Hermitage/Central Ct 646 1,706 2,352 694
7/1/99 Antioch/Cane Ridge Rd 352 1,030 1,382 453
9/1/99 Charlotte / Ashley Road 651 1,723 2,374 639
9/1/99 Raleigh / Capital Blvd 908 2,493 3,401 919
9/1/99 Charlotte / South Blvd. 719 1,792 2,511 679
9/1/99 Greensboro/W.Market St. 590 1,494 2,084 570
10/8/99 Belmont / O'neill Ave 877 4,818 5,695 1,756
10/11/99 Matthews 1,499 4,553 6,052 1,195
11/15/99 Poplar, Memphis 2,377 4,869 7,246 1,223
12/17/99 Dallas / Swiss Ave 1,877 4,555 6,432 1,646
12/30/99 Oak Park/Greenfield Rd 1,195 3,621 4,816 1,236
12/30/99 Santa Anna 3,704 5,797 9,501 1,368
1/21/00 Hanover Park 256 3,186 3,442 987
1/25/00 Memphis / N.Germantwn Pkwy 1,301 4,038 5,339 1,107
1/31/00 Rowland Heights/Walnut 687 1,698 2,385 608
2/8/00 Lewisville / Justin Rd 1,679 6,037 7,716 1,296
2/28/00 Plano / Avenue K 1,220 13,061 14,281 6,481
4/1/00 Hyattsville/Edmonson 1,036 2,749 3,785 910
4/29/00 St.Louis/Ellisville Twn Centre 1,311 5,793 7,104 1,540
5/2/00 Mill Valley 1,283 3,084 4,367 1,051
5/2/00 Culver City 2,216 5,263 7,479 3,549
5/26/00 Phoenix/N. 35th Ave 867 3,025 3,892 644
6/5/00 Mount Sinai / Route 25a 1,599 4,901 6,500 1,219
6/15/00 Pinellas Park 887 3,276 4,163 745
6/30/00 San Antonio/Broadway St 1,130 5,829 6,959 1,706
7/13/00 Lincolnwood 1,612 4,063 5,675 1,486
7/17/00 La Palco/New Orleans 1,609 4,516 6,125 991
7/29/00 Tracy/1615& 1650 W.11th S 1,761 4,836 6,597 1,598
8/1/00 Pineville 2,964 5,281 8,245 1,294
8/23/00 Morris Plains 2,719 7,358 10,077 1,580
8/31/00 Florissant/New Halls Fry 807 4,313 5,120 1,418
8/31/00 Orange, CA 667 7,577 8,244 1,233
9/1/00 Bayshore, NY 1,533 4,454 5,987 1,410
9/1/00 Los Angeles, CA 707 1,857 2,564 677
9/13/00 Merrillville 832 3,648 4,480 864
9/15/00 Gardena / W. El Segundo 1,531 3,572 5,103 1,018
9/15/00 Chicago / Ashland Avenue 849 5,726 6,575 1,712
9/15/00 Oakland / Macarthur 678 3,060 3,738 850
F-78
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
9/15/00 Alexandria / Pickett Ii - 2,743 6,198 416 -
9/15/00 Royal Oak / Coolidge Highway - 1,062 2,576 173 -
9/15/00 Hawthorne / Crenshaw Blvd. - 1,079 2,913 183 -
9/15/00 Rockaway / U.S. Route 46 - 2,424 4,945 311 -
9/15/00 Evanston / Greenbay - 846 4,436 197 -
9/15/00 Los Angeles / Coliseum - 3,109 4,013 194 -
9/15/00 Bethpage / Hempstead Turnpike - 2,899 5,457 999 -
9/15/00 Northport / Fort Salonga Road - 2,999 5,698 565 -
9/15/00 Brooklyn / St. Johns Place - 3,492 6,026 493 -
9/15/00 Lake Ronkonkoma / Portion Rd. - 937 4,199 186 -
9/15/00 Tampa/Gunn Hwy - 1,843 4,300 133 -
9/18/00 Tampa/N. Del Mabry - 2,204 2,447 10,086 -
9/30/00 Marietta/Kennestone& Hwy5 - 622 3,388 1,441 -
9/30/00 Lilburn/Indian Trail - 1,695 5,170 1,668 -
11/15/00 Largo/Missouri - 1,092 4,270 294 2,215
11/21/00 St. Louis/Wilson - 1,608 3,913 1,938 -
12/21/00 Houston/7715 Katy Frwy - 2,274 5,307 (1,678) -
12/21/00 Houston/10801 Katy Frwy - 1,664 3,884 7 -
12/21/00 Houston/Main St - 1,681 3,924 127 -
12/21/00 Houston/W. Loop/S. Frwy - 2,036 4,749 127 -
12/29/00 Chicago - 1,946 6,002 43 -
12/30/00 Raleigh/Glenwood - 1,545 3,628 145 -
12/30/00 Frazier - 800 3,324 43 -
1/5/01 Troy/E. Big Beaver Rd - 2,195 4,221 283 1,846
1/11/01 Ft Lauderdale - 954 3,972 423 2,183
1/16/01 No Hollywood/Sherman Way - 2,173 5,442 3,608 -
1/18/01 Tuscon/E. Speedway - 735 2,895 182 1,066
1/25/01 Lombard/Finley - 851 3,806 432 2,112
3/15/01 Los Angeles/West Pico - 8,579 8,630 2,578 -
4/1/01 Lakewood/Cedar Dr. - 1,329 9,356 4,061 -
4/7/01 Farmingdale/Rte 110 - 2,364 5,807 1,880 -
4/17/01 Philadelphia/Aramingo - 968 4,539 43 -
4/18/01 Largo/Walsingham Road - 1,000 3,545 (210) -
6/17/01 Port Washington/Seaview &W.Sh - 2,381 4,608 1,816 -
6/18/01 Silver Springs/Prosperity - 1,065 5,391 2,020 -
6/19/01 Tampa/W. Waters Ave & Wilsky - 953 3,785 59 -
6/26/01 Middletown - 1,535 4,258 467 2,258
7/29/01 Miami/Sw 85th Ave - 2,755 4,951 22 -
8/28/01 Hoover/John Hawkins Pkwy - 1,050 2,453 51 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
9/15/00 Alexandria / Pickett Ii 2,742 6,615 9,357 1,864
9/15/00 Royal Oak / Coolidge Highway 1,062 2,749 3,811 800
9/15/00 Hawthorne / Crenshaw Blvd. 1,078 3,097 4,175 886
9/15/00 Rockaway / U.S. Route 46 2,423 5,257 7,680 1,498
9/15/00 Evanston / Greenbay 846 4,633 5,479 1,309
9/15/00 Los Angeles / Coliseum 3,108 4,208 7,316 1,159
9/15/00 Bethpage / Hempstead Turnpike 2,898 6,457 9,355 1,774
9/15/00 Northport / Fort Salonga Road 2,998 6,264 9,262 1,762
9/15/00 Brooklyn / St. Johns Place 3,491 6,520 10,011 1,744
9/15/00 Lake Ronkonkoma / Portion Rd. 937 4,385 5,322 1,212
9/15/00 Tampa/Gunn Hwy 1,842 4,434 6,276 1,348
9/18/00 Tampa/N. Del Mabry 2,238 12,499 14,737 4,576
9/30/00 Marietta/Kennestone& Hwy5 628 4,823 5,451 1,403
9/30/00 Lilburn/Indian Trail 1,711 6,822 8,533 1,909
11/15/00 Largo/Missouri 1,838 6,033 7,871 1,448
11/21/00 St. Louis/Wilson 1,627 5,832 7,459 1,636
12/21/00 Houston/7715 Katy Frwy 1,500 4,403 5,903 882
12/21/00 Houston/10801 Katy Frwy 1,618 3,937 5,555 1,039
12/21/00 Houston/Main St 1,683 4,049 5,732 1,079
12/21/00 Houston/W. Loop/S. Frwy 2,037 4,875 6,912 1,300
12/29/00 Chicago 1,949 6,042 7,991 1,713
12/30/00 Raleigh/Glenwood 1,559 3,759 5,318 1,160
12/30/00 Frazier 800 3,367 4,167 853
1/5/01 Troy/E. Big Beaver Rd 2,820 5,725 8,545 1,326
1/11/01 Ft Lauderdale 1,745 5,787 7,532 1,324
1/16/01 No Hollywood/Sherman Way 2,200 9,023 11,223 1,815
1/18/01 Tuscon/E. Speedway 1,095 3,783 4,878 932
1/25/01 Lombard/Finley 1,564 5,637 7,201 1,311
3/15/01 Los Angeles/West Pico 8,607 11,180 19,787 3,031
4/1/01 Lakewood/Cedar Dr. 1,331 13,415 14,746 3,388
4/7/01 Farmingdale/Rte 110 1,778 8,273 10,051 1,786
4/17/01 Philadelphia/Aramingo 968 4,582 5,550 1,237
4/18/01 Largo/Walsingham Road 799 3,536 4,335 961
6/17/01 Port Washington/Seaview &W.Sh 2,359 6,446 8,805 1,434
6/18/01 Silver Springs/Prosperity 1,065 7,411 8,476 1,659
6/19/01 Tampa/W. Waters Ave & Wilsky 954 3,843 4,797 1,013
6/26/01 Middletown 2,295 6,223 8,518 1,320
7/29/01 Miami/Sw 85th Ave 2,730 4,998 7,728 1,311
8/28/01 Hoover/John Hawkins Pkwy 1,050 2,504 3,554 666
F-79
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
9/30/01 Syosset - 2,461 5,312 264 1,855
12/27/01 Los Angeles/W.Jefferson - 8,285 9,429 4,755 -
12/27/01 Howell/Hgwy 9 - 941 4,070 270 1,260
12/29/01 Catonsville/Kent - 1,378 5,289 2,636 -
12/29/01 Old Bridge/Rte 9 - 1,244 4,960 (2) -
12/29/01 Sacremento/Roseville - 876 5,344 1,954 -
12/31/01 Santa Ana/E.Mcfadden - 7,587 8,612 1,044 -
1/1/02 Concord - 650 1,332 81 -
1/1/02 Tustin - 962 1,465 27 -
1/1/02 Pasadena/Sierra Madre - 706 872 59 -
1/1/02 Azusa - 933 1,659 7,558 -
1/1/02 Redlands - 423 1,202 171 -
1/1/02 Airport I - 346 861 101 -
1/1/02 Miami / Marlin Road - 562 1,345 158 -
1/1/02 Riverside - 95 1,106 3 -
1/1/02 Oakland / San Leandro - 330 1,116 88 -
1/1/02 Richmond / Jacuzzi - 419 1,224 31 -
1/1/02 Santa Clara / Laurel - 1,178 1,789 78 -
1/1/02 Pembroke Park - 475 1,259 92 -
1/1/02 Ft. Lauderdale / Sun - 452 1,254 96 -
1/1/02 San Carlos / Shorewa - 737 1,360 (30) -
1/1/02 Ft. Lauderdale / Sun - 532 1,444 75 -
1/1/02 Sacramento / Howe - 361 1,181 16 -
1/1/02 Sacramento / Capitol - 186 1,284 180 -
1/1/02 Miami / Airport - 517 915 98 -
1/1/02 Marietta / Cobb Park - 419 1,571 276 -
1/1/02 Sacramento / Florin - 624 1,710 334 -
1/1/02 Belmont / Dairy Lane - 915 1,252 112 -
1/1/02 So. San Francisco - 1,018 2,464 207 -
1/1/02 Palmdale / P Street - 218 1,287 73 -
1/1/02 Tucker / Montreal Rd - 760 1,485 107 -
1/1/02 Pasadena / S Fair Oaks - 1,313 1,905 88 -
1/1/02 Carmichael/Fair Oaks - 584 1,431 25 -
1/1/02 Carson / Carson St - 507 877 95 -
1/1/02 San Jose / Felipe Ave - 517 1,482 64 -
1/1/02 Miami / 27th Ave - 272 1,572 129 -
1/1/02 San Jose / Capitol - 400 1,183 18 -
1/1/02 Tucker / Mountain - 519 1,385 62 -
1/3/02 St Charles/Veterans Memorial Pkwy - 687 1,602 168 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
9/30/01 Syosset 3,089 6,803 9,892 1,456
12/27/01 Los Angeles/W.Jefferson 8,332 14,137 22,469 2,585
12/27/01 Howell/Hgwy 9 1,365 5,176 6,541 1,141
12/29/01 Catonsville/Kent 1,377 7,926 9,303 1,737
12/29/01 Old Bridge/Rte 9 1,249 4,953 6,202 1,210
12/29/01 Sacremento/Roseville 526 7,648 8,174 1,764
12/31/01 Santa Ana/E.Mcfadden 7,599 9,644 17,243 2,403
1/1/02 Concord 649 1,414 2,063 411
1/1/02 Tustin 962 1,492 2,454 438
1/1/02 Pasadena/Sierra Madre 706 931 1,637 275
1/1/02 Azusa 932 9,218 10,150 1,323
1/1/02 Redlands 422 1,374 1,796 433
1/1/02 Airport I 346 962 1,308 277
1/1/02 Miami / Marlin Road 562 1,503 2,065 376
1/1/02 Riverside 94 1,110 1,204 334
1/1/02 Oakland / San Leandro 330 1,204 1,534 367
1/1/02 Richmond / Jacuzzi 419 1,255 1,674 361
1/1/02 Santa Clara / Laurel 1,178 1,867 3,045 642
1/1/02 Pembroke Park 475 1,351 1,826 381
1/1/02 Ft. Lauderdale / Sun 452 1,350 1,802 375
1/1/02 San Carlos / Shorewa 737 1,330 2,067 390
1/1/02 Ft. Lauderdale / Sun 533 1,518 2,051 455
1/1/02 Sacramento / Howe 361 1,197 1,558 336
1/1/02 Sacramento / Capitol 186 1,464 1,650 404
1/1/02 Miami / Airport 517 1,013 1,530 315
1/1/02 Marietta / Cobb Park 419 1,847 2,266 591
1/1/02 Sacramento / Florin 623 2,045 2,668 640
1/1/02 Belmont / Dairy Lane 914 1,365 2,279 440
1/1/02 So. San Francisco 1,018 2,671 3,689 879
1/1/02 Palmdale / P Street 218 1,360 1,578 422
1/1/02 Tucker / Montreal Rd 758 1,594 2,352 513
1/1/02 Pasadena / S Fair Oaks 1,312 1,994 3,306 641
1/1/02 Carmichael/Fair Oaks 584 1,456 2,040 448
1/1/02 Carson / Carson St 506 973 1,479 330
1/1/02 San Jose / Felipe Ave 516 1,547 2,063 533
1/1/02 Miami / 27th Ave 271 1,702 1,973 558
1/1/02 San Jose / Capitol 401 1,200 1,601 381
1/1/02 Tucker / Mountain 520 1,446 1,966 490
1/3/02 St Charles/Veterans Memorial Pkwy 687 1,770 2,457 519
F-80
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
1/7/02 Bothell/ N. Bothell Way - 1,063 4,995 151 -
1/15/02 Houston / N.Loop - 2,045 6,178 2,026 -
1/16/02 Orlando / S. Kirkman - 889 3,180 57 -
1/16/02 Austin / Us Hwy 183 - 608 3,856 36 -
1/16/02 Rochelle Park / 168 - 744 4,430 45 -
1/16/02 Honolulu / Waialae - 10,631 10,783 192 -
1/16/02 Sunny Isles Bch - 931 2,845 266 -
1/16/02 San Ramon / San Ramo - 1,522 3,510 46 -
1/16/02 Austin / W. 6th St - 2,399 4,493 325 -
1/16/02 Schaumburg / W. Wise - 1,158 2,598 65 -
1/16/02 Laguna Hills / Moulton - 2,319 5,200 185 -
1/16/02 Annapolis / West St - 955 3,669 44 -
1/16/02 Birmingham / Commons - 1,125 3,938 167 -
1/16/02 Crestwood / Watson Rd - 1,232 3,093 (41) -
1/16/02 Northglenn /Huron St - 688 2,075 33 -
1/16/02 Skokie / Skokie Blvd - 716 5,285 48 -
1/16/02 Garden City / Stewart - 1,489 4,039 205 -
1/16/02 Millersville / Veterans - 1,036 4,229 42 -
1/16/02 W. Babylon / Sunrise - 1,609 3,959 44 -
1/16/02 Memphis / Summer Ave - 1,103 2,772 70 -
1/16/02 Santa Clara/Lafayette - 1,393 4,626 15 -
1/16/02 Naperville / Washington - 2,712 2,225 510 -
1/16/02 Phoenix/W Union Hills - 1,071 2,934 42 -
1/16/02 Woodlawn / Whitehead - 2,682 3,355 69 -
1/16/02 Issaquah / Pickering - 1,138 3,704 26 -
1/16/02 West La /W Olympic - 6,532 5,975 106 -
1/16/02 New Orleans/I-10 - 1,286 3,380 (1,719) -
1/16/02 Pasadena / E. Colorado - 1,125 5,160 118 -
1/16/02 Memphis / Covington - 620 3,076 75 -
1/16/02 Hiawassee / N.Hiawassee - 1,622 1,892 74 -
1/16/02 Longwood / State Rd - 2,123 3,083 158 -
1/16/02 Casselberry / State - 1,628 3,308 61 -
1/16/02 Honolulu/Kahala - 3,722 8,525 79 -
1/16/02 Waukegan / Greenbay - 933 3,826 51 -
1/16/02 Southfield / Telegraph - 2,869 5,507 142 -
1/16/02 San Mateo / S. Delaware - 1,921 4,602 53 -
1/16/02 Scottsdale/N.Hayden - 2,111 3,564 44 -
1/16/02 Gilbert/W Park Ave - 497 3,534 7 -
1/16/02 W.Palm Beach/Okeechobee - 2,149 4,650 (357) -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
1/7/02 Bothell/ N. Bothell Way 1,062 5,147 6,209 1,239
1/15/02 Houston / N.Loop 2,044 8,205 10,249 1,663
1/16/02 Orlando / S. Kirkman 889 3,237 4,126 882
1/16/02 Austin / Us Hwy 183 608 3,892 4,500 1,044
1/16/02 Rochelle Park / 168 744 4,475 5,219 1,161
1/16/02 Honolulu / Waialae 10,628 10,978 21,606 2,884
1/16/02 Sunny Isles Bch 931 3,111 4,042 790
1/16/02 San Ramon / San Ramo 1,521 3,557 5,078 927
1/16/02 Austin / W. 6th St 2,399 4,818 7,217 1,400
1/16/02 Schaumburg / W. Wise 1,157 2,664 3,821 704
1/16/02 Laguna Hills / Moulton 2,318 5,386 7,704 1,480
1/16/02 Annapolis / West St 955 3,713 4,668 985
1/16/02 Birmingham / Commons 1,125 4,105 5,230 1,089
1/16/02 Crestwood / Watson Rd 1,176 3,108 4,284 805
1/16/02 Northglenn /Huron St 688 2,108 2,796 564
1/16/02 Skokie / Skokie Blvd 716 5,333 6,049 1,392
1/16/02 Garden City / Stewart 1,489 4,244 5,733 1,111
1/16/02 Millersville / Veterans 1,035 4,272 5,307 1,152
1/16/02 W. Babylon / Sunrise 1,608 4,004 5,612 1,046
1/16/02 Memphis / Summer Ave 1,102 2,843 3,945 725
1/16/02 Santa Clara/Lafayette 1,393 4,641 6,034 1,162
1/16/02 Naperville / Washington 2,711 2,736 5,447 684
1/16/02 Phoenix/W Union Hills 1,065 2,982 4,047 787
1/16/02 Woodlawn / Whitehead 2,681 3,425 6,106 924
1/16/02 Issaquah / Pickering 1,137 3,731 4,868 971
1/16/02 West La /W Olympic 6,530 6,083 12,613 1,555
1/16/02 New Orleans/I-10 1,292 1,655 2,947 509
1/16/02 Pasadena / E. Colorado 1,124 5,279 6,403 1,324
1/16/02 Memphis / Covington 620 3,151 3,771 796
1/16/02 Hiawassee / N.Hiawassee 1,621 1,967 3,588 543
1/16/02 Longwood / State Rd 2,123 3,241 5,364 940
1/16/02 Casselberry / State 1,628 3,369 4,997 861
1/16/02 Honolulu/Kahala 3,721 8,605 12,326 2,173
1/16/02 Waukegan / Greenbay 933 3,877 4,810 989
1/16/02 Southfield / Telegraph 2,868 5,650 8,518 1,445
1/16/02 San Mateo / S. Delaware 1,921 4,655 6,576 1,167
1/16/02 Scottsdale/N.Hayden 2,116 3,603 5,719 922
1/16/02 Gilbert/W Park Ave 497 3,541 4,038 900
1/16/02 W.Palm Beach/Okeechobee 2,148 4,294 6,442 1,039
F-81
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
1/16/02 Indianapolis / W.86th - 812 2,421 57 -
1/16/02 Indianapolis / Madison - 716 2,655 22 -
1/16/02 Indianapolis / Rockville - 704 2,704 27 -
1/16/02 Santa Cruz / River - 2,148 6,584 96 -
1/16/02 Novato / Rush Landing - 1,858 2,574 30 -
1/16/02 Martinez / Arnold Dr - 847 5,422 20 -
1/16/02 Charlotte/Cambridge - 836 3,908 29 -
1/16/02 Rancho Cucamonga - 579 3,222 3,616 -
1/16/02 Renton / Kent - 768 4,078 40 -
1/16/02 Hawthorne / Goffle Rd - 2,414 4,918 48 -
2/2/02 Nashua / Southwood Dr - 2,493 4,326 169 -
2/15/02 Houston/Fm 1960 East - 859 2,004 87 -
3/7/02 Baltimore / Russell Street - 1,763 5,821 195 -
3/11/02 Weymouth / Main St - 1,440 4,433 166 -
3/28/02 Clinton / Branch Ave & Schultz - 1,257 4,108 520 3,253
4/17/02 La Mirada/Alondra - 1,749 5,044 352 2,443
5/1/02 N.Richlnd Hls/Rufe Snow Dr - 632 6,337 2,323 -
5/2/02 Parkville/E.Joppa - 898 4,306 131 -
6/17/02 Waltham / Lexington St - 3,183 5,733 301 -
6/30/02 Nashville / Charlotte - 876 2,004 109 -
7/2/02 Mt Juliet / Lebonan Rd - 516 1,203 136 -
7/14/02 Yorktown / George Washington - 707 1,684 78 -
7/22/02 Brea/E. Lambert & Clifwood Pk - 2,114 3,555 167 -
8/1/02 Bricktown/Route 70 - 1,292 3,690 178 -
8/1/02 Danvers / Newbury St. - 1,311 4,140 606 -
8/15/02 Montclair / Holt Blvd. - 889 2,074 234 -
8/21/02 Rockville Centre/Merrick Rd - 3,693 6,990 367 -
9/13/02 Lacey / Martin Way - 1,379 3,217 66 -
9/13/02 Lakewood / Bridgeport - 1,286 3,000 114 -
9/13/02 Kent / Pacific Highway - 1,839 4,291 131 -
11/4/02 Scotch Plains /Route 22 - 2,124 5,072 53 -
12/23/02 Snta Clarita/Viaprincssa - 2,508 3,008 3,566 -
2/13/03 Pasadena / Ritchie Hwy - 2,253 4,218 8 -
2/13/03 Malden / Eastern Ave - 3,212 2,739 69 -
2/24/03 Miami / SW 137th Ave - 1,600 4,684 (269) -
3/3/03 Chantilly / Dulles South Court - 2,190 4,314 132 -
3/6/03 Medford / Mystic Ave - 3,886 4,982 19 -
5/27/03 Castro Valley / Grove Way - 2,247 5,881 977 -
8/2/03 Sacramento / E.Stockton Blvd - 554 4,175 47 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
1/16/02 Indianapolis / W.86th 812 2,478 3,290 625
1/16/02 Indianapolis / Madison 716 2,677 3,393 682
1/16/02 Indianapolis / Rockville 704 2,731 3,435 694
1/16/02 Santa Cruz / River 2,147 6,681 8,828 1,642
1/16/02 Novato / Rush Landing 1,858 2,604 4,462 660
1/16/02 Martinez / Arnold Dr 847 5,442 6,289 1,322
1/16/02 Charlotte/Cambridge 836 3,937 4,773 1,005
1/16/02 Rancho Cucamonga 1,130 6,287 7,417 1,108
1/16/02 Renton / Kent 768 4,118 4,886 1,058
1/16/02 Hawthorne / Goffle Rd 2,413 4,967 7,380 1,230
2/2/02 Nashua / Southwood Dr 2,492 4,496 6,988 1,073
2/15/02 Houston/Fm 1960 East 858 2,092 2,950 519
3/7/02 Baltimore / Russell Street 1,763 6,016 7,779 1,420
3/11/02 Weymouth / Main St 1,439 4,600 6,039 1,086
3/28/02 Clinton / Branch Ave & Schultz 2,357 6,781 9,138 1,272
4/17/02 La Mirada/Alondra 2,574 7,014 9,588 1,380
5/1/02 N.Richlnd Hls/Rufe Snow Dr 631 8,661 9,292 1,823
5/2/02 Parkville/E.Joppa 898 4,437 5,335 1,016
6/17/02 Waltham / Lexington St 3,202 6,015 9,217 1,334
6/30/02 Nashville / Charlotte 875 2,114 2,989 517
7/2/02 Mt Juliet / Lebonan Rd 516 1,339 1,855 328
7/14/02 Yorktown / George Washington 707 1,762 2,469 429
7/22/02 Brea/E. Lambert & Clifwood Pk 2,113 3,723 5,836 825
8/1/02 Bricktown/Route 70 1,292 3,868 5,160 853
8/1/02 Danvers / Newbury St. 1,326 4,731 6,057 997
8/15/02 Montclair / Holt Blvd. 889 2,308 3,197 640
8/21/02 Rockville Centre/Merrick Rd 3,691 7,359 11,050 1,601
9/13/02 Lacey / Martin Way 1,378 3,284 4,662 564
9/13/02 Lakewood / Bridgeport 1,285 3,115 4,400 551
9/13/02 Kent / Pacific Highway 1,839 4,422 6,261 792
11/4/02 Scotch Plains /Route 22 2,126 5,123 7,249 1,122
12/23/02 Snta Clarita/Viaprincssa 2,507 6,575 9,082 1,186
2/13/03 Pasadena / Ritchie Hwy 2,252 4,227 6,479 839
2/13/03 Malden / Eastern Ave 3,211 2,809 6,020 549
2/24/03 Miami / SW 137th Ave 1,600 4,415 6,015 872
3/3/03 Chantilly / Dulles South Court 2,190 4,446 6,636 837
3/6/03 Medford / Mystic Ave 3,884 5,003 8,887 949
5/27/03 Castro Valley / Grove Way 2,307 6,798 9,105 1,260
8/2/03 Sacramento / E.Stockton Blvd 554 4,222 4,776 804
F-82
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/13/03 Timonium / W. Padonia Road - 1,932 3,681 44 -
8/21/03 Van Nuys / Sepulveda - 1,698 3,886 2,404 -
9/9/03 Westwood / East St - 3,267 5,013 297 -
10/21/03 San Diego / Miramar Road - 2,244 6,653 658 -
11/3/03 El Sobrante/San Pablo - 1,255 4,990 1,322 -
11/6/03 Pearl City / Kamehameha Hwy - 4,428 4,839 490 -
12/23/03 Boston / Southampton Street - 5,334 7,511 799 -
1/9/04 Farmingville / Horseblock Road - 1,919 4,420 (111) -
2/27/04 Salem / Goodhue St. - 1,544 6,160 64 -
3/18/04 Seven Corners / Arlington Blvd. - 6,087 7,553 (263) -
6/30/04 Marlton / Route 73 - 1,103 5,195 14 -
7/1/04 Long Island City/Northern Blvd. - 4,876 7,610 (217) -
7/9/04 West Valley Cty/Redwood 2,265 876 2,067 332 -
7/12/04 Hicksville/E. Old Country Rd. - 1,693 3,910 147 -
7/15/04 Harwood/Ronald - 1,619 3,778 202 -
9/24/04 E. Hanover/State Rt - 3,895 4,943 232 -
10/14/04 Apple Valley/148th St 813 591 1,375 104 -
10/14/04 Blaine / Hwy 65 NE 1,367 789 1,833 860 -
10/14/04 Brooklyn Park / Lakeland Ave - 1,411 3,278 166 -
10/14/04 Brooklyn Park / Xylon Ave 1,597 1,120 2,601 345 -
10/14/04 St Paul(Eagan)/Sibley Mem'l Hwy 833 615 1,431 74 -
10/14/04 Maple Grove / Zachary Lane 1,770 1,337 3,105 65 -
10/14/04 Minneapolis / Hiawatha Ave 2,000 1,480 3,437 177 -
10/14/04 New Hope / 36th Ave 1,774 1,332 3,094 92 -
10/14/04 Rosemount / Chippendale Ave 1,165 864 2,008 94 -
10/14/04 St Cloud/Franklin 767 575 1,338 41 -
10/14/04 Savage / W 128th St 2,034 1,522 3,535 123 -
10/14/04 Spring Lake Park/Hwy 65 NE 2,129 1,534 3,562 326 -
10/14/04 St Paul / Terrace Court 1,516 1,122 2,606 132 -
10/14/04 St Paul / Eaton St - 1,161 2,698 126 -
10/14/04 St Paul-Hartzell / Wabash Ave - 1,207 2,816 223 -
10/14/04 West St Paul / Marie Ave - 1,447 3,361 374 -
10/14/04 Stillwater / Memorial Ave 2,230 1,669 3,876 133 -
10/14/04 St Paul(VadnaisHts/Birch Lake Rd 1,279 928 2,157 172 -
10/14/04 Woodbury / Hudson Road - 1,863 4,327 130 -
10/14/04 Brown Deer / N Green Bay Rd 1,432 1,059 2,461 126 -
10/14/04 Germantown / Spaten Court 809 607 1,411 43 -
10/14/04 Milwaukee/ N 77th St 1,675 1,241 2,882 143 -
10/14/04 Milwaukee/ S 13th St 1,982 1,484 3,446 118 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------------
8/13/03 Timonium / W. Padonia Road 1,931 3,726 5,657 680
8/21/03 Van Nuys / Sepulveda 1,698 6,290 7,988 827
9/9/03 Westwood / East St 3,287 5,290 8,577 962
10/21/03 San Diego / Miramar Road 2,243 7,312 9,555 1,275
11/3/03 El Sobrante/San Pablo 1,257 6,310 7,567 1,022
11/6/03 Pearl City / Kamehameha Hwy 4,429 5,328 9,757 914
12/23/03 Boston / Southampton Street 5,344 8,300 13,644 1,353
1/9/04 Farmingville / Horseblock Road 1,918 4,310 6,228 704
2/27/04 Salem / Goodhue St. 1,544 6,224 7,768 967
3/18/04 Seven Corners / Arlington Blvd. 6,085 7,292 13,377 1,104
6/30/04 Marlton / Route 73 1,103 5,209 6,312 535
7/1/04 Long Island City/Northern Blvd. 4,875 7,394 12,269 1,071
7/9/04 West Valley Cty/Redwood 883 2,392 3,275 383
7/12/04 Hicksville/E. Old Country Rd. 1,692 4,058 5,750 562
7/15/04 Harwood/Ronald 1,619 3,980 5,599 587
9/24/04 E. Hanover/State Rt 3,894 5,176 9,070 682
10/14/04 Apple Valley/148th St 592 1,478 2,070 203
10/14/04 Blaine / Hwy 65 NE 790 2,692 3,482 296
10/14/04 Brooklyn Park / Lakeland Ave 1,413 3,442 4,855 471
10/14/04 Brooklyn Park / Xylon Ave 1,121 2,945 4,066 437
10/14/04 St Paul(Eagan)/Sibley Mem'l Hwy 616 1,504 2,120 190
10/14/04 Maple Grove / Zachary Lane 1,338 3,169 4,507 414
10/14/04 Minneapolis / Hiawatha Ave 1,481 3,613 5,094 486
10/14/04 New Hope / 36th Ave 1,333 3,185 4,518 422
10/14/04 Rosemount / Chippendale Ave 865 2,101 2,966 276
10/14/04 St Cloud/Franklin 576 1,378 1,954 183
10/14/04 Savage / W 128th St 1,523 3,657 5,180 490
10/14/04 Spring Lake Park/Hwy 65 NE 1,535 3,887 5,422 516
10/14/04 St Paul / Terrace Court 1,123 2,737 3,860 375
10/14/04 St Paul / Eaton St 1,162 2,823 3,985 387
10/14/04 St Paul-Hartzell / Wabash Ave 1,206 3,040 4,246 421
10/14/04 West St Paul / Marie Ave 1,448 3,734 5,182 522
10/14/04 Stillwater / Memorial Ave 1,670 4,008 5,678 521
10/14/04 St Paul(VadnaisHts/Birch Lake Rd 929 2,328 3,257 312
10/14/04 Woodbury / Hudson Road 1,864 4,456 6,320 577
10/14/04 Brown Deer / N Green Bay Rd 1,060 2,586 3,646 352
10/14/04 Germantown / Spaten Court 607 1,454 2,061 195
10/14/04 Milwaukee/ N 77th St 1,242 3,024 4,266 409
10/14/04 Milwaukee/ S 13th St 1,485 3,563 5,048 473
F-83
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
10/14/04 Oak Creek / S 27th St 1,017 751 1,746 93 -
10/14/04 Waukesha / Arcadian Ave 2,272 1,665 3,868 253 -
10/14/04 West Allis / W Lincoln Ave 1,871 1,390 3,227 147 -
10/14/04 Garland / O'Banion Rd 1,440 606 1,414 101 -
10/14/04 Grand Prairie/ Hwy360 2,186 942 2,198 80 -
10/14/04 Duncanville/N Duncnvill 3,663 1,524 3,556 315 -
10/14/04 Lancaster/ W Pleasant 2,308 993 2,317 82 -
10/14/04 Mesquite / Oates Dr 2,179 937 2,186 85 -
10/14/04 Dallas / E NW Hwy 2,189 942 2,198 84 -
11/24/04 Pompano Beach/E. Sample 4,527 1,608 3,754 150 -
11/24/04 Davie / SW 41st St. 5,842 2,467 5,758 169 -
11/24/04 North Bay Village/Kennedy 6,280 3,275 7,644 142 -
11/24/04 Miami / Biscayne Blvd 6,226 3,538 8,258 101 -
11/24/04 Miami Gardens/NW 57th St 6,311 2,706 6,316 78 -
11/24/04 Tamarac/ N University Dr 6,177 2,580 6,022 86 -
11/24/04 Miami / SW 31st Ave 13,378 11,574 27,009 217 -
11/24/04 Hialeah / W 20th Ave 6,009 2,224 5,192 177 -
11/24/04 Miami / SW 42nd St 7,953 2,955 6,897 217 -
11/24/04 Miami / SW 40th St 7,889 2,933 6,844 203 -
11/25/04 Carlsbad/CorteDelAbeto - 2,861 6,676 3,153 -
1/19/05 Cheektowaga / William St - 965 2,262 39 -
1/19/05 Amherst / Millersport Hwy - 1,431 3,350 50 -
1/19/05 Lancaster / Walden Ave - 528 1,244 26 -
1/19/05 Tonawanda/HospitalityCentreWay - 1,205 2,823 29 -
1/19/05 Wheatfield / Niagara Falls Blv - 1,130 2,649 30 -
1/20/05 Oak Lawn / Southwest Hwy - 1,850 4,330 110 -
2/25/05 Owings Mills / Reisterstown Rd - 887 3,865 14 -
4/26/05 Hoboken / 8th St - 3,963 9,290 86 -
5/3/05 Bayville / 939 Route 9 - 1,928 4,519 54 -
5/3/05 Bricktown / Burnt Tavern Rd - 3,522 8,239 40 -
5/3/05 JacksonTwnshp/N.County Line Rd - 1,555 3,647 52 -
5/16/05 Methuen / Pleasant Valley St - 2,263 4,540 150 -
5/19/05 Libertyville / Kelley Crt - 2,042 4,783 60 -
5/19/05 Joliet / Essington - 1,434 3,367 69 -
6/15/05 Atlanta/Howell Mill Rd NW - 1,864 4,363 53 -
6/15/05 Smyrna / Herodian Way SE - 1,294 3,032 44 -
7/7/05 Lithonia / Minola Dr - 1,273 2,985 69 -
7/14/05 Kennesaw / Bells Ferry Rd NW - 1,264 2,976 778 -
7/28/05 Atlanta / Monroe Dr NE - 2,914 6,829 863 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
10/14/04 Oak Creek / S 27th St 752 1,838 2,590 248
10/14/04 Waukesha / Arcadian Ave 1,667 4,119 5,786 565
10/14/04 West Allis / W Lincoln Ave 1,391 3,373 4,764 444
10/14/04 Garland / O'Banion Rd 608 1,513 2,121 238
10/14/04 Grand Prairie/ Hwy360 944 2,276 3,220 353
10/14/04 Duncanville/N Duncnvill 1,525 3,870 5,395 631
10/14/04 Lancaster/ W Pleasant 995 2,397 3,392 374
10/14/04 Mesquite / Oates Dr 938 2,270 3,208 355
10/14/04 Dallas / E NW Hwy 944 2,280 3,224 359
11/24/04 Pompano Beach/E. Sample 1,621 3,891 5,512 511
11/24/04 Davie / SW 41st St. 2,466 5,928 8,394 789
11/24/04 North Bay Village/Kennedy 3,274 7,787 11,061 1,008
11/24/04 Miami / Biscayne Blvd 3,537 8,360 11,897 1,079
11/24/04 Miami Gardens/NW 57th St 2,706 6,394 9,100 828
11/24/04 Tamarac/ N University Dr 2,580 6,108 8,688 792
11/24/04 Miami / SW 31st Ave 11,570 27,230 38,800 3,442
11/24/04 Hialeah / W 20th Ave 2,224 5,369 7,593 958
11/24/04 Miami / SW 42nd St 2,954 7,115 10,069 1,266
11/24/04 Miami / SW 40th St 2,932 7,048 9,980 1,258
11/25/04 Carlsbad/CorteDelAbeto 2,860 9,830 12,690 1,055
1/19/05 Cheektowaga / William St 964 2,302 3,266 368
1/19/05 Amherst / Millersport Hwy 1,431 3,400 4,831 530
1/19/05 Lancaster / Walden Ave 528 1,270 1,798 204
1/19/05 Tonawanda/HospitalityCentreWay 1,205 2,852 4,057 450
1/19/05 Wheatfield / Niagara Falls Blv 1,130 2,679 3,809 425
1/20/05 Oak Lawn / Southwest Hwy 1,850 4,440 6,290 715
2/25/05 Owings Mills / Reisterstown Rd 887 3,879 4,766 450
4/26/05 Hoboken / 8th St 3,962 9,377 13,339 1,369
5/3/05 Bayville / 939 Route 9 1,927 4,574 6,501 669
5/3/05 Bricktown / Burnt Tavern Rd 3,521 8,280 11,801 1,200
5/3/05 JacksonTwnshp/N.County Line Rd 1,554 3,700 5,254 542
5/16/05 Methuen / Pleasant Valley St 2,263 4,690 6,953 496
5/19/05 Libertyville / Kelley Crt 2,041 4,844 6,885 703
5/19/05 Joliet / Essington 1,434 3,436 4,870 505
6/15/05 Atlanta/Howell Mill Rd NW 1,863 4,417 6,280 627
6/15/05 Smyrna / Herodian Way SE 1,293 3,077 4,370 439
7/7/05 Lithonia / Minola Dr 1,272 3,055 4,327 432
7/14/05 Kennesaw / Bells Ferry Rd NW 1,264 3,754 5,018 474
7/28/05 Atlanta / Monroe Dr NE 2,913 7,693 10,606 989
F-84
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
8/11/05 Suwanee / Old Peachtree Rd NE - 1,914 4,497 144 -
9/8/05 Brandon / Providence Rd - 2,592 6,067 85 -
9/15/05 Woodstock / Hwy 92 - 1,251 2,935 58 -
9/22/05 Charlotte / W. Arrowood Rd - 1,426 3,335 (201) -
10/5/05 Jacksonville Beach / Beach Bl - 2,552 5,981 123 -
10/5/05 Bronx / Brush Ave - 4,517 10,581 88 -
10/11/05 Austin / E. Ben White Blvd - 213 3,461 16 -
10/13/05 Deerfield Beach/S. Powerline R - 3,365 7,874 125 -
10/14/05 Cooper City / Sheridan St - 3,035 7,092 92 -
10/20/05 Staten Island / Veterans Rd W. - 3,599 8,430 136 -
10/20/05 Pittsburg / LoveridgeCenter - 3,602 8,448 91 -
10/21/05 Norristown / W.Main St - 1,465 4,818 273 -
11/2/05 Miller Place / Route 25A - 2,757 6,459 79 -
11/18/05 Miami / Biscayne Blvd (Omni) - 7,434 17,268 105 -
12/1/05 Manchester / Taylor St - 1,305 3,029 158 -
12/7/05 Buffalo Grove/E. Aptakisic Rd - 1,986 4,635 91 -
12/13/05 Lorton / Pohick Rd & I95 - 1,167 4,582 350 -
12/16/05 Pico Rivera / Washington Blvd - 4,719 11,012 75 -
12/27/05 Queens Village / Jamaica Ave - 3,409 5,494 (149) -
1/1/06 Costa Mesa / Placentia-A - 275 754 4 -
1/1/06 Van Nuys / Sepulveda-A - 497 886 45 -
1/1/06 Pico Rivera / Beverly - 303 865 8 -
1/1/06 San Dimas - 222 1,505 69 -
1/1/06 Long Beach / Cherry Ave - 801 1,723 2,735 -
1/1/06 E.LA / Valley Blvd - 670 1,845 36 -
1/1/06 Glendale / Eagle Rock Blvd - 1,240 1,831 211 -
1/1/06 N. Pasadena / Lincoln Ave - 357 535 14 -
1/1/06 Crossroads Pkwy/ 605 & 60 Fwys - 146 773 8 -
1/1/06 Fremont / Enterprise - 122 727 10 -
1/1/06 Milpitas/Montague I &Watson Ct - 212 607 92 -
1/1/06 Wilmington - 890 1,345 30 -
1/1/06 Sun Valley / Glenoaks - 359 616 12 -
1/1/06 Corona - 169 722 9 -
1/1/06 Norco - 106 410 32 -
1/1/06 N. Hollywood / Vanowen - 343 567 13 -
1/5/06 Norfolk/Widgeon Rd. (Liberty) - 1,328 3,125 32 -
1/11/06 Goleta/Hollister&Stork 4,398 2,873 6,788 69 -
2/15/06 RockvilleCtr/Sunrs(StrQtr2/15 - 1,813 4,264 1,390 -
3/16/06 Deerfield/S. Pfingsten Rd. - 1,953 4,569 120 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/11/05 Suwanee / Old Peachtree Rd NE 1,913 4,642 6,555 630
9/8/05 Brandon / Providence Rd 2,591 6,153 8,744 808
9/15/05 Woodstock / Hwy 92 1,250 2,994 4,244 393
9/22/05 Charlotte / W. Arrowood Rd 1,153 3,407 4,560 429
10/5/05 Jacksonville Beach / Beach Bl 2,552 6,104 8,656 775
10/5/05 Bronx / Brush Ave 4,516 10,670 15,186 1,354
10/11/05 Austin / E. Ben White Blvd 213 3,477 3,690 278
10/13/05 Deerfield Beach/S. Powerline R 3,364 8,000 11,364 1,016
10/14/05 Cooper City / Sheridan St 3,034 7,185 10,219 903
10/20/05 Staten Island / Veterans Rd W. 3,598 8,567 12,165 1,073
10/20/05 Pittsburg / LoveridgeCenter 3,601 8,540 12,141 1,067
10/21/05 Norristown / W.Main St 1,465 5,091 6,556 451
11/2/05 Miller Place / Route 25A 2,757 6,538 9,295 1,339
11/18/05 Miami / Biscayne Blvd (Omni) 7,432 17,375 24,807 2,114
12/1/05 Manchester / Taylor St 1,305 3,187 4,492 389
12/7/05 Buffalo Grove/E. Aptakisic Rd 1,986 4,726 6,712 567
12/13/05 Lorton / Pohick Rd & I95 1,184 4,915 6,099 412
12/16/05 Pico Rivera / Washington Blvd 4,718 11,088 15,806 1,320
12/27/05 Queens Village / Jamaica Ave 3,409 5,345 8,754 467
1/1/06 Costa Mesa / Placentia-A 275 758 1,033 88
1/1/06 Van Nuys / Sepulveda-A 497 931 1,428 112
1/1/06 Pico Rivera / Beverly 303 873 1,176 76
1/1/06 San Dimas 222 1,574 1,796 200
1/1/06 Long Beach / Cherry Ave 801 4,458 5,259 72
1/1/06 E.LA / Valley Blvd 685 1,866 2,551 296
1/1/06 Glendale / Eagle Rock Blvd 1,240 2,042 3,282 116
1/1/06 N. Pasadena / Lincoln Ave 357 549 906 89
1/1/06 Crossroads Pkwy/ 605 & 60 Fwys 146 781 927 117
1/1/06 Fremont / Enterprise 122 737 859 90
1/1/06 Milpitas/Montague I &Watson Ct 212 699 911 51
1/1/06 Wilmington 890 1,375 2,265 161
1/1/06 Sun Valley / Glenoaks 359 628 987 87
1/1/06 Corona 169 731 900 51
1/1/06 Norco 106 442 548 11
1/1/06 N. Hollywood / Vanowen 343 580 923 64
1/5/06 Norfolk/Widgeon Rd. (Liberty) 1,328 3,157 4,485 352
1/11/06 Goleta/Hollister&Stork 2,873 6,857 9,730 767
2/15/06 RockvilleCtr/Sunrs(StrQtr2/15 1,813 5,654 7,467 560
3/16/06 Deerfield/S. Pfingsten Rd. 1,953 4,689 6,642 502
F-85
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
3/28/06 Pembroke Pines/S. Douglas Rd. - 3,008 7,018 75 -
3/30/06 Miami/SW 24th Ave. - 4,272 9,969 110 -
3/31/06 San Diego/MiraMesa&PacHts - 2,492 7,127 11 -
5/1/06 Wilmington/Kirkwood Hwy - 1,572 3,672 35 -
5/1/06 Jupiter/5100 Military Trail - 4,397 10,266 50 -
5/1/06 Neptune/Neptune Blvd. - 3,240 7,564 40 -
5/15/06 Suwanee/Peachtree Pkwy - 2,483 5,799 46 -
5/26/06 Honolulu/Kapiolani&Kamake - 9,329 20,400 (76) -
6/6/06 Tampa/30th St - 2,283 5,337 93 -
6/22/06 Centennial/S. Parker Rd. - 1,786 4,173 27 -
7/1/06 Brooklyn/Knapp St - 6,701 5,088 (154) -
8/22/06 Scottsdale North - 5,037 14,000 145 -
8/22/06 Dobson Ranch - 1,896 5,065 44 -
8/22/06 Scottsdale Air Park - 1,560 7,060 24 -
8/22/06 Shea - 2,271 6,402 28 -
8/22/06 Collonade Mall - - 3,569 30 -
8/22/06 Union Hills - 2,618 5,357 31 -
8/22/06 Speedway - 1,921 6,105 55 -
8/22/06 Mill Avenue - 621 2,447 58 -
8/22/06 Cooper Road - 2,378 3,970 61 -
8/22/06 Desert Sky - 1,603 4,667 45 -
8/22/06 Tanque Verde Road - 1,636 3,714 25 -
8/22/06 Oro Valley - 1,729 6,158 29 -
8/22/06 Sunnyvale - 5,647 16,555 30 -
8/22/06 El Cerito - 2,002 8,710 45 -
8/22/06 Westwood - 7,826 13,848 81 -
8/22/06 El Cajon - 7,490 13,341 1,033 -
8/22/06 Santa Ana - 12,432 10,961 281 -
8/22/06 Culver City / 405 & Jefferson - 3,689 14,555 70 -
8/22/06 Solana Beach - - 11,163 122 -
8/22/06 Huntington Beach - 3,914 11,064 47 -
8/22/06 Ontario - 2,904 5,762 155 -
8/22/06 Orange - 2,421 9,184 29 -
8/22/06 Daly City - 4,034 13,280 784 -
8/22/06 Castro Valley - 3,682 5,986 150 -
8/22/06 Newark - 3,550 6,512 26 -
8/22/06 Sacramento - 1,864 4,399 19 -
8/22/06 San Leandro - 2,979 4,776 14 -
8/22/06 San Lorenzo - 1,842 4,387 40 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
3/28/06 Pembroke Pines/S. Douglas Rd. 3,008 7,093 10,101 751
3/30/06 Miami/SW 24th Ave. 4,272 10,079 14,351 1,059
3/31/06 San Diego/MiraMesa&PacHts 2,492 7,138 9,630 492
5/1/06 Wilmington/Kirkwood Hwy 1,572 3,707 5,279 365
5/1/06 Jupiter/5100 Military Trail 4,397 10,316 14,713 1,022
5/1/06 Neptune/Neptune Blvd. 3,240 7,604 10,844 753
5/15/06 Suwanee/Peachtree Pkwy 2,483 5,845 8,328 577
5/26/06 Honolulu/Kapiolani&Kamake 9,329 20,324 29,653 1,256
6/6/06 Tampa/30th St 2,283 5,430 7,713 520
6/22/06 Centennial/S. Parker Rd. 1,786 4,200 5,986 403
7/1/06 Brooklyn/Knapp St 6,701 4,934 11,635 297
8/22/06 Scottsdale North 5,035 14,147 19,182 850
8/22/06 Dobson Ranch 1,896 5,109 7,005 297
8/22/06 Scottsdale Air Park 1,560 7,084 8,644 413
8/22/06 Shea 2,271 6,430 8,701 375
8/22/06 Collonade Mall - 3,599 3,599 210
8/22/06 Union Hills 2,618 5,388 8,006 313
8/22/06 Speedway 1,921 6,160 8,081 358
8/22/06 Mill Avenue 621 2,505 3,126 147
8/22/06 Cooper Road 2,378 4,031 6,409 235
8/22/06 Desert Sky 1,603 4,712 6,315 275
8/22/06 Tanque Verde Road 1,636 3,739 5,375 218
8/22/06 Oro Valley 1,729 6,187 7,916 362
8/22/06 Sunnyvale 5,647 16,585 22,232 968
8/22/06 El Cerito 2,002 8,755 10,757 511
8/22/06 Westwood 7,826 13,929 21,755 812
8/22/06 El Cajon 7,490 14,374 21,864 835
8/22/06 Santa Ana 12,432 11,242 23,674 660
8/22/06 Culver City / 405 & Jefferson 3,689 14,625 18,314 852
8/22/06 Solana Beach - 11,285 11,285 662
8/22/06 Huntington Beach 3,914 11,111 15,025 649
8/22/06 Ontario 2,904 5,917 8,821 352
8/22/06 Orange 2,421 9,213 11,634 538
8/22/06 Daly City 4,034 14,064 18,098 796
8/22/06 Castro Valley 3,682 6,136 9,818 352
8/22/06 Newark 3,550 6,538 10,088 382
8/22/06 Sacramento 1,864 4,418 6,282 259
8/22/06 San Leandro 2,979 4,790 7,769 280
8/22/06 San Lorenzo 1,842 4,427 6,269 258
F-86
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
8/22/06 Tracy - 959 3,791 27 -
8/22/06 Aliso Viejo - 6,640 11,486 48 -
8/22/06 Alicia Parkway - 5,669 12,680 302 -
8/22/06 Capitol Expressway - - 3,970 16 -
8/22/06 Vista Park-Land Lease - - - 28 -
8/22/06 Oakley - 2,419 5,452 90 -
8/22/06 Livermore - 2,972 6,816 41 -
8/22/06 Sand City (Monterey) - 2,563 8,291 25 -
8/22/06 Tracy II - 1,762 4,487 68 -
8/22/06 SF-Evans - 3,966 7,487 276 -
8/22/06 Natomas - 1,302 5,063 35 -
8/22/06 Presidio - - - 311 -
8/22/06 Golden / 6th & Simms - 853 2,817 42 -
8/22/06 Littleton / Hampden - South - 1,040 2,261 25 -
8/22/06 Margate - 3,482 5,742 115 -
8/22/06 Delray Beach - 3,546 7,076 44 -
8/22/06 Lauderhill - 2,807 6,668 91 -
8/22/06 Roswell - 908 3,308 113 -
8/22/06 Morgan Falls - 3,229 7,844 30 -
8/22/06 Norcross - 724 2,197 68 -
8/22/06 Stone Mountain - 500 2,055 35 -
8/22/06 Tucker - 731 2,664 42 -
8/22/06 Forest Park - 502 1,731 47 -
8/22/06 Clairmont Road - 804 2,345 49 -
8/22/06 Gwinnett Place - 1,728 3,982 36 -
8/22/06 Perimeter Center - 3,414 8,283 31 -
8/22/06 Peachtree Industrial Blvd. - 2,443 6,682 31 -
8/22/06 Satellite Blvd - 1,940 3,907 59 -
8/22/06 Hillside - 1,949 3,611 97 -
8/22/06 Orland Park - 2,977 5,443 85 -
8/22/06 Bolingbrook / Brook Ct - 1,342 2,133 35 -
8/22/06 Wheaton - 1,531 5,584 42 -
8/22/06 Lincolnwood / Touhy - 700 3,307 42 -
8/22/06 Niles - 826 1,473 38 -
8/22/06 Berwyn - 728 5,310 98 -
8/22/06 Chicago Hts / N Western - 1,367 3,359 57 -
8/22/06 River West - 296 2,443 61 -
8/22/06 Fullerton (IL) - 1,369 6,500 223 -
8/22/06 Glenview West - 1,283 2,621 75 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
-----------------------------------------------------------------------------------------------------------------
8/22/06 Tracy 959 3,818 4,777 224
8/22/06 Aliso Viejo 6,640 11,534 18,174 672
8/22/06 Alicia Parkway 5,669 12,982 18,651 775
8/22/06 Capitol Expressway - 3,986 3,986 233
8/22/06 Vista Park-Land Lease - 28 28 1
8/22/06 Oakley 2,419 5,542 7,961 329
8/22/06 Livermore 2,972 6,857 9,829 400
8/22/06 Sand City (Monterey) 2,563 8,316 10,879 485
8/22/06 Tracy II 1,762 4,555 6,317 265
8/22/06 SF-Evans 3,966 7,763 11,729 455
8/22/06 Natomas 1,302 5,098 6,400 297
8/22/06 Presidio - 311 311 23
8/22/06 Golden / 6th & Simms 853 2,859 3,712 166
8/22/06 Littleton / Hampden - South 1,040 2,286 3,326 134
8/22/06 Margate 3,482 5,857 9,339 343
8/22/06 Delray Beach 3,546 7,120 10,666 415
8/22/06 Lauderhill 2,807 6,759 9,566 398
8/22/06 Roswell 908 3,421 4,329 201
8/22/06 Morgan Falls 3,229 7,874 11,103 460
8/22/06 Norcross 724 2,265 2,989 130
8/22/06 Stone Mountain 500 2,090 2,590 122
8/22/06 Tucker 731 2,706 3,437 159
8/22/06 Forest Park 502 1,778 2,280 105
8/22/06 Clairmont Road 804 2,394 3,198 140
8/22/06 Gwinnett Place 1,728 4,018 5,746 236
8/22/06 Perimeter Center 3,414 8,314 11,728 485
8/22/06 Peachtree Industrial Blvd. 2,443 6,713 9,156 392
8/22/06 Satellite Blvd 1,940 3,966 5,906 232
8/22/06 Hillside 1,949 3,708 5,657 220
8/22/06 Orland Park 2,977 5,528 8,505 332
8/22/06 Bolingbrook / Brook Ct 1,342 2,168 3,510 127
8/22/06 Wheaton 1,531 5,626 7,157 329
8/22/06 Lincolnwood / Touhy 700 3,349 4,049 195
8/22/06 Niles 826 1,511 2,337 89
8/22/06 Berwyn 728 5,408 6,136 316
8/22/06 Chicago Hts / N Western 1,367 3,416 4,783 200
8/22/06 River West 296 2,504 2,800 147
8/22/06 Fullerton (IL) 1,369 6,723 8,092 394
8/22/06 Glenview West 1,283 2,696 3,979 158
F-87
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
8/22/06 Glendale / Keystone Ave. - 1,733 3,958 36 -
8/22/06 College Park / W. 86th St. - 1,381 2,669 104 -
8/22/06 Carmel / N. Range Line Rd. - 2,580 5,025 24 -
8/22/06 Geogetown / Georgetown Rd. - 1,263 4,224 18 -
8/22/06 Fishers / Allisonville Rd. - 2,106 3,629 62 -
8/22/06 Castleton / Corporate Dr. - 914 2,465 55 -
8/22/06 Geist / Fitness Lane - 2,133 3,718 31 -
8/22/06 Indianapolis / E. 6nd St. - 444 2,141 33 -
8/22/06 Suitland - 2,337 5,799 77 -
8/22/06 Gaithersburg - 4,239 8,516 79 -
8/22/06 Germantown - 2,057 4,510 48 -
8/22/06 Briggs Chaney - 2,073 2,802 34 -
8/22/06 Oxon Hill - 1,557 3,971 43 -
8/22/06 Frederick / Thomas Johnson Dr - 1,811 2,695 109 -
8/22/06 Clinton - 2,728 5,363 78 -
8/22/06 Reisterstown - 833 2,035 56 -
8/22/06 Plymouth - 2,018 4,415 64 -
8/22/06 23014 Madison Heights - 2,354 4,391 152 -
8/22/06 Ann Arbor - 1,921 4,068 26 -
8/22/06 Canton - 710 4,287 52 -
8/22/06 23021 Fraser - 2,026 5,393 84 -
8/22/06 Livonia - 1,849 3,860 22 -
8/22/06 23023 Sterling Heights - 2,996 5,358 51 -
8/22/06 23024 Warren - 3,345 7,004 21 -
8/22/06 23025 Rochester - 1,876 3,032 40 -
8/22/06 Taylor - 1,635 4,808 43 -
8/22/06 Jackson - 442 1,756 48 -
8/22/06 23032 Troy(Satellite of 08100) - 1,237 2,093 35 -
8/22/06 23034 Rochester Hills - 1,780 4,559 35 -
8/22/06 23037 Auburn Hills - 1,888 3,017 20 -
8/22/06 23039 Flint South - 543 3,068 47 -
8/22/06 23040 Troy - Maple - 2,570 5,775 21 -
8/22/06 Matawan - 4,282 7,813 23 -
8/22/06 Marlboro - 2,214 5,868 57 -
8/22/06 Voorhees - 2,705 5,486 23 -
8/22/06 Dover/Rockaway - 3,395 5,327 20 -
8/22/06 Marlton - 1,635 2,273 49 -
8/22/06 West Paterson - 701 5,689 48 -
8/22/06 Yonkers - 4,473 9,925 809 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
8/22/06 Glendale / Keystone Ave. 1,733 3,994 5,727 234
8/22/06 College Park / W. 86th St. 1,381 2,773 4,154 160
8/22/06 Carmel / N. Range Line Rd. 2,580 5,049 7,629 296
8/22/06 Geogetown / Georgetown Rd. 1,263 4,242 5,505 248
8/22/06 Fishers / Allisonville Rd. 2,106 3,691 5,797 218
8/22/06 Castleton / Corporate Dr. 914 2,520 3,434 147
8/22/06 Geist / Fitness Lane 2,133 3,749 5,882 219
8/22/06 Indianapolis / E. 6nd St. 444 2,174 2,618 127
8/22/06 Suitland 2,337 5,876 8,213 342
8/22/06 Gaithersburg 4,239 8,595 12,834 502
8/22/06 Germantown 2,057 4,558 6,615 267
8/22/06 Briggs Chaney 2,073 2,836 4,909 165
8/22/06 Oxon Hill 1,557 4,014 5,571 236
8/22/06 Frederick / Thomas Johnson Dr 1,811 2,804 4,615 161
8/22/06 Clinton 2,728 5,441 8,169 316
8/22/06 Reisterstown 833 2,091 2,924 120
8/22/06 Plymouth 2,018 4,479 6,497 262
8/22/06 23014 Madison Heights 2,354 4,543 6,897 267
8/22/06 Ann Arbor 1,921 4,094 6,015 238
8/22/06 Canton 710 4,339 5,049 252
8/22/06 23021 Fraser 2,026 5,477 7,503 317
8/22/06 Livonia 1,849 3,882 5,731 227
8/22/06 23023 Sterling Heights 2,996 5,409 8,405 314
8/22/06 23024 Warren 3,345 7,025 10,370 410
8/22/06 23025 Rochester 1,876 3,072 4,948 179
8/22/06 Taylor 1,635 4,851 6,486 282
8/22/06 Jackson 442 1,804 2,246 105
8/22/06 23032 Troy(Satellite of 08100) 1,237 2,128 3,365 123
8/22/06 23034 Rochester Hills 1,780 4,594 6,374 268
8/22/06 23037 Auburn Hills 1,888 3,037 4,925 178
8/22/06 23039 Flint South 543 3,115 3,658 181
8/22/06 23040 Troy - Maple 2,570 5,796 8,366 338
8/22/06 Matawan 4,282 7,836 12,118 457
8/22/06 Marlboro 2,214 5,925 8,139 348
8/22/06 Voorhees 2,705 5,509 8,214 322
8/22/06 Dover/Rockaway 3,395 5,347 8,742 312
8/22/06 Marlton 1,635 2,322 3,957 137
8/22/06 West Paterson 701 5,737 6,438 335
8/22/06 Yonkers 4,473 10,734 15,207 584
F-88
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
-------------------------------------------------------------------------------------------------------------------------------
8/22/06 Van Dam Street - 3,527 6,935 1,368 -
8/22/06 Northern Blvd - 5,373 9,970 433 -
8/22/06 Gold Street - 6,747 16,544 432 -
8/22/06 Utica Avenue - 7,746 13,063 112 -
8/22/06 Melville - 4,659 6,572 96 -
8/22/06 Westgate - 697 1,211 74 -
8/22/06 Capital Boulevard - 757 1,681 24 -
8/22/06 Cary - 1,145 5,104 57 -
8/22/06 Garner - 529 1,211 29 -
8/22/06 Morrisville - 703 1,880 65 -
8/22/06 Atlantic Avenue - 1,693 6,293 35 -
8/22/06 Friendly Avenue - 1,169 3,043 41 -
8/22/06 Glenwood Avenue - 1,689 4,948 60 -
8/22/06 Poole Road - 1,271 2,919 28 -
8/22/06 South Raleigh - 800 2,219 38 -
8/22/06 Wendover - 2,891 7,656 48 -
8/22/06 Beaverton / Hwy 217 & Allen Bl - 2,130 3,908 48 -
8/22/06 Gresham / Hogan Rd - 1,957 4,438 24 -
8/22/06 Hillsboro / TV Hwy & 30th St - 3,095 8,504 29 -
8/22/06 Westchester - - 5,735 50 -
8/22/06 Airport - 4,597 8,728 67 -
8/22/06 Oxford Valley - 2,430 5,365 40 -
8/22/06 Valley Forge - - - 36 -
8/22/06 Jenkintown - - - 19 -
8/22/06 Burke - 2,522 4,019 24 -
8/22/06 Midlothian Turnpike - 1,978 3,244 37 -
8/22/06 South Military Highway - 1,611 2,903 29 -
8/22/06 Newport News North - 2,073 4,067 42 -
8/22/06 Virginia Beach Blvd. - 2,743 4,786 46 -
8/22/06 Bayside - 1,570 2,708 30 -
8/22/06 Chesapeake - 1,507 4,296 32 -
8/22/06 Leesburg - 1,935 2,485 30 -
8/22/06 Dale City - 1,885 3,335 88 -
8/22/06 Gainesville - 1,377 2,046 32 -
8/22/06 Charlottesville - 1,481 2,397 53 -
8/22/06 Laskin Road - 1,448 2,634 44 -
8/22/06 Holland Road - 1,565 2,227 42 -
8/22/06 Princess Anne Road - 1,479 2,766 28 -
8/22/06 Cedar Road - 1,138 2,083 47 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Van Dam Street 3,527 8,303 11,830 415
8/22/06 Northern Blvd 5,373 10,403 15,776 593
8/22/06 Gold Street 6,747 16,976 23,723 1,037
8/22/06 Utica Avenue 7,746 13,175 20,921 767
8/22/06 Melville 4,659 6,668 11,327 388
8/22/06 Westgate 697 1,285 1,982 75
8/22/06 Capital Boulevard 757 1,705 2,462 101
8/22/06 Cary 1,145 5,161 6,306 303
8/22/06 Garner 529 1,240 1,769 73
8/22/06 Morrisville 703 1,945 2,648 111
8/22/06 Atlantic Avenue 1,693 6,328 8,021 369
8/22/06 Friendly Avenue 1,169 3,084 4,253 180
8/22/06 Glenwood Avenue 1,689 5,008 6,697 293
8/22/06 Poole Road 1,271 2,947 4,218 173
8/22/06 South Raleigh 800 2,257 3,057 132
8/22/06 Wendover 2,891 7,704 10,595 452
8/22/06 Beaverton / Hwy 217 & Allen Bl 2,130 3,956 6,086 231
8/22/06 Gresham / Hogan Rd 1,957 4,462 6,419 261
8/22/06 Hillsboro / TV Hwy & 30th St 3,095 8,533 11,628 498
8/22/06 Westchester - 5,785 5,785 337
8/22/06 Airport 4,597 8,795 13,392 513
8/22/06 Oxford Valley 2,430 5,405 7,835 315
8/22/06 Valley Forge - 36 36 2
8/22/06 Jenkintown - 19 19 1
8/22/06 Burke 2,522 4,043 6,565 236
8/22/06 Midlothian Turnpike 1,978 3,281 5,259 192
8/22/06 South Military Highway 1,611 2,932 4,543 172
8/22/06 Newport News North 2,073 4,109 6,182 241
8/22/06 Virginia Beach Blvd. 2,743 4,832 7,575 283
8/22/06 Bayside 1,570 2,738 4,308 160
8/22/06 Chesapeake 1,507 4,328 5,835 253
8/22/06 Leesburg 1,935 2,515 4,450 147
8/22/06 Dale City 1,885 3,423 5,308 199
8/22/06 Gainesville 1,377 2,078 3,455 123
8/22/06 Charlottesville 1,481 2,450 3,931 144
8/22/06 Laskin Road 1,448 2,678 4,126 158
8/22/06 Holland Road 1,565 2,269 3,834 133
8/22/06 Princess Anne Road 1,479 2,794 4,273 163
8/22/06 Cedar Road 1,138 2,130 3,268 124
F-89
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
----------------------------------------------------------------------------------------------------------------------------------
8/22/06 Crater Road - 1,497 2,266 67 -
8/22/06 Temple - 993 2,231 67 -
8/22/06 Jefferson Davis Hwy - 954 2,156 32 -
8/22/06 McLean - - 8,815 79 -
8/22/06 Burke Centre - 4,756 8,705 22 -
8/22/06 Fordson - 3,063 5,235 31 -
8/22/06 Fullerton - 4,199 8,867 67 -
8/22/06 Telegraph - 2,183 4,467 52 -
8/22/06 Mt Vernon - 4,876 11,544 24 -
8/22/06 Bellingham - 2,160 4,340 47 -
8/22/06 Everett Central - 2,137 4,342 33 -
8/22/06 Tacoma / Highland Hills - 2,647 5,533 37 -
8/22/06 Edmonds - 5,883 10,514 31 -
8/22/06 Kirkland 124th - 2,827 5,031 85 -
8/22/06 Woodinville - 2,603 5,723 53 -
8/22/06 Burien / Des Moines - 3,063 5,952 36 -
8/22/06 SeaTac - 2,439 4,623 272 -
8/22/06 Southcenter-Satellite of 08251 - 2,054 3,665 61 -
8/22/06 Puyallup / Canyon Rd - 1,123 1,940 15 -
8/22/06 Puyallup / South Hill - 1,567 2,610 28 -
8/22/06 Queen Anne/Magnolia - 3,191 11,723 64 -
8/22/06 Kennydale - 3,424 7,799 50 -
8/22/06 Bellefield - 3,019 5,541 35 -
8/22/06 Factoria Square - 3,431 8,891 58 -
8/22/06 Auburn / 16th Ave - 2,491 4,716 26 -
8/22/06 East Bremerton - 1,945 5,203 42 -
8/22/06 Port Orchard - 1,144 2,885 22 -
8/22/06 West Seattle - 3,573 8,711 39 -
8/22/06 Vancouver / Salmon Creek - 2,667 5,597 35 -
8/22/06 West Bremerton - 1,778 3,067 15 -
8/22/06 Kent / 132nd - 1,806 3,880 26 -
8/22/06 Lacey / Martin Way & Marvin Rd - 1,211 2,162 22 -
8/22/06 Lynwood / Hwy 9 & 189th St SW - 2,172 3,518 45 -
8/22/06 W Olympia / Black Lake Blvd II - 1,295 2,300 34 -
8/22/06 Parkland / A St - 1,855 3,819 41 -
8/22/06 Lake Union - 7,586 11,024 1,904 -
8/22/06 Bellevue / 122nd - 9,552 21,891 67 -
8/22/06 Gig Harbor/Olympic & Soundview - 1,762 3,196 44 -
8/22/06 Seattle /Ballinger Way & 205th - - 7,098 21 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Crater Road 1,497 2,333 3,830 137
8/22/06 Temple 993 2,298 3,291 135
8/22/06 Jefferson Davis Hwy 954 2,188 3,142 129
8/22/06 McLean - 8,894 8,894 519
8/22/06 Burke Centre 4,756 8,727 13,483 510
8/22/06 Fordson 3,063 5,266 8,329 308
8/22/06 Fullerton 4,199 8,934 13,133 520
8/22/06 Telegraph 2,183 4,519 6,702 263
8/22/06 Mt Vernon 4,876 11,568 16,444 675
8/22/06 Bellingham 2,160 4,387 6,547 257
8/22/06 Everett Central 2,137 4,375 6,512 256
8/22/06 Tacoma / Highland Hills 2,647 5,570 8,217 325
8/22/06 Edmonds 5,883 10,545 16,428 616
8/22/06 Kirkland 124th 2,827 5,116 7,943 298
8/22/06 Woodinville 2,603 5,776 8,379 337
8/22/06 Burien / Des Moines 3,063 5,988 9,051 351
8/22/06 SeaTac 2,439 4,895 7,334 278
8/22/06 Southcenter-Satellite of 08251 2,054 3,726 5,780 217
8/22/06 Puyallup / Canyon Rd 1,123 1,955 3,078 114
8/22/06 Puyallup / South Hill 1,567 2,638 4,205 155
8/22/06 Queen Anne/Magnolia 3,191 11,787 14,978 688
8/22/06 Kennydale 3,424 7,849 11,273 458
8/22/06 Bellefield 3,019 5,576 8,595 325
8/22/06 Factoria Square 3,431 8,949 12,380 522
8/22/06 Auburn / 16th Ave 2,491 4,742 7,233 277
8/22/06 East Bremerton 1,945 5,245 7,190 305
8/22/06 Port Orchard 1,144 2,907 4,051 170
8/22/06 West Seattle 3,573 8,750 12,323 510
8/22/06 Vancouver / Salmon Creek 2,667 5,632 8,299 329
8/22/06 West Bremerton 1,778 3,082 4,860 180
8/22/06 Kent / 132nd 1,806 3,906 5,712 228
8/22/06 Lacey / Martin Way & Marvin Rd 1,211 2,184 3,395 128
8/22/06 Lynwood / Hwy 9 & 189th St SW 2,172 3,563 5,735 209
8/22/06 W Olympia / Black Lake Blvd II 1,295 2,334 3,629 135
8/22/06 Parkland / A St 1,855 3,860 5,715 225
8/22/06 Lake Union 7,586 12,928 20,514 646
8/22/06 Bellevue / 122nd 9,552 21,958 31,510 1,281
8/22/06 Gig Harbor/Olympic & Soundview 1,762 3,240 5,002 187
8/22/06 Seattle /Ballinger Way & 205th - 7,119 7,119 415
F-90
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/22/06 Scottsdale South - 2,377 3,524 28 -
8/22/06 Phoenix - 2,516 5,638 60 -
8/22/06 Chandler - 2,910 5,460 27 -
8/22/06 Phoenix East - 1,524 5,151 61 -
8/22/06 Mesa - 1,604 4,434 66 -
8/22/06 Union City - 1,905 3,091 4,927 -
8/22/06 La Habra - 5,439 10,239 49 -
8/22/06 Palo Alto - 4,259 6,362 47 -
8/22/06 Kearney - Balboa - 4,565 11,584 126 -
8/22/06 South San Francisco - 1,593 4,995 149 -
8/22/06 Mountain View - 1,505 3,839 19 -
8/22/06 Denver / Tamarac II - 666 1,109 58 -
8/22/06 Littleton / Windermere I - 2,214 4,186 144 -
8/22/06 Thornton / Quivas - 547 1,439 18 -
8/22/06 Northglenn / Irma Dr. - 1,579 3,716 1,988 -
8/22/06 Oakland Park - 8,821 20,512 463 -
8/22/06 Seminole - 1,821 3,817 86 -
8/22/06 Military Trail - 6,514 10,965 111 -
8/22/06 Blue Heron - 8,121 11,641 113 -
8/22/06 Alsip / 127th St - 1,891 3,414 74 -
8/22/06 Dolton - 1,784 4,508 28 -
8/22/06 Lombard / 330 W North Ave - 1,506 2,596 115 -
8/22/06 Rolling Meadows / Rohlwing - 1,839 3,620 91 -
8/22/06 Schaumburg / Hillcrest Blvd - 1,732 4,026 42 -
8/22/06 Bridgeview - 1,396 3,651 90 -
8/22/06 Willowbrook - 1,730 3,355 45 -
8/22/06 Lisle - 1,967 3,525 46 -
8/22/06 Laurel - 1,323 2,577 33 -
8/22/06 Crofton - 1,373 3,377 35 -
8/22/06 Lansing - 114 1,126 48 -
8/22/06 Southfield - 4,181 6,338 19 -
8/22/06 23006 Troy - Oakland Mall - 2,281 4,953 43 -
8/22/06 Walled Lake - 2,788 4,784 26 -
8/22/06 Salem / Lancaster - 2,036 4,827 52 -
8/22/06 Tigard / King City - 1,959 7,189 16 -
8/22/06 Portland / SE 82nd Ave - 1,519 4,390 39 -
8/22/06 Beaverton/HWY 217 & Denny Rd E - 3,294 7,186 27 -
8/22/06 Beaverton / Cornell Rd - 1,869 3,814 20 -
8/22/06 Fairfax - 6,895 10,006 52 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Scottsdale South 2,377 3,552 5,929 208
8/22/06 Phoenix 2,516 5,698 8,214 332
8/22/06 Chandler 2,910 5,487 8,397 321
8/22/06 Phoenix East 1,524 5,212 6,736 304
8/22/06 Mesa 1,604 4,500 6,104 262
8/22/06 Union City 1,905 8,018 9,923 329
8/22/06 La Habra 5,439 10,288 15,727 599
8/22/06 Palo Alto 4,259 6,409 10,668 376
8/22/06 Kearney - Balboa 4,565 11,710 16,275 687
8/22/06 South San Francisco 1,593 5,144 6,737 303
8/22/06 Mountain View 1,505 3,858 5,363 226
8/22/06 Denver / Tamarac II 666 1,167 1,833 68
8/22/06 Littleton / Windermere I 2,214 4,330 6,544 257
8/22/06 Thornton / Quivas 547 1,457 2,004 85
8/22/06 Northglenn / Irma Dr. 1,579 5,704 7,283 277
8/22/06 Oakland Park 8,821 20,975 29,796 1,230
8/22/06 Seminole 1,821 3,903 5,724 227
8/22/06 Military Trail 6,514 11,076 17,590 646
8/22/06 Blue Heron 8,121 11,754 19,875 686
8/22/06 Alsip / 127th St 1,891 3,488 5,379 204
8/22/06 Dolton 1,784 4,536 6,320 265
8/22/06 Lombard / 330 W North Ave 1,506 2,711 4,217 158
8/22/06 Rolling Meadows / Rohlwing 1,839 3,711 5,550 215
8/22/06 Schaumburg / Hillcrest Blvd 1,732 4,068 5,800 237
8/22/06 Bridgeview 1,396 3,741 5,137 224
8/22/06 Willowbrook 1,730 3,400 5,130 200
8/22/06 Lisle 1,967 3,571 5,538 208
8/22/06 Laurel 1,323 2,610 3,933 151
8/22/06 Crofton 1,373 3,412 4,785 199
8/22/06 Lansing 114 1,174 1,288 69
8/22/06 Southfield 4,181 6,357 10,538 371
8/22/06 23006 Troy - Oakland Mall 2,281 4,996 7,277 291
8/22/06 Walled Lake 2,788 4,810 7,598 280
8/22/06 Salem / Lancaster 2,036 4,879 6,915 284
8/22/06 Tigard / King City 1,959 7,205 9,164 421
8/22/06 Portland / SE 82nd Ave 1,519 4,429 5,948 258
8/22/06 Beaverton/HWY 217 & Denny Rd E 3,294 7,213 10,507 422
8/22/06 Beaverton / Cornell Rd 1,869 3,834 5,703 224
8/22/06 Fairfax 6,895 10,058 16,953 587
F-91
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
----------------------------------------------------------------------------------------------------------------------------------
8/22/06 Falls Church - 2,488 15,341 47 -
8/22/06 Manassas West - 912 2,826 25 -
8/22/06 Herndon - 2,625 3,105 71 -
8/22/06 Newport News South - 2,190 5,264 18 -
8/22/06 North Richmond - 1,606 2,411 148 -
8/22/06 Kempsville - 1,165 1,951 26 -
8/22/06 Manassas East - 1,297 2,843 46 -
8/22/06 Vancouver / Vancouver Mall - 1,751 3,251 55 -
8/22/06 White Center(aka West Seattle) - 2,091 4,530 43 -
8/22/06 Factoria - 2,770 5,429 113 -
8/22/06 Federal Way/Pac Hwy& 320th St - 4,027 8,554 2,267 -
8/22/06 Renton - 2,752 6,378 36 -
8/22/06 Issaquah - 3,739 5,624 24 -
8/22/06 East Lynnwood - 2,250 4,790 66 -
8/22/06 Tacoma / 96th St & 32nd Ave - 1,604 2,394 32 -
8/22/06 Smokey Point - 607 1,723 37 -
8/22/06 Shoreline / 145th - 2,926 4,910 3,504 -
8/22/06 23038 Mt. Clemens 1,871 1,247 3,590 20 -
8/22/06 Ramsey - 552 2,155 34 -
8/22/06 Apple Valley / 155th St - 1,203 3,136 28 -
8/22/06 Brooklyn Park / 73rd Ave - 1,953 3,902 170 -
8/22/06 Burnsville Parkway W - 1,561 4,359 48 -
8/22/06 Chanhassen - 3,292 6,220 50 -
8/22/06 Coon Rapids / Robinson Dr - 1,991 4,975 184 -
8/22/06 Eden Prairie East - 3,516 5,682 144 -
8/22/06 Eden Prairie West - 3,713 7,177 38 -
8/22/06 Edina - 4,422 8,190 23 -
8/22/06 Hopkins - 1,460 2,510 23 -
8/22/06 Little Canada - 3,490 7,062 42 -
8/22/06 Maple Grove / Lakeland Dr - 1,513 3,272 768 -
8/22/06 Minnetonka - 1,318 2,087 45 -
8/22/06 Plymouth 169 - 684 1,323 89 -
8/22/06 Plymouth 494 - 2,000 4,260 227 -
8/22/06 Plymouth West - 1,973 6,638 36 -
8/22/06 Richfield - 1,641 5,688 123 -
8/22/06 Shorewood - 2,805 7,244 61 -
8/22/06 Woodbury / Wooddale Dr - 2,220 5,307 57 -
8/22/06 Central Parkway - 2,545 4,637 53 -
8/22/06 Kirkman East - 2,479 3,717 151 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Falls Church 2,488 15,388 17,876 898
8/22/06 Manassas West 912 2,851 3,763 166
8/22/06 Herndon 2,625 3,176 5,801 185
8/22/06 Newport News South 2,190 5,282 7,472 308
8/22/06 North Richmond 1,606 2,559 4,165 151
8/22/06 Kempsville 1,165 1,977 3,142 116
8/22/06 Manassas East 1,297 2,889 4,186 170
8/22/06 Vancouver / Vancouver Mall 1,751 3,306 5,057 193
8/22/06 White Center(aka West Seattle) 2,091 4,573 6,664 266
8/22/06 Factoria 2,770 5,542 8,312 320
8/22/06 Federal Way/Pac Hwy& 320th St 4,031 10,817 14,848 568
8/22/06 Renton 2,752 6,414 9,166 375
8/22/06 Issaquah 3,739 5,648 9,387 329
8/22/06 East Lynnwood 2,250 4,856 7,106 282
8/22/06 Tacoma / 96th St & 32nd Ave 1,604 2,426 4,030 142
8/22/06 Smokey Point 607 1,760 2,367 103
8/22/06 Shoreline / 145th 2,926 8,414 11,340 478
8/22/06 23038 Mt. Clemens 1,247 3,610 4,857 211
8/22/06 Ramsey 552 2,189 2,741 128
8/22/06 Apple Valley / 155th St 1,203 3,164 4,367 184
8/22/06 Brooklyn Park / 73rd Ave 1,953 4,072 6,025 245
8/22/06 Burnsville Parkway W 1,561 4,407 5,968 257
8/22/06 Chanhassen 3,292 6,270 9,562 367
8/22/06 Coon Rapids / Robinson Dr 1,991 5,159 7,150 305
8/22/06 Eden Prairie East 3,516 5,826 9,342 342
8/22/06 Eden Prairie West 3,713 7,215 10,928 421
8/22/06 Edina 4,422 8,213 12,635 480
8/22/06 Hopkins 1,460 2,533 3,993 148
8/22/06 Little Canada 3,490 7,104 10,594 414
8/22/06 Maple Grove / Lakeland Dr 1,513 4,040 5,553 236
8/22/06 Minnetonka 1,318 2,132 3,450 125
8/22/06 Plymouth 169 684 1,412 2,096 82
8/22/06 Plymouth 494 2,000 4,487 6,487 264
8/22/06 Plymouth West 1,973 6,674 8,647 390
8/22/06 Richfield 1,641 5,811 7,452 337
8/22/06 Shorewood 2,805 7,305 10,110 427
8/22/06 Woodbury / Wooddale Dr 2,220 5,364 7,584 313
8/22/06 Central Parkway 2,545 4,690 7,235 274
8/22/06 Kirkman East 2,479 3,868 6,347 227
F-92
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/22/06 Pinole - 1,703 3,047 26 -
8/22/06 Martinez - 3,277 7,126 31 -
8/22/06 Portland / 16th & Sandy Blvd - 1,053 3,802 63 -
8/22/06 Houghton - 2,694 4,132 23 -
8/22/06 Antioch - 1,853 6,475 22 -
8/22/06 Walnut Creek - - - 42 -
8/22/06 Holcomb Bridge - 1,906 4,303 34 -
8/22/06 Palatine / Rand Rd - 1,215 1,895 31 -
8/22/06 WashingtonSquare/Wash.Point Dr - 523 1,073 42 -
8/22/06 Indianapolis-Dwntwn/N.Illinois - 182 2,795 56 -
8/22/06 Canton South - 769 3,316 79 -
8/22/06 Bricktown - 2,881 5,834 39 -
8/22/06 Commack - 2,688 6,376 42 -
8/22/06 Nesconset / Nesconset Hwy - 1,374 3,151 23 -
8/22/06 Great Neck - 1,229 3,299 24 -
8/22/06 Hempstead / S. Franklin St. - 509 3,042 38 -
8/22/06 Bethpage / Stuart Ave - 2,387 7,104 49 -
8/22/06 44079 Helotes - 1,833 3,557 25 -
8/22/06 Medical Center San Antonio - 1,571 4,217 31 -
8/22/06 44081 Oak Hills - - 7,449 50 -
8/22/06 44082 Olympia - 2,382 4,182 21 -
8/22/06 Las Colinas - 676 3,338 46 -
8/22/06 Old Towne - 2,756 13,080 48 -
8/22/06 Juanita - 2,318 7,554 28 -
8/22/06 Ansley Park - 3,132 11,926 73 -
8/22/06 Brookhaven - 2,740 8,333 33 -
8/22/06 Decatur - 2,556 10,146 32 -
8/22/06 Oregon City - 1,582 3,539 30 -
8/22/06 Portland/Barbur Bl &Multonomah - 2,328 9,134 34 -
8/22/06 Salem / Liberty Road - 1,994 5,304 110 -
8/22/06 Edgemont - 3,585 7,704 22 -
8/22/06 44001 Bedford - 2,042 4,176 50 -
8/22/06 44024 Kingwood - 1,625 2,926 58 -
8/22/06 44029 Hillcroft - - 3,994 25 -
8/22/06 44030 T.C. Jester - 2,047 4,819 67 -
8/22/06 Windcrest - 764 2,601 102 -
8/22/06 44036 Mission Bend - 1,381 3,141 53 -
8/22/06 Parker Road & Independence - 2,593 5,464 36 -
8/22/06 Park Cities East - 4,205 6,259 28 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Pinole 1,703 3,073 4,776 179
8/22/06 Martinez 3,277 7,157 10,434 419
8/22/06 Portland / 16th & Sandy Blvd 1,053 3,865 4,918 226
8/22/06 Houghton 2,694 4,155 6,849 244
8/22/06 Antioch 1,853 6,497 8,350 379
8/22/06 Walnut Creek - 42 42 2
8/22/06 Holcomb Bridge 1,906 4,337 6,243 253
8/22/06 Palatine / Rand Rd 1,215 1,926 3,141 113
8/22/06 WashingtonSquare/Wash.Point Dr 523 1,115 1,638 65
8/22/06 Indianapolis-Dwntwn/N.Illinois 182 2,851 3,033 166
8/22/06 Canton South 769 3,395 4,164 198
8/22/06 Bricktown 2,881 5,873 8,754 342
8/22/06 Commack 2,688 6,418 9,106 376
8/22/06 Nesconset / Nesconset Hwy 1,374 3,174 4,548 186
8/22/06 Great Neck 1,229 3,323 4,552 194
8/22/06 Hempstead / S. Franklin St. 509 3,080 3,589 179
8/22/06 Bethpage / Stuart Ave 2,387 7,153 9,540 416
8/22/06 44079 Helotes 1,833 3,582 5,415 266
8/22/06 Medical Center San Antonio 1,571 4,248 5,819 248
8/22/06 44081 Oak Hills - 7,499 7,499 437
8/22/06 44082 Olympia 2,382 4,203 6,585 245
8/22/06 Las Colinas 676 3,384 4,060 197
8/22/06 Old Towne 2,756 13,128 15,884 765
8/22/06 Juanita 2,318 7,582 9,900 442
8/22/06 Ansley Park 3,132 11,999 15,131 700
8/22/06 Brookhaven 2,740 8,366 11,106 488
8/22/06 Decatur 2,556 10,178 12,734 594
8/22/06 Oregon City 1,582 3,569 5,151 208
8/22/06 Portland/Barbur Bl &Multonomah 2,328 9,168 11,496 536
8/22/06 Salem / Liberty Road 1,994 5,414 7,408 318
8/22/06 Edgemont 3,585 7,726 11,311 451
8/22/06 44001 Bedford 2,042 4,226 6,268 246
8/22/06 44024 Kingwood 1,625 2,984 4,609 173
8/22/06 44029 Hillcroft - 4,019 4,019 235
8/22/06 44030 T.C. Jester 2,047 4,886 6,933 286
8/22/06 Windcrest 764 2,703 3,467 158
8/22/06 44036 Mission Bend 1,381 3,194 4,575 185
8/22/06 Parker Road & Independence 2,593 5,500 8,093 322
8/22/06 Park Cities East 4,205 6,287 10,492 367
F-93
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
8/22/06 MaCarthur Crossing - 2,635 5,698 26 -
8/22/06 Arlington/S.Cooper &Green Oaks - 2,305 4,308 23 -
8/22/06 Woodforest - 1,534 3,545 966 -
8/22/06 Preston Road - 1,931 3,246 29 -
8/22/06 44043 East Lamar - 1,581 2,878 45 -
8/22/06 Lewisville/Interstate 35 &Main - 2,696 4,311 51 -
8/22/06 44046 Round Rock - 1,256 2,153 25 -
8/22/06 44047 Slaughter Lane - 1,881 3,326 33 -
8/22/06 Valley Ranch - 1,927 5,390 27 -
8/22/06 44050 Nacogdoches - 1,422 2,655 47 -
8/22/06 Thousand Oaks - 1,815 3,814 43 -
8/22/06 44054 Highway 78 - 1,344 2,288 32 -
8/22/06 44057 The Quarry - 1,841 8,765 55 -
8/22/06 44062 Cinco Ranch - 939 2,085 20 -
8/22/06 North Carrollton - 2,408 4,204 54 -
8/22/06 44073 First Colony - 1,181 2,930 27 -
8/22/06 44074 North Park - 1,444 3,253 30 -
8/22/06 44075 South Main - TX - 521 723 73 -
8/22/06 44077 Westchase - 903 3,748 37 -
8/22/06 44086 Lakeline - 1,289 3,762 38 -
8/22/06 44087 Highway 26 - 1,353 3,147 21 -
8/22/06 44088 Shavano Park - 972 4,973 22 -
8/22/06 44089 Oltorf - 880 3,693 39 -
8/22/06 44090 Irving - 686 1,367 83 -
8/22/06 44091 Hill Country Village - 988 3,524 59 -
8/22/06 44092 San Antonio NE - 253 664 78 -
8/22/06 East Pioneer II - 786 1,784 40 -
8/22/06 44095 Westheimer - 594 2,316 114 -
8/22/06 San Antonio/Jones-Maltsberger - 1,102 2,637 38 -
8/22/06 44097 Beltline - 1,291 2,336 63 -
8/22/06 44098 MacArthur - 1,590 2,265 29 -
8/22/06 Hurst / S. Pipeline Rd - 661 1,317 37 -
8/22/06 Balcones Hts/Fredericksburg Rd - 2,372 4,718 47 -
8/22/06 44101 Blanco Road - 1,742 4,813 49 -
8/22/06 Leon Valley/Bandera Road - 501 1,044 2,465 -
8/22/06 44103 Imperial Valley - 1,166 2,756 47 -
8/22/06 44104 Sugarland - 1,714 3,407 34 -
8/22/06 44105 Woodlands - 1,353 3,131 54 -
8/22/06 44106 Federal Road - 1,021 3,086 34 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 MaCarthur Crossing 2,635 5,724 8,359 335
8/22/06 Arlington/S.Cooper &Green Oaks 2,305 4,331 6,636 252
8/22/06 Woodforest 1,534 4,511 6,045 261
8/22/06 Preston Road 1,931 3,275 5,206 191
8/22/06 44043 East Lamar 1,581 2,923 4,504 171
8/22/06 Lewisville/Interstate 35 &Main 2,696 4,362 7,058 254
8/22/06 44046 Round Rock 1,256 2,178 3,434 128
8/22/06 44047 Slaughter Lane 1,881 3,359 5,240 195
8/22/06 Valley Ranch 1,927 5,417 7,344 316
8/22/06 44050 Nacogdoches 1,422 2,702 4,124 158
8/22/06 Thousand Oaks 1,815 3,857 5,672 225
8/22/06 44054 Highway 78 1,344 2,320 3,664 135
8/22/06 44057 The Quarry 1,841 8,820 10,661 514
8/22/06 44062 Cinco Ranch 939 2,105 3,044 122
8/22/06 North Carrollton 2,408 4,258 6,666 250
8/22/06 44073 First Colony 1,181 2,957 4,138 172
8/22/06 44074 North Park 1,444 3,283 4,727 191
8/22/06 44075 South Main - TX 521 796 1,317 47
8/22/06 44077 Westchase 903 3,785 4,688 221
8/22/06 44086 Lakeline 1,289 3,800 5,089 222
8/22/06 44087 Highway 26 1,353 3,168 4,521 186
8/22/06 44088 Shavano Park 972 4,995 5,967 292
8/22/06 44089 Oltorf 880 3,732 4,612 218
8/22/06 44090 Irving 686 1,450 2,136 85
8/22/06 44091 Hill Country Village 988 3,583 4,571 208
8/22/06 44092 San Antonio NE 253 742 995 45
8/22/06 East Pioneer II 786 1,824 2,610 106
8/22/06 44095 Westheimer 594 2,430 3,024 143
8/22/06 San Antonio/Jones-Maltsberger 1,102 2,675 3,777 156
8/22/06 44097 Beltline 1,291 2,399 3,690 141
8/22/06 44098 MacArthur 1,590 2,294 3,884 134
8/22/06 Hurst / S. Pipeline Rd 661 1,354 2,015 79
8/22/06 Balcones Hts/Fredericksburg Rd 2,372 4,765 7,137 277
8/22/06 44101 Blanco Road 1,742 4,862 6,604 284
8/22/06 Leon Valley/Bandera Road 501 3,509 4,010 140
8/22/06 44103 Imperial Valley 1,166 2,803 3,969 163
8/22/06 44104 Sugarland 1,714 3,441 5,155 201
8/22/06 44105 Woodlands 1,353 3,185 4,538 185
8/22/06 44106 Federal Road 1,021 3,120 4,141 182
F-94
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
----------------------------------------------------------------------------------------------------------------------------------
8/22/06 44107 West University - 1,940 8,121 37 -
8/22/06 Medical Center/Braeswood II - 1,121 4,678 42 -
8/22/06 Richardson/Audelia &Buckingham - 1,034 2,703 26 -
8/22/06 North Austin - 2,143 3,674 121 -
8/22/06 Warner - 1,603 3,998 60 -
8/22/06 44034 Universal City - 777 3,194 40 -
8/22/06 Seattle / Lake City Way S - 3,406 7,789 66 -
8/22/06 Arrowhead - 2,372 5,818 64 -
8/22/06 Ahwatukee - 3,017 5,975 20 -
8/22/06 Blossom Valley - 2,721 8,418 22 -
8/22/06 Jones Bridge - 3,065 6,015 31 -
8/22/06 Lawrenceville - 2,076 5,188 28 -
8/22/06 Fox Valley - 1,880 3,622 37 -
8/22/06 Eagle Creek / Shore Terrace - 880 2,878 47 -
8/22/06 North Greenwood/E.CountyLineRd - - 3,954 32 -
8/22/06 Annapolis - - 7,439 34 -
8/22/06 Creedmoor - 3,579 7,366 51 -
8/22/06 Painters Crossing - 1,582 4,527 31 -
8/22/06 Greenville Ave & Meadow - 2,066 6,969 47 -
8/22/06 Potomac Mills - 2,806 7,347 39 -
8/22/06 Sterling (Cascades) - 3,435 7,713 28 -
8/22/06 Redmond / Plateau - 2,872 7,603 21 -
8/22/06 Val Vista - 3,686 6,223 477 -
8/22/06 Van Ness - 11,120 13,555 139 -
8/22/06 Sandy Plains - 2,452 4,669 33 -
8/22/06 Country Club Hills - 2,783 5,438 36 -
8/22/06 Schaumburg / Irving Park Rd - 2,695 4,781 32 -
8/22/06 23033 Clinton Township - 1,917 4,143 17 -
8/22/06 44060 Champions - 1,061 3,207 30 -
8/22/06 44061 Southlake - 2,794 4,760 25 -
8/22/06 City Place - 2,045 5,776 37 -
8/22/06 44066 Bee Cave Road - 3,546 10,341 33 -
8/22/06 44068 Oak Farms - 2,307 8,481 59 -
8/22/06 44069 Henderson Street - 542 5,001 46 -
8/22/06 Merrifield - 5,061 10,949 41 -
8/22/06 Mill Creek - 2,917 7,252 28 -
8/22/06 Pier 57 - 2,042 8,719 69 -
8/22/06 Redmond / 90th - 3,717 7,011 26 -
8/22/06 Seattle / Capital Hill - 12th - 3,811 11,104 291 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------------
8/22/06 44107 West University 1,940 8,158 10,098 476
8/22/06 Medical Center/Braeswood II 1,121 4,720 5,841 276
8/22/06 Richardson/Audelia &Buckingham 1,034 2,729 3,763 159
8/22/06 North Austin 2,143 3,795 5,938 218
8/22/06 Warner 1,603 4,058 5,661 237
8/22/06 44034 Universal City 777 3,234 4,011 189
8/22/06 Seattle / Lake City Way S 3,406 7,855 11,261 458
8/22/06 Arrowhead 2,372 5,882 8,254 343
8/22/06 Ahwatukee 3,017 5,995 9,012 350
8/22/06 Blossom Valley 2,721 8,440 11,161 493
8/22/06 Jones Bridge 3,065 6,046 9,111 354
8/22/06 Lawrenceville 2,076 5,216 7,292 305
8/22/06 Fox Valley 1,880 3,659 5,539 213
8/22/06 Eagle Creek / Shore Terrace 880 2,925 3,805 173
8/22/06 North Greenwood/E.CountyLineRd - 3,986 3,986 233
8/22/06 Annapolis - 7,473 7,473 436
8/22/06 Creedmoor 3,579 7,417 10,996 432
8/22/06 Painters Crossing 1,582 4,558 6,140 265
8/22/06 Greenville Ave & Meadow 2,066 7,016 9,082 409
8/22/06 Potomac Mills 2,806 7,386 10,192 431
8/22/06 Sterling (Cascades) 3,435 7,741 11,176 451
8/22/06 Redmond / Plateau 2,872 7,624 10,496 446
8/22/06 Val Vista 3,686 6,700 10,386 403
8/22/06 Van Ness 11,120 13,694 24,814 798
8/22/06 Sandy Plains 2,452 4,702 7,154 275
8/22/06 Country Club Hills 2,783 5,474 8,257 319
8/22/06 Schaumburg / Irving Park Rd 2,695 4,813 7,508 281
8/22/06 23033 Clinton Township 1,917 4,160 6,077 243
8/22/06 44060 Champions 1,061 3,237 4,298 189
8/22/06 44061 Southlake 2,794 4,785 7,579 279
8/22/06 City Place 2,045 5,813 7,858 339
8/22/06 44066 Bee Cave Road 3,546 10,374 13,920 605
8/22/06 44068 Oak Farms 2,307 8,540 10,847 499
8/22/06 44069 Henderson Street 542 5,047 5,589 294
8/22/06 Merrifield 5,061 10,990 16,051 642
8/22/06 Mill Creek 2,917 7,280 10,197 425
8/22/06 Pier 57 2,042 8,788 10,830 513
8/22/06 Redmond / 90th 3,717 7,037 10,754 411
8/22/06 Seattle / Capital Hill - 12th 3,811 11,395 15,206 653
F-95
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/22/06 Costa Mesa 2,830 3,622 6,030 89 -
8/22/06 West Park 7,241 11,715 12,915 288 -
8/22/06 Cabot Road-Resco LLC 4,217 5,168 9,253 93 -
8/22/06 San Juan Creek-Resco LLC 4,629 4,755 10,749 112 -
8/22/06 Rancho San Diego-RESCO LLC 3,708 4,226 7,652 82 -
8/22/06 Palms - RESCO LLC 4,636 2,491 11,404 117 -
8/22/06 West Covina 3,711 3,595 7,360 111 -
8/22/06 Woodland Hills 4,704 4,376 11,898 143 -
8/22/06 Long Beach - 3,130 11,211 120 -
8/22/06 Northridge - 4,674 11,164 122 -
8/22/06 Rancho Mirage - 2,614 4,744 78 -
8/22/06 Palm Desert - 1,910 5,462 97 -
8/22/06 Davie - 4,842 9,388 67 -
8/22/06 Portland / I-205 & Division - 2,026 4,299 42 -
8/22/06 Milwaukie/Hwy224&Internatn'lWy - 2,867 5,926 19 -
8/22/06 44031 River Oaks - 2,625 8,930 63 -
8/22/06 Tacoma / South Sprague Ave - 2,189 4,776 46 -
8/22/06 Vancouver / Hazel Dell - 2,299 4,313 37 -
8/22/06 Canyon Park - 3,628 7,327 167 -
8/22/06 South Boulevard 4,204 3,090 6,041 55 1,463
8/22/06 Weddington 2,961 2,172 4,263 35 1,030
8/22/06 Gastonia - 644 2,808 25 507
8/22/06 Amity Ct 1,897 610 1,378 35 313
8/22/06 Pavilion 1,547 1,490 3,114 32 732
8/22/06 Randleman 2,026 1,639 2,707 46 712
8/22/06 Matthews - 1,733 6,457 101 1,220
8/22/06 Eastland 1,718 949 2,159 88 488
8/22/06 Albermarle 3,197 1,557 4,636 41 945
8/22/06 COTT 1,186 429 1,732 62 320
8/22/06 Ashley River - 1,907 4,065 148 947
8/22/06 Clayton - 1,071 2,869 788 608
8/22/06 Dave Lyle - 604 2,111 939 407
8/22/06 English Rd - 437 1,215 27 254
8/22/06 Sunset - 659 1,461 72 334
8/22/06 Cone Blvd - 1,253 2,462 45 595
8/22/06 Wake Forest - 1,098 2,553 50 573
8/22/06 Silas Creek - 1,304 2,738 42 642
8/22/06 Winston 2,215 1,625 3,368 65 794
8/22/06 Hickory 2,350 1,091 4,271 53 795
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Costa Mesa 3,622 6,119 9,741 339
8/22/06 West Park 11,715 13,203 24,918 702
8/22/06 Cabot Road-Resco LLC 5,168 9,346 14,514 542
8/22/06 San Juan Creek-Resco LLC 4,755 10,861 15,616 631
8/22/06 Rancho San Diego-RESCO LLC 4,226 7,734 11,960 447
8/22/06 Palms - RESCO LLC 2,491 11,521 14,012 670
8/22/06 West Covina 3,595 7,471 11,066 434
8/22/06 Woodland Hills 4,376 12,041 16,417 699
8/22/06 Long Beach 3,130 11,331 14,461 658
8/22/06 Northridge 4,674 11,286 15,960 652
8/22/06 Rancho Mirage 2,614 4,822 7,436 279
8/22/06 Palm Desert 1,910 5,559 7,469 323
8/22/06 Davie 4,842 9,455 14,297 552
8/22/06 Portland / I-205 & Division 2,026 4,341 6,367 255
8/22/06 Milwaukie/Hwy224&Internatn'lWy 2,867 5,945 8,812 347
8/22/06 44031 River Oaks 2,625 8,993 11,618 526
8/22/06 Tacoma / South Sprague Ave 2,189 4,822 7,011 281
8/22/06 Vancouver / Hazel Dell 2,299 4,350 6,649 254
8/22/06 Canyon Park 3,628 7,494 11,122 432
8/22/06 South Boulevard 3,766 6,883 10,649 401
8/22/06 Weddington 2,647 4,853 7,500 284
8/22/06 Gastonia 785 3,199 3,984 187
8/22/06 Amity Ct 743 1,593 2,336 92
8/22/06 Pavilion 1,816 3,552 5,368 208
8/22/06 Randleman 1,998 3,106 5,104 182
8/22/06 Matthews 2,112 7,399 9,511 432
8/22/06 Eastland 1,156 2,528 3,684 146
8/22/06 Albermarle 1,898 5,281 7,179 309
8/22/06 COTT 522 2,021 2,543 119
8/22/06 Ashley River 2,324 4,743 7,067 278
8/22/06 Clayton 1,307 4,029 5,336 195
8/22/06 Dave Lyle 737 3,324 4,061 144
8/22/06 English Rd 532 1,401 1,933 83
8/22/06 Sunset 803 1,723 2,526 101
8/22/06 Cone Blvd 1,526 2,829 4,355 165
8/22/06 Wake Forest 1,338 2,936 4,274 173
8/22/06 Silas Creek 1,590 3,136 4,726 183
8/22/06 Winston 1,980 3,872 5,852 226
8/22/06 Hickory 1,329 4,881 6,210 285
F-96
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/22/06 Wilkinson 2,040 1,366 3,235 71 720
8/22/06 Lexington NC 1,194 874 1,806 48 426
8/22/06 Florence 2,876 952 5,557 159 932
8/22/06 Sumter 1,134 560 2,002 50 384
8/22/06 Garners Ferry 2,430 1,418 2,516 167 638
8/22/06 Greenville 1,864 1,816 4,732 172 1,014
8/22/06 Spartanburg 491 799 1,550 43 377
8/22/06 Rockingham 805 376 1,352 102 258
8/22/06 Monroe 2,209 1,578 2,996 133 735
8/22/06 Salisbury - Ground Lease 3,316 40 5,488 41 724
8/22/06 N. Tryon 2,051 1,271 2,330 62 582
8/22/06 Pineville 4,307 2,609 6,829 320 1,461
8/22/06 Park Rd 4,414 2,667 7,243 60 1,527
8/22/06 Ballantyne - 1,758 3,720 683 869
8/22/06 Stallings 2,402 1,348 2,882 61 671
8/22/06 Concord 1,998 1,147 2,308 120 552
8/22/06 Woodruff 1,589 1,154 1,616 49 463
8/22/06 Shriners 1,761 758 2,347 61 472
8/22/06 Charleston - 604 3,313 103 564
8/22/06 Rock Hill - 993 2,222 958 506
8/22/06 Arrowood 2,702 2,014 4,214 76 989
8/22/06 Country Club - 935 3,439 47 652
8/22/06 Rosewood (Morningstar) - 352 2,141 39 356
8/22/06 James Island (Folly Road) - 2,061 3,708 28 934
8/22/06 Battleground - 1,995 3,757 37 925
8/22/06 Greenwood Village / DTC Blvd - 684 2,925 90 -
8/22/06 Highlands Ranch/ Colorado Blvd - 793 2,000 110 -
8/22/06 Seneca Commons - 2,672 5,354 41 1,283
8/22/06 Capital Blvd South - 3,002 6,273 42 1,474
8/22/06 Southhaven 1,813 1,286 3,578 134 271
8/22/06 Wolfchase 1,431 987 2,816 143 212
8/22/06 Winchester 1,811 676 1,500 194 121
8/22/06 Sycamore View 1,110 705 1,936 214 147
8/22/06 South Main - 70 186 48 (50)
8/22/06 Southfield at Telegraph - 1,757 8,341 27 -
8/22/06 Westland - 1,572 3,687 25 -
8/22/06 Dearborn - 1,030 4,847 61 -
8/22/06 Roseville - 1,319 5,210 34 -
8/22/06 Farmington Hills - 982 2,878 44 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Wilkinson 1,664 3,728 5,392 219
8/22/06 Lexington NC 1,065 2,089 3,154 122
8/22/06 Florence 1,160 6,440 7,600 374
8/22/06 Sumter 683 2,313 2,996 136
8/22/06 Garners Ferry 1,728 3,011 4,739 174
8/22/06 Greenville 2,213 5,521 7,734 320
8/22/06 Spartanburg 974 1,795 2,769 106
8/22/06 Rockingham 458 1,630 2,088 96
8/22/06 Monroe 1,924 3,518 5,442 205
8/22/06 Salisbury - Ground Lease 49 6,244 6,293 365
8/22/06 N. Tryon 1,549 2,696 4,245 159
8/22/06 Pineville 3,179 8,040 11,219 468
8/22/06 Park Rd 3,250 8,247 11,497 482
8/22/06 Ballantyne 2,144 4,886 7,030 253
8/22/06 Stallings 1,643 3,319 4,962 194
8/22/06 Concord 1,398 2,729 4,127 160
8/22/06 Woodruff 1,407 1,875 3,282 111
8/22/06 Shriners 924 2,714 3,638 160
8/22/06 Charleston 736 3,848 4,584 225
8/22/06 Rock Hill 1,211 3,468 4,679 152
8/22/06 Arrowood 2,454 4,839 7,293 284
8/22/06 Country Club 1,139 3,934 5,073 232
8/22/06 Rosewood (Morningstar) 429 2,459 2,888 144
8/22/06 James Island (Folly Road) 2,512 4,219 6,731 247
8/22/06 Battleground 2,431 4,283 6,714 250
8/22/06 Greenwood Village / DTC Blvd 684 3,015 3,699 170
8/22/06 Highlands Ranch/ Colorado Blvd 793 2,110 2,903 118
8/22/06 Seneca Commons 3,257 6,093 9,350 355
8/22/06 Capital Blvd South 3,659 7,132 10,791 416
8/22/06 Southhaven 1,357 3,912 5,269 213
8/22/06 Wolfchase 1,042 3,116 4,158 161
8/22/06 Winchester 713 1,778 2,491 91
8/22/06 Sycamore View 744 2,258 3,002 114
8/22/06 South Main 57 197 254 15
8/22/06 Southfield at Telegraph 1,757 8,368 10,125 488
8/22/06 Westland 1,572 3,712 5,284 217
8/22/06 Dearborn 1,030 4,908 5,938 286
8/22/06 Roseville 1,319 5,244 6,563 306
8/22/06 Farmington Hills 982 2,922 3,904 172
F-97
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/22/06 Hunt Club - 2,527 5,483 59 729
8/22/06 Speedway IN /N. High School Rd - 2,091 3,566 50 -
8/22/06 Alafaya @ University Blvd. - 2,817 4,549 44 689
8/22/06 McCoy @ 528 - 2,656 5,206 40 -
8/22/06 S. Orange Blossom Trail @ 417 2,862 2,810 6,849 59 870
8/22/06 Alafaya-Mitchell Hammock Road 2,590 2,363 5,092 33 679
8/22/06 Maitland / 17/92 @ Lake Ave 4,177 5,146 10,670 45 1,445
8/22/06 S. Semoran @ Hoffner Road 2,549 2,633 6,601 39 829
8/22/06 Red Bug @ Dodd Road 2,598 2,552 5,959 41 769
8/22/06 Altmonte Sprgs/SR434(S. of 436 2,213 1,703 5,125 32 604
8/22/06 Brandon 2,917 2,810 4,584 36 691
8/22/06 Granada @ U.S. 1 2,833 2,682 4,751 50 689
8/22/06 Daytona/Beville @ Nova Road 2,822 2,616 6,085 52 786
8/22/06 Eau Gallie 2,535 1,962 4,677 23 599
8/22/06 Hyde Park 2,826 2,719 7,145 51 883
8/22/06 Carrollwood 1,441 2,050 6,221 31 731
8/22/06 Conroy @ I-4 1,845 2,091 3,517 29 523
8/22/06 West Waters - 2,190 5,186 24 666
8/22/06 Oldsmar 2,211 2,276 5,253 32 682
8/22/06 Mills North of Colonial 4,490 1,995 5,914 16 701
8/22/06 Alafaya @ Colonial 2,789 2,836 4,680 124 701
8/22/06 Fairbanks @ I-4 - 2,846 6,612 46 855
8/22/06 Maguire @ Colonial - 479 7,521 188 839
10/20/06 Burbank-Rich R. - 3,793 9,103 (97) -
10/24/06 Stonegate - 651 4,278 (678) -
2/9/07 Portland/Barbur Bl &Luradel ST - 830 3,273 (1) -
3/27/07 Ewa Beach / Ft Weaver Road - 7,454 14,825 33 -
6/1/07 South Bay - 1,017 4,685 31 -
8/14/07 Murrieta / Whitewood Road - 5,764 6,197 30 -
8/22/07 Palm Springs/S. Gene Autry Trl - 3,785 7,859 310 -
9/7/07 Mahopac / Rte 6 - 1,330 8,407 - -
9/11/07 East Point / N Desert Dr - 1,186 9,239 29 -
9/11/07 Canton / Ridge Rd - 389 4,197 - -
9/13/07 Murrieta / Antelope Rd - 1,630 2,991 4 -
10/14/07 New Orleans / I10 & Bullard - - 2,211 5 -
Self-storage Facilities - Europe
- - - - -
8/22/06 Wokingham - 3,243 9,492 307 -
8/22/06 Diemen - 1,755 6,901 1,053 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
8/22/06 Hunt Club 2,823 5,975 8,798 349
8/22/06 Speedway IN /N. High School Rd 2,091 3,616 5,707 211
8/22/06 Alafaya @ University Blvd. 3,147 4,952 8,099 290
8/22/06 McCoy @ 528 2,656 5,246 7,902 306
8/22/06 S. Orange Blossom Trail @ 417 3,140 7,448 10,588 434
8/22/06 Alafaya-Mitchell Hammock Road 2,640 5,527 8,167 323
8/22/06 Maitland / 17/92 @ Lake Ave 5,749 11,557 17,306 675
8/22/06 S. Semoran @ Hoffner Road 2,941 7,161 10,102 419
8/22/06 Red Bug @ Dodd Road 2,851 6,470 9,321 378
8/22/06 Altmonte Sprgs/SR434(S. of 436 1,902 5,562 7,464 325
8/22/06 Brandon 3,140 4,981 8,121 291
8/22/06 Granada @ U.S. 1 2,996 5,176 8,172 304
8/22/06 Daytona/Beville @ Nova Road 2,922 6,617 9,539 386
8/22/06 Eau Gallie 2,192 5,069 7,261 296
8/22/06 Hyde Park 3,038 7,760 10,798 453
8/22/06 Carrollwood 2,290 6,743 9,033 394
8/22/06 Conroy @ I-4 2,336 3,824 6,160 223
8/22/06 West Waters 2,447 5,619 8,066 328
8/22/06 Oldsmar 2,542 5,701 8,243 334
8/22/06 Mills North of Colonial 2,229 6,397 8,626 374
8/22/06 Alafaya @ Colonial 3,169 5,172 8,341 301
8/22/06 Fairbanks @ I-4 3,179 7,180 10,359 420
8/22/06 Maguire @ Colonial 815 8,212 9,027 474
10/20/06 Burbank-Rich R. 3,793 9,006 12,799 365
10/24/06 Stonegate 651 3,600 4,251 145
2/9/07 Portland/Barbur Bl &Luradel ST 830 3,272 4,102 98
3/27/07 Ewa Beach / Ft Weaver Road 7,454 14,858 22,312 448
6/1/07 South Bay 1,017 4,716 5,733 95
8/14/07 Murrieta / Whitewood Road 5,764 6,227 11,991 72
8/22/07 Palm Springs/S. Gene Autry Trl 3,785 8,169 11,954 102
9/7/07 Mahopac / Rte 6 1,330 8,407 9,737 84
9/11/07 East Point / N Desert Dr 1,186 9,268 10,454 93
9/11/07 Canton / Ridge Rd 389 4,197 4,586 38
9/13/07 Murrieta / Antelope Rd 1,630 2,995 4,625 28
10/14/07 New Orleans / I10 & Bullard - 2,216 2,216 7
Self-storage Facilities - Europe
- - - -
8/22/06 Wokingham 3,304 9,738 13,042 168
8/22/06 Diemen 1,957 7,752 9,709 443
F-98
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
--------------------------------------------------------------------------------------------------------------------------------
8/22/06 Surbiton - 805 2,774 86 -
8/22/06 Veldhoven - 1,347 5,636 855 -
8/22/06 Wuppertal Friedrich-Engels-Alle 4,789 221 2,470 351 -
8/22/06 Mulheim Dusseldorfer Strasse 4,488 567 3,989 559 -
8/22/06 Koln Melatengurtel 5,753 624 5,534 765 -
8/22/06 Dordrecht Ampere - 409 4,786 650 -
8/22/06 Dusseldorf Erkrather Strasse 5,127 1,143 4,052 643 -
8/22/06 Delft - 1,149 6,926 995 -
8/22/06 Marseille Bonneveine 4,273 1,156 6,891 1,003 -
8/22/06 Utrecht Cartesius - 774 6,092 911 -
8/22/06 Forest 1,678 11 4,815 616 -
8/22/06 Molenbeek - 197 1,974 285 -
8/22/06 Waterloo 986 49 8,941 1,128 -
8/22/06 Aartselaar - 1,847 6,950 1,155 -
8/22/06 Overijse - 870 4,121 689 -
8/22/06 Leuven - 843 4,804 696 -
8/22/06 Kortrijk - 520 3,319 489 -
8/22/06 Brugge - 659 3,024 832 -
8/22/06 Antwerpen Bredabaan - 1,759 3,822 720 -
8/22/06 Luik - 571 4,101 682 -
8/22/06 Linkeroever - 551 2,884 432 -
8/22/06 Borgerhout 239 17 2,001 255 -
8/22/06 Zaventem - 3,361 6,931 1,262 -
8/22/06 Machelen - 1,696 4,871 809 -
8/22/06 Ghent - 897 7,778 (1,586) -
8/22/06 Sint Pieters Leeuw - 729 3,924 578 -
8/22/06 Jette - 1,643 6,733 879 -
8/22/06 Wavre - 610 4,031 569 -
8/22/06 Den Haag - 166 11,472 1,451 -
8/22/06 Rotterdam - 29 9,644 1,233 -
8/22/06 Utrecht Nieuwegein - 2,563 9,799 1,516 -
8/22/06 Amsterdam - 7 9,047 1,126 -
8/22/06 Zaandam - 398 5,887 781 -
8/22/06 Amersfoort 2,098 17 7,473 909 -
8/22/06 Apeldoorn - 999 6,091 918 -
8/22/06 Breda - 824 6,985 1,006 -
8/22/06 Spaanse Polder - - 5,690 719 -
8/22/06 Kerkrade - Heerlen - 381 5,097 692 -
8/22/06 Heemstede 2,315 18 8,564 1,050 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Surbiton 820 2,845 3,665 2,845
8/22/06 Veldhoven 1,501 6,337 7,838 361
8/22/06 Wuppertal Friedrich-Engels-Alle 247 2,795 3,042 163
8/22/06 Mulheim Dusseldorfer Strasse 632 4,483 5,115 261
8/22/06 Koln Melatengurtel 696 6,227 6,923 363
8/22/06 Dordrecht Ampere 456 5,389 5,845 308
8/22/06 Dusseldorf Erkrather Strasse 1,274 4,564 5,838 261
8/22/06 Delft 1,281 7,789 9,070 445
8/22/06 Marseille Bonneveine 1,289 7,761 9,050 445
8/22/06 Utrecht Cartesius 863 6,914 7,777 397
8/22/06 Forest 12 5,430 5,442 311
8/22/06 Molenbeek 219 2,237 2,456 128
8/22/06 Waterloo 55 10,063 10,118 576
8/22/06 Aartselaar 2,059 7,893 9,952 454
8/22/06 Overijse 970 4,710 5,680 272
8/22/06 Leuven 939 5,404 6,343 308
8/22/06 Kortrijk 580 3,748 4,328 214
8/22/06 Brugge 1,088 3,427 4,515 196
8/22/06 Antwerpen Bredabaan 1,961 4,340 6,301 249
8/22/06 Luik 636 4,718 5,354 274
8/22/06 Linkeroever 615 3,252 3,867 186
8/22/06 Borgerhout 19 2,254 2,273 128
8/22/06 Zaventem 3,747 7,807 11,554 447
8/22/06 Machelen 1,891 5,485 7,376 314
8/22/06 Ghent 1,000 6,089 7,089 404
8/22/06 Sint Pieters Leeuw 813 4,418 5,231 252
8/22/06 Jette 1,831 7,424 9,255 425
8/22/06 Wavre 680 4,530 5,210 258
8/22/06 Den Haag 185 12,904 13,089 500
8/22/06 Rotterdam 32 10,874 10,906 423
8/22/06 Utrecht Nieuwegein 2,857 11,021 13,878 428
8/22/06 Amsterdam 8 10,172 10,180 395
8/22/06 Zaandam 444 6,622 7,066 257
8/22/06 Amersfoort 19 8,380 8,399 324
8/22/06 Apeldoorn 1,113 6,895 8,008 269
8/22/06 Breda 918 7,897 8,815 307
8/22/06 Spaanse Polder - 6,409 6,409 249
8/22/06 Kerkrade - Heerlen 424 5,746 6,170 223
8/22/06 Heemstede 20 9,612 9,632 372
F-99
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/22/06 Rotterdam Stadionweg - 419 5,842 795 -
8/22/06 Dordrecht II - 815 5,524 788 -
8/22/06 Nijmegen - - 5,328 689 -
8/22/06 Ede - 867 5,406 805 -
8/22/06 Rijswijk - 949 5,956 856 -
8/22/06 Spijkenisse - 633 6,573 891 -
8/22/06 Maastricht - 923 4,874 756 -
8/22/06 Essen Martin Luther Strasse 5,538 1,875 5,771 955 -
8/22/06 Kungens Kurva - 5,473 7,911 998 -
8/22/06 Taby - 2,249 11,309 1,025 -
8/22/06 Jakobsberg - 1,971 8,920 822 -
8/22/06 Rissne - 111 11,258 903 -
8/22/06 Solna - 2,666 17,961 1,579 -
8/22/06 Uppsala - 1,413 9,818 850 -
8/22/06 Hogdalen - 1,192 9,475 823 -
8/22/06 Handen - 1,548 11,019 951 -
8/22/06 Molndal - 2,828 9,605 933 -
8/22/06 Sodermalm - 15 2,729 234 -
8/22/06 Upplands Vasby - 1,196 8,090 702 -
8/22/06 Skondal - 62 11,110 855 -
8/22/06 Lundavagen - 1,866 8,390 772 -
8/22/06 Moraberg - 1,552 7,071 661 -
8/22/06 Lund - 1,485 5,766 567 -
8/22/06 Ystadsvagen - 908 7,632 664 -
8/22/06 Minelund - 1,763 8,292 761 -
8/22/06 Vastra Frolunda - 2,184 8,140 821 -
8/22/06 Danderyd - 2,571 9,366 910 -
8/22/06 Arstaberg - 69 9,846 767 -
8/22/06 Hvidovre - 1,576 10,166 1,428 -
8/22/06 Ish0j - 816 8,048 1,082 -
8/22/06 Roskilde - 794 8,723 1,161 -
8/22/06 H0rsholm - 2,364 10,860 1,602 -
8/22/06 Croydon - 12,151 8,992 477 -
8/22/06 Streatham - 6,351 6,134 301 -
8/22/06 Reading - 6,955 8,859 371 -
8/22/06 Hayes - 5,121 10,468 404 -
8/22/06 Hanworth - 7,586 9,661 393 -
8/22/06 Ewell - 5,351 14,127 466 -
8/22/06 Neasden - 5,514 9,178 360 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Rotterdam Stadionweg 467 6,589 7,056 256
8/22/06 Dordrecht II 909 6,218 7,127 241
8/22/06 Nijmegen - 6,017 6,017 234
8/22/06 Ede 966 6,112 7,078 237
8/22/06 Rijswijk 1,058 6,703 7,761 259
8/22/06 Spijkenisse 706 7,391 8,097 286
8/22/06 Maastricht 1,029 5,524 6,553 215
8/22/06 Essen Martin Luther Strasse 2,090 6,511 8,601 373
8/22/06 Kungens Kurva 5,853 8,529 14,382 258
8/22/06 Taby 2,405 12,178 14,583 368
8/22/06 Jakobsberg 2,108 9,605 11,713 548
8/22/06 Rissne 119 12,153 12,272 368
8/22/06 Solna 2,851 19,355 22,206 584
8/22/06 Uppsala 1,512 10,569 12,081 319
8/22/06 Hogdalen 1,275 10,215 11,490 308
8/22/06 Handen 1,656 11,862 13,518 358
8/22/06 Molndal 3,025 10,341 13,366 312
8/22/06 Sodermalm 16 2,962 2,978 90
8/22/06 Upplands Vasby 1,279 8,709 9,988 262
8/22/06 Skondal 66 11,961 12,027 361
8/22/06 Lundavagen 1,996 9,032 11,028 272
8/22/06 Moraberg 1,660 7,624 9,284 230
8/22/06 Lund 1,588 6,230 7,818 188
8/22/06 Ystadsvagen 972 8,232 9,204 248
8/22/06 Minelund 1,885 8,931 10,816 269
8/22/06 Vastra Frolunda 2,335 8,810 11,145 267
8/22/06 Danderyd 2,750 10,097 12,847 304
8/22/06 Arstaberg 74 10,608 10,682 604
8/22/06 Hvidovre 1,757 11,413 13,170 447
8/22/06 Ish0j 910 9,036 9,946 354
8/22/06 Roskilde 885 9,793 10,678 558
8/22/06 H0rsholm 2,635 12,191 14,826 696
8/22/06 Croydon 12,379 9,241 21,620 264
8/22/06 Streatham 6,470 6,316 12,786 181
8/22/06 Reading 7,086 9,099 16,185 260
8/22/06 Hayes 5,217 10,776 15,993 309
8/22/06 Hanworth 7,728 9,912 17,640 284
8/22/06 Ewell 5,451 14,493 19,944 415
8/22/06 Neasden 5,618 9,434 15,052 269
F-100
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/22/06 Putney - 6,032 14,902 498 -
8/22/06 Greenford - 8,747 11,122 463 -
8/22/06 Ruislip - - 14,975 388 -
8/22/06 Gypsy Corner - 9,299 11,086 476 -
8/22/06 Montrouge - 25 10,697 1,355 -
8/22/06 Varlin - - 1,348 171 -
8/22/06 Nice - 2,379 7,015 1,139 -
8/22/06 Osny - 820 6,050 888 -
8/22/06 Nanterre - 3,668 15,878 2,376 -
8/22/06 Port-Marly - 1,702 9,647 1,387 -
8/22/06 Fresnes - 2,680 9,012 1,438 -
8/22/06 Ballainvilliers - 1,643 7,711 1,134 -
8/22/06 Pontault Combault - 908 7,096 1,021 -
8/22/06 Villejust - 981 9,134 1,258 -
8/22/06 Asnieres - 3,057 14,566 2,146 -
8/22/06 Rosny - 1,619 9,876 1,479 -
8/22/06 Buchelay - 950 5,152 739 -
8/22/06 Coignieres - 1,142 7,511 1,066 -
8/22/06 Grigny - 548 7,518 1,000 -
8/22/06 Marseille - 365 6,148 808 -
8/22/06 Epinay - 417 6,395 845 -
8/22/06 Thiais - 2,602 7,221 1,200 -
8/22/06 Vitrolles - 581 6,380 860 -
8/22/06 La Seyne - 1,047 6,978 984 -
8/22/06 Sevran - 933 8,155 1,116 -
8/22/06 Noisy - 1,347 7,537 1,121 -
8/22/06 Lyon Gerland - 991 4,578 699 -
8/22/06 Chambourcy - 1,867 8,415 1,268 -
8/22/06 West London - 5,730 14,278 475 -
8/22/06 Monchengladbach Krefelder Strasse 4,851 1,510 4,425 724 -
8/22/06 Monchengladbach Waldnieler Strasse 5,019 1,846 4,416 790 -
8/22/06 Dusseldorf Heerdter Landstrasse 4,538 1,125 4,708 732 -
8/22/06 Osterbro 5,712 2,345 8,334 1,291 -
8/22/06 Tarnby 5,673 1,731 6,210 965 -
8/22/06 Krefeld Diessemer Bruch 4,259 932 4,819 701 -
8/22/06 Herlev 5,260 2,149 5,500 924 -
8/22/06 Bonn Bornheimer Strasse 5,132 2,072 5,044 862 -
8/22/06 Amager 5,388 534 7,598 992 -
8/22/06 Koln Clevischer Ring 4,317 1,247 4,812 733 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
--------------------------------------------------------------------------------------------------------------
8/22/06 Putney 6,146 15,286 21,432 437
8/22/06 Greenford 8,912 11,420 20,332 326
8/22/06 Ruislip - 15,363 15,363 440
8/22/06 Gypsy Corner 9,474 11,387 20,861 326
8/22/06 Montrouge 28 12,049 12,077 279
8/22/06 Varlin - 1,519 1,519 35
8/22/06 Nice 2,652 7,881 10,533 450
8/22/06 Osny 914 6,844 7,758 159
8/22/06 Nanterre 4,089 17,833 21,922 413
8/22/06 Port-Marly 1,897 10,839 12,736 251
8/22/06 Fresnes 2,988 10,142 13,130 235
8/22/06 Ballainvilliers 1,831 8,657 10,488 200
8/22/06 Pontault Combault 1,012 8,013 9,025 186
8/22/06 Villejust 1,094 10,279 11,373 238
8/22/06 Asnieres 3,408 16,361 19,769 378
8/22/06 Rosny 1,805 11,169 12,974 260
8/22/06 Buchelay 1,059 5,782 6,841 133
8/22/06 Coignieres 1,273 8,446 9,719 483
8/22/06 Grigny 611 8,455 9,066 483
8/22/06 Marseille 406 6,915 7,321 394
8/22/06 Epinay 465 7,192 7,657 411
8/22/06 Thiais 2,901 8,122 11,023 464
8/22/06 Vitrolles 648 7,173 7,821 409
8/22/06 La Seyne 1,168 7,841 9,009 447
8/22/06 Sevran 1,041 9,163 10,204 212
8/22/06 Noisy 1,501 8,504 10,005 197
8/22/06 Lyon Gerland 1,105 5,163 6,268 119
8/22/06 Chambourcy 2,081 9,469 11,550 541
8/22/06 West London 5,838 14,645 20,483 6,443
8/22/06 Monchengladbach Krefelder Strasse 1,683 4,976 6,659 284
8/22/06 Monchengladbach Waldnieler Strasse 2,058 4,994 7,052 287
8/22/06 Dusseldorf Heerdter Landstrasse 1,254 5,311 6,565 304
8/22/06 Osterbro 2,614 9,356 11,970 533
8/22/06 Tarnby 1,930 6,976 8,906 398
8/22/06 Krefeld Diessemer Bruch 1,039 5,413 6,452 309
8/22/06 Herlev 2,396 6,177 8,573 352
8/22/06 Bonn Bornheimer Strasse 2,310 5,668 7,978 324
8/22/06 Amager 596 8,528 9,124 486
8/22/06 Koln Clevischer Ring 1,391 5,401 6,792 308
F-101
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/22/06 Edgeware 8,857 3,569 8,811 308 -
8/22/06 Forest Hill 8,352 3,443 9,126 330 -
8/22/06 Wallington 7,368 2,047 8,402 259 -
8/22/06 Helsingborg 3,963 652 4,920 289 -
8/22/06 Vallingby 5,136 2,288 6,933 693 -
8/22/06 Eragny 4,558 892 5,672 798 -
8/22/06 Utrecht Franciscus 5,400 2,882 4,757 940 -
8/22/06 Amsterdam Sneevliet 5,149 - 5,615 667 -
8/22/06 Sucy 5,360 3,743 4,227 961 -
8/22/06 Tilburg 4,235 1,265 4,629 695 -
8/22/06 Almere 4,842 1,294 5,654 777 -
8/22/06 Wattignies 3,932 712 4,930 690 -
8/22/06 Eindhoven Praxis 3,442 - 4,835 574 -
8/22/06 Pessac 4,749 1,443 5,531 1,139 -
8/22/06 Amstelveen 2,974 - 3,792 471 -
8/22/06 Lyon Vaise 4,833 2,084 4,486 804 -
8/22/06 Amsterdam Badhoeve 4,288 1,542 4,573 752 -
8/22/06 Wambrechies 3,540 1,615 3,136 582 -
8/22/06 Merignac 4,469 1,282 5,193 794 -
8/22/06 Pierrefitte 5,084 1,917 5,338 887 -
8/22/06 Avignon 4,115 1,456 4,738 754 -
8/22/06 Wasquehal 4,271 961 5,205 745 -
8/22/06 Lormont 4,445 956 5,792 817 -
8/22/06 Lyon Sarrazin 5,051 660 6,568 884 -
8/22/06 Hatch End 9,071 3,010 7,910 294 -
8/22/06 Nacka 5,838 1,072 6,507 724 -
8/22/06 Kgl Tennishallen 1,445 - 1,373 147 -
8/22/06 Den Haag 2, Lozerlaan 3,377 - 4,615 524 -
8/22/06 Zoetermeer 3,383 - 4,368 511 -
8/22/06 Aix La Pioline 5,831 1,661 5,945 1,045 -
8/22/06 Poissonniers 11,946 2,160 14,646 2,375 -
8/22/06 Marseille le cannet 3,455 925 2,844 611 -
8/22/06 Groot-Bijgaarden 5,234 2,321 4,749 890 -
8/22/06 Aubervilliers la Villette - - 544 194 -
8/22/06 Charenton - - 1,946 275 -
8/22/06 Nanterre - la Defense 9,773 3,908 8,718 1,690 -
8/22/06 Bezons - Pont 6,363 2,194 5,785 994 -
8/22/06 Clichy Republique 6,528 4,641 6,112 1,317 -
8/22/06 Creteil 8,215 1,754 7,311 1,186 -
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
----------------------------------------------------------------------------------------------------------------
8/22/06 Edgeware 3,636 9,052 12,688 515
8/22/06 Forest Hill 3,508 9,391 12,899 535
8/22/06 Wallington 2,085 8,623 10,708 490
8/22/06 Helsingborg 697 5,164 5,861 287
8/22/06 Vallingby 2,447 7,467 9,914 424
8/22/06 Eragny 994 6,368 7,362 363
8/22/06 Utrecht Franciscus 3,213 5,366 8,579 307
8/22/06 Amsterdam Sneevliet - 6,282 6,282 357
8/22/06 Sucy 4,173 4,758 8,931 272
8/22/06 Tilburg 1,410 5,179 6,589 294
8/22/06 Almere 1,442 6,283 7,725 355
8/22/06 Wattignies 794 5,538 6,332 316
8/22/06 Eindhoven Praxis - 5,409 5,409 307
8/22/06 Pessac 1,609 6,504 8,113 384
8/22/06 Amstelveen - 4,263 4,263 243
8/22/06 Lyon Vaise 2,323 5,051 7,374 288
8/22/06 Amsterdam Badhoeve 1,719 5,148 6,867 294
8/22/06 Wambrechies 1,801 3,532 5,333 202
8/22/06 Merignac 1,430 5,839 7,269 333
8/22/06 Pierrefitte 2,137 6,005 8,142 343
8/22/06 Avignon 1,623 5,325 6,948 304
8/22/06 Wasquehal 1,071 5,840 6,911 333
8/22/06 Lormont 1,066 6,499 7,565 370
8/22/06 Lyon Sarrazin 736 7,376 8,112 420
8/22/06 Hatch End 3,066 8,148 11,214 467
8/22/06 Nacka 1,147 7,156 8,303 401
8/22/06 Kgl Tennishallen - 1,520 1,520 85
8/22/06 Den Haag 2, Lozerlaan - 5,139 5,139 294
8/22/06 Zoetermeer - 4,879 4,879 279
8/22/06 Aix La Pioline 1,852 6,799 8,651 383
8/22/06 Poissonniers 2,408 16,773 19,181 877
8/22/06 Marseille le cannet 1,031 3,349 4,380 185
8/22/06 Groot-Bijgaarden 2,588 5,372 7,960 303
8/22/06 Aubervilliers la Villette - 738 738 33
8/22/06 Charenton - 2,221 2,221 110
8/22/06 Nanterre - la Defense 4,357 9,959 14,316 561
8/22/06 Bezons - Pont 2,446 6,527 8,973 325
8/22/06 Clichy Republique 5,174 6,896 12,070 344
8/22/06 Creteil 1,955 8,296 10,251 412
F-102
PUBLIC STORAGE
SCHEDULE III - REAL ESTATE
AND ACCUMULATED DEPRECIATION
Adjustments
Initial Cost Resulting from
2007 -------------------------- Costs the Acquisition
Date Encum- Buildings & Subsequent of Minority
Acquired Description brances Land Improvements to Acquisition interests
---------------------------------------------------------------------------------------------------------------------------------
8/22/06 Lyon - Jean Mace 3,534 419 3,012 474 -
11/16/06 Camberley 10,317 3,266 9,786 544 -
12/1/06 Jean Jaures 8,897 3,016 8,034 2,236 -
12/1/06 bezon 6,632 1,611 5,778 1,957 -
12/19/06 Munkeback 4,595 1,193 3,920 977 -
12/27/06 Evere 4,150 1,645 3,288 993 -
12/27/06 Gent, Antwerpsestw 4,164 875 3,673 1,337 -
2/1/07 Hogsbo 4,849 1,127 5,154 - -
2/1/07 Choisy le Roi 5,566 1,538 7,766 - -
6/16/07 Br0ndby 6,241 2,969 5,890 - -
7/20/07 Champigny 7,175 2,985 7,419 - -
10/1/07 Valby 6,559 3,303 6,976 - -
10/1/07 Villeneuve-Loubet 7,228 3,880 7,626 - -
12/1/07 Almere - 3,386 5,822 - -
12/1/07 Silvertown 6,361 2,083 11,894 - -
12/1/07 Noisy le Sec 5,359 3,148 6,926 - -
Other properties
2/16/96 Glendale/Western Avenue - 1,622 3,771 16,428 -
8/22/06 Corporate - Belgium - 2 6,473 1,297 -
8/22/06 Seattle/Valley St. - 4,016 20,995 - -
12/13/99 Burlingame - 4,043 9,434 343 -
4/28/00 San Diego/Sorrento - 1,282 3,016 406 -
6/29/98 Pompano Bch/Center Port Circle - 795 2,312 24 -
12/30/99 Tamarac Parkway - 1,902 4,467 1,348 -
12/29/00 Gardena - 1,737 5,456 29 -
4/2/02 Long Beach - 887 6,251 17 -
8/22/06 Lakewood 512 Business Park - 4,437 6,685 654 -
8/22/06 Olive Innerbelt Business Park - 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 - 99 - - -
Construction in Progress 6,113 - - 60,324 -
-----------------------------------------------------------------------------
$ 659,023 $ 2,940,790 $ 7,383,554 $ 1,025,062 $ 369,725 $
=============================================================================
Gross Carrying Amount
At December 31, 2007
Date ------------------------------------- Accumulated
Acquired Description Land Buildings Total Depreciation
---------------------------------------------------------------------------------------------------------------
8/22/06 Lyon - Jean Mace 468 3,437 3,905 170
11/16/06 Camberley 3,330 10,266 13,596 446
12/1/06 Jean Jaures 3,365 9,921 13,286 388
12/1/06 bezon 1,797 7,549 9,346 304
12/19/06 Munkeback 1,278 4,812 6,090 185
12/27/06 Evere 1,835 4,091 5,926 159
12/27/06 Gent, Antwerpsestw 937 4,948 5,885 185
2/1/07 Hogsbo 1,127 5,154 6,281 188
2/1/07 Choisy le Roi 1,538 7,766 9,304 283
6/16/07 Br0ndby 2,969 5,890 8,859 128
7/20/07 Champigny 2,985 7,419 10,404 133
10/1/07 Valby 3,303 6,976 10,279 70
10/1/07 Villeneuve-Loubet 3,880 7,626 11,506 76
12/1/07 Almere 3,386 5,822 9,208 19
12/1/07 Silvertown 2,083 11,894 13,977 39
12/1/07 Noisy le Sec 3,148 6,926 10,074 23
Other properties
2/16/96 Glendale/Western Avenue 1,616 20,205 21,821 17,349
8/22/06 Corporate - Belgium 6 7,766 7,772 417
8/22/06 Seattle/Valley St. 4,016 20,995 25,011 1,153
12/13/99 Burlingame 4,042 9,778 13,820 3,275
4/28/00 San Diego/Sorrento 1,023 3,681 4,704 1,281
6/29/98 Pompano Bch/Center Port Circle 795 2,336 3,131 921
12/30/99 Tamarac Parkway 1,889 5,828 7,717 1,227
12/29/00 Gardena 1,737 5,485 7,222 1,228
4/2/02 Long Beach 886 6,269 7,155 721
8/22/06 Lakewood 512 Business Park 4,437 7,339 11,776 411
8/22/06 Olive Innerbelt Business Park 787 3,023 3,810 164
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 99 - 99 -
Construction in Progress - 60,324 60,324 -
----------------------------------------------------------
$ 3,021,309 $ 8,697,822 $ 11,719,131 $ 2,128,225
==========================================================
Note: Buildings are depreciated over a useful life of 25 years.
F-103