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TheStreet Open House

Public Storage Reports Results For The Third Quarter Ended September 30, 2012

Property Operations – Same Store Facilities

The Same Store Facilities represent those facilities that have been owned and operated on a stabilized basis since January 1, 2010 and therefore provide meaningful comparisons for 2011 and 2012. The following table summarizes the historical operating results of these 1,941 facilities (122.5 million net rentable square feet) that represent approximately 94% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at September 30, 2012.

           

Selected Operating Data for the Same Store

Facilities (1,941 Facilities) (unaudited):

Three Months Ended September 30,

Nine Months Ended September 30,

2012

     

2011

      PercentageChange

2012

     

2011

      PercentageChange
(Dollar amounts in thousands, except for weighted average data)
Revenues:
Rental income $ 391,461 $ 372,301 5.1 % $ 1,130,548 $ 1,076,400 5.0 %
Late charges and administrative fees   21,180     21,518   (1.6 )%   60,721     59,459   2.1 %

Total revenues (a)

  412,641     393,819   4.8 %   1,191,269     1,135,859   4.9 %
 
Cost of operations:
Property taxes 40,580 39,550 2.6 % 125,563 121,196 3.6 %
On-site property manager payroll 24,694 25,289 (2.4 )% 74,973 76,481 (2.0 )%
Repairs and maintenance 8,487 10,960 (22.6 )% 31,097 32,718 (5.0 )%
Utilities 10,153 10,501 (3.3 )% 27,852 29,175 (4.5 )%
Media advertising 1,239 2,144 (42.2 )% 6,275 9,550 (34.3 )%
Other advertising and selling expense 8,943 7,816 14.4 % 24,968 24,589 1.5 %
Other direct property costs (b) 8,739 8,917 (2.0 )% 26,492 27,215 (2.7 )%
Supervisory payroll (c) 8,191 8,199 (0.1 )% 25,630 24,605 4.2 %
Allocated overhead (d)   7,540     7,962   (5.3 )%   27,441     26,880   2.1 %
Total cost of operations (a)   118,566     121,338   (2.3 )%   370,291     372,409   (0.6 )%
 
Net operating income (e) $ 294,075   $ 272,481   7.9 % $ 820,978   $ 763,450   7.5 %
 
Gross margin 71.3 % 69.2 % 3.0 % 68.9 % 67.2 % 2.5 %
Weighted average for the period:
Square foot occupancy (f) 92.7 % 92.2 % 0.5 % 91.9 % 91.5 % 0.4 %
Realized annual rent per occupied square foot (g) (h) $ 13.79 $ 13.19 4.5 % $ 13.39 $ 12.81 4.5 %
REVPAF (h) (i) $ 12.79 $ 12.16 5.2 % $ 12.31 $ 11.72 5.0 %
 
Weighted average at September 30:
Square foot occupancy 92.5 % 91.7 % 0.9 %
In place annual rent per occupied square foot (j) $ 14.63 $ 14.13 3.5 %
Total net rentable square feet (in thousands) 122,464 122,464 -
 
(a)     Revenues and cost of operations do not include ancillary revenues and expenses generated at the facilities with respect to tenant reinsurance and retail sales.
 
(b) Other direct property costs include administrative expenses that are solely attributable to the self-storage facilities, such as property insurance, office expenses incurred at the property, telephone and data communication lines at the properties, business license costs and bank charges related to handling the properties’ cash deposits.
 
(c) Supervisory payroll expense represents compensation paid to the management personnel who directly and indirectly supervise the on-site property managers.
 
(d) Allocated overhead represents administrative expenses for shared general corporate functions, which are allocated to self-storage property operations to the extent their efforts are devoted to self-storage operations. Such functions include data processing, human resources, operational accounting and finance, information technology, marketing and costs of senior executives (other than the Chief Executive Officer and Chief Financial Officer, whose compensation is allocated to general and administrative expense).
 
(e) Net operating income or “NOI” is a non-GAAP (generally accepted accounting principles) financial measure that excludes the impact of depreciation expense. Although depreciation is an operating expense, we believe that NOI is a meaningful measure of operating performance, because we utilize NOI in making decisions with respect to capital allocations, in determining current property values, segment performance and comparing period-to-period and market-to-market property operating results. NOI is not a substitute for net operating income after depreciation in evaluating our operating results. See attached reconciliation of Same Store NOI to our net income.
 
(f) Square foot occupancies represent weighted average occupancy levels over the entire period.
 
(g) 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, which reduce rental income from the contractual amounts due.
 
(h) Late charges and administrative fees are excluded from the computation of realized annual rent per occupied square foot and annualized rental income per available square foot (“REVPAF”) because exclusion of these amounts provides a better measure of our ongoing level of revenue.
 
(i) REVPAF represents annualized rental income which excludes late charges and administrative fees divided by total available net rentable square feet. REVPAF takes into consideration promotional discounts that reduce rental income from the contractual amounts due.
 
(j) In place annual rent per occupied square foot represents annualized contractual rents per occupied square foot without reductions for promotional discounts and excludes late charges and administrative fees.
 

The following table summarizes selected quarterly financial data with respect to the Same Store Facilities (unaudited):

 
        Three Months Ended      
March 31       June 30       September 30       December 31 Full Year
Total revenues (in 000’s):
2012 $ 383,928 $ 394,700 $ 412,641
2011 $ 366,497 $ 375,543 $ 393,819 $ 386,196 $ 1,522,055
 
Total cost of operations (in 000’s):
2012 $ 130,682 $ 121,043 $ 118,566
2011 $ 128,295 $ 122,776 $ 121,338 $ 104,632 $ 477,041
 
Property taxes (in 000’s):
2012 $ 43,058 $ 41,925 $ 40,580
2011 $ 41,382 $ 40,264 $ 39,550 $ 26,063 $ 147,259
 
Repairs and maintenance (in 000’s):
2012 $ 12,025 $ 10,585 $ 8,487
2011 $ 10,765 $ 10,993 $ 10,960 $ 12,519 $ 45,237
 
Media advertising (in 000’s):
2012 $ 3,145 $ 1,891 $ 1,239
2011 $ 4,046 $ 3,360 $ 2,144 $ 992 $ 10,542
 
REVPAF:
2012 $ 11.89 $ 12.25 $ 12.79
2011 $ 11.36 $ 11.64 $ 12.16 $ 11.96 $ 11.78
 
Weighted average realized annual rent per occupied square foot for the period:
2012 $ 13.17 $ 13.23 $ 13.79
2011 $ 12.65 $ 12.61 $ 13.19 $ 13.26 $ 12.92
 
Weighted average occupancy levels for the period:
2012 90.3 % 92.6 % 92.7 %
2011 89.8 % 92.3 % 92.2 % 90.2 % 91.2 %
 
 

Investing Activities

During the three months ended September 30, 2012, we acquired four self-storage facilities (300,000 net rentable square feet), located in Hawaii (two), New Jersey and California, for an aggregate of approximately $56 million in cash. Subsequent to September 30, 2012, we acquired four self-storage facilities (409,000 net rentable square feet) in Texas, New York, Georgia, and Arizona for an aggregate of approximately $43 million in cash. We are also under contract, subject to contingencies, to acquire two additional self-storage facilities (one in Georgia and one in California) with 218,000 net rentable square feet, at a total cost of approximately $21 million in cash.

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