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

Additional information about Public Storage is available on our website, www.publicstorage.com.

Forward-Looking Statements

All statements in this press release, other than statements of historical fact, are forward-looking statements which may be identified by the use of the words “expects,” “believes,” “anticipates,” “should,” “estimates” and similar expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause Public Storage’s actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance are described from time to time in Public Storage’s filings with the Securities and Exchange Commission, including in Item 1A, “Risk Factors” in Public Storage’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, Form 10-Q for the period ended September 30, 2012 expected to be filed on or before November 9, 2012, our other Quarterly Reports on Form 10-Q and current reports on Form 8-K. These risks include, but are not limited to, the following: 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; risks associated with downturns in the national and local economies in the markets in which we operate; the impact of competition from new and existing storage and commercial facilities and other storage alternatives; difficulties in our ability to successfully evaluate, finance, integrate into our existing operations and manage acquired and developed properties; risks related to our participation in joint ventures; risks associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations that could adversely affect our earnings and cash flows; the impact of the regulatory environment as well as national, state and local laws and regulations including, without limitation, those governing REITs; risks associated with a possible failure by us to qualify as a REIT under the Internal Revenue Code of 1986, as amended; disruptions or shutdowns of our automated processes and systems; difficulties in raising capital at a reasonable cost; delays in the development process; and economic uncertainty due to the impact of war or terrorism. Public Storage disclaims any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, new estimates, or other factors, events or circumstances after the date of this press release, except where expressly required by law.

PUBLIC STORAGE SELECTED INCOME STATEMENT DATA (Unaudited)
				Three Months Ended September 30,												Nine Months Ended September 30,
				2012						2011						2012						2011
				(Amounts in thousands, except per share data)
Operating Revenues:
Self-storage facilities				$	440,918					$	415,552					$	1,268,256					$	1,194,753
Ancillary operations					32,013						30,011						93,022						85,817
					472,931						445,563						1,361,278						1,280,570
Operating Expenses:
Self-storage cost of operations					127,367						128,787						395,381						393,446
Ancillary cost of operations					9,857						9,793						29,156						28,304
Depreciation and amortization					89,897						90,821						265,195						268,254
General and administrative					15,298						14,116						44,117						40,944
Asset impairment charges (a)					-						2,186						-						2,186
					242,419						245,703						733,849						733,134
Operating income					230,512						199,860						627,429						547,436
Other income (expense):
Interest and other income					5,444						6,875						16,639						25,218
Interest expense					(4,926	)					(5,862	)					(15,327	)					(18,779	)
Equity in earnings of unconsolidated real estate entities (b)					12,642						15,269						30,353						41,755
Foreign currency exchange gain (loss)					9,019						(28,253	)					(2,481	)					13,495
Gain on real estate sales and debt retirement					193						4,983						1,456						5,111
Income from continuing operations					252,884						192,872						658,069						614,236
Discontinued operations (c)					11,935						1,641						12,403						1,786
Net income					264,819						194,513						670,472						616,022
Allocation to noncontrolling interests					(927	)					(3,374	)					(2,585	)					(12,331	)
Net income allocable to Public Storage shareholders					263,892						191,139						667,887						603,691
Allocation of net income to:
Preferred shareholders - distributions					(49,267	)					(56,670	)					(156,272	)					(172,926	)
Preferred shareholders - redemptions					(11,350	)					(16,178	)					(49,677	)					(32,077	)
Restricted share units					(810	)					(341	)					(1,787	)					(1,164	)
Net income allocable to common shareholders				$	202,465					$	117,950					$	460,151					$	397,524
Per common share:
Net income per common share – Basic				$	1.19					$	0.69					$	2.70					$	2.35
Net income per common share – Diluted				$	1.18					$	0.69					$	2.68					$	2.33
Weighted average common shares - Basic					170,576						169,728						170,460						169,512
Weighted average common shares - Diluted					171,700						170,830						171,558						170,538

		(a)			Impairment charges relate to non-real estate assets.
		(b)			Due to the application of EITF D-42 to PSB’s preferred equity redemptions, equity in earnings of unconsolidated real estate entities has been reduced by $1.6 million and $7.2 million for the three and nine months ended September 30, 2012, respectively, and increased $3.0 million in the nine months ended September 30, 2011.
		(c)			Discontinued operations for the three and nine months ended September 30, 2012 includes an aggregate gain of $11.7 million on disposition of three self-storage facilities that were condemned through eminent domain proceedings, as well as the revenues and expenses generated by these facilities for all periods presented.

PUBLIC STORAGE SELECTED BALANCE SHEET DATA
				September 30, 2012 (unaudited)												December 31, 2011
				(Amounts in thousands, except share and per share data)
ASSETS
Cash and cash equivalents				$	535,752											$	139,008
Operating real estate facilities:
Land and buildings, at cost					10,980,706												10,777,576
Accumulated depreciation					(3,650,000	)											(3,398,379	)
					7,330,706												7,379,197
Investment in unconsolidated real estate entities					716,401												714,627
Goodwill and other intangible assets, net					210,148												209,833
Loan receivable from unconsolidated real estate entity					399,794												402,693
Other assets					95,319												87,204
Total assets				$	9,288,120											$	8,932,562
LIABILITIES AND EQUITY
Notes payable				$	347,943											$	398,314
Preferred shares called for redemption					367,325												-
Accrued and other liabilities					242,706												210,966
Total liabilities					957,974												609,280
Redeemable noncontrolling interests					-												12,355
Equity:
Public Storage shareholders’ equity:
Cumulative Preferred Shares of beneficial interest, $0.01 par value, 100,000,000 shares authorized, 128,000 shares issued (in series) and outstanding (475,000 at December 31, 2011), at liquidation preference					3,200,000												3,111,271
Common Shares of beneficial interest, $0.10 par value, 650,000,000 shares authorized, 170,634,560 shares issued and outstanding (170,238,805 at December 31, 2011)					17,064												17,024
Paid-in capital					5,411,623												5,442,506
Accumulated deficit					(312,690	)											(259,578	)
Accumulated other comprehensive loss					(15,371	)											(23,014	)
Total Public Storage shareholders’ equity					8,300,626												8,288,209
Permanent noncontrolling interests					29,520												22,718
Total equity					8,330,146												8,310,927
Total liabilities and equity				$	9,288,120											$	8,932,562

Shurgard Europe Same Store Selected Operating Data

The Shurgard Europe Same Store Pool represents the 162 facilities (8.6 million net rentable square feet) that have been consolidated and operated by Shurgard Europe on a stabilized basis since January 1, 2010 and therefore provide meaningful comparisons for 2011 and 2012. We account for our investment in Shurgard Europe under the equity method of accounting; accordingly, our pro-rata share of the operating results for these facilities is included in “equity in earnings of unconsolidated real estate entities” on our income statement.

Selected Operating Data for the Shurgard Europe Same Store Pool (162 facilities) (unaudited):				Three Months Ended September 30,																	Nine Months Ended September 30,
				2012						2011						PercentageChange					2012						2011						PercentageChange
				(Dollar amounts in thousands, except weighted average data, utilizing constant exchange rates (a))
Rental income, late charges, and administrative fees				$	46,953					$	47,891					(2.0	)%				$	140,871					$	141,676					(0.6	)%
Cost of operations					19,250						20,758					(7.3	)%					59,970						62,012					(3.3	)%
Net operating income				$	27,703					$	27,133					2.1	%				$	80,901					$	79,664					1.6	%
Gross margin					59.0	%					56.7	%				4.1	%					57.4	%					56.2	%				2.1	%
Weighted average for the period:
Square foot occupancy (b)					83.5	%					86.1	%				(3.0	)%					83.5	%					85.3	%				(2.1	)%
Realized annual rent per occupied square foot (c) (d)				$	25.65					$	25.32					1.3	%				$	25.63					$	25.19					1.7	%
REVPAF (d) (e)				$	21.42					$	21.80					(1.7	)%				$	21.40					$	21.49					(0.4	)%
Weighted average at September 30:
Square foot occupancy																						83.3	%					86.0	%				(3.1	)%
In place annual rent per occupied square foot (f)																					$	28.14					$	27.19					3.5	%
Total net rentable square feet (in thousands)																						8,627						8,627					-
Average Euro to U.S. Dollar exchange rates: (a)
Constant exchange rates used herein					1.251						1.251					-						1.282						1.282					-
Actual historical exchange rates					1.251						1.415					(11.6	)%					1.282						1.406					(8.8	)%

					(a)			In order to isolate changes in the underlying operations from the impact of exchange rates, the amounts in this table are presented on a constant exchange rate basis. The amounts for the three and nine months ended September 30, 2011 have been restated using the actual exchange rates for the three and nine months ended September 30, 2012, respectively.
					(b)			Square foot occupancies represent weighted average occupancy levels over the entire period.
					(c)			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.
					(d)			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.
					(e)			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.
					(f)			In place annual rent per occupied square foot represents annualized contractual rents per occupied square foot without reductions for promotional discounts and excludes late charges and administrative fees.

PUBLIC STORAGE SELECTED FINANCIAL DATA Computation of Funds from Operations and Funds Available for Distribution (Unaudited)
				Three Months EndedSeptember 30,												Nine Months EndedSeptember 30,
				2012						2011						2012						2011
				(Amounts in thousands, except per share data)
Computation of FFO Allocable to Common Shares:
Net Income				$	264,819					$	194,513					$	670,472					$	616,022
Add back – depreciation and amortization, including amounts classified as discontinued operations					89,991						90,956						265,517						268,695
Add back – depreciation from unconsolidated real estate investments					18,391						17,925						56,955						52,351
Eliminate – gains on sale of real estate investments, including discontinued operations and from unconsolidated real estate investments					(13,010	)					(5,943	)					(14,273	)					(5,818	)
FFO allocable to equity holders					360,191						297,451						978,671						931,250
Less allocation of FFO to:
Noncontrolling equity interests					(1,730	)					(3,784	)					(4,950	)					(13,696	)
Preferred shareholders - distributions					(49,267	)					(56,670	)					(156,272	)					(172,926	)
Preferred shareholders - redemptions					(11,350	)					(16,178	)					(49,677	)					(32,077	)
Restricted share unitholders					(1,198	)					(641	)					(2,990	)					(2,060	)
FFO allocable to Common Shares				$	296,646					$	220,178					$	764,782					$	710,491
Diluted weighted average common shares outstanding					171,700						170,830						171,558						170,538
FFO per diluted common share				$	1.73					$	1.29					$	4.46					$	4.17
Computation of Funds Available for Distribution (“FAD”):
FFO allocable to Common Shares				$	296,646					$	220,178					$	764,782					$	710,491
Eliminate effect of non-cash items on FFO:
Share-based compensation expense					7,111						6,147						18,394						17,968
Asset impairment charges					-						2,186						-						2,186
Foreign currency exchange (gain) loss					(9,019	)					28,253						2,481						(13,495	)
Application of EITF D-42					12,941						16,178						56,856						29,060
Less: Capital improvements to real estate facilities					(18,344	)					(12,734	)					(58,642	)					(57,026	)
FAD (a)				$	289,335					$	260,208					$	783,871					$	689,184
Distribution paid to common shareholders				$	187,629					$	161,526					$	562,625					$	458,062
Distribution payout ratio (b)					64.8	%					62.1	%					71.8	%					66.5	%
Distributions per Common Share				$	1.10					$	0.95					$	3.30					$	2.70

		(a)			Funds available for distribution (“FAD”) is presented because many analysts consider it to be a measure of the performance and liquidity of real estate companies and because we believe that FAD is helpful to investors as an additional measure of the performance of a REIT. FAD is not a substitute for our cash flow or net income as a measure of our liquidity, operating performance, or our ability to pay dividends. FAD does not take into consideration required principal payments on debt. Other REITs may not compute FAD in the same manner; accordingly, FAD may not be comparable among REITs.
		(b)			The distribution payout ratio is computed by dividing the distribution paid by FAD.

PUBLIC STORAGE SELECTED FINANCIAL DATA Reconciliation of Same Store Data and Net Operating Income to Consolidated Data of the Company (Unaudited)
				Three Months EndedSeptember 30,												Nine Months EndedSeptember 30,
				2012						2011						2012						2011
				(Amounts in thousands)
Revenues for:
Same Store Facilities				$	412,641					$	393,819					$	1,191,269					$	1,135,859
Non Same Store Facilities (a)					28,277						21,733						76,987						58,894
Self-storage revenues					440,918						415,552						1,268,256						1,194,753
Self-storage cost of operations for:
Same Store Facilities					118,566						121,338						370,291						372,409
Non Same Store Facilities (a)					8,801						7,449						25,090						21,037
Self-storage cost of operations					127,367						128,787						395,381						393,446
Net operating income for:
Same Store Facilities					294,075						272,481						820,978						763,450
Non Same Store Facilities (a)					19,476						14,284						51,897						37,857
Self-storage net operating income					313,551						286,765						872,875						801,307
Ancillary revenues					32,013						30,011						93,022						85,817
Ancillary cost of operations					(9,857	)					(9,793	)					(29,156	)					(28,304	)
Depreciation and amortization					(89,897	)					(90,821	)					(265,195	)					(268,254	)
General and administrative expense					(15,298	)					(14,116	)					(44,117	)					(40,944	)
Asset impairment charges					-						(2,186	)					-						(2,186	)
Interest and other income					5,444						6,875						16,639						25,218
Interest expense					(4,926	)					(5,862	)					(15,327	)					(18,779	)
Equity in earnings of unconsolidated real estate entities					12,642						15,269						30,353						41,755
Foreign currency exchange gain (loss)					9,019						(28,253	)					(2,481	)					13,495
Gain on real estate sales and debt retirement					193						4,983						1,456						5,111
Discontinued operations					11,935						1,641						12,403						1,786
Net income				$	264,819					$	194,513					$	670,472					$	616,022

(a)

We consolidate the operating results of 114 additional self-storage facilities that are not Same Store Facilities. Since January 1, 2012, we have acquired 14 self-storage facilities from third parties, and on June 1, 2012, we commenced consolidating three self-storage facilities that we previously accounted for on the equity method. Included in the table above for the three and nine months ended September 30, 2012, are revenues totaling $2,806,000 and $4,417,000, respectively, and cost of operations totaling $1,228,000 and $1,962,000, respectively, for these 17 facilities.

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