Public Storage (NYSE:PSA) announced today operating results for the quarter and year ended December 31, 2015.

Operating Results for the Three Months Ended December 31, 2015

For the three months ended December 31, 2015, net income allocable to our common shareholders was $303.0 million or $1.74 per diluted common share, compared to $284.0 million or $1.64 in 2014 representing an increase of $19.0 million or $0.10. The increase is primarily due to (i) a $39.5 million increase in self-storage net operating income offset partially by (ii) a $30.3 million reduction in equity in earnings of unconsolidated real estate entities, primarily due to a $36.5 million gain recognized from our investment in PS Business Parks, Inc. ("PSB") in the quarter ended December 31, 2014.

The $39.5 million increase in self-storage net operating income is a result of a $29.5 million increase in our Same Store Facilities and a $9.9 million increase in our Non Same Store Facilities. Revenues for the Same Store Facilities increased 6.6% or $31.3 million in the three months ended December 31, 2015 as compared to 2014, due primarily to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities increased by 1.7% or $1.8 million in the three months ended December 31, 2015 as compared to 2014, due primarily to increases in snow removal and on-site property manager payroll. The increase in net operating income for the Non Same Store Facilities is due primarily to the impact of the development and acquisition of 202 self-storage facilities since January 2013.

Operating Results for the Year Ended December 31, 2015

For the year ended December 31, 2015, net income allocable to our common shareholders was $1,053.1 million or $6.07 per diluted common share, compared to $908.2 million or $5.25 in 2014 representing an increase of $144.9 million or $0.82 per diluted common share. The increase is primarily due to (i) a $165.8 million increase in self-storage net operating income and (ii) a $16.0 million increase in gains on sale of real estate, offset partially by (iii) a $22.1 million reduction in equity in earnings of PSB due primarily to reduced gains on disposition in 2015 as compared to 2014 and (iv) a $15.6 million reduction in equity in earnings of Shurgard Europe due primarily to a 16% reduction in the average value of the Euro relative to the dollar.

The $165.8 million increase in self-storage net operating income is a result of a $114.1 million increase in our Same Store Facilities and a $51.7 million increase in our Non Same Store Facilities. Revenues for the Same Store Facilities increased 6.5% or $121.2 million in the year ended December 31, 2015 as compared to 2014, due primarily to higher realized annual rent per occupied square foot. Cost of operations for the Same Store Facilities increased by 1.4% or $7.1 million in the year ended December 31, 2015 as compared to 2014, due primarily to increases in snow removal and property taxes, offset partially by lower advertising and selling expenses. The increase in net operating income for the Non Same Store Facilities is due primarily to the impact of the development and acquisition of 202 self-storage facilities since January 2013.

Funds from Operations

For the three months ended December 31, 2015, funds from operations ("FFO") was $2.46 per diluted common share, as compared to $2.17 in 2014, representing an increase of $0.29 per share. FFO is a non-GAAP (generally accepted accounting principles) term defined by the National Association of Real Estate Investment Trusts and generally represents net income before depreciation, gains and losses and impairment charges with respect to real estate assets.

For the year ended December 31, 2015, FFO was $8.79 per diluted common share, as compared to $7.98 in 2014, representing an increase of $0.81 per share.

We also present "Core FFO per share," a non-GAAP measure that represents FFO per share excluding the impact of (i) foreign currency exchange gains and losses, (ii) EITF D-42 charges related to the redemption of preferred securities, (iii) property acquisition costs and (iv) certain other items. We believe Core FFO per share is a helpful measure used by investors and REIT analysts to understand our performance. However, Core FFO per share is not a substitute for net income per share. Because other REITs may not compute Core FFO per share in the same manner as we do, may not use the same terminology or may not present such a measure, Core FFO per share may not be comparable among REITs.

The following table reconciles from FFO per share to Core FFO per share (unaudited):

                       
Three Months Ended December 31, Year Ended December 31,
Percentage Percentage
2015 2014 Change 2015 2014 Change
 
FFO per share $ 2.46 $ 2.17 13.4 % $ 8.79 $ 7.98 10.2 %

Eliminate the per share impact of items excluded from Core FFO:

Foreign currency exchange loss
- - - 0.04
Application of EITF D-42 - - 0.06 -
Property acquisition costs - 0.02 0.04 0.03
Other items   (0.01 )   0.01   0.01   0.04
Core FFO per share $ 2.45   $ 2.20 11.4 % $ 8.90 $ 8.09 10.0 %
 

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, 2013 and therefore provide meaningful comparisons for 2014 and 2015. The following table summarizes the historical operating results of these 1,990 facilities (126.3 million net rentable square feet) that represent approximately 86% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at December 31, 2015.
                       

Selected Operating Data for the Same

Store Facilities (1,990 facilities)

(unaudited):
Three Months Ended December 31, Year Ended December 31,
Percentage Percentage
2015 2014 Change 2015 2014 Change
 

(Dollar amounts in thousands, except for per square foot amounts)
Revenues:
Rental income $ 479,585 $ 449,673 6.7% $ 1,881,154 $ 1,762,601 6.7%
Late charges and administrative fees   23,469   22,056 6.4%   91,740   89,068 3.0%
Total revenues (a)   503,054   471,729 6.6%   1,972,894   1,851,669 6.5%
 
Cost of operations:
Property taxes 27,808 28,037 (0.8)% 177,004 170,010 4.1%
On-site property manager payroll 22,607 21,905 3.2% 99,899 99,278 0.6%
Supervisory payroll 7,979 7,851 1.6% 34,840 34,193 1.9%
Repairs and maintenance 8,993 8,734 3.0% 35,625 35,768 (0.4)%
Snow removal 1,217 663 83.6% 9,568 7,900 21.1%
Utilities 8,770 9,303 (5.7)% 38,640 39,691 (2.6)%
Advertising and selling expense 6,398 6,430 (0.5)% 24,967 26,911 (7.2)%
Other direct property costs 12,790 12,346 3.6% 51,906 50,778 2.2%
Allocated overhead   9,786   9,291 5.3%   37,093   37,886 (2.1)%
Total cost of operations (a)   106,348   104,560 1.7%   509,542   502,415 1.4%
Net operating income (b) $ 396,706 $ 367,169 8.0% $ 1,463,352 $ 1,349,254 8.5%
 
Gross margin 78.9% 77.8% 1.4% 74.2% 72.9% 1.8%
 
Weighted average for the period:
Square foot occupancy 93.9% 93.5% 0.4% 94.5% 93.9% 0.6%
Realized annual rental income per (c):
Occupied square foot $ 16.18 $ 15.23 6.2% $ 15.76 $ 14.86 6.1%
Available square foot ("REVPAF") $ 15.18 $ 14.24 6.6% $ 14.89 $ 13.95 6.7%
At December 31:
Square foot occupancy 92.8% 92.5% 0.3%

Annual contract rent per occupied square foot (d)
$ 16.75 $ 15.82 5.9%
(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) See attached reconciliation of self-storage net operating income ("NOI") to operating income.
 
(c) Realized annual rent per occupied square foot is computed by dividing annualized rental income, before late charges and administrative fees, by the weighted average occupied square feet for the period. Realized annual rent per available square foot ("REVPAF") is computed by dividing annualized rental income, before late charges and administrative fees, by the total available rentable square feet for the period. These measures exclude late charges and administrative fees in order to provide a better measure of our ongoing level of revenue. Late charges are dependent upon the level of delinquency and administrative fees are dependent upon the level of move-ins. In addition, the rates charged for late charges and administrative fees can vary independently from rental rates. These measures take into consideration promotional discounts, which reduce rental income.
 
(d) Contract rent represents the applicable contractual monthly rent charged to our tenants, excluding the impact of promotional discounts, late charges and administrative fees.
 

The following table summarizes selected quarterly financial data with respect to the Same Store Facilities (unaudited):
                     
For the Quarter Ended
March 31 June 30 September 30 December 31 Entire Year
 
(Amounts in thousands, except for per square foot amounts)
Total revenues:
2015 $ 470,792 $ 487,206 $ 511,842 $ 503,054 $ 1,972,894
2014 $ 443,848 $ 456,203 $ 479,889 $ 471,729 $ 1,851,669
 
Total cost of operations:
2015 $ 141,997 $ 129,073 $ 132,124 $ 106,348 $ 509,542
2014 $ 140,429 $ 127,717 $ 129,709 $ 104,560 $ 502,415
 
Property taxes:
2015 $ 49,972 $ 49,821 $ 49,403 $ 27,808 $ 177,004
2014 $ 47,967 $ 47,452 $ 46,554 $ 28,037 $ 170,010
 

Repairs and maintenance, including snow removal expenses:
2015 $ 16,000 $ 8,935 $ 10,048 $ 10,210 $ 45,193
2014 $ 14,823 $ 9,510 $ 9,938 $ 9,397 $ 43,668
 
Advertising and selling expense:
2015 $ 6,163 $ 5,500 $ 6,906 $ 6,398 $ 24,967
2014 $ 6,544 $ 6,093 $ 7,844 $ 6,430 $ 26,911
 
REVPAF:
2015 $ 14.21 $ 14.73 $ 15.43 $ 15.18 $ 14.89
2014 $ 13.35 $ 13.76 $ 14.46 $ 14.24 $ 13.95
 

Weighted average realized annual rent per occupied square foot:
2015 $ 15.21 $ 15.44 $ 16.19 $ 16.18 $ 15.76
2014 $ 14.41 $ 14.53 $ 15.27 $ 15.23 $ 14.86
 

Weighted average occupancy levels for the period:
2015 93.4% 95.4% 95.3% 93.9% 94.5%
2014 92.6% 94.7% 94.7% 93.5% 93.9%
 

Property Operations - Non Same Store Facilities

The Non Same Store Facilities at December 31, 2015 represent 276 facilities that were not stabilized with respect to occupancies or rental rates since January 1, 2013 or that we did not own as of January 1, 2013. The following table summarizes operating data with respect to the Non Same Store Facilities (unaudited):
                       

NON SAME STORE FACILITIES
Three Months Ended December 31, Year Ended December 31,

 
2015 2014 Change 2015 2014 Change
 
(Dollar amounts in thousands, except square foot amounts)
Revenues:
2015 acquisitions $ 2,752 $ - $ 2,752 $ 6,255 $ - $ 6,255
2014 acquisitions 10,929 8,532 2,397 41,972 15,347 26,625
2013 acquisitions 28,667 25,800 2,867 110,603 96,947 13,656
Other facilities   27,482   23,160   4,322     103,801     85,919     17,882  
Total revenues   69,830   57,492   12,338     262,631     198,213     64,418  
 

Cost of operations before depreciation and amortization expense:
2015 acquisitions 915 - 915 2,067 - 2,067
2014 acquisitions 3,001 2,448 553 12,304 4,566 7,738
2013 acquisitions 8,052 8,379 (327 ) 32,724 32,917 (193 )
Other facilities   7,302   6,037   1,265     30,059     27,000     3,059  
Total cost of operations   19,270   16,864   2,406     77,154     64,483     12,671  
 
Net operating income:
2015 acquisitions 1,837 - 1,837 4,188 - 4,188
2014 acquisitions 7,928 6,084 1,844 29,668 10,781 18,887
2013 acquisitions 20,615 17,421 3,194 77,879 64,030 13,849
Other facilities   20,180   17,123   3,057     73,742     58,919     14,823  
 
Net operating income (a) $ 50,560 $ 40,628 $ 9,932   $ 185,477   $ 133,730   $ 51,747  
 

At December 31:
Square foot occupancy:
2015 acquisitions 85.3 % - -
2014 acquisitions 91.1 % 89.9 % 1.3 %
2013 acquisitions 92.5 % 90.4 % 2.3 %
Other facilities   83.7 %   83.6 %   0.1 %
  88.4 %   87.8 %   0.7 %
Annual contract rent per occupied square foot:
2015 acquisitions $ 12.87 $ - -
2014 acquisitions 13.51 12.15 11.2 %
2013 acquisitions 15.15 13.99 8.3 %
Other facilities   16.05     15.65     2.6 %
$ 15.06   $ 14.22     5.9 %
Number of facilities:
2015 acquisitions 17 - 17
2014 acquisitions 44 44 -
2013 acquisitions 121 121 -
Other facilities   94     83     11  
  276     248     28  
Net rentable square feet (in thousands):
2015 acquisitions 1,285 - 1,285
2014 acquisitions 3,457 3,442 15
2013 acquisitions 8,056 8,056 -
Other facilities   8,217     7,029     1,188  
  21,015     18,527     2,488  
(a)   See attached reconciliation of self-storage NOI to operating income.
 

Investing and Capital Markets Activities

During the three months ended December 31, 2015, we acquired seven self-storage facilities (three located in Florida and two each in Texas and California), with 0.5 million net rentable square feet, for $71 million. For the year ended December 31, 2015, we acquired 17 self-storage facilities with an aggregate of 1.3 million net rentable square feet for approximately $169 million. Subsequent to December 31, 2015, we acquired or were under contract to acquire 17 self-storage facilities (seven in Florida, eight in Ohio, one each in South Carolina and Tennessee), with 1.2 million net rentable square feet, for $149 million.

During the three months ended December 31, 2015, we completed four newly developed facilities and various expansion projects (0.4 million net rentable square feet) costing $34 million. For the year ended December 31, 2015, we completed 13 newly developed facilities (1.2 million net rentable square feet) at an aggregate cost of $119 million, and various expansion projects with an aggregate cost of $5 million which added 0.1 million net rentable square feet. At December 31, 2015, we had various facilities in development (3.0 million net rentable square feet) estimated to cost $396 million and various expansion projects (0.7 million net rentable square feet) estimated to cost $90 million. The remaining $267 million development cost for these projects is expected to be incurred primarily in 2016.

On October 8, 2015, we redeemed our 6.50% Series P Preferred Shares for $125 million plus accrued dividends.

On November 3, 2015, we issued €242.0 million of Euro-denominated ($264.3 million) unsecured Senior Notes, bearing interest at a fixed rate of 2.175% and maturing in ten years.

On January 20, 2016, we issued our 5.40% Series B Preferred Shares for gross proceeds of $300 million.

Distributions Declared

On February 15, 2016, our Board of Trustees declared a regular common quarterly dividend of $1.70 per common share. The Board also declared dividends with respect to our various series of preferred shares. All the dividends are payable on March 31, 2016 to shareholders of record as of March 16, 2016.

Fourth Quarter Conference Call

A conference call is scheduled for February 17, 2016 at 11:00 a.m. (PST) to discuss the fourth quarter earnings results. The domestic dial-in number is (866) 406-5408, and the international dial-in number is (973) 582-2770 (conference ID number for either domestic or international is 19273906). A simultaneous audio webcast may be accessed by using the link at www.publicstorage.com under "Company Info, Investor Relations, News and Events, Events Calendar." A replay of the conference call may be accessed through March 4, 2016 by calling (800) 585-8367 (domestic) or (404) 537-3406 (international) or by using the link at www.publicstorage.com under "Company Info, Investor Relations, News and Events, Events Calendar." All forms of replay utilize conference ID number 19273906.

About Public Storage

Public Storage, a member of the S&P 500 and FT Global 500, is a REIT that primarily acquires, develops, owns and operates self-storage facilities. The Company's headquarters are located in Glendale, California. At December 31, 2015, we had interests in 2,277 self-storage facilities located in 38 states with approximately 148 million net rentable square feet in the United States and 217 storage facilities located in seven Western European nations with approximately 12 million net rentable square feet operated under the "Shurgard" brand. We also own a 42% common equity interest in PS Business Parks, Inc. (NYSE:PSB) which owned and operated approximately 28 million rentable square feet of commercial space at December 31, 2015.

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 our 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 our filings with the Securities and Exchange Commission, including in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014, 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 self-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 development of new properties and/or 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 and our tenant reinsurance business; risks associated with a possible failure by us to qualify as a REIT under the Internal Revenue Code of 1986, as amended; security breaches or a failure of our networks, systems or technology could adversely impact our business, customer and employee relationships; changes in federal tax laws related to the taxation of REITs, which could impact our status as a REIT; difficulties in raising capital at a reasonable cost; delays in the development process; ongoing litigation and other legal and regulatory actions which may divert management's time and attention, require us to pay damages and expenses or restrict the operation of our business; and economic uncertainty due to the impact of war or terrorism. We disclaim any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, new estimates, or other factors, events or circumstances after the date of this press release, except where expressly required by law.
 
PUBLIC STORAGE
SELECTED INCOME STATEMENT DATA

(Amounts in thousands, except per share data)

(Unaudited)
               
Three Months Ended Year Ended
December 31, December 31,
2015 2014 2015 2014
 
Revenues:
Self-storage facilities $ 572,884 $ 529,221 $ 2,235,525 $ 2,049,882
Ancillary operations   36,446     32,460     146,171     127,414  
  609,330     561,681     2,381,696     2,177,296  
 
Expenses:
Self-storage cost of operations 125,618 121,424 586,696 566,898
Ancillary cost of operations 12,091 10,953 48,806 46,426
Depreciation and amortization 106,307 110,573 426,008 437,114
General and administrative   19,456     19,219     88,177     71,459  
  263,472     262,169     1,149,687     1,121,897  
 
Operating income 345,858 299,512 1,232,009 1,055,399
 
Other income (expense):
Interest and other income 5,035 3,964 16,544 17,638
Interest expense (610 ) - (610 ) (6,781 )

Equity in earnings of unconsolidated real estate entities
14,670 44,962 50,937 88,267
Gain on real estate sales - - 18,503 2,479
Foreign currency exchange gain (loss)   306     (12 )   306     (7,047 )
Net income 365,259 348,426 1,317,689 1,149,955
Allocation to noncontrolling interests   (1,769 )   (1,711 )   (6,445 )   (5,751 )
Net income allocable to Public Storage shareholders 363,490 346,715 1,311,244 1,144,204
Allocation of net income to:
Preferred shareholders - distributions (59,031 ) (61,694 ) (245,097 ) (232,636 )
Preferred shareholders - redemptions - - (8,897 ) -
Restricted share units   (1,456 )   (1,064 )   (4,200 )   (3,392 )
Net income allocable to common shareholders $ 303,003   $ 283,957   $ 1,053,050   $ 908,176  
 

Per common share:
Net income per common share - Basic $ 1.75   $ 1.65   $ 6.10   $ 5.27  
Net income per common share - Diluted $ 1.74   $ 1.64   $ 6.07   $ 5.25  
Weighted average common shares - Basic   172,877     172,434     172,699     172,251  
Weighted average common shares - Diluted   173,759     173,258     173,510     173,138  
 
 
PUBLIC STORAGE
SELECTED BALANCE SHEET DATA

(Amounts in thousands, except share and per share data)
       
December 31, 2015 December 31, 2014
ASSETS

(Unaudited)
 
Cash and cash equivalents $ 104,285 $ 187,712
 
Operating real estate facilities:
Land and buildings, at cost 13,205,261 12,863,235
Accumulated depreciation   (4,866,738 )   (4,482,520 )
8,338,523 8,380,715
Construction in process 219,190 104,573
Investments in unconsolidated real estate entities 809,308 813,740
Goodwill and other intangible assets, net 211,458 228,632
Other assets   95,468     103,304  
Total assets $ 9,778,232   $ 9,818,676  
 
 
 
LIABILITIES AND EQUITY
Senior unsecured notes $ 263,940 $ -
Mortgage notes 55,076 64,364
Accrued and other liabilities   261,578     247,141  
Total liabilities 580,594 311,505
 
Equity:
Public Storage shareholders' equity:

Cumulative Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 162,200 shares issued (in series) and outstanding (173,000 at December 31, 2014), at liquidation preference
4,055,000 4,325,000

Common Shares, $0.10 par value, 650,000,000 shares authorized, 172,921,241 shares issued and outstanding (172,445,554 shares at December 31, 2014)
17,293 17,245
Paid-in capital 5,601,506 5,561,530
Accumulated deficit (434,610 ) (374,823 )
Accumulated other comprehensive loss   (68,548 )   (48,156 )
Total Public Storage shareholders' equity 9,170,641 9,480,796
Noncontrolling interests   26,997     26,375  
Total equity   9,197,638     9,507,171  
Total liabilities and equity $ 9,778,232   $ 9,818,676  
 
 
PUBLIC STORAGE
SELECTED FINANCIAL DATA
 
Computation of Funds from Operations and Funds Available for Distribution

(Unaudited - amounts in thousands, except per share data)
               
Three Months Ended Year Ended
December 31, December 31,
2015 2014 2015 2014
 

Computation of FFO per Share:
 
Net income allocable to common shareholders $ 303,003 $ 283,957 $ 1,053,050 $ 908,176
Eliminate items excluded from FFO:
Depreciation and amortization 106,307 110,573 426,008 437,114
Depreciation from unconsolidated real estate investments 19,893 18,992 78,985 79,413

Depreciation allocated to noncontrolling interests and restricted share unitholders
(887 ) (808 ) (3,519 ) (3,638 )

Gains on sale of real estate investments, including our equity share from investments and other
  (888 )   (36,351 )   (29,721 )   (39,083 )
FFO allocable to common shares (a) $ 427,428   $ 376,363   $ 1,524,803   $ 1,381,982  
Diluted weighted average common shares   173,759     173,258     173,510     173,138  
FFO per share (a) $ 2.46   $ 2.17   $ 8.79   $ 7.98  
 

Reconciliation of Earnings per Share to FFO per Share:
 
Earnings per share - diluted $ 1.74 $ 1.64 $ 6.07 $ 5.25
Eliminate per share amounts excluded from FFO:

Depreciation and amortization, including amounts from investments and excluding amounts allocated to noncontrolling interests and restricted share unitholders
0.72 0.74 2.89 2.96

Gains on sale of real estate investments, including our equity share from investments and other
  -     (0.21 )   (0.17 )   (0.23 )
FFO per share (a) $ 2.46   $ 2.17   $ 8.79   $ 7.98  
 

Computation of Funds Available for Distribution ("FAD"):
 
FFO allocable to common shares $ 427,428 $ 376,363 $ 1,524,803 $ 1,381,982
Eliminate effect of items included in FFO but not FAD:
Non-cash share-based compensation expense 8,167 7,383 32,570 29,541

Foreign currency exchange (gain) loss, including our equity share from investments
(1,773 ) 12 (1,773 ) 7,047

Application of EITF D-42, including our equity share from investments
- - 9,944 -
Less: Capital expenditures to maintain real estate facilities   (10,194 )   (16,185 )   (63,069 )   (79,784 )
 
FAD (a) $ 423,628   $ 367,573   $ 1,502,475   $ 1,338,786  
 
Distributions paid to common shareholders $ 293,716   $ 241,253   $ 1,122,126   $ 964,591  
 
Distribution payout ratio   69.3 %   65.6 %   74.7 %   72.0 %
 
Distributions per common share $ 1.70   $ 1.40   $ 6.50   $ 5.60  
(a)   FFO and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts and, along with FAD, are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents net income before real estate depreciation, gains or losses and impairment charges, which are excluded because they are based upon historical real estate costs and assume that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. FAD represents FFO adjusted to exclude certain non-cash charges and to deduct capital expenditures. FFO and FFO per share are not a substitute for net income or earnings per share. FFO and FAD are not substitutes for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful.
 
 
PUBLIC STORAGE
SELECTED FINANCIAL DATA
 

Reconciliation of Self-Storage Net Operating Income to Operating Income

(Unaudited - amounts in thousands)
               
Three Months Ended Year Ended
December 31, December 31,
2015 2014 2015 2014
 
Self-storage revenues for:
Same Store Facilities $ 503,054 $ 471,729 $ 1,972,894 $ 1,851,669
Non Same Store Facilities   69,830     57,492     262,631     198,213  
Self-storage revenues 572,884 529,221 2,235,525 2,049,882
 
Self-storage cost of operations for:
Same Store Facilities 106,348 104,560 509,542 502,415
Non Same Store Facilities   19,270     16,864     77,154     64,483  
Self-storage cost of operations 125,618 121,424 586,696 566,898
 
Self-storage net operating income for:
Same Store Facilities 396,706 367,169 1,463,352 1,349,254
Non Same Store Facilities   50,560     40,628     185,477     133,730  
Self-storage net operating income (a) 447,266 407,797 1,648,829 1,482,984
Ancillary operating revenues 36,446 32,460 146,171 127,414
Ancillary cost of operations (12,091 ) (10,953 ) (48,806 ) (46,426 )
Depreciation and amortization (106,307 ) (110,573 ) (426,008 ) (437,114 )
General and administrative expense   (19,456 )   (19,219 )   (88,177 )   (71,459 )
Operating income on our income statement $ 345,858   $ 299,512   $ 1,232,009   $ 1,055,399  
(a)   Net operating income or "NOI" is a non-GAAP financial measure that excludes the impact of depreciation and amortization 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, in evaluating property performance and in comparing period-to-period and market-to-market property operating results. In addition, we believe the investment community utilizes NOI in determining operating performance and real estate values, and does not consider depreciation expense because it is based upon historical cost. NOI is not a substitute for net income, net operating cash flow, or other related GAAP financial measures, in evaluating our operating results. This table reconciles from NOI for our self-storage facilities to the operating income presented on our income statement.

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