Public Storage Reports Results for the Quarter Ended March 31, 2013

  Public Storage Reports Results for the Quarter Ended March 31, 2013

Business Wire

GLENDALE, Calif. -- May 09, 2013

Public Storage (NYSE:PSA) announced today operating results for the quarter
ended March 31, 2013.

Operating Results for the Three Months Ended March 31, 2013

For the three months ended March 31, 2013, net income allocable to our common
shareholders was $161.9 million or $0.94 per diluted common share, compared to
$125.3 million or $0.73 per diluted common share for the same period in 2012,
representing an increase of $36.6 million or $0.21 per diluted common share.
This increase is due primarily to (i) a $30.3 million increase in self-storage
net operating income and (ii) a $27.1 million increase from reduced
allocations of net income to preferred shareholders due to the application of
EITF D-42 to our, and our equity share of PS Business Parks, Inc.’s (“PSB”),
redemptions of preferred securities, partially offset by (iii) a $24.9 million
reduction from foreign currency exchange gains and losses incurred primarily
in translating the value of our Euro-denominated loan receivable from Shurgard
Europe into U.S. Dollars.

Our self-storage net operating income increased $30.3 million in the three
months ended March 31, 2013 as compared to the same period in 2012, including
$24.2 million for our Same Store Facilities and $6.1 million for our non-Same
Store Facilities. Revenues for the Same Store Facilities increased 5.4% or
$21.1 million in the quarter ended March 31, 2013 as compared to the same
period in 2012, due to higher realized annual rent per occupied square foot
and higher average occupancy. Cost of operations for the Same Store Facilities
decreased by 2.3% or $3.1 million in the quarter ended March 31, 2013 as
compared to the same period in 2012, due primarily to lower repairs and
maintenance and advertising and selling costs. The increase in net operating
income for the non-Same Store Facilities is due primarily to the impact of the
acquisition of 24 self-storage facilities in 2012, combined with improved net
operating income on the other properties in this group.

Funds from Operations

For the three months ended March 31, 2013, funds from operations (“FFO”) was
$1.57 per diluted common share, as compared to $1.35 for the same period in
2012, representing an increase of $0.22 per share. FFO is a non-GAAP 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.

In addition to FFO, we often discuss “Core FFO” per share which is also a
non-GAAP measure that represents FFO per share, adjusted to exclude the impact
of i) foreign currency exchange gains and losses, representing a loss of $12.7
million and a gain of $12.2 million for the three months ended March 31, 2013
and 2012, respectively, and ii) the impact of EITF D-42 charges, including our
equity share from PSB, representing a $27.1 million charge for the three
months ended March 31, 2012 (none for the same period in 2013), and iii) our
$1.4 million equity share of charges incurred by Shurgard Europe in closing a
facility during the three months ended March 31, 2013. We believe Core FFO is
a helpful measure in understanding our ongoing earnings. We also believe that
the analyst community, likewise, reviews our Core FFO and Core FFO per share
(or similar measures using different terminology). Core FFO is not a
substitute for net income, earnings per share or cash flow from operations.
Because other real estate investment trusts ("REITs") may not compute Core FFO
in the same manner as we do, may not use the same terminology, or may not
present such a measure, Core FFO may not be comparable among REITs.

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

                                  Three Months Ended March 31,
                                        2013     2012      Percentage
                                                                    Change
FFO per share                          $ 1.57       $ 1.35          16.3   %
                                                                    
Eliminate the per share
impact of items excluded
from Core FFO:
Foreign currency exchange                0.07         (0.07 )
loss (gain)
Application of EITF D-42                 -            0.16
Shurgard Europe’s facility              0.01        -     
closure charge
                                                                    
Core FFO per share                     $ 1.65       $ 1.44         14.6   %
                                                                    

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, 2011 and therefore provide
meaningful comparisons for 2012 and 2013. The following table summarizes the
historical operating results of these 1,949 facilities (122.8 million net
rentable square feet) that represent approximately 93% of the aggregate net
rentable square feet of our U.S. consolidated self-storage portfolio at March
31, 2013.

Selected Operating Data for
the Same Store                  Three Months Ended March 31,
Facilities (1,949
facilities) (unaudited):
                                     2013        2012       Percentage
                                                                    Change
                                    (Dollar amounts in thousands, except for
                                    weighted average data)
Revenues:
Rental income (a)                   $ 389,107       $ 368,681       5.5    %
Late charges and                     20,497        19,818       3.4    %
administrative fees
Total revenues (b)                   409,604       388,499      5.4    %
                                                                    
Cost of operations:
Property taxes                        44,758          43,142        3.7    %
On-site property manager              25,716          26,031        (1.2   )%
payroll
Supervisory payroll (c)               9,106           8,990         1.3    %
Repairs and maintenance               7,508           10,387        (27.7  )%
Snow removal expenses                 3,316           1,848         79.4   %
Utilities                             9,259           9,447         (2.0   )%
Advertising and selling               7,453           10,531        (29.2  )%
expense
Other direct property costs           12,601          12,254        2.8    %
(a) (d)
Allocated overhead (e)               11,641        11,781       (1.2   )%
Total cost of operations             131,358       134,411      (2.3   )%
(b)
                                                                    
Net operating income (f)            $ 278,246      $ 254,088      9.5    %
                                                                    
Gross margin (a)                      67.9    %       65.4    %     3.8    %
Weighted average for the
period:
Square foot occupancy (g)             91.9    %       90.3    %     1.8    %
Realized annual rental
income per:
Occupied square foot (a)            $ 13.79         $ 13.30         3.7    %
(h)
Available square foot               $ 12.67         $ 12.01         5.5    %
(“REVPAF”) (a) (h)
Weighted average at March
31:
Square foot occupancy                 92.4    %       90.8    %     1.8    %
Annual contract rent per            $ 14.38         $ 13.96         3.0    %
occupied square foot (i)
                                                                    

      In previous presentations, credit card fees were presented as a
(a)  reduction to rental income; such fees are now classified as cost of
      operations under “other direct property costs.”
      
      Revenues and cost of operations do not include ancillary revenues and
(b)   expenses generated at the facilities with respect to tenant reinsurance
      and retail sales.
      
      Supervisory payroll expense represents compensation paid to management
(c)   personnel who directly and indirectly supervise on-site property
      managers.
      
      Other direct property costs include administrative expenses that are
      solely attributable to the self-storage facilities, such as property
(d)   insurance, business license costs, bank charges related to processing
      the properties’ cash receipts, credit card fees, and the cost of
      operating each property’s rental office including supplies and telephone
      data communication lines.
      
      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
(e)   operations. Such functions include data processing, human resources,
      operational accounting and finance, 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).
      
(f)   See attached reconciliation of Same Store NOI to operating income.
      
(g)   Square foot occupancies represent weighted average occupancy levels over
      the entire period.
      
      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
(h)   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.
      
      Contract rent represents the applicable contractual monthly rent charged
(i)   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):

               Three Months Ended                                                  
                 March 31       June 30        September      December 31       Full Year
                                                     30
                                                                                         
Total
revenues (in
000’s):
2013             $ 409,604
2012             $ 388,499         $ 399,725         $ 418,085         $ 410,489         $ 1,616,798
                                                                                         
Total cost
of
operations
(in 000’s):
2013             $ 131,358
2012             $ 134,411         $ 125,126         $ 122,987         $ 102,936         $ 485,460
                                                                                         
Property
taxes (in
000’s):
2013             $ 44,758
2012             $ 43,142          $ 42,051          $ 40,703          $ 26,295          $ 152,191
                                                                                         
Repairs and
maintenance,
including
snow removal
expenses (in
000’s):
2013             $ 10,824
2012             $ 12,235          $ 10,443          $ 8,500           $ 8,901           $ 40,079
                                                                                         
Advertising
and selling
expenses (in
000’s):
2013             $ 7,453
2012             $ 10,531          $ 10,586          $ 10,216          $ 7,538           $ 38,871
                                                                                         
REVPAF:
2013             $ 12.67
2012             $ 12.01           $ 12.37           $ 12.93           $ 12.73           $ 12.51
                                                                                         
Weighted
average
realized
annual rent
per occupied
square foot:
2013             $ 13.79
2012             $ 13.30           $ 13.39           $ 13.90           $ 13.83           $ 13.61
                                                                                         
Weighted
average
occupancy
levels:
2013               91.9    %
2012               90.3    %         92.4    %         93.0    %         92.1    %         91.9      %
                                                                                         

Investing and Capital Activities

During the three months ended March 31, 2013, we acquired two self-storage
facilities (149,000 net rentable square feet of self-storage space) locatedin
Arizona and Georgia for a total of approximately $14 million in cash. We are
under contract to acquire a facility (80,000 net rentable square feet of
self-storage space) locatedin Arizona for approximately $8 million in cash.

On January 16, 2013, we issued our 5.20% Series W Preferred Shares for gross
proceeds of $500 million, and on March 13, 2013, we issued our 5.20% Series X
Preferred Shares for gross proceeds of $225 million.

Distributions Declared

On May 9, 2013, our Board of Trustees declared a regular common quarterly
dividend of $1.25 per common share. The Board also declared dividends with
respect to our various series of preferred shares. All the dividends are
payable on June 27, 2013 to shareholders of record as of June 12, 2013.

First Quarter Conference Call

A conference call is scheduled for May 10, 2013 at 10:00 a.m. (PDT) to discuss
the first 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 34505258). A simultaneous audio
web cast may be accessed by using the link at www.publicstorage.com under
“Company Info, Investor Relations, Upcoming Events.” A replay of the
conference call may be accessed through May 24, 2013 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, Webcasts.” All
forms of replay utilize conference ID number 34505258.

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 March 31, 2013,
we had interests in 2,080 self-storage facilities located in 38 states with
approximately 133 million net rentable square feet in the United States and
188 storage facilities located in seven Western European nations with
approximately ten million net rentable square feet operated under the
“Shurgard” brand. We also own a 41% common equity interest in PS Business
Parks, Inc. (NYSE:PSB) which owned and operated approximately 28.2 million
rentable square feet of commercial space, primarily flex, multitenant office
and industrial space, at March 31, 2013.

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, 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 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 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; 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; 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
                                                 March 31,
                                                  2013         2012    
                                                                   
Operating Revenues:
Self-storage facilities (a)                      $ 439,665         $ 410,559
Ancillary operations                              31,235          29,276  
                                                  470,900         439,835 
Operating Expenses:
Self-storage cost of operations (a)                140,993           142,193
Ancillary cost of operations                       9,396             9,518
Depreciation and amortization                      91,001            86,824
General and administrative                        18,253          16,405  
                                                  259,643         254,940 
Operating income                                   211,257           184,895
                                                                   
Other income (expense):
Interest and other income                          5,581             5,655
Interest expense                                   (3,497  )         (5,334  )
Equity in earnings of unconsolidated               11,643            9,115
real estate entities
Foreign currency exchange (loss) gain             (12,737 )        12,157  
Income from continuing operations                  212,247           206,488
Discontinued operations                           -               234     
Net income                                         212,247           206,722
Allocation to noncontrolling interests            (1,024  )        (870    )
Net income allocable to Public Storage             211,223           205,852
shareholders
Allocation of net income to:
Preferred shareholders - distributions             (48,590 )         (55,095 )
Preferred shareholders - redemptions               -                 (24,900 )
Restricted share units                            (697    )        (514    )
Net income allocable to common                   $ 161,936        $ 125,343 
shareholders
Per common share:
Net income per common share – Basic              $ 0.94           $ 0.74    
Net income per common share – Diluted            $ 0.94           $ 0.73    
Weighted average common shares – Basic            171,446         170,309 
Weighted average common shares – Diluted          172,514         171,415 
                                                                   

      In order to comply with the current year presentation, adjustments have
(a)  been made to amounts previously reported to reflect credit card fees as
      a cost of operations rather than a reduction to revenues.
      

PUBLIC STORAGE

SELECTED BALANCE SHEET DATA

(Amounts in thousands, except share and per share data)

                                   March 31, 2013    December 31, 2012
ASSETS                                  (Unaudited)
Cash and cash equivalents               $ 398,252            $  17,239
Operating real estate
facilities:
Land and buildings, at cost               11,053,432            11,033,819
Accumulated depreciation                 (3,825,115 )         (3,738,130  )
                                          7,228,317             7,295,689
Construction in process                   64,022                36,243
Investment in unconsolidated              717,264               735,323
real estate entities
Goodwill and other intangible             207,004               209,374
assets, net
Loan receivable from
unconsolidated real estate                398,565               410,995
entity
Other assets                             88,127              88,540      
Total assets                            $ 9,101,551         $  8,793,403   
LIABILITIES AND EQUITY
Borrowings on bank credit               $ -                  $  133,000
facility
Notes payable                             142,419               335,828
Accrued and other liabilities            205,129             201,711     
Total liabilities                         347,548               670,539
                                                             
Equity:
Public Storage shareholders’
equity:
Cumulative Preferred Shares,
$0.01 par value, 100,000,000
shares
authorized, 142,500 shares
issued (in series) and                    3,562,500             2,837,500
outstanding
(113,500 at December 31,
2012), at liquidation
preference
Common Shares, $0.10 par
value, 650,000,000 shares
authorized,                               17,154                17,139
171,534,957 shares issued and
outstanding (171,388,286 at
December 31, 2012)
Paid-in capital                           5,498,782             5,519,596
Accumulated deficit                       (331,984   )          (279,474    )
Accumulated other                        (20,889    )         (1,005      )
comprehensive loss
Total Public Storage                      8,725,563             8,093,756
shareholders’ equity
Permanent noncontrolling                 28,440              29,108      
interests
Total equity                             8,754,003           8,122,864   
Total liabilities and equity            $ 9,101,551         $  8,793,403   
                                                             

Shurgard Europe Same Store Selected Operating Data

The Shurgard Europe Same Store Pool represents Shurgard Europe’s 163
facilities (8.7 million net rentable square feet) that have been operated on a
stabilized basis since January 1, 2011 and therefore provide meaningful
comparisons for 2012 and 2013. These 163 facilities represent approximately
86% of the aggregate net rentable square feet of Shurgard Europe’s
self-storage portfolio. 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 (163        
facilities)                       Three Months Ended March 31,
(unaudited):
                                   2013        2012       Percentage
                                                                    Change
                                  (Dollar amounts in thousands, except
                                  weighted average data,
                                  utilizing constant exchange rates (a))
                                                                    
Rental income, late
charges and                       $ 46,983         $ 47,930         (2.0   )%
administrative fees
                                                                    
Cost of operations                 20,063         20,761        (3.4   )%
                                                                    
Net operating income              $ 26,920        $ 27,169        (0.9   )%
                                                                    
Gross margin                        57.3   %         56.7   %       1.1    %
Weighted average for
the period:
Square foot occupancy               80.4   %         83.7   %       (3.9   )%
(b)
Realized annual rent,
prior to late charges
and administrative
fees, per:
Occupied square foot              $ 26.57          $ 26.03          2.1    %
(c)
Available square foot             $ 21.36          $ 21.78          (1.9   )%
(“REVPAF”) (c)
                                                                    
Weighted average at
March 31:
Square foot occupancy               80.0   %         83.7   %       (4.4   )%
Annual contract rent
per occupied square               $ 30.07          $ 29.12          3.3    %
foot (d)
                                                                    
Average Euro to U.S.
Dollar exchange rates:
(a)
Constant exchange rates             1.320            1.320          -
used herein
Actual historical                   1.320            1.310          0.8    %
exchange rates
                                                                    

      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
(a)  exchange rate basis. The amounts for the three months ended March 31,
      2012 have been restated using the actual exchange rates for the three
      months ended March 31, 2013.
      
(b)   Square foot occupancies represent weighted average occupancy levels over
      the entire period.
      
      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
(c)   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.
      
      Contract rent represents the applicable contractual monthly rent charged
(d)   to our tenants, excluding the impact of promotional discounts, late
      charges, and administrative fees.
      

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
                                                 March 31,
                                                  2013         2012    
Computation of FFO per Share
                                                                   
Net income                                       $ 212,247         $ 206,722
Adjust for amounts not included in
FFO:
Depreciation and amortization,
including amounts in discontinued                  91,001            86,938
operations
Depreciation from unconsolidated real             18,903          19,741  
estate investments
FFO allocable to equity holders                    322,151           313,401
Less allocation of FFO to:
Noncontrolling equity interests                    (1,631  )         (1,718  )
Preferred shareholders - distributions             (48,590 )         (55,095 )
Preferred shareholders - redemptions               -                 (24,900 )
Restricted share unitholders                      (1,105  )        (923    )
FFO allocable to common shares (a)               $ 270,825        $ 230,765 
Diluted weighted average common shares            172,514         171,415 
outstanding
FFO per diluted common share (a)                 $ 1.57           $ 1.35    
                                                                   
Computation of Funds Available for
Distribution (“FAD”):
                                                                   
FFO allocable to common shares                   $ 270,825         $ 230,765
Eliminate effect of items included in
FFO but not FAD:
Non-cash share-based compensation                  5,894             5,305
expense
Foreign currency exchange loss (gain)              12,737            (12,157 )
Application of EITF D-42                           -                 27,085
Less: Capital expenditures to maintain            (7,818  )        (14,278 )
real estate facilities
                                                                   
FAD                                              $ 281,638        $ 236,720 
                                                                   
Distributions paid to common                     $ 214,386        $ 187,407 
shareholders
                                                                   
Distribution payout ratio                         76.1    %        79.2    %
                                                                   
Distributions per common share                   $ 1.25           $ 1.10    
                                                                   

      FFO is a non-GAAP 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. We present FFO and FFO per share because we consider
      FFO to be an important measure of the performance of real estate
      companies, as do many analysts in evaluating our Company. We believe
      that FFO is a helpful measure of a REIT’s performance since FFO excludes
      depreciation, which is included in computing net income and assumes the
(a)  value of real estate diminishes predictably over time. We believe that
      real estate values fluctuate due to market conditions and in response to
      inflation. FFO computations do not consider scheduled principal payments
      on debt, capital improvements, distributions and other obligations of
      the Company. FFO and FFO per share are not a substitute for our cash
      flow or net income per share as a measure of our liquidity or operating
      performance or our ability to pay dividends. Because other REITs may not
      compute FFO in the same manner; FFO may not be comparable among REITs.

      
      

PUBLIC STORAGE

SELECTED FINANCIAL DATA



Reconciliation of Same Store Data and Self-Storage Net Operating Income to

Operating Income

(Unaudited – amounts in thousands)
                                           
                                                 Three Months Ended
                                                 March 31,
                                                  2013         2012    
                                                                   
Revenues for:
Same Store Facilities                            $ 409,604         $ 388,499
Non Same Store Facilities (a)                     30,061          22,060  
                                                                   
Self-storage revenues                             439,665         410,559 
                                                                   
Self-storage cost of operations for:
Same Store Facilities                              131,358           134,411
Non Same Store Facilities (a)                     9,635           7,782   
                                                                   
Self-storage cost of operations                   140,993         142,193 
Net operating income for:
Same Store Facilities                              278,246           254,088
Non Same Store Facilities (a)                     20,426          14,278  
                                                                   
Self-storage net operating income (b)              298,672           268,366
Ancillary revenues                                 31,235            29,276
Ancillary cost of operations                       (9,396  )         (9,518  )
Depreciation and amortization                      (91,001 )         (86,824 )
General and administrative expense                (18,253 )        (16,405 )
Operating income on our income                   $ 211,257        $ 184,895 
statement
                                                                   

      We have 118 additional self-storage facilities that are not Same Store
      Facilities. In the three months ended March 31, 2013, we acquired two
(a)  self-storage facilities for an aggregate of approximately $14 million in
      cash. Included in the table above for the three months ended March 31,
      2013 is $40,000 and $9,000, respectively, in revenues and cost of
      operations for these two self-storage facilities.
      
      Net operating income or “NOI” is a non-GAAP (generally accepted
      accounting principles) 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
(b)   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.

Contact:

Public Storage
Clemente Teng
(818) 244-8080, Ext. 1141
 
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