Public Storage 1997 Annual Report Download - page 36

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Public Storage, Inc. 1997 Annual Report
Equity in earnings of real estate entities: As of December 31, 1997, the Company had ownership interests in 29 affiliated limited partnerships
and two affiliated REITs which comprise the Unconsolidated Entities. The Company’s ownership interest in these entities is less than 50%. Due
to the Company’s limited ownership interest and control of these entities, the Company does not consolidate the accounts of these entities for
financial reporting purposes.
Equity in earnings of real estate entities represents the Company’s pro rata share of earnings of the Unconsolidated Entities using the equity
method. Similar to the Company, the Unconsolidated Entities generate substantially all of their income from their ownership of self-storage
facilities which are managed by the Company. In the aggregate, the Unconsolidated Entities own a total of 181 real estate facilities, 179 of
which are self-storage facilities. The following table summarizes the components of the Company’s equity in earnings of real estate entities:
Year Ended December 31, Year Ended December 31,
Dollar Dollar
(Amounts in thousands) 1997 1996 Change 1996 1995 Change
Self-storage operations
(1)
$31,026 $ 41,722 $(10,696) $ 41,722 $ 6,573 $ 35,149
Commercial property operations 1,428 2,667 (1,239) 2,667 269 2,398
Depreciation:
Self-storage facilities (10,935) (15,709) 4,774 (15,709) (1,909) (13,800)
Commercial properties (539) (1,741) 1,202 (1,741) (136) (1,605)
Other
(2)
(3,411) (4,818) 1,407 (4,818) (1,034) (3,784)
Total equity in earnings of real estate entities $ 17,569 $ 22,121 $ (4,552) $ 22,121 $ 3,763 $ 18,358
1.The fiscal 1997 amount includes the Company’s share of operations from the joint venture partnership performing development activities of $288,000.
2. Principally the Company’s pro rata share of general and administrative expense and interest expense.
The decrease in 1997 earnings compared to 1996 is principally the result of certain business combinations occurring in 1996 and 1997
whereby the Company’s existing ownership interest in certain entities were converted into wholly-owned real estate facilities (See Note 3 to
the consolidated financial statements).
The increase in earnings in 1996 compared to 1995 is due to (i) the 1996 earnings reflecting a full year’s operations for those interests
acquired in the PSMI Merger as opposed to just one and one-half months in 1995, (ii) the Company’s acquisition of additional interests
during 1996 in the Unconsolidated Entities which resulted in increased earnings from these entities (See Note 5 to the consolidated financial
statements) offset by (iii) certain business combinations occurring in 1996 whereby the Company’s existing ownership interest in certain
entities were converted into wholly-owned real estate facilities (See Note 3 to the consolidated financial statements).
The following table summarizes the combined operating data for fiscal 1997 (historical) with respect to those Unconsolidated Entities in
which the Company had an ownership interest as of December 31, 1997:
(In thousands)
Rental income $94,652
Total revenues $96,650
Cost of operations $33,077
Depreciation $12,805
Net income $40,775