Public Storage 2000 Annual Report Download - page 34

P UBLIC S TORAGE , I NC . 2000 A NNUAL R EPORT
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The following discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and
notes thereto.
F ORWARD L OOKING S TATEMENTS :
When used within this document, the words “expects,” “believes,” “anticipates,” “should,” “estimates,” and similar expressions are
intended to identify “forward-looking statements” within the meaning of that term in Section 27A of the Securities Exchange Act of
1933, as amended, and in Section 21F of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors, which may cause the actual results and performance of the Company to
be materially different from those expressed or implied in the forward-looking statements. Such factors include the impact of
competition from new and existing storage and commercial facilities which could impact rents and occupancy levels at the Company’s
facilities; the Company’s ability to evaluate, finance, and integrate acquired and developed properties into the Company’s existing
operations; the Company’s ability to effectively compete in the markets that it does business in; the impact of the regulatory
environment as well as national, state, and local laws and regulations including, without limitation, those governing Real Estate
Investment Trusts; the acceptance by consumers of the containerized storage concept; the impact of general economic conditions
upon rental rates and occupancy levels at the Company’s facilities; and the availability of permanent capital at attractive rates.
O VERVIEW :
The storage industry is highly fragmented and is composed predominantly of numerous local and regional operators. Competition in
the markets in which we operate is significant and is increasing from additional development of storage facilities in many markets
which may negatively impact occupancy levels and rental rates at the storage facilities. However, we believe that we possess several
distinguishing characteristics which enable us to compete effectively with other owners and operators.
We are the largest owner and operator of storage facilities in the United States with ownership interests as of December 31, 2000
in 1,361 storage facilities containing approximately 81.3 million net rentable square feet. All of our facilities are operated under the
“Public Storage” brand name, which we believe is the most recognized and established name in the storage industry. Located in the
major metropolitan markets of 37 states, our storage facilities are geographically diverse, giving us national recognition and
prominence. This concentration establishes us as one of the dominant providers of storage space in each market in which we operate
and enables us to use a variety of promotional activities, such as radio advertising as well as targeted discounting and referrals and, to
a lesser extent, television advertising, which are generally not economically viable to our competitors. In addition, we believe that the
geographic diversity of the portfolio reduces the impact from regional economic downturns and provides a greater degree of revenue
stability.
We will continue to focus our growth strategies on: (i) improving the operating performance of our existing traditional self-storage
properties, (ii) increasing our ownership of storage facilities through additional investments, (iii) improving the operating performance
of the containerized storage business and (iv) participating in the growth of PS Business Parks, Inc. Major elements of these strategies
are as follows:
• We will continue to focus upon enhancing the operating performance of our existing traditional self-storage properties, primarily
through increases in revenues achieved through the telephone reservation center and associated marketing efforts. These
increases in revenue levels are expected to result primarily from increases in realized rent per occupied square foot rather than
significant increases in occupancy levels.
• We expect to continue our storage facility development program. Over the past three years, the Company and related
development joint ventures opened a total of 70 storage facilities at a cost of approximately $334 million, with 4,475,000 net
rentable square feet. The Company and a related development joint venture partnership have a total of 110 projects identified
for openings after December 31, 2000 at a total cost of $628 million. These 110 projects (which includes Combination Facilities)
are comprised of 53 storage facilities for which we have acquired the land at December 31, 2000 (total estimated costs upon
completion of $368 million), 25 storage facilities identified for which we have not acquired the land (estimated costs upon
M ANAGEMENT ’ S D ISCUSSION AND A NALYSIS OF F INANCIAL C ONDITION
AND R ESULTS OF O PERATIONS