Public Storage 2000 Annual Report Download - page 37

35
P
UBLIC S TORAGE , I NC . 2000 A NNUAL R EPORT
The Consistent Group of facilities experienced increased revenues in 2000 and 1999 of 4.3% and 4.1%, respectively, as compared
to the preceding year. The 4.3% increase in revenues in 2000 as compared to 1999 was caused primarily by a 4.6% increase in
realized rent per occupied square foot, offset by a 0.2% reduction in average occupancy levels. Similarly, the 4.1% increase in
revenues in 1999 as compared to 1998 was caused primarily by a 4.3% increase in realized rent per occupied square foot, with no
change in average occupancy levels.
Over the past several months, we have increased scheduled rents (rental rates charged to new customers) throughout the portfolio.
Scheduled rental rates for the Consistent Group of facilities are approximately 14.5% higher as of December 31, 2000 than they were
at the same time last year. We are currently evaluating the impact of higher rental rates on our move-in and move-out activity. In
addition, we are evaluating market supply and demand factors and based on these analyses we may adjust rental rates further, either
increasing or decreasing them.
As indicated above, the scheduled rental rates are the rates being charged to new customers. The rental rates charged to our existing
customer base, is on average, less than the current scheduled rates. For 2000, the average realized rental rate per square foot was
approximately $1.04 or 9.3% below current scheduled rents. Our rental agreements are generally on a month-by-month basis giving
us the flexibility to increase rates to our existing customers. During the first quarter of fiscal 2001, we began to implement higher rental
rates to our existing customer base. The amount of increase will depend on a number of factors and may not result in rental rates
equal to the level of scheduled rental rates. There can be no assurance that higher rental rates will not adversely affect our
occupancies.
Cost of operations includes all direct and indirect costs of operating, marketing and managing the facilities. The following table
summarizes major operating expenses with respect to the Consistent Group (in thousands):
2000 1999 1998
Payroll expense $ 43,833 $ 42,637 $ 42,152
Property taxes 44,028 44,294 44,356
Repairs and maintenance 14,964 12,193 12,033
Advertising 8,148 7,161 4,940
Telephone reservation center costs 9,159 7,520 6,748
Other 35,326 33,126 32,839
$155,458 $146,931 $143,068
Increases in advertising cost are principally due to expanded yellow page advertising in telephone directories. Promotional
advertising is an important part of our operational strategy. Our advertising activities have increased customer call volume into our
national reservation system, where one of our representatives discusses with the customer space requirements, price and location
preferences and also informs the customer of other products and services provided by the Company and its subsidiaries. During 2000,
call volume averaged approximately 200,000 calls per month, as compared to approximately 185,000 and 180,000 in 1999 and
1998, respectively.
While there can be no assurance, we do not believe that the power crisis experienced currently in California will have any material
impact upon our operations; for the year ended December 31, 2000, total Consistent Group utility expense was less than 2% of total
revenues.
Telephone reservation center costs have increased due to the expansion of our telephone reservation system. During 2000, we
opened our second call center in Plano, Texas. In connection with the national telephone reservation system, we implement various
pricing and promotional discount strategies designed to increase rental activity. For the Consistent Group promotional discounts (which
are included as a reduction to gross rents to arrive at rental income) were $13,372,000 in 2000, $14,374,000 in 1999, and
$14,735,000 in 1998.
During the past three years, we have opened 30 newly developed facilities (24 in 2000, 6 in 1999 and none in 1998) with a total
cost of approximately $145.7 million. Included in the table on page 34, under the caption “Other Facilities”, are revenues of
$3,870,000 and $4,000 for 2000 and 1999, respectively, and cost of operations of $2,980,000 and $38,000 for 2000 and 1999,
respectively, with respect to these facilities.