Public Storage 2003 Annual Report Download - page 17

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agency approvals. The Company continues to seek attractive sites for development of additional storage facilities
and evaluates existing sites for expansion or enhancement opportunities.
Improve the operating performance of containerized storage operations and repurpose real estate space
previously used by the containerized storage operations: During 2002 and 2003, management closed certain non-
strategic containerized storage facilities (the Closed Facilities), with the number of PSPUDs facilities decreasing
from 55 at December 31, 2001 to 24 at December 31, 2003.
Certain of the Closed Facilities were operated in real estate facilities owned by the Company. Through
December 31, 2003, the Company had converted 208,000 net rentable square feet of industrial space previously used
by the Closed Facilities into self-storage space, and was in the process of converting another 779,000 net rentable
square feet of such space.
As with the traditional self-storage facilities, PSPUD believes that the containerized storage business
experiences seasonal fluctuations in occupancy levels with occupancies generally higher in the summer months than
in winter months. There can be no assurance as to the level of PSPUDs expansion, level of gross rentals, level of
move-outs or profitability. Management continues to evaluate the optimum level of containerized facility operations
in each market in which it operates.
Participate in the growth of commercial facilities owned primarily by PS Business Parks, Inc.: On
January 2, 1997, we reorganized our commercial property operations into a separate private REIT. The private
REIT contributed its assets to a newly created operating partnership (the Operating Partnership) in exchange for a
general partnership interest and limited partnership interests. During 1997, the Company and certain partnerships in
which the Company has a controlling interest contributed substantially all of their commercial properties to the
Operating Partnership in exchange for limited partnership interests or to the private REIT in exchange for common
stock. On March 17, 1998, the private REIT merged into Public Storage Properties XI, Inc., a publicly traded REIT
and an affiliate of the Company and the name of the surviving corporation was changed to PS Business Parks, Inc.
(the REIT and the related Operating Partnership are hereinafter referred to collectively as PSB).
The Company has a 44% common equity interest in PSB as of December 31, 2003, comprised of 5,418,273
shares of common stock and 7,305,355 limited partnership units in the Operating Partnership. The limited
partnership units are convertible at our option, subject to certain conditions, on a one-for-one basis into PSB
common stock.
At December 31, 2003, PSB owned and operated approximately 18.3 million net rentable square feet of
commercial space located in eight states.
In addition to our investment in PSB, we have direct interests in three commercial facilities with an
aggregate of 204,000 net rentable square feet. In addition, certain of the Companys self-storage facilities rent a
total of 1,187,000 net rentable square feet of commercial space at the same location. This commercial space is
managed by PSB pursuant to management agreements.
Policies with respect to investing activities: Following are the Companys policies with respect to certain
other investing strategies, each of which may be entered into without a vote of shareholders:
• Making loans to other entities: The Company has made loans in connection with the sale of properties,
has made short-term loans to PS Business Parks, Inc. in the last three years and may make loans to
third parties as part of its investment objectives. However, the Company does not expect such items to
be a significant part of its investing activities.
• Investing in the securities of other issuers for the purpose of exercising control: There have been two
instances in the past four years where the Company has invested in the securities of another publicly-
held REIT, one which resulted in control of that REIT (the merger with Storage Trust in 1999), and
one that did not. The Company may engage in these activities in the future as a component of its real