Public Storage 2010 Annual Report Download - page 63

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compared to $5,530,000 for 2009. We expect approximately $7.0 million in intangible amortization during the year
ending December 31, 2011, with respect to our intangible assets at December 31, 2010, primarily attributable to the
42 self-storage facilities we acquired in 2010. Future intangible amortization will also depend upon the level of
acquisitions of facilities that have tenants in place.
The decrease in depreciation and amortization expense in 2009 as compared to 2008 is due principally to a
decline in amortization of tenant intangible assets that were acquired in connection with the 2006 Shurgard Merger.
Amortization expense with respect to tenant intangible assets was $5,530,000 in 2009 and $51,158,000 in 2008.
Effective March 31, 2008, depreciation and amortization ceased on the facilities owned by Shurgard
Europe, which was deconsolidated effective March 31, 2008. Included in our depreciation and amortization related
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General and administrative expense: General and administrative expense was $38,487,000, $35,735,000,
and $62,809,000 for the years ended December 31, 2010, 2009 and 2008, respectively. General and administrative
expense principally consists of state income taxes, investor relations expenses, and corporate and executive salaries.
In addition, general and administrative expenses includes expenses that vary depending on our activity levels in
certain areas, such as overhead associated with the acquisition and development of real estate facilities, certain
expenses related to capital raising and acquisition activities, litigation expenditures, employee severance, share-
based compensation, and incentive compensation for corporate and executive personnel. During the year ended
December 31, 2010, we incurred $2.6 million of expenses related to the acquisition of self-storage facilities.
General and administrative expense for the year ended December 31, 2008 includes $2,144,000 in ongoing
general and administrative expense for Shurgard Europe incurred prior to March 31, 2008 and $27,900,000 in
additional incentive compensation incurred related to our disposition of an interest in Shurgard Europe. Following
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operations.
We expect ongoing general and administrative expense to approximate $35 million to $40 million in 2011,
excluding expenses related to property acquisitions. Costs related to property acquisitions are included in general
and administrative expense; however, such expenses for 2011 are dependent on the level of acquisitions, which is
not determinable at this time.
Interest expense: Interest expense was $30,225,000, $29,916,000 and $43,944,000 for the years ended
December 31, 2010, 2009 and 2008, respectively.
The increase in 2010 as compared to 2009 is due to $1,399,000 in interest expense on debt assumed in
connection with property acquisitions during the quarter ended June 30, 2010. The decrease in 2009 as compared to
2008 is due to the deconsolidation of Shurgard Europe effective March 31, 2008, which incurred $6,892,000 in
interest expense for the three months ended March 31, 2008, as well as a reduction of $5,859,000 in interest expense
due to the aforementioned early retirement in February 2009 of $110.2 million face amount of senior unsecured
debt.
See Note 6 to our December 31, 2010 consolidated financial statements for a schedule of our notes payable
balances, principal repayment requirements, and average interest rates.
Capitalized interest expense totaled $385,000, $718,000 and $1,998,000 for the years ended December 31,
2010, 2009 and 2008, respectively, in connection with our development activities.
Foreign Exchange Gain (Loss): Our loan receivable from Shurgard Europe is denominated in Euros and
we have not entered into any agreements to mitigate the impact of currency exchange fluctuations between the U.S.
Dollar and the Euro. As a result, the amount of U.S. Dollars we will receive on repayment will depend upon the
currency exchange rates at that time. In each period where we expect repatriation of these funds within two years
from period end, we record the change in the U.S. Dollar equivalent of the loan balance from the beginning to the
end of the period as a foreign currency gain or loss. We recorded a foreign currency translation loss of $42,264,000,